Apparently, change is the same Secretary of Defense.
Let me write that again: Change is the SAME Secretary of Defense.
Barack Obama announced that he will retain the services of War Secretary Robert Gates, the man George Bush turned to when Donald Rumsfeld finally lost his stomach for the Iraq war. The man whose sole purpose over the last two years has been to prop up the failed endeavor by finding yes men, mischaracterizing the state of affairs in Iraq, paying off insurgents not to kill our soldiers, and perpetuating lies to the people who bear the costs of war. The man whose very existence seems to be the antithesis of the rhetoric that propelled Obama to the presidency.
One of the worst results of the Bush presidency comes from his assault on the English language. The meanings of some of our greatest words have been lost to Bush politics. Words like freedom, democracy, liberty, and rule-of-law are now largely useless. Hell, even torture is a word now devoid of meaning.
And now, before his presidency has even begun, Obama has added this previously important word to the list of casualties: change.
Life At The Margin would like to take this opportunity to make two predictions:
1) Barack Obama will face significant opposition for his party's nomination in 2012.
2) A majority of black Americans will come to loathe this man for the remainder of the 21st century.
Tuesday, November 25, 2008
Monday, November 24, 2008
The Rupture of Citibank
One of the world's largest banks fell off the wall and broke yesterday.
Instead of sweeping up the mess, the king's men continue to try to put it back together again. That means you and I and every holder of U.S. Treasury securities get taken for a ride.
My reading is that the U.S. Treasury signed up for liability of about $250 billion of Citigroup; whereas the dopes who made bad investments retain about $50 billion in liability.
Some thoughts on this bailout:
1) Citigroup's common stock rallied on the news. I firmly believe that the government should stay out of this mess, but I recognize I am in the minority living in a democracy. If, however, we the people are going to bail these punks out, it should be an absolute precondition that the equity holders get wiped out. On Friday, the stock was worth zero; today it is worth slightly more than zero. Shareholders got a better deal than they deserve, but those who buy this rally are fools.
2) A condition of the deal is that Citigroup cannot pay more than $.01 each quarter in dividends. This means they can give out over $200 million per year to shareholders, and I am sure they will. It's a scam people. We are being punked. Taxpayer money is not going to sure up the financial system; it is going to limit the losses of the people who messed up the financial system.
3) I keep reading that allowing Lehman Bros. to go into bankruptcy was a mistake that cannot be repeated. The opposite is true. Allowing Lehman's failure to run its course is the only bright spot on the king's men's resume. Of course, there were reverberations from it. Of course, people lost money. People are supposed to lose money when their business fails. The reverberation from propping these failures up is much worse, though often unseen.
4) Most of the liability assumed by taxpayers for this bailout falls outside the lines of the $700 billion bailout that Congress passed. In fact, $700 billion is fast becoming inconsequential. Taxpayers will ultimately lose trillions, and all of it will happen without so much as a peep from Congress.
5) The world does not need Citibank. I am repeatedly baffled by the lack of imagination on the part of the economic commentariat. Of course they are an important piece in the current economic makeup; they provide a lot of important services. But we don't need the current economic makeup and it may not even be the best option. If Citibank goes away, we will not be left with a gaping hole. We'll be left with other, better banks competing to fulfill the needs of society. No cog is vital to an economy.
Instead of sweeping up the mess, the king's men continue to try to put it back together again. That means you and I and every holder of U.S. Treasury securities get taken for a ride.
My reading is that the U.S. Treasury signed up for liability of about $250 billion of Citigroup; whereas the dopes who made bad investments retain about $50 billion in liability.
Some thoughts on this bailout:
1) Citigroup's common stock rallied on the news. I firmly believe that the government should stay out of this mess, but I recognize I am in the minority living in a democracy. If, however, we the people are going to bail these punks out, it should be an absolute precondition that the equity holders get wiped out. On Friday, the stock was worth zero; today it is worth slightly more than zero. Shareholders got a better deal than they deserve, but those who buy this rally are fools.
2) A condition of the deal is that Citigroup cannot pay more than $.01 each quarter in dividends. This means they can give out over $200 million per year to shareholders, and I am sure they will. It's a scam people. We are being punked. Taxpayer money is not going to sure up the financial system; it is going to limit the losses of the people who messed up the financial system.
