Taking back the healthcare debate….
OK, I’ll admit I’m venting a little….
It’s time for a little sanity and rationality. I’m tired of the angry mob ranting and screaming over scheduled speakers in the healthcare town halls even before they get a chance to utter their first word. I have read H.R. 3200 and H.R. 676 and I’m still working on reading the rest of the proposals, so I do at least know and understand what is in H.R. 3200, which is what the media has been referring to when they talk about the healthcare bill.
Let me say upfront that I do not support H.R. 3200 because it does not accomplish what I believe needs to happen for real healthcare reform, which is Medicare for All – a single-payer universal healthcare solution that gets the for-profit insurance companies out of the healthcare business permanently. Why? Because it is the nature of for-profit insurance companies, mandated by law, that they must make a profit for their stockholders, which increases our premiums and deductibles.
The first responsibility of insurance company executives is to their stockholders, not to their insureds (patients). And, especially in recent years, we have seen policy premiums, deductibles and co-pays rise astronomically and coverage is continually cut back further and further while insurance company CEOs continue to get hundreds of millions of dollars in yearly bonuses….
Every town hall I have seen on the tube shows people screaming at the politicians or other presenters about unrelated issues or making wild accusations like the Palin comment about “death panels,” which is not just incorrect, it is grossly misrepresentative and a completely irresponsible remark for a former Governor and Vice Presidential candidate to make.
And I am tired of hearing how anyone who does not support the verbal lynchings that go on in the town halls is suppressing free speech and being a bully. Those in attendance of the town halls who are respectful and ask the ranters to be quiet long enough for the speaker to make his or her presentation aren’t being bullies just because we want to hear what the scheduled speaker has to say before we make comments or ask questions. I’m sick and tired of ill informed idiots trying to shout the speakers down rather than have a rational, factual discussion about healthcare…..
This issue is much too important to allow special interests and those only concerned with scoring political points based on propaganda, lies and fabrications to take over the discussion. I fear that the stranglehold that corporations and special interests have over politicians (because we have not dealt with much-needed election reform and campaign finance reform) is coming back to bite us in the butt once again.
There are plenty of logical reasons to oppose any of the healthcare bills — none of them are perfect, nor will they ever be, and some of them may well be worse than doing nothing. But the reality is that there is a huge inequity in our healthcare system because of lack of access to care based on unaffordability, uninsurability (because of pre-existing illnesses) and “job lock” (having to stay at a job you don’t like because changing insurance companies could jeopardize your coverage based on pre-existing conditions). Those who can easily afford the premiums and co-pays are happy with what they have, and why shouldn’t they be? But over 47 million (and counting, since the numbers grow as unemployment rises) people have no healthcare and even more have inadequate healthcare coverage — and worse still, they often don’t know it and don’t find out until the need it.
The town hall ranters speak about “taking their country back,” but from whom?
From my view, it looks like “we the rational” need to take this issue back from “those the hysterical” that are dominating the news! Some of these demonstrators are simply honest, but ill-informed and easily manipulated, folk being used by the right wing-nuts to score political points. Some are right wing-nuts or special interests that are deliberately trying to confuse and obfuscate and manipulate Americans using fearmongering to reject healthcare reform, yet again, and, often, not based on their perception of the need for healthcare reform, but because it provides them a convenient opportunity to score political points against a political opponent. In other words, any issue will do if it creates a backlash against the opposing party.
And, given the change in public attitudes regarding healthcare and the recognition that this crisis has serious economic implications in contrast with the economic and political forces opposing healthcare reform, this may be the last real chance we have for a very long time to make any progress toward solving our healthcare crisis.
At this point, we Americans who understand the importance of this issue are all going to have to stand up and claim ownership of this issue and make a concerted effort to get the debate back to what should be the real focus: single-payer universal healthcare v. for-profit insurance company-dominated healthcare. And our common goal should be working together to solve problems, not fearmonger.
It is amazing to me how many people have no idea what single-payer universal healthcare really is. They think it is socialized medicine, and it is not. It is a “hybrid” system that makes the government the insurer, reducing the overhead of for-profit insurers by about 26%, but the healthcare providers are still privately owned and controlled.
It is equally disturbing to find that many of the people making these wild accusations about what is in the healthcare bill haven’t read any of the proposals yet. What’s worse, even our elected officials admit they haven’t read the bill(s) either, and some have already admitted they don’t intend to. It’s hard to wrap my head around the level of arrogance an elected official must have in order to vote on a bill he or she hasn’t read. Why do they think we put them in office? We certainly didn’t put them there just so they’d have a media platform, and the ability to get contributions for the next campaign.
