The Mound of Sound

This appeal to Democrats, published in The New Republic, holds an invaluable lesson for liberals everywhere:

I heard a cogent point about the Bush regime’s $700-billion bailout proposal last night. It’s a telling point, one that should give everyone pause.

The keystone issue is that the Feds will be buying those bad debt mortgages at far above fair, actual value. In essence, they’ll be paying the scoundrels who ran this awful scam, what John McCain calls a “Ponzi Scheme,”much more than the fair market value of the mortgages they pick up. They’ll be paying “value plus a premium” to the very people who laid waste to the American economy.

So, why the largesse? Because these Wall Street predators are holding a gun to America’s head. “We’ll go down, sure, but we’re taking you with us.” For the American taxpayer it’s a return to the Savings & Loans scandal bail outs only on a much grander scale.

Here’s something that strikes me as curious. Even without this housing boom/derivative fueled scandal, the US government has steadily run deficits in the order of several hundred billions of dollars. Even before this current crisis, Bush had swelled the Reagan legacy – America’s federal debt – to a staggering $9.7 trillion. Today’s government is financing both Mr. Bush’s war of whim and its tax cuts for the rich out of foreign borrowings.

So, in a nutshell, you already have a government that pretends it can levitate, pledging the good credit of generations yet to come in order to defy fiscal gravity. Now they’re lining up to add another TRILLION dollars (yes it’s a trillion plus when you add in Bear Stearns, Freddie Mac, Fannie Mae and AIG to the current bailout) to the obligations of future, wage-earning taxpayers.

DOESN’T ANYBODY THINK THAT AMERICA’S RICH FOLKS OUGHT TO BE TOLD THEIR NATION CAN’T AFFORD THOSE EXTRAVAGANT TAX CUTS RIGHT NOW? Especially given that now, those richest of the rich, have inflicted this very scam on the nation and its wage-earning taxpayers. How can these greasy pols scream “crisis” and “disaster” and blithely ignore the tax cuts for the rich issue? That’s because they have no intention, not the slightest, of changing this outrage.

Now that the Repugs are going all socialist on us, effectively nationalizing America’s largest economic sector, the financial sector, maybe it’s time to talk about America’s social compact with its working people. It strikes me this would be an ideal moment to explore the gaping and rapidly expanding chasm between rich and ordinary Americans. Maybe it’s time to start closing that gap for the good of the American people and the good of their country.

Bush’s “trickle down/top end tax cuts” dogma is nothing more than a revival of Reaganomics – pure Voodoo economics at its very worst. Even the guy who dreamed up this scam, Reagan’s budget director Dave Stockman, later admitted it was all contrivance – a means to justify transferring tax burdens from the shoulders of the richest onto the shoulders of those beneath them.

Bush and Cheney have pulled this very same swindle on the American people. Remember how Cheney talked Bush into a second round of rich boy tax cuts by telling him that Reagan showed that “deficits don’t matter?” Well they sure as hell matter now.

I suspect the loudly proclaimed “urgency” in getting this bailout in place is at least partly the result of wanting a done deal before little people start asking some very hard questions that these hucksters and fixers don’t want asked.

And that’s another way of looking at things.

Is John McCain as crazy as the proverbial s__thouse rat?

The Old Geezer, it seems, has been caught again. He recently claimed that his top aide, Rick Davis, severed all ties with failed mortgage company Freedie Mac a long time ago, going on to add, “…and I’ll be glad to have his record examined by anybody who wants to look at it“.

Well The New York Times took Senator McSame up on it and discovered – why Davis had been getting paid by Freddie Mac right up to last month, just before it cratered. Now the $15,000 a month wasn’t going to Davis directly but to his firm Davis Manafort. However the only thing that FM seemed to be getting for its money from RD was access to JM.

McCain hasn’t disputed the Times’ claims. No, McGeezer is choosing to attack the NYT, instead. From The Guardian:

“Today the New York Times launched its latest attack on this campaign in its capacity as an Obama advocacy organization,” the statement began.
It continued: “Therefore this ‘report’ from the New York Times must be evaluated in the context of its intent and purpose. It is a partisan attack falsely labelled as objective news. And its most serious allegations are based entirely on the claims of anonymous sources, a familiar yet regretful tactic for the paper.”

Johnny, Johnny, Johnny – if you want to slam the Times, at least say what they’re claiming isn’t true. You gotta say they’re lying because, if what they’ve reported is true, you and Rick Davis are the liars. With your campaign teetering on the edge of abyss, this is no time to cast yourself as a liar – unless, of course, that’s all you’ve got left.

