Monday, February 27, 2012

Moral Hazard

Bail Them Out? Think of the Moral Hazard!

Downloaded to my Kindle are books examining the origins of the financial crisis which surely would have precipitated the second Great Depression, had the federal government not acted to avert it.

This appears to be a case of having studied history and as a result, having been able to avoid repeating it.

The origins, the history of how we got to the brink is, like all history, one long argument, and surely, there are many factors, but sometimes it helps to be simple minded and unencumbered by too many facts; Alexander, after all, cut through the Gordian knot with a single stroke, seeing a simple solution.

In my case, being simple minded, the story looks clear enough: For years Republicans agitated to rescind the safeguards, the regulations, placed on the American banking system after the 1929 Depression. The Republicans argued our economy could not compete with other economies around the world as long as our bankers were shackled by regulations which prevented bankers from engaging in the imaginative, creative, innovative practices which the rest of the world was developing. Unleash the animal ferocity of market forces, the Republicans cried, and the Democrats, as usual, not having the courage of their own convictions, not wanting to look like the slumped shouldered, wispy voiced wusses the Republicans said they were--the Democrats meekly acquiesced and allowed the repeal of a law called (and I've likely misspelled) Glass-Speigel Act.

So the bankers were now free to take the most carefully examined and reliable form of personal debt--home mortgages--and to buy and bundle these as collateral and sell these as stocks on the market.

Of course, as soon as mortgages became a commodity, the quality of the work which had made mortgages so safe and valuable evaporated, and the brokers didn't care what they were selling as long as they had something to sell, so the bankers rushed to find any names to affix to any paper mortgage and a lot of people found themselves new home owners and that phony phrase, The American Dream, became just that. A dream, not a reality.

Of course, as is true of most shoddy products, these mortgages looked good for fleeting moment but with time, they fell apart like cardboard shoes.

Then the whole thing collapsed, right on President Obama's head.

The Republicans, who had been the instigator of the whole fiasco then blamed it all on Fannie Mae and Freddie Mac, the most available scape goats with a government connection, and loudly decried any form of relief for mortgage holders, for the average guy on the street, for the fools, as a form of "Moral Hazard."

After all, the mortgage holder was fool enough to sign a contract for a house he could not afford--now he had to take his bankruptcy and the loss of his home like any gambler who had lost a foolish bet.

Of course, there was no moral hazard talk in connection with the sleazy brokers or the sleazy bank officers or the sleazy Republican politicians who had built, marketed and sold the cardboard shoes.
No, all the moral hazard belonged to the little guy on Main Street, not to the Wall Street Crowd.

The Wall Street crowd had long since got its bonuses and moved on.

Tuesday, February 21, 2012

A Republican Mount Rushmore

A stock question at every presidential debate is: Who are your heroes?

We have, in New Hampshire a nice granite surface, recently transformed from the Old Man of the Mountain into a blank palate.

With Republican majorities in the House of Delegates and the state Senate, we ought to consider whose faces might be carved into the stone.

For sheer, unbridled veneration, surely Ronald Reagan will get the nod.

As the man who most clearly enunciates the Republican gospel and as a man who inspires all Republican politicians and provides the phrases and the style to Republican values, Rush Limbaugh belongs up there.

And for pure gamesmanship and model behavior, Mitch McConnell, too long neglected deserves his place.

And one more thing, now that we are talking symbols. Do we really want an elephant? I mean, elephants have long memories and the last thing we want is to remember things. The Depression and how we got there, the rescue from the Depression and how that happened, the great Recession and how we got there, and how Obama averted it. Republicans live in the present. We have been called vulture capitalists, but you know, vultures eat only the dead. So we ought to consider a better pack animal, one who derives his strength from falling in line and coordinating attacks: The hyena, a better idea.

Destroying the Village to Save It

We Had to Destroy That Village, Mr. Ryan, To Save It

Paul Ryan presented a plan to convert Medicare into a coupon care plan, where Medicare insured would receive a coupon for a set amount every year, (some estimated $8,000 per person annually) to cover all medical expenses for that year.
A coronary by pass surgery runs about $250,000, all of which is covered under current Medicare rules.

Virtually every Republican voted for this bill, to kill Medicare.

Ryan and the Republicans justified voting to convert Medicare to Coupon Care, as a way to reduce the deficit they had dreamed up (to justify killing Medicare.)