A perfect example is the “death panels” comment by Palin. There is no such thing as death panels where government officials or medical professional make life or death decisions about patients in any of the bills. What she was referring to is the end-of-life consultation provision in H.R.3200 which simply allows healthcare professionals to be reimbursed for the time they spend explaining the medical content of Living Wills, et al., to patients. These consultations are completely voluntary on the part of patients, who request a conference with the doctor or nurse practioner to sit down with the patient and explain what each provision in a Living Will (Advance Directive for Healthcare) means, medically speaking. More about Living Wills later….
The other bill where the “death panel” charge was wrongfully made was regarding the Health Information Technology provision in the Stimulus bill: the provisions contained constitute an amendment to the Public Health Service Act (42 U.S.C. 201 et seq.). See http://www.law.cornell.edu/uscode/42/usc_sup_01_42.html for complete text). There is no provision in the stimulus bill for “death panels” which would review a patient’s medical records and decide to approve or deny coverage based on his or her value to society (age, general health, etc.). Oddly enough, insurance companies do that now in their appeals process.
The Health Information Technology section is amending a previous bill that mandates a national database information exchange with a codified format that will allow health information systems to “speak” to each other and to access medical records of individuals. All this must conform to HIPAA standards regarding privacy http://en.wikipedia.org/wiki/Health_Insurance_Portability_and_Accountability_Act ).
Now, back to Living Wills and the bogus “death panels” charge regarding the H.R.3200 (commonly referred to by the media as the healthcare bill or ObamaCare) –go to the Library of Congress website (http://www.thomas.gov/cgi-bin/query/F?c111:1:./temp/~c111whxT0k:e513253), and see SEC. 1233. ADVANCE CARE PLANNING CONSULTATION. Advance care planning consultation “means a consultation between the individual and a practitioner described in paragraph (2) regarding advance care planning….” and “An explanation by the practitioner of advance directives, including living wills and durable powers of attorney, and their uses;” and “An explanation by the practitioner of the role and responsibilities of a health care proxy [someone designated by the patient to make medical decisions should the patient become unconscious or incompetent],” and so on.
Every individual should have a Living Will (Advance Directive for Healthcare), which is a legal document with instructions on what to do should he or she (the patient) become ill or injured and is unable to communicate his or her wishes directly. The medical practicioner refers the patient to a number of resources (some funded by the government that are free or low cost), including attorneys and other professionals who can help the patient determine his or her resources and the options that are available to him or her should hr or she need hospice care or other special end-of-life services. There is no “death panel” – no committee of government officials or healthcare professionals voting to see if grandma lives or dies.
Of all the misrepresentations made thus far, I find this the most objectionable, particularly since it is creating fear in the elderly about something which all of us need to address BEFORE WE BECOME INCOMEPTENT AND UNABLE TO MAKETHESE DECISIONS FOR OURSELVES. Shame on you, Sarah Palin, for promulgating this nonsense!
Now, if you recall, I stated early on in the piece that I don’t like the H.R.3200 healthcare bill (ObamaCare); so, you might ask yourself, why am I defending parts of it? Well, it’s not the bill itself I am concerned about defending, it’s correcting the lies and propaganda. In order for our country to get past the hyperpolarization and political gamesmanship that pervades the public forum, we must start speaking truthfully with accuracy and clarity about all the issues and bills – whether we like them or not. In order to “speak truth to power,” we first must begin speaking truthfully. If we don’t like a bill or are against an issue, we should be able to articulate truthfully the reasons why without resorting to fabrication, emotionalism and propaganda. My concern is that we as a people have not made good decisions in the recent past, due in large part to the fact that we are too busy trying to manipulate each other rather than respectfully argue the pros and cons of an issue with truth, accuracy and clarity.
I believe that honesty may not always be the best policy, particularly if the truth does not serve your interests, but honesty is ALWAYS the sincerest form of respect. When you respect someone, you are honest with them. And it is time that our elected officials earned our respect by showing us the respect of being honest with us.
For those of you who are proactive in nature and responsible enough to want to inform yourselves, go to www.thomas.gov (the Library of Congress website) and search for bills using the word “healthcare.” You will come up with about 250 entries to work your way through. The two major proposals that have gotten some media attention are H.R. 3200 (ObamaCare) and H.R.676 (the only single-payer option that I am aware of), but there are about six other plans.
The bottom line is that we need accurate, complete, clear information. I believe that Obama made a mistake to not have a solid plan to discuss before holding these town hall meetings. However, these meetings could be effective if they were used to discuss possible provisions, their pros and cons, and find out from the people what they need and want rather than dictating to them what the administration thinks they need and want.
Timing is everything. Preparation is the next most important thing, and the administration blew it on both counts. But it is not too late for the American citizens to stand up and take the issue back from the special interests and insist on sanity, clarity and truthfulness. We need to get the country focused on solving problems rather than acting out in anger and ignorance, because whether you like any of the bills proposed or not, healthcare is the one, single most important issue that prevents American labor from being competitive internationally.
