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Wednesday, April 30, 2008

A Racist at the Sun Times

When Jimmy the Greek uttered these notorious words,

bred to be the better athlete because, this goes all the way to the Civil War when ... the slave owner would breed his big woman so that he would have a big black kid

not only was he fired by CBS but his entire career was ended. He lived out the rest of his days in infamy generating little to no income. Such was the fate of a white person that was branded with the term of racist.

If the Chicago Sun Times were to hire David Duke it would likely face uncontrollable and intense protests. Their business would grind nearly to a halt and the company would likely go under. Such is the fate of any newspaper hiring a white racist.

Yet, the Chicago Sun Times has absolutely no problem and faces absolutely no criticism for hiring an African American racist in Mary Mitchell. I first noticed the incendiary and racist thoughts of Mary Mitchell in a column that started as such

Black people get it, white people don't, now let's move on

Outside of my own criticism, I didn't pick up on anger from anywhere. Despite the outrageous and racist tone of the column, Mary Mitchell and the Sun Times faced absolutely no criticism. It appears in the world of news, while hiring a white racist is a taboo, an African American racist is perfectly fine.

Thus, it should come as no surprise that this racist has just finished yet another racist column.

This is a sad day for Black America.

At a time when African Americans are on the cusp of watching a barrier come crashing down, up jumps a divisive issue that is being driven by those outside of the black community.

Obviously, Wright's timing for a press conference about his sermons couldn't have been worse. Still, when Obama says he is "offended" by Wright's latest comments -- given in defense against an orchestrated assault on his character and on his ministry -- he's opening up a can of worms.

There is no institution in the black community more respected than the black church. And the notion that white pundits can dictate what constitutes unacceptable speech in the black church is repulsive to most black people.

Now, let's try an experiment...

This is a sad day for White America.

At a time when Caucasians are on the cusp of watching a barrier come crashing down, up jumps a divisive issue that is being driven by those outside the white community.


There is no institution in the white community more respected than the white church and the notion that African American pundits can dictate what is acceptable speech in the white church is repulsive to most white people.

The first quote will likely be viewed as provocative and the second would be shocking and racist. It appears that in America if you are an African American racist with a gift for putting words together you can be a columnist or commentator, while if you switched that around, you would be shunned.

Mitchell used the term "repulsed as part of her diatrobe. I will tell you what repulses me. What repulses me is that a major newspaper in a very large city would legitimize her racism by giving her a regular platform. Furthermore, I found this particular article at Real Clear Politics which gives it even more credibility. What is repulsive to me is that major media outlets choose to legitimize racism by giving it a platform.

Jimmy the Greek uttered one racial thought and his entire career was ended. Mary Mitchell makes those thoughts a career.

The stakes could not be higher. If racism pays, it will encourage more racism. Mary Mitchell will spawn the next generation of African American racists looking to cash in on their racism. She will create more proteges who will continue to spew more of the same filth and continue to poison the waters through their incendiary language. The simple fact of the matter is that society should never stand for a racist no matter their color, and certainly racists should not make racism their profession. The Chicago Sun Times has offered just such an outlet for one and it is unacceptable. Mary Mitchell's racism is no longer in question. The only question is how much longer she will continue to earn a living from it.

Tuesday, April 29, 2008

The Media and Pavlov

Ivan Pavlov was a turn of the last century scientist that discovered what is known as classical conditioning through experiments in mice. Through a system of rewards and punishments he was able to train mice either to eat or stay away from cheese left in their cages. These experiments lead to all sorts of breakthroughs in theories on affecting behavior through punishment and reward.

One of the things that struck me about the movie Good Night and Good Luck was one of the side plots in which a fellow newsman wound up committing suicide because he couldn't stand the pressure of being seen as not objective. During Murrow's time, objectivity was seen as so tantamount that a reputation as biased spelled the end of any news career. In fact, Murrow's insistence on giving his opinion was one of several things that made him so revolutionary. Yet, it is amazing how much the news business placed a premium on objectivity at that time. If you compare the news business then to Pavlov, the insistence through threat of black balling on objectivity was the punishment that created classical conditioning of journalists that adhered so strictly to objectivity.

The sort of objectivity that was demanded back in the day of Murrow has all but disappeared today. The campaign season has brought about all sorts of new examples so called hard news journalists totally losing any hint of objectivity whether it be subtly or blatantly. The news media was so smitten with Barack Obama for instance that it took an SNL skit to put them in their place. Yesterday's coverage of the Reverend Wright speech brought all new examples. Soledad O'Brien must feel rather embarrassed today now that Obama has nearly totally disassociated from the pastor she said hit a "home run" with his speech.

Lee Cowan actually proclaimed that his "knee quakes" when he hears Obama speak. Chris Mathews also echoed such sentiments. Mary Mitchell, of the Sun Times, started one column like this...

Black People Get It, White People Don't Know Let's Move On

Of course, this campaign season is only the latest example. Iraq suddenly faded from the headlines at the exact same time that things turned around and violence diminished. The media spent the better part of a month promoting the station Air America nearly non stop when it first got on the air. No broadcasting enterprise had ever before received such overwhelming coverage, and of course their demise is nearly non existent in the media. I could go on for days of example of bias, subtle and obvious.

So, what is the cause of all of this bias? I think it has much to do with Pavlov. Unlike in Murrow's days, objectivity is no longer treated with such esteem as it was in Murrow's days. Had Cowan made such a statement then he would have immediately been reassigned to the obituaries if not black balled from the business entirely. O'Brien would have wound up working the overnight shift after her statement in Murrow's days.

