Cultural Foxhole

The Bail-Out Vote

Apparently Republicans aren't just in favor of smaller government; they also seem to favor a smaller economy to go with it.

The Bail-Out Debate: Wall Street Vs. Main Street

Wall Street does not have a monopoly on greed and stupidity.  True, their mistakes and excesses are at the heart of this financial crisis.  But Main Street deserves a serious share of blame as well.  And the hard core ideologues on all sides need to keep that thought at the forefront of the bail-out debate.

 

The ultimate culprit here is easy money; over the last decade it made people do really stupid things.  On Wall Street it confused MBA’s into thinking that irresponsible lending and excess leverage represented major innovation.  On Main Street it encouraged people to turn their homes into ATM’s and buy way more “stuff” then they could realistically afford.  It fostered a new Gilded Age and encouraged people to elect politicians that promised to keep the party humming.

 

Of course, along the way no one squawked.  The MBA’s took home ridiculously big bonuses.  (Forget CEO’s; last year Wall Street’s bonus pool was $38 billion.)  The little people happily spent like crazy, while the value of every home in the neighborhood jumped at equally ridiculous rates.  And the politicians kept reassuring us it was all good, while they spent their easy money like Saturday night drunks.

 

Today the credit system is on the verge of meltdown because, mostly, of an unprecedented number of home mortgage defaults.  But remember: also at the heart of this crisis is the simple fact that a lot of people made some very dumb personal financial choices.  Yes, there was probably some outright fraud and high pressure selling that bordered on fraud.  The harsh, ugly truth, however, is that a large group of people out there have simply been living way beyond their means, for too long.

 

The real victims in all of this are the large number of people who behaved prudently in the last few years.  They didn’t finance their oversized credit card bills with a home equity line.  They didn’t jump into a starter house without a spare nickel in the bank, or trade-up to a 50% more expensive house without any increase in salary.  They never tried their hand at flipping condos in Florida.  And they aren’t in any danger of defaulting on the loans they have.

 

The problem is that, one way or another, this bail-out is going to cost us all something.  There is no free lunch here for anyone.  A trillion dollars may be a steep price to pay for this mess.  But, if we let the markets melt down the entire economy may well tank.  Sinking home prices are going to keep sinking and a deep recession is not going to provide enough tax revenues to pay our war bills or educate our kids.  

  

Wall Street certainly deserves a swift kick.  As the debate continues, however, we would all do well to remember that a lot of our neighbors have brought this upon themselves.  So our choices get more complicated.  Throwing a little charity toward the idiot down the street may be the only thing standing between you and financial apocalypse … whatever your political inclinations.

The Alaska Disasta

Found this on The Young Turks today: The Alaska Disasta.  Seems that the reportedly popular governor is not universally loved.  Must say that the pictures are convincing ... these folks got some genuine distaste for their state leader.

The Palin Onion

This begins to feel like peeling onions ... layer after layer after layer, and the tears just keep coming.  Although I'm not sure if I'm laughing or crying.

Over at Politico, Scott Lily offers a great example of do the math, go figure on the Sara Palin at home per diem silliness.  Given the sheer number of days she charged the state for being at home becomes pretty striking evidence that she isn't much more than a part time governor.  I'm also inclined to think Lily is spot on about the whole "I fired the chef" thing: poor guy probably wasn't fired, he just quit out of boredom. 

But if we're being fair here, no one ever seemed to really know where the hell the current Vice President was hiding for most of the last eight years.  Isn't that reassuring?

Is Hank Kidding Us?

Jason Linkins makes a strong point about some outrageous shenanigans hiding in the detail of the proposed bailout.  To wit: a clause the would give Paulson unprecedented power:

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

 

How crazy is this?  Paulson would never have even dared make this kind suggestion for running his former investment bank.  It flies in the face of every tenent of corporate governance and financial common sense. 

 

But, hey, this is just our government, it only affects nearly every human on the planet and we're only looking to "borrow" the money for a little while ... never mind that it is more money than has ever been authorized in a single shot in the entire history of the world.  So you can trust me to do the right thing here!

The Republican Brand

On Friday, Peggy Noonan wrote in the WSJ:

Open question only history will answer: President Bush did not address the nation on the crisis until Thursday of this week, almost a week after it began, and Democrats are going to try to paint this as 9/11 times Katrina: Where was he? Will this work? Will it stick? They’re going to try to turn Mr. Bush into Herbert Hoover. Hoover was not good for the Republican brand.  (Read the full piece.)

For my money, Bush & Co. make Hoover look almost brilliant when it comes to Republican brand building.  To mash the metaphor, if this fiancial mess isn't the frosting on the cake, then it's at least the fourth leg of the stool.  After eight years we have: a nation profoundly and hysterically divided; our moral and political stature in the global community badly tarnished; our government's basic functional and operational capabilities crippled by ineptitude, graft and political ideology; oh, and in the process, capitalism as we know it has pretty much been destroyed.  Not bad for a college under-achiever. 

Why on earth would we elect an another Republican for anything, ever?  Obama may not be the best candidate in history, but at this point he is 700billion times better than any Republican option.

Palin's Experience

Experience comes in both quantitative and qualitative flavors.  In Palin’s case the former is slight and the latter increasingly looks like a major problem.  We are about only about a month into her candidacy and so far we’ve discovered that experience is characterized by: hiring unqualified “pals,” turning the governor’s office over to an out-of-state political campaign, short term memory lapses on earmarks and pledges to her constituency on Troopergate, and running away from direct questions by the press.

 

Hmmm, looks like the four C’s are back on the Republican table: Cronyism,  Culpability,  Credibility, and Con-jobs.  And some of you worried that McCain was the Bush clone.

 

Where The Hell Is Bush?

Has the man gone on vacation again?  We're in the middle of the worst economic crisis in 75 years and the guy is a complete no-show.

Getting tagged as Herbert Hoover is bad.  Getting tagged as Hebert Hoover without courage?  That's gonna leave a mark on the old legacy thing.

Selective Maverick-tivity

John McCain wants us to believe he's a maverick.  But it looks like a case of selective marverick-tivity to me.

Question: What do campaign financing reform and earmarks/government waste have in common?  They are major issues Republican issues.  Of course he had to buck his own party.  They're the folks at the heart of those problems over the last 8 years.

When it comes to basic economic ideology, however, McCain is a dyed-red-in-the-wool, card-carrying, Republican company man right down to his last strand of DNA.  Deregulation is not merely a Republican platform, it is the price of admission to the party.  And McCain has a pretty lengthy and clear record on the subject.  Last week the market spoke unequivically to the wisdom of following that herd.

Maybe that's the definition of a conservative maverick: you go against the grain on trivial stuff but run with the herd on everything that matters.

Economic Terror

Well that was certainly a fun week!  Not.

The thing I found fascinating about Paulson over the weekend was the little dance he was doing around the question of "just how bad was it?"  On the one hand, he's begging us to remain calm and trying to reassure the markets and the country that this bailout will make it all right.  On the other hand, we've got the fact that: a) he's asking for $700billion; and b) he was apparently able to scare the living crap out of the collective congressional leadership.  Don't know about you, but that second part suggests to me that we must have been about heartbeat away from something akin to finanacial apocalypse.  And his conundrum is that admitting it means owning up to the fact that he and his counterparts screwed up big time.

The unanswered question in all of this: should we really trust the solution to these problems to the same folks who got us into this mess?  What I do know for sure is that last week and that question have left me really scared.