And it is a national shame that the richest country in the world ranks only 37th internationally in terms of healthcare – lower than all the European countries and even Cuba. As Robert Kennedy once said of America: we can do better than this! And we must if we want to regain our economic power and stability.
Are America’s better days behind us?
Paddy Ashdown, in a speech given at the 2009 Guardian Hay festival entitled “The end of western hegemony” basically declared America to be “yesterday’s news” among the superpowers ( http://u.tv/News/The-end-of-western-hegemony/21f93f82-c918-4c1f-86a3-36382f2aa00b), but is this the truth? Ashdown’s obvious bias may lie in his professed faith, Islam:
Nezavisne novine. 29 October 2002. (http://www.oscebih.org/public/default.asp?d=6&article=show&id=177. Retrieved on 2007-11-23.)
”I am from Ireland, where society is divided too. In my school children were separated on Catholics and Protestants, but I said that I am a Muslim, because my father was a catholic, my mother a protestant. That’s not a reason why I was so bad student. My teachers told me that knowledge is gaining through whole life, and man is learning all the time. That changed my life. That’s why, this start of education campaign in BiH is the most important, since I came to BiH”, said Ashdown.”
This multiculturalism is a mask for Islamic domination promoted by the Council on American-Islamic Relations (CAIR, founded by a Hamas leader), the American Muslim Council (AMC, funded by the Saudis, whose founder supports Hamas, Hezbollah and Al Qaeda; http://www.military.com/NewContent/0,13190,Defensewatch_100903_Wahhabi,00.html), the Islamic Circle of North America (ICNA, which funds Hamas), the National Coalition to Protect Political Freedom (NCPPF, which funds Palestinian Islamic Jihad terrorist groups), the American Muslim Armed Forces and Veterans Affairs Council (which funds both Hamas and Hezbollah), the Muslim Brotherhood, Islamic Society of North America (ISNA), the Graduate School of Islamic and Social Sciences (GSISS), the International Institute of Islamic Thought (IIIT), and World Assembly of Muslim Youth (WAMY). etc. in many ways, it is far more serious an attack. The goal is to establish Sharia law throughout the nations of the world, which, in effect, establishes a worldwide Caliphate, as Muslims are instructed to do in the Qur’an.
This is frightening on many levels because many extreme left liberals, blinded by their multiculturalist utopia, are suggesting that we “roll over and play dead” rather than commit ourselves to learning from our mistakes AND our successes, then moving forward cognizant of those lessons. We have reached a point in democratic societies where our attempt to be politically correct is infringing our right to freedom of speech. The recent incident with Geert Wilders being refused admission into the U.K. because they feared it would rile the Muslims is very concerning. And our friend Ashdown was very much a part of that effort to keep him out. Other countries in the U.K. are caving to the Muslims’ demands as well. We must find a balance between being respectful of others’ views and speaking our mind freely, without fear of reprisal from any government. But that is a discussion for another day….
On the other hand, we seem to have forgotten over the last eight years that being a world power does not entitle us to be a world bully. Regardless, our place in the world depends on having a strong, stable economy. And we must deal with a two-headed monster: the national debt and our failing industries that produce tangible goods.
So, what should we have learned?
First, we know that deregulation does not work, or, conversely, regulation does work. Whether financial, environmental, social or other, the times when our nation has been most stable is when we had a solid set of enforceable, manageable rules in place, a clear line of authority and agencies empowered with the authority to act. Over the past few decades, “free marketeers” and “free-traders” have been buying their way into the political scene and using their influence to convince politicians of their ideology. It is a siren’s song that we find very seductive, because we Americans are an independent, free-thinking bunch, and anything that has “free” in it sounds like it must be tailor-made for us. But this is not the case.
As for free markets, the laissez-faire (French for “let [the people] do” [for themselves what they know how to do] (http://en.wikipedia.org/wiki/Laissez_faire) theory may work beautifully in a laboratory setting where all factors are easily controlled, but in the real world, it has failed miserably. Why? Because man is foible, and you can’t expect the market (run by greedy, unethical men) to police itself. Every time we tried to deregulate, it ciomes back to bite us in the butt. In the ‘80s, it was the Savings & Loan debacle and Michael Milken’s junk bonds; today it is the investment bankers, corrupt credit rating analysts, junk mortgage bundlers, junk derivatives and Bernie Madoff’s fraudulent Ponzi scheme. Hedge funds and derivatives have turned our stock market into a casino where nobody wins. There is not just one piece of deregulation legislation that acts as the dagger to the heart, but rather a thousand paper cuts that finally caused our economy to bleed to death.