The simple fact of the matter is that the lack of objectivity is no longer punished with the same draconian measures that it was in Murrow's days. Rather than zapping the reporter with the proverbial electric shock when they show bias, they are instead given a treat. The business is teaching its journalists the exact opposite lesson everytime the fall out of line of what they taught them in Murrow's days.

The question is what changed. The blame certainly can't fall on the readers. The lack of objectivity has been met with precipitous drops in circulation, readership, and viewership. Certainly, the public is performing its function in the Pavlov theory. They are in fact punishing severly the lack of objectivity the media is showing. The problem is that reporters don't have their pay based on circulation or viewership normally and thus they don't feel their punishment.

The market has also certainly punished the lack of objectivity. Blogs, Fox News, and other new media like have all risen much because of the failure of the MSM to stay objective. There is no doubt that there is at least some correlation between the extreme fragmenting of the market and the loss of objectivity. Little Green Footballs, for instance, rose to prominence because they lead the charge in breaking the fake documents in the story over Bush's supposed lack of Vietnam service. Had the MSM done their job, LGF would have never gotten off the ground. Fox News has filled the space left by the rest of the MSM which has tilted so far left, that conservatives viewership had nowhere else to turn. Certainly, the market has fragmented at least in part because the objectivity that Murrow's day had has faded. Thus, you can't blame the market either for not doing their Pavlov duty.

That only leaves the editors and here we have the culprit. I mentioned earlier the racist column by Mary Mitchell. There is no way any editor would have ever allowed such garbage to reach the pages of any legitimate newspaper back in Murrow's day. Likely, Mitchell wouldn't have been employed after submitting that sort of a column. In fact, all of the examples I mentioned would have been stopped by any reasonabl editor back in the day when editors actually did their job. There was a time when management in news actually managed. Now, managers allow their reporters to run free. Arthur Salzberger defended his reporters after the hit piece with flimsy evidence about McCain and the lobbyist. Brian Williams called Cowan courageous after he admitted that he was smitten with the candidate he was covering.

Can you really blame reporters for losing all objectivity when their management rewards that sort of behavior? In fact, it is text book Pavlov theory. Rather than punishing harshly any hint of lack of objetivity, it is usually rewarded or overlooked. The reporters and other journalists are not really all that different than mice in that case. The reason there was such strict standards of objectivity in Murrow's day was because management demanded it in draconian manner. The reason there is none now is because management could care less if there is or not. The total lack of journalistic standards can be laid at the feet of management that refuses to demand that there be any.

Obama Takes Morris' Advice

It appears that Barack Obama may have caught a part of H&C last night, because he is following the advice that Dick Morris gave him last night. Last night, Morris suggested that Obama needs to not only denounce Wright again but to denounce his views and turn himself against his former pastor. Today, that is EXACTLY what Barack Obama is doing.

Here we go. Barack press conference is on:

“I’m outraged by the comments that were made and saddened by the spectacle. The person that I saw yesterday was not the person I met 20 years ago. His comments were not only divisive and destructive, but they end up giving comfort to those who prey on hate. I believe they do not accurately portray the perspective of the black church. They certainly don’t portray mine. If he considers this political posturing, then he doesn’t know me very well. And I don’t know him well either.”

Now, I suspect that Morris' advice is spot on and thus this is likely his best political move in a long time. This will go a long way to limiting whatever political damage Wright will cause him. The only thing left is to figure out just how much damage there is and whether or not this will stop any further damage. While this presser is quite wise, there will continue to remain doubts and concerns. For instance, he said this...

The person I saw was not the person that I’d come to know over 20 years…Shocked me, surprised me.”

That seems unlikely. I don't think that Reverend Wright went through a transformation but rather Obama just noticed who he really is. That will likely leave some serious lingering doubts. Still, the past is the past. Obama can't now go back and remove himself from the church many years ago. He is doing all that he can now which is putting as much distance as he can between himself and Wright. He probably should have done it before but again the past is the past.

Morris is likely right. By challenging Wright directly he puts himself against his vicious views. That is the right place to be politically and shows the kind of political strength necessary to allay some of the fears that many of his potential voters have of him.

There is no doubt that his sudden change of heart will be met with plenty of skepticism and much of it may be warranted, however this is all that he can do now. He has finally done what I have been calling for him to do for weeks...get out front of this story. Don't let the critics fool you, this was a very wise political move by Obama and long over due.

Foreclosures and Policy Making

According to this article foreclosures continue to rise as the housing crisis worsens.

Home foreclosure filings jumped 23 percent in the first quarter from the prior quarter, and more than doubled from a year earlier, as more overextended borrowers failed to make timely payments, real estate data firm RealtyTrac said on Tuesday.

One of every 194 households received a notice of default, auction sale or bank repossession between January and March, for the seventh straight quarter of rising foreclosure activity, RealtyTrac said.

Of course, this is at this point barely news. Foreclosures are rising and they will likely continue to rise indefinitely. What was of interest to me was this paragraph buried deeper in the story.

"In most of the states with the highest levels of foreclosure activity, we're still seeing the fallout from overheated home prices and people overextending themselves with risky loans to try to buy those properties," Rick Sharga, vice president of marketing at RealtyTrac, in Irvine, California, said in an interview.

Now, this is a statement that I have echoed before myself. In fact, I venture to predict that this view would be echoed by most mortgage professionals in the country. That's because most mortgage professionals know that whatever role they played they had willing partners, not naive dopes, in borrowers. I would take this statement one step further and say that rising foreclosures everywhere are the result of folks over extending themselves and taking on risky loans.