Seriously, John, you’re beginning to sound unhinged. And, by the way, it doesn’t help to have Davis skip his press lunch today.

I ran a bankruptcy practice and so I’ve had plenty of experience of bubbles and recessions. I’ve seen a lot of people lose their homes, wiped out, their houses flogged off at distress prices.

I’m old fashioned enough to believe that a home is the essential core asset of any family. It’s not like a car or a cottage or a stock portfolio. It’s where you go to at the end of the day, where you raise your kids, it’s where you live out your life.

Out here in the West we’ve certainly had our housing bubbles, albeit not as wild as the disaster now unfolding in the U.S. In B.C. they used to follow a 7-year cycle. Property values would escalate and then they’d slump. The more they escalated, the bigger and harder the slump that followed.

The wildest days out here were in the early 80’s. We went real estate mad. Just holding an interim agreement was enough to generate a huge return. In some cases interim agreements changed hands several times before the property was actually bought and transferred to the “new” owner who was likely then to simply put it right back on the market.

I can remember taking the elevator with former real estate magnate Nelson Skalbania and watching him turn to the wall of the elevator so he could write cheques on his way up to his lawyers’ offices. At the time he said there was no such thing as a bad deal. If you paid too much for a property you only had to wait a couple of months before it became a good deal. There was no bad property, there were no bad deals.

At that time, real estate agents got heavily into the housing market, buying properties themselves on spec. Between the developers and the realtors, they cranked the housing market into a frenzy.

What had happened is that these moneymen turned housing into a speculative commodity, not a basic essential. That led to inflated, runaway prices. Now, if you owned your own home it all looked grand. But if you were a young couple, eager to start a family, desperation set in. People who wanted homes were buying out of desperation, afraid if they didn’t take “the plunge,” prices would get totally out of their reach in a month or two. So they dived in and paid $450,000 for a $250,000 house.

Wait a minute. If a house is selling for $450,000 it’s worth $450,000, not $250,000 right? Maybe if you’re selling it but not if you’re buying out of fear.

In a healthy housing market, a house is worth no more than someone willing to live in that quality of house can afford to pay for it. Today in Vancouver, with new home ownership requiring close to 75% of the typical buyers’ combined takehome pay, that’s all gone up in smoke.

Years ago I read about a Scandinavian country, Sweden if memory serves, that chose to recognize that housing was special and that affordable housing met a crucial, social need. So they found a way to make house prices reflect their actual value. They simply taxed away speculative profit.

Everybody got a deal – on one residence. If you owned your home for a set number of years you could sell it without a speculative profit tax. If you sold your house before then it was okay so long as you invested your takings in another residence. But, if you bought a house to flog it on spec, well then your profits would be taxed away on the sale. Obviously it was more sophisticated than that but this is the rough idea.

The policy recognized that houses are supposed to be homes and homes are an important part of a healthy society. Therefore they’re to be treated differently than other assets. Stop allowing speculators to whipsaw the housing market and homeowners come out the winners.

In America, it was speculation that destroyed their housing market just as it was speculation in housing that drove the American economy during the Bush years. It was speculation in housing that triggered the credit crisis their government is wrestling with today. It was speculation in housing that accounts for the $700-billion bail out now pending in Washington.

Speculation in housing has undermined the very economy of the United States of America, forcing the most “free market” capitalist government to resort to nationalization of their country’s financial sector.

Cut out all the middlemen – the subprime scam artists, the derivative-flogging hucksters of Wall Street – and you’re left with housing speculation at one end and economic catastrophe at the other and a powerfully direct, causal link between the two.

Maybe if housing speculation is enough to bring the American economy to its knees, it’s time to put an end to it.

Paul Simon wrote, “…it’s all happening at the zoo. I do believe it, I do believe it’s true.” He wrote that in 1967 but it’s spot on to describe the denizens of Pennsylvania Ave. (N.W.) today.

America’s fiscal crisis has swept Pennsylvania Ave., from the Capitol building at one end to the White House at the other, like a wildfire racing through a zoo. The beasts are in full panic.

I got the full measure of that last night watching, you guessed it, The Daily Show, when Jon Stewart laid out the conditions US Treasury Secretary, Henry Merrit Paulson Jr., has imposed on Congress before he’ll accept their $700-billion bailout money.