As for free trade, we should have learned by now that there is a happy place between free trade and protectionism called fair trade. We are not yet living in a truly global society. America has been far too generous with our markets, with far too few restrictions, or at least enforceable ones. As a result, we find that foreign goods made cheaply, and often without the consumer protections and quality assurance we need, are nevertheless making their way to a store near you. However, this is not reciprocated in kind with many of our trading partners. This must be changed in a reasonable, rational manner to include enforceable consumer, environmental and labor standards. No more lead in children’s toys and no more poison in pet food. No more of our labor force trying to compete with slave labor and child labor in foreign countries.
But the current financial crisis is not just fixing the mortgage industry and the credit crunch or revising trade agreements, it is deeper than that. The U.S. has moved from a self-sufficient nation that produced tangible goods and services to an economy based on consumer spending, paper wealth and banking products that are parasitic and exploitive in nature. In the IT business, we call the current banking model vaporware, because our investment and commercial banks don’t really exist to provide customers with a needed service anymore, but to create a perception of wealth via derivatives, hedge funds and bundling and reselling paper.
In the ‘90s, with the IT industry in overdrive combating the Y2K problem, we envisioned an information economy, but as is the case with all bubbles, that bubble soon burst, because, in the final analysis, IT work is in large part can be a remote service at which other nations like India, Pakistan, Southeast Asia and Japan can excel and provide greater value due to cheap well-educated and well-trained labor. We have also lost our clothing manufacturing to third-world countries with cheap labor, often slave labor or child labor. We now see even our flagship industry – automobile manufacturing – losing steadily to foreign imports and on the verge of not just bankruptcy, but complete collapse.
Why?
It’s time to set some priorities. First, it is a matter of national security for us to free ourselves of foreign oil. Foreign oil is draining our economy of billions of dollars daily. A politician said during the campaign that we borrow money from China to buy oil from Saudi Arabia. This cannot continue! High-priced oil and petroleum products are the single-most factor that drives up cost of tangible goods. When the items necessary for daily life are more expensive, labor cost goes up, which raises the cost of domestic goods even further. It is a vicious spiral. Big Business and their benefactors, primarily Republicans and conservatives, try to sell us the idea that it’s all union labor’s fault, but logic tells us otherwise. Ask any union members if they would take a lower salary (if it was truly a living wage) if accompanied with corresponding cuts in prices of consumer goods, and you might be surprised to find that they would accept that. Why? Because it’s not how much money you make, it’s what your money’s worth (what you can buy with it)! that counts! And that’s why a weak dollar hits the middle and lower classes far worse than the privileged class.
We must cure our need for immediate gratification and short-term thinking and challenge ourselves to value stability and steady growth over immediate “windfall” or unreasonable profits. We need to wake up and realize that all bubbles burst, and feeding frenzies in the Stock Market generally don’t pan out, certainly not for the companies who are victimized by them. What we need is stable, steady growth, not bursts of profitability with long gaps of decline, which is where we have been since the 1980s and the Reagan Revolution with the supply-side economics and trickle-down theory. The “voodoo economics” of the 1980s that GWB warmed over in the last eight years has not worked for the 21st century thus far. Actually, it didn’t really work in the 1980s either.
How to we fix this?
We all heard in the last campaign that it’s about jobs, jobs, jobs…. Well, guess what! It IS about jobs, Jobs, JOBS! We must create jobs. There are two ways to create jobs:
- We can borrow more money, increase our national debt, exacerbate inflation and put people to work based on government projects, and/or
- We can find other ways (i.e., tax breaks and incentives, guaranteed loans) to encourage the private sector to create jobs.
The above is a short-term strategy to stop the bleeding of jobs moving overseas. But we also need a long-term strategy. Every time we increase our national debt, we give away a larger and larger portion of our annual budget to the payment of interest on the national debt: money we might as well be flushing down the toilet. And, normally, I would not support increasing the national debt, but this is a critical moment with a window of opportunity that is quickly closing….
The Green Economy and Energy Independence
The buzz word during the last election was the green economy. Unfortunately, this seems to be the one good idea that has been put on the back burner. It is due, in large part, to special interest groups and undue influence on politicians to maintain the status quo — the influence of Big Oil on our politicians. But the lack of progress and lethargic public support is more likely due to the fear of the unknown — we have lived with an oil-based economy for over a century now. Oil, for us, is much like heroin for a junkie; it may give us the temporary “high”/feeling of security, but the reality is that we are killing our economy with foreign oil. It seems unreasonable and unlikely that the U.S. government should start its own energy company, so it is far more likely that providing tax incentives and guaranteed loans for private energy companies who are willing to commit to creating jobs (as well as providing a green energy product and/or service).