This assertion would have significant implications to future policy regarding mortgages. If in fact the crisis is a result of simple overextension then any bailout or help is patently unnecessary and counter productive.

So, then, why, if most mortgage professionals hold the view that the crisis was caused by overextension and taking on risky loans to chase out of control real estate, are policy makers so insistent on providing bailouts? Why would we bailout folks that simply took on more than they could chew? Well, first, it is because mortgage professionals are not asked much by policy makers how the crisis happened and what we should do. Mortgage professionals are seen as the bad doers and thus their opinion is irrelevant.

Thus, you have a fallatious view that borrowers were duped and now need a bailout. Policy makers are all too willing to listen to any sob story of borrowers that fell on hard times and make that the centerpiece of their policy. Yet, they likely would never listen to the thoughts of a mortgage professional because they are seen as the cause of the crisis. Of course, this is not only unfair but also faulty. A borrower was only a part of one loan. A mortgage professional was a part of hundreds if not thousands of loans. Yet, their thoughts and opinions mean very little. I doubt you would find very few if any mortgage professionals that think that any sort of a bailout is a good idea. Yet, that seems to be the conclusion of most policy makers. So, it appears that policy is being determined regarding housing with little to no consultation from anyone that worked in the field. Such faulty priorities leads to faulty policy. That is exactly what we have, and it should surprise no one.

The Fed and the Dollar

The WSJ has written a piece that continues the much needed debate about the Fed's role in monetary policy and its relation to a steady dollar. The thoughts echoed in this piece are fairly similar to those echoed by Steve Forbes recently. The WSJ also asserts that the Fed should prioritize Dollar stabilization over economic stimulus...

When Federal Reserve governors meet today, they should consider that solutions to their twin challenges – a flagging economy and systemic moral hazard in financial markets – have common roots in a stable dollar. One of the primordial lessons of economic history is that sound money is a necessary condition to promote long-run prosperity and maximal growth. Moreover, a stable currency and low inflation lessen the need for complex hedging vehicles which can be leveraged to harmful effect in volatile markets.

The Journal adds a few other interesting pieces of context to this arguement. First, the monetary policy of the Fed is based on an old thesis known as the Phillips Curve...

To understand why it may not, and why a different path should be taken, it must be recognized that Fed policy has long been guided by – or perhaps more accurately, yoked to – the alleged trade-off between unemployment and inflation: the so-called Phillips Curve.

A.W. Phillips's original 1958 paper dealt with wage rate changes and unemployment. But eventually it would become conventional policy wisdom to apply his insight more broadly to price level movements against the unemployment rate.

In other words, the better the employment the more pressure there is on inflation and vice versa. The Journal argues though that this theory is not necessarily guided by historical data.

Since 1948, according to Bureau of Labor Statistics figures, inflation has averaged 3.7% per year, unemployment 5.6%, and real GDP growth 3.4%. But the 10 lowest inflation years (between 1949-62, and 1986) averaged 0.5% inflation and 5.2% unemployment, along with 3.5% GDP growth. And the 10 high inflation years (between 1973-81, 1969, and 1990) averaged 9.1% in consumer price increases, along with 6.2% unemployment and 2.6% in growth. In other words, low inflation was often associated with lower unemployment and stronger GDP growth than high-inflation years.

More strikingly, the years following the 10 lowest inflation years were even better in terms of performance (averaging 5.1% unemployment and 4.4% growth), and the years following the high inflation years were even worse (7% unemployment and 1.4% GDP growth). This record shows the importance of sound money, fostering an environment allowing the key growth drivers of entrepreneurship and capital investment to flourish under stable long-run expectations.

So, the Journal argues, the Fed is working on a model that says that since employment is weak there is no inflation fear. The Journal argues that this thesis is faulty. Since the thesis is faulty the Fed is following inappropriate monetary policy...

The bottom line is this: the Fed should bury its errant Phillips Curve framework, and cease attempts to fine-tune perfect balance between inflation and recession. It should halt further rate cuts and soon begin a series of interest rate increases.

In other words, much like Forbes the Journal argues that the Fed is concerned with all the wrong things. Rather than trying to provide stimulus which the Journal argues leads to loose money and thus a "moral hazard" (their term), they should concentrate on stabilizing the dollar. Forbes argues this should be the long term and consistent goal of the Fed. The Journal says much the same thing...

By discarding the Phillips Curve blinders, the Fed would happily learn that economic growth and low inflation are not a mutually exclusive trade-off. A stable dollar promotes both, along with making fiscal and moral hazard problems easier to solve in the future.

This is a much needed debate and I will continue to monitor.

Monday, April 28, 2008

Carter "Clarifies" Peace Mission

Jimmy Carter was not satisfied with his jaunt around the Middle East in which our biggest ally largely shunned him while at the same time most of our biggest enemies largely welcomed him with open arms. It appears that to Carter, those facts didn't speak for themselves. He continues to be convinced that sitting down with the exiled leader was a good idea. As such, he is on whirlwind tour of the media to preach the message he attempted to start there. As part of this message, here is this opinion piece in the New York Times. He starts with a most misleading euphimism...

A COUNTERPRODUCTIVE Washington policy in recent years has been to boycott and punish political factions or governments that refuse to accept United States mandates. This policy makes difficult the possibility that such leaders might moderate their policies.

Now, by refusing mandates, what he actually means is an unwillingness to cease lobbing rockets at urban areas and having folks strap bombs and finding an area with a maximum number of civilians before blowing themselves up. This is just one of those mandates that the U.S. will insist before they legitimize the other party with a face to face meeting.