Class Warfare

My Success Does Not Diminish Your Worth--That's the Politics of Envy

Republicans are really admirable when it comes to marketing.
I've been watching Mad Men re runs and I can see the art now, as it applies to selling ideas.
So Ritt Romney is not "filthy rich," he is "Successful."
And the fact the rich are rich is not of concern to those who have been cut out...the rich are hard working and successful and they have played the game by the rules and those who are not rich, are not deserving.
The big concept is that if I am rich and have a bigger slice of the pie, you ought to be happy for me, and someday, when you are rich I will be happy for you. And my big slice does not make you any poorer, because when we grow the economy, the pie gets bigger and even your small slice of that big pie will be more than you can eat.
Just look at African Americans, who travel back to Tanzania or Liberia and come home saying they are lucky to be living in America. Even our poorest citizens are doing better in America, because the American pie is so big.

Nice fantasy, if you can sell it.

Monday, February 20, 2012

Entitlement Envy

Entitlement Envy

A recent survey of Medicare and Social Security recipients noted that only 40% of those receiving payments realized these checks came from the federal government

Of Republican recipients of Medicare and Social Security, a substantial number say they are opposed to "entitlements" and would like to see the budget deficit addressed by reducing "entitlements."

When Republican candidates like Mitt Romney and Ron Santorum say they want to cut "entitlements" recipients of Medicare and Social Security apparently do not connect the proposed cuts to the checks they are themselves receiving in the mail

If you ask these same people how they feel about "entitlements," they are against entitlements, which they think of as government handouts to the undeserving
If you ask them whether they would be willing to give up Medicare or Social Security, they say they deserve these benefits because they earned them.
This might be called "Entitlement Envy."
Once again, the Republicans have been masters of rebranding. Call Medicare and Social Security, two programs they have been hungering to devour and destroy for decades, "entitlements," and you can likely slip by many voters the actual fact these voters would be hurt badly if the Republican bosses got their way.

Saturday, February 11, 2012

Catholic Bishops, Contraception and the Right: An Unholy Alliance

"The bishops have totally failed to convince their own faithful that birth control is a moral evil and now appear to be trying to get the federal government to do the job for them. "

--Gail Collins

Gail Collins, that peerless columnist for the New York Times has a tough job. She has to spend her days reading the rantings of the Republican right.

It's a tough job, but somebody has to do it.

Before we get to the really spectacular part, let me point out a little googling reveals nearly 30 states have laws which require institutions run by the Catholic church, hospitals mostly, to provide insurance coverage for contraception when they provide other sorts of health care insurance for their workers, who are, after all, by no stretch all Catholics.

So President Obama has fashioned a compromise to meet the objections of those who say if the Catholics don't want to support contraception, they shouldn't be made to support it. So Obama says, "Well, you don't have to pay for it, but the insurance companies, who make money from the contract you have with them, they have to pay for it." Nifty compromise.

Actually, I worked at a Catholic hospital for 30 years. A Jesuit hospital, it's true, but Catholic. The Jesuits have always been a very open minded order. There were times I was reminded there was a picture of the Pope in the lobby, but for the most part, they did not smack you in the face with the Catholic part. What they wanted to do was provide healthcare, and they weren't going to make you genuflect to get it. If you thought better of them after they had saved your life, well, maybe down the road, you might come to mass.
But the Catholic church I am seeing now I can hardly recognize.

And here's how the Right has reacted:

Congressman Chris Smith (R-NJ) says the President "will use force, coercion and ruinous fines that put faith-based charities, hospitals and schools at risk of closure, harming millions of kids, as well as the poor, sick and disabled that they serve, in order to force obedience to Obama's will."

Oh, that bad Obama, forcing the Catholic Church to bend to his will.
Or, Rick Santorum, decries the White House folks for "trying to impose their values on somebody else." Certainly, something Rick Santorum would never do.
hen there is Paul Rondeau, of the American Life League--don't you love the name?--speaking of President Obama: "This man is totally addicted to abortion and totally addicted to the idea that not only is he the smartest man in the room, he is the smartest in the nation and taxpayers will fund his worldview whether they like it or not."

Oh, yes, the poor right to lifers victimized again by that dictatorial Kenyan socialist who wants to use the world wide conspiracy with its black helicopters to force abortions on the nation's womanhood.

Those Democrats think they are so smart.

But wait, I don't understand. How did we get from contraception to abortion? I would have thought effective contraception would prevent abortion. Isn't abortion what you get when you don't have contraception?

I am obviously not the smartest person in the room.

Thursday, February 9, 2012

That Interfering Government

Watching the first episode of Mad Men re runs last night, I had to laugh out loud at the scene where tobacco company executives meeting with the creative staff of the advertising agency. The tobacco company CEO is fuming (both figuratively and literally--everyone smokes all the time on Mad Men--it's 1959). The government has forbidden the makers of cigarettes from advertising the health benefits of cigarettes. A plethora of studies have linked smoking to lung cancer and heart disease. But the CEO of the cigarette company does not want to believe those studies. He wants to believe the studies coming out of his own research institute. "We set up that whole research institute, funded it, it cost us a lot of money," said the CEO, "To prove cigarettes are good for you, or at least not bad."