Rebuild Our Infrastructure
The equally important issue where the solution will help solve two problems – our crumbling infrastructure and jobs – is government-funded or subsidized innovative projects that repair roads, bridges, tunnels, sewers, waste disposal and recycling, water pipelines, utility lines, etc. Our energy grid is almost maxed out. We have witnessed the tragedy of collapsing bridges.
In addition to wind energy, solar energy, nuclear energy and biofuels obtained from crops, we could address our nation’s waste disposal problems with innovative energy plants using garbage. Right now, we have barges and floating mountains of trash that are killing sea life and polluting are oceans by design simply because we have nowhere to put all this waste. And that doesn’t even cover the waste illegally disposed of in our lakes, rivers and streams.
The answer to our economic crisis need not be elegant, just doable. The problem is we have to light a fire under our politicians and convince them to grow a pair and get this done.
Pay OFF National Debt
If we regain economic stability, we must then seriously pay off our national debt. An old Tennessee Ernie Williams song was “I owe my soul to the company store.” There is much truth in that. As long as China, Saudi Arabia and other Middle Eastern countries own our debt, they effectively own us. We dare not try to enforce our human rights policies on China unless we want them to call in our loans. Likewise with Saudi Arabia and their human rights issue or their support of Islamic terrorist: should we fall into disfavor with Saudi Arabia, they have the entire Middle Eastern oil cartel at their disposal, and our oil could be cut off overnight if they so chose to exercise that power. Notice that every time we show strength against Muslim nations, particularly Sunni Muslim nations, they cut production. If you doubt that our debt is not an issue of national security, imagine waking up to a world with no electricity in your house and no gasoline to put in your car.
Peace!
Unfortunately, the Beatles song, “All you need is love!” is a utopian, naiive theory that does not work in the time of global jihad . The next component to our economic recovery is to end the war in Iraq and win the war in Afghanistan and Pakistan quickly and efficiently. Conservatives want us to believe that it is “entitlement” programs like welfare, Medicaid and Food Stamps that have bankrupted us. They even include the government-sponsored indivudal retirement investment fund called Social Security as an entitlement. This is a bold-faced lie. The Aghanistan and Iraq wars have almost single-handedly caused our national debt to skyrocket exponentially. We can no longer be policeman for the world. And we must demand that our allies take care of themselves (i.e., Germany, Japan and South Korea, in particular).
Economic Policy and Monetary Policy
The last item of business is regarding currency management. We must have far more transparency in the Federal Reserve System. The idea of creating a hybrid system that would prevent banking panics and balance privatization with government regulation was important. No one would argue that our system needs elastic currency and liquidity, but, Greenspan’s (and the presidents in office during his tenure) reliance on monetary policy to manage the economy (by raising and lowering interest rates) rather than managing the nation’s monetary supply is one of the components of the financial crisis. We have simply not had an effective Treasury Secretary in place to create effective economic policy. Managing the economy by interest rates in place of real economic policy does not work Lance Taylor’s 2004 Reconstructing Macroeconomics maintains that the sources of inflation must be found in the distributional structure of the economy. The Fed was never intended to supplant the Treasury Secretary. And one the Fed’s biggest failures in this current crisis is that it did not “protect the credit rights of consumers” or “contain systemic risk in financial markets” (http://en.wikipedia.org/wiki/Federal_Reserve_System). We need a comprehensive economic plan and policy.
Our Founding Principles
The idea that the U.S. should resign itself to obscurity is neither acceptable nor inevitable. We will have just as much relevance and power as we aspire to have, providing we back up our aspiration with perspiration and determination.
It’s not just a question of dominance that drives America, it is a question of whose values will the world respect and follow. Leadership is not solely dependent on a powerful economy or a powerful military; those are secondary to our founding principles of individual equality, freedom and responsibility, a citizen-run government and political process, well-regulated capitalism where everyone is free to participate and grow wealth, and, lastly, the transparency and integrity of our government and political system, which is the Constitution. Our present failure is due not to the weakness of our values, but our failure to observe them. We cannot allow our recent failure in leadership to cause the world to reject our values, rather, we must “clean up our own back yard” and continue to promote our values.
We have been and must continue to be the shining beacon of light in what is now a very dark world.
The More Things Change, the More They Remain the Same.
Betty Lou sent me an e-mail she received from Jim Babka, President, DownsizeDC.org, Inc., on October 1, 2008. This is an excerpt from that e-mail:
The bailout fight is not over, and the time for action is right now! Since the bankers lost by just a 12 vote swing in the House on Monday, the Congressional leadership has regrouped. In their desperation they’ve decided to violate both the Constitution and ALL the principles of the current Downsize DC Agenda.