Carter then recounts the events of the last twelve years in Nepal. I will cry ignorance and take him at his word that he somehow got terrorists to change things around. Frankly, I don't much care. That's because Carter focuses most of his energies on dialogue with Hamas. This is a subject I am quite familiar with.

Hamas had been declared a terrorist organization by the United States and Israel, and the elected Palestinian government was forced to dissolve. Eventually, Hamas gained control of Gaza, and Fatah is “governing” the Israeli-dominated West Bank. Opinion polls show Hamas steadily gaining popularity. Since there can be no peace with Palestinians divided, we at the Carter Center believed it important to explore conditions allowing Hamas to be brought peacefully back into the discussions. (A recent poll of Israelis, who are familiar with this history, showed 64 percent favored direct talks between Israel and Hamas.)

Similarly, Israel cannot gain peace with Syria unless the Golan Heights
dispute is resolved. Here again, United States policy is to ostracize the Syrian
government and prevent bilateral peace talks, contrary to the desire of high
Israeli officials.

Now, let's take the second paragraph first. There is no dispute over the Golan Heights. Israel won a war and subsequently took the Heights as part of the agreement to end the war. The Golan Heights is a de facto peace agreement because the strategic value of the high ground it provides is its own peace accord. Syria has no means of attacking Israel because it has a decided strategic military disadvantage in any military confrontation. The fact that Israel maintains the high ground in the form of the Golan Heights is its own peace accord. Now, this vital military fact seems to slip Carter's mind.

To him the Golan Heights is equivalent to the plot of grass that you consider part of your yard and your neighbor insists is his. Carter seems to think that Israel's troubles will end if they will only give that insignificant piece of land to their enemies, and trade it for a piece of paper.

As for the first paragraph, Carter seems to think that the U.S. put a bunch of names into a hat and Hamas was simply chosen to be on its list of terror organizations. In his opinion, it wasn't that Hamas has consistently bombed innocent civilians, but that they needlessly wound up on a list that turned them violent.

If there is any doubt about just how much legitimacy, Carter gives Hamas, he then lists out a series of things that he assures the audience Hamas will do to bring peace. He knows this because Hamas representatives told him so. They include disbanding their militia, accepting peace accords, releasing Gilad Shalit, and creating a cease fire.

Keep in mind that Hamas illegally crossed into Israel and illegally fired and killed several soldiers before illegally taking Shalit hostage. It is quite big of them to assure that he be released.

It is shocking and downright sad that this man once held the highest office in the land. He has simply lost whatever marbles he ever had and is now in some sort of alternative universe.

Food Shortages and Free Trade

The New York Times had an excellent piece on the connection between world food prices and free trade.

The damage that trade restrictions cause is probably most evident in the case of rice. Although rice is the major foodstuff for about half of the world, it is highly protected and regulated. Only about 5 to 7 percent of the world’s rice production is traded across borders; that’s unusually low for an agricultural commodity.

So when the price goes up — indeed, many varieties of rice have roughly doubled in price since 2007 — this highly segmented market means that the trade in rice doesn’t flow to the places of highest demand.

Rice appears to be a microcosm of the benefits of free trade. The theory behind free trade goes like this. Every country and area has things they specialize in. Through free trade each country can focus on those things and can import that which they don't specialize in. Rice is one of many goods and services for which this is true.

It is also clear what the results of protectionist policies is vis a vis rice. Since much of the world doesn't have access to a lot of rice, it doesn't get to where it needs to because countries also put tariffs and other restrictions on its importations. Ultimately, the people it really hurts are the poor folks in each of these countries.

The Wright Pandora's Box Opens Again

In order to understand the damage that Wright is doing to Obama, I need to once again share the view Dick Morris had on politics. He said that it really didn't matter how the media covered any such event. Rather, what was important was what they covered. He pointed out that if the media was say focused on health care and the environment that was good for Dems. If they were focused on the GWOT then that was good for Republicans.

The weakest that Obama's campaign has been was in the week or so that the Wright issue exploded. Obama seemed to finally move the campaign beyond Wright when lo and behold Wright decided to pop on the scene again this past weekend and this morning.

The news media has been nothing short of obsessed with his speech today at the National Press Club. The coverage has been generally negative though if you looked enough you would find just about any and all sort of coverage of it. What you are going to find is that the coverage is intense and relentless.

Wright presents old and new problems again for Obama and while it is still unclear just how much damage there is, there is no question this latest jaunt all over the media will present serious damage. First, it damages Obama by the Morris rule. His campaign is at its worst when the media focuses on Wright. That is what they are doing now and it is unclear how long they will go but it will eat up significant time between now and Indian/NC.

The second part of it is even more signficant. Obama was on FNS yesterday and he repeated that it was unfair that the media took Wright's most offensive statements and looped them for thirty seconds ad nauseum. That perspective has some reasonable merit. None of us want to be defined by thirty seconds of the worst things we have ever said. Those things likely don't reflect the overwhelming nature of our character. That said, most of us don't necessarily repeat our worst thirty seconds. In the case of Wright, he proceeded to blow that theory straight out of the water in his speech today. All of the worst things that were played ad nauseum were repeated today at the National Press Club and several new ones. He repeated his HIV conspiracy, codemned America as a racist nation, and said our own actions warranted the response on 9/11.

Furthermore, he proceeded to proclaim that an attack on him was an attack on the black church apparatus. The worst thing for Obama is that he implied that Obama only distanced himself from Wright because he is a politician and that's what politicians do. That undercuts the entire theme of Obama's campaign.