3) I keep reading that allowing Lehman Bros. to go into bankruptcy was a mistake that cannot be repeated. The opposite is true. Allowing Lehman's failure to run its course is the only bright spot on the king's men's resume. Of course, there were reverberations from it. Of course, people lost money. People are supposed to lose money when their business fails. The reverberation from propping these failures up is much worse, though often unseen.
4) Most of the liability assumed by taxpayers for this bailout falls outside the lines of the $700 billion bailout that Congress passed. In fact, $700 billion is fast becoming inconsequential. Taxpayers will ultimately lose trillions, and all of it will happen without so much as a peep from Congress.
5) The world does not need Citibank. I am repeatedly baffled by the lack of imagination on the part of the economic commentariat. Of course they are an important piece in the current economic makeup; they provide a lot of important services. But we don't need the current economic makeup and it may not even be the best option. If Citibank goes away, we will not be left with a gaping hole. We'll be left with other, better banks competing to fulfill the needs of society. No cog is vital to an economy.
Saturday, November 15, 2008
Headlines
Headlines amuse me. A few days ago, in the midst of a 300-point decline in the Dow, the headline on Marketwatch, was "Sellers Back In Driver's Seat."
Aren't low prices better for buyers than sellers, or did I just waste 3 years of life (studying Economics, that is)?
Aren't low prices better for buyers than sellers, or did I just waste 3 years of life (studying Economics, that is)?
Saturday, November 8, 2008
Wait For It All To End
Apparently, Barack Obama has been meeting regularly with a group of financial heavyweights in order to create a strategy for dealing with our nation's economic problems.
"I want to see a stimulus package sooner rather than later," Obama said. "If it does not get done in a lame duck session [of Congress], it will be the first thing I get done as president of the United States."
Nancy Pelosi, she of the lame duck Congress, has talked about $100 billion or more of stimulus plus permanent tax cuts. In the 37 days of this fiscal year, the U.S. Treasury has already increased its net borrowing by over $600 billion. (Note that 37 is about 1/10 of 365).
Obama has also said, with regard to the economy, that he wants to "hit the ground running" when he takes office in January.
We have a group of people who have no idea what to do and a lot of power with which to do it. Economic policy, however, is best left to those who don't know what to do but have no power (Harvard professors, for instance).
This will all end in one of two ways: Somebody, perhaps Obama, will realize they are doing more harm than good, stop the interventions, and let America be America.
Or, the economy will crash under the weight of bailouts and false promises.
Until one of these things happens, Life At The Margin recommends that people with savings refrain from buying U.S. stocks, bonds, or any other promise to pay American dollars. If you cannot make it into a pretty necklace, burn it to make energy, or store it in a silo, it aint worth having.
For if pessimism is the contraction of the soul toward darkness, overoptimism is the contraction of the bank account toward zero.
As for the first thing to "get done" as president, Life At The Margin hopes the elected will reconsider. Invite some friends over, Mr.Obama, and throw a party. The White House is a beautiful place; its most productive use is entertainment. Party on, Barack. We'll all be better off.
"I want to see a stimulus package sooner rather than later," Obama said. "If it does not get done in a lame duck session [of Congress], it will be the first thing I get done as president of the United States."
Nancy Pelosi, she of the lame duck Congress, has talked about $100 billion or more of stimulus plus permanent tax cuts. In the 37 days of this fiscal year, the U.S. Treasury has already increased its net borrowing by over $600 billion. (Note that 37 is about 1/10 of 365).
Obama has also said, with regard to the economy, that he wants to "hit the ground running" when he takes office in January.
We have a group of people who have no idea what to do and a lot of power with which to do it. Economic policy, however, is best left to those who don't know what to do but have no power (Harvard professors, for instance).
This will all end in one of two ways: Somebody, perhaps Obama, will realize they are doing more harm than good, stop the interventions, and let America be America.
Or, the economy will crash under the weight of bailouts and false promises.
Until one of these things happens, Life At The Margin recommends that people with savings refrain from buying U.S. stocks, bonds, or any other promise to pay American dollars. If you cannot make it into a pretty necklace, burn it to make energy, or store it in a silo, it aint worth having.
For if pessimism is the contraction of the soul toward darkness, overoptimism is the contraction of the bank account toward zero.