The Senate is set to begin debate and VOTE TONIGHT, after the Jewish holiday Rosh Hashanah is over. Rosh Hashanah is the Hebrew New Year, but, as the quotes above indicate, there’s nothing “new” about the games being played on Capitol Hill.
Author G. Edward Griffin wrote about our central banking system,
The name of the game is bailout…. Although national monetary events may appear mysterious and chaotic, they are governed by well-established rules which bankers and politicians rigidly follow. The central fact to understanding these events is that all the money in the banking system has been created out of nothing through the process of making loans. A defaulted loan, therefore, costs the bank little of tangible value, but it shows up on the ledger as a reduction in assets without a corresponding reduction in liabilities. If the bad loans exceed the assets, the bank becomes technically insolvent and must close its doors.
The first rule of survival is therefore to avoid writing off large, bad loans and if possible to at least continue receiving interest payments on them. To accomplish that, the endangered loans are rolled over and increased in size. This provides the borrower with money to continue paying interest plus fresh funds for new spending. The basic problem is not solved, it is postponed for a while and made worse.
The final solution on behalf of the banking cartel is to have the federal government guarantee payment of the loan should the borrower default in the future. This is accomplished by convincing Congress that not to do so would result in great damage to the economy and hardship for the people. From that point forward, the burden of the loan is removed from the banks ledger and transferred to the taxpayer.
Does that sound familiar? Griffin wrote it back in 1994.
A lawless Congress isn’t new either. Since the bill didn’t pass the House on Monday, the Senate is going to violate the Constitution, and pass their own version of the bailout first. What’s the big deal?
According to Article I, Section 7 of the Constitution, the Founding Fathers wanted the people’s House to originate all spending bills. This was the branch that was closest to the citizenry. Members of
House were to be, in the fullest sense of the word, “representatives.”
The Senate was to be a check on the excesses of the House. The President was given a veto to check them still further. And finally the Courts could put a stop to un-Constitutional spending not
specifically enumerated or authorized by the Constitution.
But now, with the bailout, the Senate is getting things backwards. They have no bill from the House.
But it gets worse.
New Hampshire Senator Judd Gregg, appearing on TV last night, suggested that they had a way around the Constitution. He said it’s done all the time. The Senate will simply attach its bailout bill to
a current “CR” — a Continuing Resolution. In other words, they’ll attach it to another, unrelated bill — and send it back over to the House.
Not only is this un-Constitutional — a violation of Article I, Section 7 — but this Judd Gregg approach also breaks the principle of the One Subject at a Time Act.
And the rush to get this done printed and voted on in a hurry violates the transpartisan principles of the Read the Bills Act.
Now as if that’s not all bad enough, Judd Gregg wasn’t done being reckless. When asked about potentially suspending the “mark-to-market” rules, he said that the Congress didn’t have the specialization necessary to address that issue. Instead, what to do about mark-to-market needed to be left in the hands of the (unelected) “experts” at the Securities and Exchange Commission.
Trace the dangerous logic here: Congress is expert enough to authorize, in one bill, the single largest increase in federal government spending ever, but not qualified to address a little accounting rule!
By the way, that too is a violation of Article I. Only Congress has the legislative power. That authority cannot be delegated to unelected bureaucrats, or anyone else for that matter. But such illegal delegation happens routinely, and it’s why we wrote the Write the Laws Act.
Of course, Congress has no authority to save the markets or give such vast, discretionary authority to one man or one agency of the government. So it violates the principles underlying the Enumerated Powers Act as well – said act would compel Congress to cite, chapter and verse, from where, in the Constitution, the bill they’re voting on is authorized.
And for the ballooning of deficit and debt, this bill is unmatched, but don’t expect Congress to tighten its belt, as we propose with the Fiscal Responsibility Act. This bill, also known as H.R. 500, if passed into law, would trigger a cut in Congressional pay for each year in which the federal government runs a deficit.
Maybe they’d be more interested in changing arbitrary rules like mark-to-market, than expending $700 billion, if they had to take a pay cut. But since you and your offspring are going to get the bill, why
should they be concerned about the expense?
So this bailout violates the Constitution and the entire Downsize DC Agenda. ON THESE MORAL PRINCIPLES ALONE, YOU, THE DOWNSIZE DC ARMY, HAVE SUFFICIENT REASON TO OPPOSE THE BAILOUT.
And since the vote is going to happen in the Senate tonight, and probably in the House on Thursday, we cannot let up on the pressure — even though it appears it will pass the Senate. We encourage you to use our proprietary Educate the Powerful System to get your voice heard, because we must still defeat this in the House.