The worst thing for Obama is still coming in my opinion. That's because it appears as though Wright really revels in the spotlight. He isn't going to shut up, not for long. I don't think he will remove himself from the spotlight entirely for the entire course of the campaign. He will continue to show up from time to time just so everyone can be reminded of why they shouldn't vote for Obama.

Wright has now firmly wrapped himself around Obama's neck and become his albatross. Obama can simply not get rid of him. Wright went ahead and confirmed all of the worst things people thought about him today, and frankly all weekend. Furthermore, he managed to degrade most of Obama's most reasonable arguements for why this shouldn't be held against him. For Obama's supporters, there is no spinning this. Wright is here to stay and the more we see the less chance Obama has of being elected to anything.

Vultures Move in on Subprime?

According to MoneyNews, that appears to be what is happening to the subprime secondary market.

The allure of rotting mortgage bonds has grown so strong that Wall Street's vultures have begun picking over their carcasses — a signal the credit crisis has entered a crucial stage in its vicious cycle.

In the past two months, these intrepid investors have begun betting billions of dollars on a hunch that mortgage security prices have fallen enough. It is a risk few have taken for a year or more as the credit crisis rooted in this very market wreaked havoc in financial markets around the world.

Long term readers are going to know this quote...

Where are the speculators, vultures and hedge funds? Where are the big money players willing to buy the exotic but still substantial mortgage-backed securities for which markets have ceased? The Fed's liquidity rush seems only to have convinced them the time is ripe for staying on the sidelines.

That is from a Wall Stree Journal article on the direction of the housing crisis. It makes a very important point about market dynamics after a bubble. The market has bottomed out and is ready for the move back up when so called "vultures" swoop in for what they see are bottomed out deals. Essentially, the article asked for what is happening today.

Now, if bottom feeders are moving in to buy the secondaries of sub prime mortgages then that, more than anything else, is a sign that the worst of the crisis is over. The article from Moneynews makes a similary point...

The behavior of Gundlach and those like him is important because this brand of investor — patient, value scavengers willing to stomach some initial loss in exchange for huge windfalls when a market turns — frequently signals that a market is forming a bottom when they are active.

What is missing from the article though is some good raw numbers. I am still unclear as to just how many bonds these so called vultures are buying and some context as to their place in their overall market. While this article paints a somewhat rosey picture on the future of the sub prime market, it is still unclear if these vultures are doing enough.

Sunday, April 27, 2008

Ayers, Rezko, and Obama: Countering the Outsider Image

Hyde Park, Barack Obama's home neighborhood in Chicago, is ground zero for some of the biggest corruption in government in the country. It is not only a part of Chicago politics, long known nationally for a history of corruption, but home to the equally corrupt Cook County and Illinois state governments. While Barack Obama claims that only an outsider like himself can change Washington, he is himself quite the insider to these three governments.

Recently many have argued just how close the relationship between William Ayers and Barack Obama is. While their relationship continues to appear to be tangential at best, it is in fact Ayers cozy relationship with the political class of Chicago that should raise most eyebrows. How does a former domestic terrorist find himself so cozy with so many power players in Chicago? Well, this is the city most famous for this quote after all (by the late Richard J. Daley and father of the current mayor)

vote early and vote often

In fact, Obama got his start in politics at a fundraiser at Ayers' home. Furthermore, Obama was the hand picked successor to Alice Palmer. So, while Barack Obama may claim to be an outsider in Washington, he has been the ultimate insider in Hyde Park, Cook County, and Springfield.

While this may mean nothing outside of those areas, his insider status in those three governments should say plenty about his ability to change Washington.

The current governor of Illinois, Rod Blagojevich, is under investigation on a series of corruption related matters. His predecessor, George Ryan, is serving time for corruption. Another former governer, Dan Walker, served federal time until his release years ago.

Corruption is just a way of life in the government of the state of Illinois. Here is the way in which activists view the history of corruption in Illinois.

Voters are increasingly convinced that public corruption is deeply embedded in Illinois' history and political culture. It doesn't have to be that way(Cynthia Canary, Director of the Illinois Campaign for Political Reform)


Illinois' citizens are getting tired of the paradeof scandals, indictments and investigations that plague our state government (Jay Stewart, Executive Director, Better Government Association. )


I would like for my children and all of the children growing up with them and after them to know that we did everything we could to help ensure that justice is blind, that you get a fair shake in the courts regardless of who you are or where you come from (said William Delgado, D-Chicago,)

Barack Obama was State Senator for eight years and what did he do to combat the systemic corruption in state government. His biggest contribution to the corruption in Illinois is his cozy relationship with Illinois' version of Jack Abramoff, Tony Rezko.

While Obama was in state government, he was anything but the outsider reformer that he claims to be now. In fact, he did everything he could to be as much of an insider as he could. That's why he attended this fundraiser hosted by the former domestic terrorist, Bill Ayers. That's why he began a decade plus friendship with Tony Rezko.

The Cook County government is no better. A couple years back I heard Tony Peraica speak. Peraica is a member of the Cook County Board and currently running for Cook County State's Attorney (on a platform of rooting out the very corruption I am talking about). He described one Cook County Board meeting in which the then President, John Stroger, was trying to muscle through a no bid contract that Peraica and his allies had traced back to a buddy of Stroger. According to Peraica, Stroger was trying to muscle it through in less than the four business days that was called for. The action was voted against 15-2 according to Peraica. With news cameras rolling, Stroger brazenly said that the motion passed despite being overwhelmingly voted against.