As for the first thing to "get done" as president, Life At The Margin hopes the elected will reconsider. Invite some friends over, Mr.Obama, and throw a party. The White House is a beautiful place; its most productive use is entertainment. Party on, Barack. We'll all be better off.
Wednesday, November 5, 2008
Where is the Change?
Yesterday, we the people elected Barack Obama to the presidency. I believe that it is a great thing that a black man with an Arabic name can be elected president. It is shameful to look back at our history and see the extremes to which racism pervaded the society. This election is a signal and a reminder that we have come a long way and that progress continues to flow. In this sense yesterday's election was indeed, as many have written and said, historic.
But the election of Barack Obama did not change America. The changes that made it possible for a country founded with subjugation of an entire race imbedded in its constitution to elect a man of that race to its highest government office occurred over hundreds of years, in baby steps, with many failures strewn among its successes. While history may appear to have leaped forward today, we actually got here by crawling. Crawling aimlessly more often than not. Rather than change ourselves on election day we proved to ourselves and the world that we have changed.
I would like to make two important points, both of which are likely to be unpopular: First, racism, sexism, and intolerance are alive and well in America. To state just one relevant example, there was far more talk in this campaign as to whether Barack Obama was a muslim than talk about whether or not we should care if he is a muslim (We should not, in my view).
The second point is that, while the reality that a black man can be elected president is important, the fact that we did elect a black man is largely irrelevant.
We must keep in mind the role of the person we have elected. He is to be the president of the United States, the leader of the executive branch of our federal government. I am not aware of any reason to believe that skin color has any impact on the execution of that role.
What is relevant to me is what he plans to do with the power the American electorate have handed to him. In truth, I have little idea what he will do, and that scares me. It would scare me no matter who was elected. It scares me because we elected a man who constantly talked about change, but we never forced him to speak meaningfully about what, substantively, he actually plans to change. Beyond a few largely meaningless tax changes and a health care plan that we have no chance of actually implementing, he has been glaringly vague.
In my view, the most important issue facing this nation (for both the immediate future and the long run) is whether we will contract the hegemonic military empire that bankrupts our citizens, brings death and destruction to millions, and provides incentive for thousands of people around the world to devote their lives to fighting us. Let us not forget that Obama's rise to prominence was made possible by his strong opposition to the Iraq war and occupation. Unfortunately, as he became the presidential frontrunner his stance on this issue morphed quietly from "change" to something that looks a lot more like "slightly modify."
George Bush and John McCain would like to have an enduring presence in Iraq and Barack Obama is no different. Sure, he says he will draw down the number of soldiers, and I have no reason to doubt that intention. But the only appropriate number of American soldiers in Iraq is zero. Moreover, this man has been clear that he believes we should invade Pakistan and his threatening rhetoric toward Iran sounds a lot like it was written by Bush's speechwriters. He has even pledged to do everything in his power to prevent Iran from obtaining a nuclear weapon. If we think about the types of things that are in his power, this pledge is downright dangerous.
The real difference between John McCain and Barack Obama regarding the Middle East appears to be that McCain wants to threaten Iran from its western border; whereas, Obama wants to make his threats from the East. When Obama speaks of sending our troops home, he means that they will get on a plane, fly around Iran, to their new home in Afghanistan.
The reality of Iraq is that we are completely beaten and that we are likely to leave there before Obama's term is completed. He may even point to this as fulfillment of his campaign promise, but he will have had nothing to do with it. We are being thrown out of Iraq by a populace and a government that is proving far more committed to democracy than Bush or any of the neo-cons foresaw. Moreover, the Pretend War Against Terrorism is a complete failure in Afghanistan. We are beaten there as well, and throwing more soldiers, money, and hope into that debacle will not change the outcome.
The reality of our military adventures does not play well in politics. Both major candidates have told us that we are winning, must win, and will win if only. Never mind the costs. To speak of costs is to be defeatist, anti-American, and a distraction from our rhetorical message of hope and confidence. We are the greatest country in the world and nothing more needs to be said. But the realities of war are not as vulnerable to rhetoric as is the average voter. We have lost these wars. More importantly, we should have never tried to fight them.
I await with great interest Obama's choice for Secretary of State and National Security Advisor. The choice of cabinet members is the most important decision a president makes, and these two are especially important this time around. If they are filled with the likes of Richard Holbrooke and Dennis Ross, it will be a sign that the U.S. will continue the long and painful intervention in the Middle East.