As Upton Sinclair once observed: "It is difficult to bring a man to understanding, when his salary depends on not understanding."

Same is probably true in the global warming debate today.

Which is to say, the company funded research to find the results which would be good for business.

Those government "intruders," are intolerable, he says. It's going toward communism, right here in the USA, all these government regulations to prevent profitable companies from making profits.

It was all vaguely reassuring, to think big business rich people have been complaining about government regulators cutting into their profits for decades. The song Mitt Romney and Ron Paul and Rick Santorum and Newt Gingrich are singing has been sung for decades.

But that doesn't make it any truer.

Tuesday, February 7, 2012

Win/Lose or Win/Win

The basic dispute between the two parties during this election cycle is whether or not the "success" of the upper one percent comes at the cost of the success of the other 99%.

Of course, the question is more nuanced than this. We are really talking about the success of the upper 10 or 20 percent, which is where the huge slice of the pie is eaten.

Watching Downton Abbey, it is very clear that when an aristocracy controls so very much of the economy, the castle, the town, all the cottages, and even the churches, there is very little left for the common folk, who are then grateful to grovel for menial jobs, brushing their masters' shoes, making their ladies' beds and driving their masters about in their masters' cars.

And we can see even the most benign overlords, like the Earl of Downton, is still part of what keeps the vast majority in servitude.

We have the Republicans and those who support them, from Joe Sixpack to the local garage owner, who say the rich have made their money fair and square and their being rich has not made my life harder, except it reminds me, watching them drive by in their fancy cars, watching them at play or driving by their mansions, how far I am from having made it. But I realize, that is, as Romney says, the politics of envy.

And if the pie were infinitely expandable, or expanding, then the rich could have all the pie they want, as long as there is enough left for the rest of us.

But, it is beginning to look as if the way the rich get that way almost always means their gain is our loss. They don't pay taxes, and they accumulate so much wealth the national economy begins to look like a board game of monopoly, where the winner has so many hotels and so much property, the rest of the players find themselves struggling to just get round the board, watching their own supply of money depleted, paying for every space they land on, then money making the rich richer and preventing the poor from buying a single hotel to set down on Park Place.

But financial finagling is a slippery and arcane subject. Joe Sixpack cannot appreciate how it works. I know I can't quite get a handle on it.

I do know that when Mitt Romney does not have to draw a salary, when he can live on a source of income I didn't even know there was a word for--special dividends or what not, I've got a problem.

And you know when the Republicans cling to the line that there is no way they are willing to raise the taxes on the rich, if only back to the Clinton era level, despite the obvious black eye that gives them, despite being unable to justify it, they must be bought and paid for. It means all our suspicions about the phoniness of their howl about the danger of the deficit is just so much deception, because if the deficit really were so dangerous, the Republicans would be willing to do anything, even taxing their patrons, to get the country out of it.

Monday, February 6, 2012

A Simple Question

In the 1980 Presidential debate, Ronald Reagan looked into the camera and summed up his argument for why he ought to be President. Actually, it was an argument not for why he ought to be President, but for why Jimmy Carter should not be allowed to continue being President.

Reagan said, "When you go into that voting booth, ask yourself one simple question: Are you better off now than you were 4 years ago?"
Thus began the validation of simple minded political discourse. It was perfectly appropriate, fair, incisive and legitimate to boil things down to a simple one sentence question.

The American people loved it. As H.L. Mencken observed: "Nobody ever went broke underestimating the intelligence of the American public."
So Barack Obama had better have an answer ready for Mitt Romney, when he stares into the camera and asks the same question.

I am hoping Barack Obama will pre-empt this attack with a question of his own: "You had better ask yourself, are you better off now than you were in the year 2000? That is the year when the Republicans effectively seized power of the government and started running the economy. Even my own election has afforded only a two year respite from the onslaught of Republican trickle down, voodoo economics. What you've got is basically Republican winner take all politics, with the richest one percent protected at all costs, and the 99% spurned."

"Or you could ask yourself a more interesting question: What would have happened if the Republicans had got their way and we had not bailed out General Motors, or the banks, much as we hated doing it? What sort of Depression would we be in now? And what would you have to look forward to, if the Republicans had the votes to vote through Coupon Care instead of Medicare, as they tried to do, but were prevented by the slim majority of Democrats in the Senate?
"If you like simple questions, here's one for you? Are you now among the one percent? I'm not asking whether you think you will be some day or whether you think the one percenters are the job creators or are a benign aristocracy looking out for the other 99%. I'm asking you, are you now among the one percent? Just remember, if you're not there now, the Republicans have cooked the tax books so you never will be."
Or Words to that effect.
Wouldn't you love to see President Obama look into the camera and throw those punches?
Oh, if pigs could fly.