Stroger lay in a coma for several months before his last election in 2006. His son, Todd Stroger, eventually won the position in a rather dubious manner.

On March 14, 2006, John Stroger, Cook County Board of Commissioners president since 1994 and Todd Stroger's father, suffered a serious stroke one week before the eventually won the Democratic nomination, winning about 53 percent of the votes cast, defeating Forrest Claypool. For months after the elder Stroger's stroke he did not appear in public, and his family provided little information about his condition.

Shortly after the stroke, Todd Stroger gave noncommittal responses about the likelihood that his father would remain on the ballot. But in May, he reversed his previous stance, saying his father would return to office.[2] Ultimately, John Stroger would submit his resignation. At the same time that John Stroger submitted his resignation, it was announced that alderman William Beavers would assume the County Commissioner seat while Todd Stroger, if elected, would take over the County Board presidency.

This announcement came four days after the deadline for third-party candidates to file for the Board presidency race.[3]In the aftermath of his father's resignation, Todd Stroger emerged as the front-runner for his father's presidential seat. His main opponent was U.S. Representative Danny K. Davis. Another opponent, County Commissioner Bobbie Steele, dropped out of the race shortly before party leaders chose a new candidate.[3]

Eventually, Todd Stroger was chosen to represent the Democrats for Cook County Board President. He took on Tony Peraica in the general election. This election was hard fought, close, and with many rumors of malfeasance. According to Peraica, there was even legitimate instances of voter fraud though he said that he simply couldn't find enough to overturn the election.

Since taking office Stroger has recently passed one of the biggest sales tax increases in the country and there are allegations of cronyism, waste and of course other corruption. Meanwhile, Cook County Hospital's budget has been cut. More recently, CBS affiliate has reported of several instances of Stroger friends having cushy six figure jobs in his office.

Stroger's campaign was invigorated by the endorsement and late campaign push of none other than Barack Obama in 2006. Stroger and Obama remain political allies, and Stroger has returned the favor by endorsing Obama for President.

Obama is also endorsed by the mayor of Chicago, Richard M. Daley. Daley's history of corruption is too long to list in one post but let's just he is giving his dad a run for his money on this issue. Daley is also rumored to be the subject of investigations of corruption.

So, while Obama's relationship with Bill Ayers remains tenuous, what isn't tenuous is Obama's relationship with the corrupt city, county, and state governments he calls home. What is clear is that in eight years as a state senator the only thing he did was get himself very cozy with all of the power players that make up the fiber of the corruption. While Obama claims to be an outsider ready to fix Washington, it is clear that in his eight years as a State Senator he was the exact opposite. His rhetoric of reform may sound nice and promising however it comes with a history of action that is the exact opposite. Whatever anyone thinks of the Washington government, it is down right peachy compared to the governments at Chicago City Hall, Cook County, and Springfield. For all of those three levels, Obama is the ultimate insider, and rather than battling the corrupting forces, he has gotten into political bed with most of them.

Saturday, April 26, 2008

Al Sadr's Nuance

Moqtada Al Sadr showed he knows a thing about nuance with his latest declaration.

Under pressure from Iraqi government troops and the American military, Moktada
called on his followers to stop the bloodshed, unite with all Iraqis and focus their firepower on driving out the “occupation forces,” meaning the United States military and its foreign allies.

The statement, read at Friday prayers, appeared to be part of a carefully calibrated political strategy of reaching out to his “Iraqi brothers” while threatening any Iraqis who work with the occupying forces.

Now, given that it is Iraqi troops that are doing most of the fighting against his troops, this declaration is a clear strategic retreat by Sadr.

While the fighting between his troops and the coalition have caused much bloodshed both in Basra and in Sadr City, it appears more and more as though it will wind up a strategic victory for the good guys.

McCain "Clarifies" Sensibly Borrowed

Recently, I criticized John McCain's mortgage proposal because I felt his term "borrowed sensibly" was nebulous. I recently had an opportunity to participate on a blogger's conference call. I wanted to ask him this question however the call ran out of time before I got my opportunity. I was able to submit my question and here is the response from the campaign...

Eligibility: Holders of a sub-prime mortgage taken after 2005 who live in their home (primary residence only); can prove creditworthiness at the time of the original loan; are either delinquent, in arrears on payments, facing a reset or otherwise demonstrate that they will be unable to continue to meet their mortgage obligations; and can meet the terms of a new 30 year fixed-rate mortgage on the existing home.

Now, while this specifies which borrowers will get help, this certainly doesn't conform to my definition of borrowing sensibly. In other words, this is any subprime borrower (2005 and later) that could make their mortgage payment once but can't anymore. No reason needs to be given besides personal current financial hardship. I believe that this phrase

can prove creditworthiness at the time of the original loan;

means only borrowers with full doc loans, however this is a bailout in wool's clothing. I suppose it makes some sense to exclude borrowers that made up their income (so called stated loans), however that will also limit who will be helped to a tiny minority of those that need help. Furthermore, just because you could prove your income initially, that doesn't mean you borrowed sensibly. Most of the folks now in trouble that could prove their income likely qualified at the edges of any loan program. Many banks extended debt to income levels to 55% and even 60% and many of these borrowers likely only qualified using those loans. Now, that overextension is coming back at them, and McCain wants to reward this lack of financial restraint with a bailout.

McCain has gone from recognizing that the mortgage crisis was created by a speculative market and thus saying that only the market can fix it to a bailout. McCain can spruce up the language all he wants, however he is willing to give people loans they could never get on their own as long as they fit a time frame and can't make their current payment or won't once their payment resets.