The second most important issue facing our country is the role of government as it relates to the free market. I watched with amazement as Obama portrayed himself as a proponent for the little guy, even criticizing McCain repeatedly for supporting the big corporate interests like the banks who have caused so much trouble. Lost in his inconsistent rhetoric was the fact that Obama not only voted in favor of the bank handout, but also actively campaigned on its behalf.
We know more about the handout than we did when it first passed the Congress. Primarily we know that the only way the little guy is affected is that the value of his savings is declining as the owners and operators of failed banks are gorging themselves on cash. Recipients of federal money through this plan have already paid out $25 billion of it in dividends to shareholders. The other use of those funds is the consolidation of the banking system, the very opposite of what would help the little guy. What we need in this country is more, smaller, banks competing to serve customers of all types. What we are paying for is an increasingly monopolistic industry which will yield fewer benefits to its customers and fewer benefits to society as a whole. The banking industry fell apart under the weight of its own incompetence, and we are providing the money so that the same people can rebuild it for their own best interests.
As a presidential candidate, Barack Obama was in an unusually powerful position to scuttle this disastrous policy in the name of the common man (The same is true of McCain). Instead, he and a majority of the elected democrats chose to support the wealthy elite who pay for their television ads.
According to polls, the American people overwhelmingly agree with me (at least in general terms) on these two issues. Change is indeed popularly supported by the electorate. We think of Obama as a liberal like us, but the reality is that on the 2 most important issues, he is way to the right of the people who support him. Why do we hear him use the word "change" and ignore the status quo that his actions support?
In the aftermath of this election I have witnessed a great deal of optimism in my friends and in others around the country. I believe that this is a very good thing. It may well be that the optimism that this man foments induces actions in the great many individuals who make this country thrive. We face important challenges and tough decisions, but there is no need for panic. And there is no need to look to one person, any person, for hope. Hope springs forth and grows from the level of the individual; it does not shower down from above. We must not look to the president to lead us, even if he is up to that task. The president, and all elected officials, are there to follow. Follow the will of the people that is. We must lead Barack Obama. To do that we must hold him accountable. His greatest supporters must ensure that he does not speak to us of change but implements the changes that serve the people.
Furthermore, I hope that I am wrong about Obama. I hope he does serve the common man, draw down the wars, and allow the free market to work. We'll see.
But the election of Barack Obama did not change America. The changes that made it possible for a country founded with subjugation of an entire race imbedded in its constitution to elect a man of that race to its highest government office occurred over hundreds of years, in baby steps, with many failures strewn among its successes. While history may appear to have leaped forward today, we actually got here by crawling. Crawling aimlessly more often than not. Rather than change ourselves on election day we proved to ourselves and the world that we have changed.
I would like to make two important points, both of which are likely to be unpopular: First, racism, sexism, and intolerance are alive and well in America. To state just one relevant example, there was far more talk in this campaign as to whether Barack Obama was a muslim than talk about whether or not we should care if he is a muslim (We should not, in my view).
The second point is that, while the reality that a black man can be elected president is important, the fact that we did elect a black man is largely irrelevant.
We must keep in mind the role of the person we have elected. He is to be the president of the United States, the leader of the executive branch of our federal government. I am not aware of any reason to believe that skin color has any impact on the execution of that role.
What is relevant to me is what he plans to do with the power the American electorate have handed to him. In truth, I have little idea what he will do, and that scares me. It would scare me no matter who was elected. It scares me because we elected a man who constantly talked about change, but we never forced him to speak meaningfully about what, substantively, he actually plans to change. Beyond a few largely meaningless tax changes and a health care plan that we have no chance of actually implementing, he has been glaringly vague.
In my view, the most important issue facing this nation (for both the immediate future and the long run) is whether we will contract the hegemonic military empire that bankrupts our citizens, brings death and destruction to millions, and provides incentive for thousands of people around the world to devote their lives to fighting us. Let us not forget that Obama's rise to prominence was made possible by his strong opposition to the Iraq war and occupation. Unfortunately, as he became the presidential frontrunner his stance on this issue morphed quietly from "change" to something that looks a lot more like "slightly modify."