But the information we’re getting about the bailout gets even worse. On the very same program on which Judd Gregg appeared, one of the Congressmen opposing it, Rep. Brad Sherman (D-CA) also appeared. Hang on to your hats, because this may be the very reason even $700 billion won’t be enough to do the job it’s proposed to do. It provides bailouts to foreign investors too. Sherman said,
…you have to read the bill. It’s very clear. The Bank of Shanghai can transfer all of its toxic assets to the Bank of Shanghai of Los Angeles which can then sell them the next day to the Treasury. I had a provision to say if it wasn’t owned by an American entity even a subsidiary, but at least an entity in the US, the Treasury can’t buy it. It was rejected.
The bill is very clear. Assets now held in China and London can be sold to US entities on Monday and then sold to the Treasury on Tuesday. Paulson has made it clear he will recommend a veto of any
bill that contained a clear provision that said if Americans did not own the asset on September 20th that it can’t be sold to the Treasury.Hundreds of billions of dollars are going to bail out foreign investors. They know it, they demanded it and the bill has been carefully written to make sure that can happen.
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)
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.
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“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…
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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
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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.
Framing the economic debate
Republicans love slogans — they’re short and they, therefore, cannot be substantive.
John McCain has resurrected the “liberal” and “tax and spend” slogans in this campaign. We cannot take this lightly. These are ingrained in the consciousness of middle Americans — and much of it is our own fault (see my blog entitled “Elephantizing” — http://www.democrats.org/page/community/post/lauraschneider/C5mb).
So, how do we Democrats frame the truth in slogan form — something, as Jack Sparrow would say, “It’s short, it’s easy to remember….”
What is the truth?
Democrats are “The Party of Fiscal Responsibility” and “Pay As You Go“
The truth is that Democrats are fiscally responsible. We believe in “pay as you go.” We also believe in “paying down the national debt” and “balanced budgets.” We believe in small, streamlined, but EFFECTIVE government. If balancing the budget and paying down the national debt require raising taxes, Democrats will do so as a last resort rather than be fiscally irresponsible. Democrats focus on labor as the backbone of the economy.
Democrats believe in the working man and woman. We believe in fair wages and benefits. We believe in investing in the American people through social programs as a means of growing the economy. It is much easier to grow an economy where the populace is educated, healthy and has a sense of empowerment and purpose in their lives. If you have lived in an areas where the public school system is less than adequate to meet the needs of the community, you know it is harder to recruit businesses to that area. They want educated workers. They want good schools for their managers’ and executives’ children. They don’t want to spend tons of money re-educating their workers because the public schools are inadequate and are not doing the job.
Republicans are “Borrow and Spend“ or “Buy Now, [let our grandkids] Pay Later“
The truth about Republicans is that they are the “borrow and spend” party. During my lifetime, every Republican administration was marked by a burdeoning bureaucracy, incompetence, a exponentially growing national debt and a “credit card” mentality. Republicans have tried to convince us we can “spend our way to a good economy,” and, if that doesn’t work, we can “borrow our way to a good economy.” Republicans focus on investors as the backbone of the economy. They believe in an exclusive economy that only allows the wealthy to play and enjoy the fruits of your labor.
Republicans believe in lower taxes — but not for everyone — just for big business and the wealthy. They try to convince middle America that giving tax breaks to the rich will stimulate the economy, but they put no conditions on their tax breaks to ensure that this will happen. Theirs is a trickle-down economic philosophy, but the trickle never seems to make it to my level or the level of most middle class Americans. Consequently, they don’t like social programs. They believe that education, health and other social safety nets are an unnecessary expense (at least for them). Republicans also favor ideas such as the so-called “fair” tax or the “flat” tax, which gives everyone the same tax rate, but it disproportionately penalizes the poor and middle class and gives the upper class more money to burn.
Republicans = Fixed Pie Theory (Consolidate the Wealth)
For Republicans, it’s all about profit. It’s the fixed-pie theory. The fixed-pie theory says our pie is only so big, so, if I want a bigger piece, or if you want a piece at all, it means everyone else has to take a smaller piece. It’s about consolidating wealth among a few supra-sovereign elites who run the show. No sharing allowed — no sharing power, no sharing wealth, no sharing opportunity.
Democrats = Bigger Pie Theory (Share the Wealth)
For Democrats, it’s all about people. Democrats believe in the bigger-pie theory. We say, if the pie is not big enough for everyone to have a good piece, then let’s bake a bigger pie. In other words, let’s grow the economy to include everyone. Democrats believe in the Progressive Tax, which has a floor to protect the poorest in society, and graduates as the income increases, with no loopholes to allow the wealthy and corporations to avoid paying their fair share of taxes.
So, how do you say this in a slogan? We need to figure this out before the GE gets too far underway. The unfortunate fact is that most Americans have been programmed to have a short attention span and like to be spoon-fed. We can either accommodate this or ignore it to our detriment.