Unfortunately, McCain's plan is the definition of a moral hazard. Borrowers don't just somehow wind up not being able to afford their mortgage. This happens as a result of poor financial management. Yet, McCain will reward these borrowers with new loans, and he will make them fixed rates no less. Most of these folks took on the risk of an ADJUSTABLE rate mortgage, and now that is biting them. Rather than paying the added price of taking on more financial risk, these same borrowers will be bailed out.

Unfortunately, in my opinion, McCain has gone from looking at the crisis sensibly and with courage to having a plan no less disastrous than any other politician. It is now clear between Congress, the Democratic Presidential candidates, and McCain that the only thing more scary than the crisis itself is what the government will do in response to it.

Friday, April 25, 2008

Yougstown, Free Trade, and Moral Hazards

Youngstown, Ohio is ground zero in the debate over free trade. It is among the hardest hit by the obliteration of manufacturing jobs and the folks in Youngstown are hurting. When people hurt, they always look for someone or something to blame. Their pain, and the pain of folks like them all over Ohio and Pennsylvania, were exploited by both Sherrod Brown as well Bob Casey Jr. in 2006. Their suffering was laid at the feet nearly entirely of free trade and by extension those that supported it. (in this case both their opponents who were painted as villain for supporting acts that cost these folks their jobs)

In my opinion, the real reason these jobs have moved away has much more to do with a complicated set of economic conditions. It was a combination of forces including an evolving economy that evolved away from manufacturing, to better productivity which meant less labor was necessary, to state and national tax structures that made these areas less competitive. The two Democrats didn't see reality as easy to exploit as such things as NAFTA, CAFTA, and all the free trade agreements that were upcoming. Youngstown's income levels is among the nation's poorest at 24k yearly according to the last census, and it relies heavily on the exact jobs that Brown claimed were lost due mostly to free trade. The folks in Youngstown bought it and Brown was elected, and the same could be said for many similar towns in Pennsylvania which elected Casey.

They used terms like "job outsourcing" and implied that foreigners were taking jobs that were rightly theirs. While this rhetoric was a political goldmine, it also ignored some substantive truths. Economically, what job outsourcing means is that companies found a way to do things better somewhere else. If Casey and Brown were to succeed in their quest they would artificially hold onto jobs that should rightfully, through market forces, go somewhere else.

Furthermore, they ignored the most important reality. Youngstown, and other places like it, relied far too much on manufacturing for their income. Just like an investment portfolio needs to be diversified, a city must diversify its employment opportunities or it will be destroyed everytime economies evolve. In fact, that is exactly what happened to Youngstown previously,

Between the 1920s and 1960s, the city was known as an important industrial hub that featured the massive furnaces and foundries of such companies as Republic Steel and U.S. Steel. At the same time, Youngstown never became economically diversified, as did larger industrial cities such as Chicago, Pittsburgh, Akron, or Cleveland.[42] Hence, when economic changes forced the closure of plants throughout the 1970s, the city was left with few substantial economic alternatives. The 1969 corporate merger between the Youngstown Sheet and Tube Company and the New Orleans-based Lykes Corporation proved to be a turning point in the demise of the local steel industry.[49] The merger and subsequent takeover of Youngstown Sheet and Tube burdened the community's primary steel producer with hundreds of thousands of dollars in debt.[49] Further, the deal placed control of the company outside of the Mahoning Valley.[49] The September 19, 1977, announcement of the closure of a large portion of Youngstown Sheet and Tube, an event still remembered by many Youngstowners as "Black Monday", is widely regarded as the death knell of
the old area steel industry. This was followed by the withdrawal of U.S. Steel in 1979 and 1980, and the bankruptcy of Republic Steel in the mid-1980s.[50] Attempts to revive the local steel industry proved unsuccessful. Shortly after the closure of most of Youngstown Sheet and Tube's area operations, local religious leaders, steelworkers, and activists such as Staughton Lynd participated in a grassroots effort to purchase and refurbish one of the company's abandoned plants in neighboring Campbell, Ohio.[51] This project met with failure in April 1979.[51] In the wake of the steel plant shutdowns, the community lost an estimated 40,000 manufacturing jobs, 400 satellite businesses, $414 million in personal income, and from 33 to 75 percent of the school tax revenues.[52] The Youngstown area has yet to fully recover from the loss of jobs in the steel sector.[53]

By having an economy nearly totally dependent on steel, the economy was depressed when our economy evolved away from steel. It is likely that Silicon Valley and Youngstown won't be mentioned in the same breath often but on one point they have similarities. For nearly a decade in the 1990's Silicon Valley was the place to be in the entire United States. That's because Silicon Valley was ground zero for all things internet. It was the twentieth century equivalent of the gold rush. Every entrepeneur was rushing to Silicon Valley to add a .com to their company, go IPO, and then call themselves a multi millionaire. Once the internet busted so did the entire economy of Silicon Valley. Yet, politicians didn't rush to Silicon Valley to propose ways to artificially keep jobs there. Everyone understood that these entrepeneurs took risks and this was the result of those risks. The same can be said of a city that relies to heavily on any one industry. Detroit is facing a similar problem because its economy is so dependent on automotives. You aren't likely to hear New Yorkers complain about "job outsourcing" though because its economic job market is plenty diversified. In fact, Youngstown showed that it learned from its previous mistakes. It is taking steps, however tiny, to diversify its own job market...