Basically, Paulson has described he’ll take their filthy lucre but only on condition that there’s no oversight on what he does with the stuff. No accountability whatsoever. He even wants a condition expressly stated that how he doles it out – and to whom can’t be reviewed by any court.

The beasts, hearing the crackle of flames and choking on the acrid smoke, appear willing to agree to anything if only someone will make this nightmare go away. Anything, anything, just ask and it’s yours.

Of course it’s not their money anyway, not really. The $700-billion doesn’t exist, not within the United States. The government doesn’t have it, they’re already running multi-hundred billion dollar deficits funding wars of choice and tax cuts for the rich. But there are places to get it. China has that kind of money – and they have it in US dollar holdings to boot. You know, that Wal-Mart money they rake in from filling the shelves of America’s top retailer.

It’s not like they’re going to stiff the taxpayers with it either. No, the Chinese offer easy-credit plans that let you pawn it all off on today’s voters’ kids and grandkids and their kids and grandkids. Since Bush showed up, that’s practically become the American Way. Do whatever you like, just keep the pain out of the immediate voting cycle and hope it won’t show up at the ballot box.

Make it go away – for now.

It looks as though the beasts will get their way. The Dems are trying to draw a couple of lines in the sand. They’re balking at the zero-oversight demand and they want the bailout subject to conditions that taxpayers be compensated with an equity position in the firms bailed out.

Even some Republicans are now lining up behind Senate Banking Committee chairman Chris Dodd.

The Democrats have also decided to include a group left out of the Bush Bailout – struggling homeowners. Since the Feds are going to wind up owning a lot of these bad mortgages anyway, it actually may be better for taxpayers to find some compromise that keeps these people in their homes and gets them to make payments they can afford.

Now I know a lot of you right-wingers will recoil at the suggestion of writing down some little guy’s mortgage debt and settling for what they can pay but let me tell you, from lengthy personal experience, that we’ve been doing that for businesses for years.

I was involved in a lot of receiverships in the early 80’s. Back then the banks would appoint a receiver, trigger a bankruptcy and then just have the receiver-trustee firesale the assets. That led to recoveries of pennies on the dollar. It took a while but finally the banks figured out that the trigger they were pulling led to a barrel at their own heads too. That’s when they started looking at work-outs, settlements. Better to write off 20% if it keeps the business going and recovers interest and principal on the remaining 80% than get 10-cents on the dollar right now. That’s the same thing they’re talking about with home foreclosures.

Just because you don’t like it, doesn’t mean it’s not the right thing to do.

It doesn’t get much better than this.

American voters are casting about trying to figure out just who to blame for the subprime mortgage/derivative/credit crunch/housing bubble scandal. The Repugs, naturally, have their spin machines in overdrive – trying to convince average Americans that both parties are to blame and their Repug followers that it’s really the Dems doing.

Time for a photo montage. You can start with Reagan’s “trickle down” genius David Stockman, now staring at 30-years in prison for corporate accounting fraud. Then, how about Bush Sr. and Silverado Savings & Loan. Next up, John McCain and Chales Keating and Lincoln Savings & Loan. Then George w. Bush and “Kenny Boy” Lay of Enron fame. Cheney and Haliburton. Finally a Rogues Gallery of the Republican’s “look the other way” regulators and then a quick return to John McCain and Charles Keating. Fade to black.

Ouch, ouch, ouch and ouch.

Keep hammering away at four decades of Republican shenanigans that have repeatedly wiped out little folks’ life savings while facilitating the skyrocketing wealth of the real elite, America’s wealthiest. Bring up clip of George w. at that black tie dinner bragging about his friends, “the haves and the have-mores, my base.” Close with clip of John McCain saying he’s supported Bush on every important piece of legislation throughout his presidency and his pledge to even further deregulate the financial services sector.

You might have to break that down into a series of three ads. Then but the best airtime you can get and run them in successive commercial breaks.

Bingo. Bye, bye Geezer.

It didn’t have to be this way. If Keith Davey was still around, it wouldn’t be.

Stephane Dion’s Green Shift has been a disaster in its introduction and in its marketing.

We all know that the Green Shift stumbled at birth. Mr. Dion lost control of its introduction. It was uncloaked before it could be unveiled. It was released when it was most vulnerable to empty, alarmist attack and before it could be explained, defended and sold to the public.