George Bush and John McCain would like to have an enduring presence in Iraq and Barack Obama is no different. Sure, he says he will draw down the number of soldiers, and I have no reason to doubt that intention. But the only appropriate number of American soldiers in Iraq is zero. Moreover, this man has been clear that he believes we should invade Pakistan and his threatening rhetoric toward Iran sounds a lot like it was written by Bush's speechwriters. He has even pledged to do everything in his power to prevent Iran from obtaining a nuclear weapon. If we think about the types of things that are in his power, this pledge is downright dangerous.
The real difference between John McCain and Barack Obama regarding the Middle East appears to be that McCain wants to threaten Iran from its western border; whereas, Obama wants to make his threats from the East. When Obama speaks of sending our troops home, he means that they will get on a plane, fly around Iran, to their new home in Afghanistan.
The reality of Iraq is that we are completely beaten and that we are likely to leave there before Obama's term is completed. He may even point to this as fulfillment of his campaign promise, but he will have had nothing to do with it. We are being thrown out of Iraq by a populace and a government that is proving far more committed to democracy than Bush or any of the neo-cons foresaw. Moreover, the Pretend War Against Terrorism is a complete failure in Afghanistan. We are beaten there as well, and throwing more soldiers, money, and hope into that debacle will not change the outcome.
The reality of our military adventures does not play well in politics. Both major candidates have told us that we are winning, must win, and will win if only. Never mind the costs. To speak of costs is to be defeatist, anti-American, and a distraction from our rhetorical message of hope and confidence. We are the greatest country in the world and nothing more needs to be said. But the realities of war are not as vulnerable to rhetoric as is the average voter. We have lost these wars. More importantly, we should have never tried to fight them.
I await with great interest Obama's choice for Secretary of State and National Security Advisor. The choice of cabinet members is the most important decision a president makes, and these two are especially important this time around. If they are filled with the likes of Richard Holbrooke and Dennis Ross, it will be a sign that the U.S. will continue the long and painful intervention in the Middle East.
The second most important issue facing our country is the role of government as it relates to the free market. I watched with amazement as Obama portrayed himself as a proponent for the little guy, even criticizing McCain repeatedly for supporting the big corporate interests like the banks who have caused so much trouble. Lost in his inconsistent rhetoric was the fact that Obama not only voted in favor of the bank handout, but also actively campaigned on its behalf.
We know more about the handout than we did when it first passed the Congress. Primarily we know that the only way the little guy is affected is that the value of his savings is declining as the owners and operators of failed banks are gorging themselves on cash. Recipients of federal money through this plan have already paid out $25 billion of it in dividends to shareholders. The other use of those funds is the consolidation of the banking system, the very opposite of what would help the little guy. What we need in this country is more, smaller, banks competing to serve customers of all types. What we are paying for is an increasingly monopolistic industry which will yield fewer benefits to its customers and fewer benefits to society as a whole. The banking industry fell apart under the weight of its own incompetence, and we are providing the money so that the same people can rebuild it for their own best interests.
As a presidential candidate, Barack Obama was in an unusually powerful position to scuttle this disastrous policy in the name of the common man (The same is true of McCain). Instead, he and a majority of the elected democrats chose to support the wealthy elite who pay for their television ads.
According to polls, the American people overwhelmingly agree with me (at least in general terms) on these two issues. Change is indeed popularly supported by the electorate. We think of Obama as a liberal like us, but the reality is that on the 2 most important issues, he is way to the right of the people who support him. Why do we hear him use the word "change" and ignore the status quo that his actions support?
In the aftermath of this election I have witnessed a great deal of optimism in my friends and in others around the country. I believe that this is a very good thing. It may well be that the optimism that this man foments induces actions in the great many individuals who make this country thrive. We face important challenges and tough decisions, but there is no need for panic. And there is no need to look to one person, any person, for hope. Hope springs forth and grows from the level of the individual; it does not shower down from above. We must not look to the president to lead us, even if he is up to that task. The president, and all elected officials, are there to follow. Follow the will of the people that is. We must lead Barack Obama. To do that we must hold him accountable. His greatest supporters must ensure that he does not speak to us of change but implements the changes that serve the people.
Furthermore, I hope that I am wrong about Obama. I hope he does serve the common man, draw down the wars, and allow the free market to work. We'll see.
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