This is how it starts…..
Anyone who knows the history of Hitler and how he built the Third Reich or of the U.S.S.R. and how Russia built the Soviet Union, piece by piece, knows where Russia’s attack on Georgia is going.
But this time, It will be different. Putin has learned from the former U.S.S.R.’s mistakes. He also does not trust China, because China, although Communist, is a threat to Russia both territorially, economically and militarily.
So, what is a poor leader of Russia to do when trying to reconstitute the Soviet empire? He looks south to Iran and the “oil belt.”
China is becoming even more addicted to oil than we are. China will need oil well into the future and is not likely to jump on the bandwagon of green energy at the cost of retooling its factories that are so productive now. The U.S. needs oil and is at the mercy of the oil-producing nations until it gets its green energy industries up and running and its renewable and alternative fuels in distribution.
And there’s that pipeline that so conveniently runs through Georgia. And Iran, who is a “friend” in need of Russia’s. Iran depends on Russia keeping the U.N. off its back with its veto power in the U.N. Security Council. Iran depends on Russian weapons to wage its wars and fund its terrorists and their activities. Iran is a pseudo-puppet of Russia already and won’t be able to buck Russia when the time comes for it to need to do so.
We must learn from Hitler’s takeover (http://www.historyplace.com/worldwar2/timeline/ww2time.htm) of Austria, the Rhineland, Czechoslavakia, Poland, Denmark, Norway, France, Belgium, Luxembourg and the Netherlands, France, Hungary, Romania, Yugoslavia, Greece, Ukraine and parts of Russia, not to mention most of Africa and the Middle East. A side note, the definition of fascism as defined by the AntiFascist League (http://antifascist.socialistforum.net/):
How did the word “fascism” originate?
Word “fascism” was first coined Italian fascist dictator Benito Mussolini. In Italian language, word fascio means bundle of iron rods. Mussolini and his party used to kill communists and socialists by torturing them with iron rods. So, they named their party as fascist party. Benito Mussolini upheld corporatism (a system of capitalist government that exercises a dictatorship of the extreme right, typically through the merging of state and business leadership). Racial hatred against Asians and Africans also includes in Mussolini style fascism.
Hitler’s rise to power gave the U.S.S.R. an opportunity to expand after the war (although some expansion had occurred earlier on). The Nazis and Soviets divided up Poland:
“…the Nazi-Soviet Nonaggression Pact, which made possible the occupation of Lithuania, Latvia, Estonia and the invasion of Poland in 1939. In late November 1939, unable to force Finland into agreement to move its border 25 kilometres back from Leningrad by diplomatic means, Stalin ordered the invasion of Finland….”
“…the Battle of Stalingrad, lasting from late 1942 to early 1943, became a major turning point of the war, after which Soviet forces drove through Eastern Europe to Berlin before Germany surrendered in 1945 (see Great Patriotic War).”
“The Soviet Union aided post-war reconstruction in the countries of Eastern Europe while turning them into Soviet satellite states, founded the Warsaw Pact in 1955, later, the Comecon,…”
“Soviet military force was used to suppress nationalistic uprisings in Hungary and Poland in 1956.” (Wiki)
And that is how you build an empire — piece by piece, territory by territory, country by country, until you reach the point of diminishing returns and can no longer support your occupation expenses.
Putin is former KGB. He is not a part of the new Russia, and never has been. His goal is to restore the Soviet empire to its former glory, but he intends to do it in a much smarter way — by controlling the oil and pipeline from Russia down to Iran. And how will we stop him?
Iran will cooperate in the near term because they hate the U.S. and want to see us brought down. In combination with Russia’s military backing, they can do so without significant fear of any serious reprisal. Russia will use Iran to help bring us down until such time as the mission shifts to “imperialist” mode and Iran will get gobbled up by Russia and the New Soviet Union.
And America and its allies will not be able to do very much about it, since we have oil-based economies. Unless we get smart and start a Manhattan-Project-level effort to convert to green, renewable resources now.
It really is a matter of our own national security.
“Those who cannot learn from history are doomed to repeat it.” — George Wilhelm Hegel
About Laura Schneider
I am a moderate progressive, life-long Democrat and supporter of Hillary Rodham Clinton. I am a retired IT consultant, musician, animal lover, environmentalist and human rights activist, with particular interest in the protection of civil liberties and constitutional rights and freedoms.
One of my deepest concerns is the loss of our constitutional rights and protections during the last decade. We have been told that 9/11 changed everything and that we would have to change to accommodate to this new reality, but:
Abandoning our democratic values in exchange for the delusion that we are safer is the greatest “win” the terrorists could have hoped for…. and we gave this to them out of fear.
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