Steve Harper was able to tie the Green Shift around Mr. Dion’s neck and keep it there. After that, there was no separating the two which ensured that it would be Dion, not Harper, on the defensive in the critical opening weeks of the election campaign.

Everything we complained about Harper, every excess, every anti-democratic and authoritarian abuse, the scandals, every broken promise – it all got swept away. Harper hasn’t had to defend his record at all, not even remotely. It’s as though none of that stuff ever happened.

Harper’s shield, his cloak of invisibility? Mr. Dion’s Green Shift.

At no time since Mr. Dion assumed the party leadership have the Liberals been strong enough to launch an initiative of the scope of the Green Shift. It’s much too big for a party to attempt from a position of relative weakness.

The Tories have held a huge financial advantage over the LPC throughout Mr. Dion’s leadership and there was no sign he was ever making any inroads on that. That alone ought to have set the alarm bells ringing. The Liberals didn’t have the luxury of launching a major and controversial initiative. They couldn’t afford it.

The one thing the Liberals didn’t have to buy was the litany of Harper’s excesses. That was free. People had watched it all unfold – Cadman, Mulroney, Afghanistan, In and Out, accountability, environmental stonewalling, gagging the military, and secrecy, secrecy, secrecy.

So, why isn’t Harper being forced to hop and dance around his own record right now? Why is he able to recast himself as an average guy in a sweater vest? It’s because he grabbed the opportunity, back when the Green Shift unveiling was so terribly botched, to put Dion on the defensive and to keep him there.

The Liberals didn’t have enough money to launch a Green Shift platform. They didn’t have enough money or enough time. It’s not a policy suited to an opposition party in any case. It takes a massive information campaign, meetings and discussions with the public and every key player, a building of consensus. That’s a job only a government can tackle.

Dion needed sage advice and it seems he didn’t get it. He needed to take the initiative and go on the offensive. He needed to frame the issues.

A – The first step ought to have been to assure the public that a newly elected Liberal government would absolutely not introduce Green Shift legislation unless certain key conditions had been met. In other words, Mr. Dion ought to have removed the Green Shift as an election issue altogether.

B – Mr. Dion should have promised broad consultations with the Canadian public and the most heavily affected sectors – transportation, energy, agriculture and so on. Mr. Dion ought to have made clear that his party would then seek to hone that input into the strongest possible consensus behind an effective carbon reduction programme. In opposition, the Liberals have neither the funding nor the time for an undertaking of that magnitude. Restating the obvious isn’t a sign of weakness.

C – And then – the third condition – would have been to promise a plebiscite. Let the government come up with a policy, explain it properly to the public and then seek public approval. Promise the Canadian people that they would decide the Canadian response to global warming. After all, if you introduce policies they don’t support, they’ll do the deciding anyway in the next election.

The logic of this approach ought to have been obvious to any Quebecker. This issue shares a lot of the complexities of a sovereignty referendum. It’s something that has to be sold to the voting public. They have to decide it’s fate, they have to support it or send their government back to the drawing board.

Getting Dion and the cash-strapped LPC off Harper’s hook ought to have been as easy as A-B-C. Then it might have been possible to make this election a verdict on Harper’s greasy record of the past two years.

I’m not sure there’s still time for Mr. Dion to drag himself out of the Green Shift hole that Harper has dug for him. But, damn, he’s got to try!

A US District Court Judge has forbidden the destruction of documents from Vice President Dick Cheney’s years in the White House.

As you may have guessed, Cheney was opposing this. I suspect he’d like to leave a lot of his paper trail in the form of ashes. That seems to be what the judge thought too. From CBC.CA:

A private group, Citizens for Responsibility and Ethics in Washington, is suing Cheney and the Executive Office of the President in an effort to ensure that no presidential records are destroyed or handled in a way that makes them unavailable to the public.
The judge said the administration’s legal position “heightens the court’s concern” that some records may not be preserved.

In a 22-page opinion, Kollar-Kotelly revealed that in recent days lawyers for the administration balked at a proposed agreement between the two sides on how to proceed with the case.

She said the administration wanted any court order on what records are at issue in the case to cover only the office of the vice-president, not Cheney himself or the other defendants in the lawsuit: the Executive Office of the President and the National Archives.

The suit alleges that the administration’s actions over the past 7½ years raise questions over whether the White House will turn over records created by Cheney and his staff to the National Archives when the newly elected administration takes over in January.

Now, all those who believe Dick Cheney is going to leave the paper trail intact, please raise your right hands and board the bus to Fantasyland.