Youngstown's downtown, which once underscored the community's economic difficulties, is a site of new business growth. The Youngstown Business Incubator, located in the heart of the downtown, houses several start-up technology companies, which have received office space, furnishings, and access to utilities.[58] Some companies supported by the incubator have earned recognition, and a few are starting to outgrow their current space. In an effort to keep such companies downtown, the incubator secured approval to demolish a row of vacant buildings
nearby to clear space for expansion. The project will be funded by a $2 million federal grant awarded in 2006.[58] Meanwhile, the downtown has retained its traditional role as the community's financial center. Several banks, including JP Morgan Chase, National City, Huntington, and First National Bank have offices in the city; and the Youngstown-based Home Savings & Loan is headquartered there.

Youngstown has taken the lesson of the steel bust to heart and now its making headway into diversifying the economy. That won't happen if our government artificially forces manufacturing jobs to stay domestic even though there are better outlets elsewhere. That is known as a moral hazard. The sort of town that Yougstown is was first introduced to me by the movie All the Right Moves. While there is no doubt that towns where everyone works at the steel mill are in many ways part of Americana, they are also an example of exactly what not to do in localized economies. Basic investment ideals say you don't put your entire investment portfolio into one stock. Yet, localized economies that put their entire employment portfolio into one industry or one plant are not only celebrated, but politicians line up to protect their flawed structure.

They are rewarding the exact behavior that should be punished. In order for local economies to survive long term they most evolve, adapt, and diversify. If your entire economy is dependent on steel, it will be destroyed sooner or later. As soon as steel stops being vital. That is exactly the sort of economic behavior that free trade punishes. Yet, protectionists want limit free trade and reward economies that don't diversify. Politicians bemoan the loss of manufacturing and promise to bring it back. They should be bemoaning the local officials that sat by while their economies became entirely too dependent on manufacturing and did nothing. It is not courageous or wise to proclaim that you will force jobs to stay local even though free trade could give companies better opportunities elsewhere. What is courageous is exactly what John McCain said in Youngstown recently

The biggest problem is not free trade, but our inability to adjust to a new world economy. I can't look you in the eye and tell you that I believe those jobs are coming back... [but] protectionism and isolationism have never worked in American history."

John McCain is absolutely right. Free trade is not the villain. Free trade exposed the weaknesses and deficiencies that caused these problems. Unfortunately, there are opportunistic politicians everywhere that will tell people what they want to hear not what they need to hear. On the issue of free trade, the rhetoric is downright dangerous, as is any rhetoric that leads to a moral hazard.

Mughabe Turns Up the Heat

Robert Mughabe continued his campaign of intimidation.

Armed riot police raided the headquarters of Zimbabwe's main opposition
party on Friday and detained scores of people in the biggest crackdown on the
MDC since disputed elections last month, officials said.

The Movement for Democratic Change says its leader Morgan Tsvangirai beat President Robert Mugabe in the March 29 vote, and initial results showed it had also ended the ruling party's 28-year hold on parliament.

A delay to the presidential result and a recount of some parliamentary votes has brought growing international pressure on Mugabe, 84, and stoked fears of bloodshed in a country already suffering an economic collapse.

Dozens of riot police detained around 100 MDC supporters who were taken away in a crowded police bus, a Reuters witness said. The MDC said 200 to 250 police took part in the raid and they also took away computers used by the election command centre.

Meanwhile, the election results have still not been announced. Keep in mind there will likely be a run off because of convoluted Zimbabwean election laws that no one really understands. Also, keep in mind that there is three weeks between the time that results are announced and the new election. Mughabe continues to withhold the election results while he continues his brazen campaign of intimidating and arresting the opposition. The world has stood largely silent while Mughabe has brazenly run a campaign of terror and intimidation while also brazenly refusing to announce the election results. The UN, the AU, and most world leaders have been silent despite the systematic violation of human rights by a vicious dictator desperate to hold onto power.

You can help the opposition by visiting here and lending your support.

Memo to Obama: Don't Listen to Out of Touch Elitist Inside the Beltway Journalists

Howard Fineman, purported I assume to be an objective journalist, wrote a revealing article meant to help Obama with his image problem. First he said something that will be important later.

Senator Obama, you stand accused of being an out-of-touch, arugula-eating Ivy League elitist who couldn't convert a one-pin spare if the presidency depended on it. I

Now, keep in mind the problem as Fineman sees it as he moves along with the solution. First, let's take a view of something else Fineman says...

I don't have a dog in this fight (despite what Hillary Clinton supporters sometimes think of me)

Clearly, by this statement, he does. That pony appears to be either of the Democratic candidates. An objective journalist wouldn't have a pony in either party. Instead, Fineman doesn't care who wins as long as it is a Democrat.

Fineman then proceeds to list seven things that Obama should do. Here is the first.

You are from where you chose to be from, which is the South Side of Chicago.

Now, Fineman clearly doesn't know where Obama is really from. He isn't merely from the "South Side of Chicago". Obama is from Hyde Park in Chicago. Hyde Park is home to the University of Chicago. The University of Chicago is the Ivy League of the Midwest. Now, there is nothing wrong with that. In fact, I have spent many a night at the U of C going to many of the movies they screen, for free usually. They are usually a good time. I personally enjoy checking out an old Cassavetes flick among academics and students. It's a good night when you tap the person in front of you and proceed to have coffee and discuss the film, philosophy, and life at the local coffee shop. Let's just not pretend that Hyde Park is something it isn't. This is home to yuppies, students and academics. There is nothing wrong with this but Hyde Park doesn't sell your image as an every man.

Yes, the South Side of Chicago is home mostly to neighborhoods full of abject poverty: Englewood, Woodlawn, Austin. There are two that stand out: Bridgeport and Hyde Park. Bridgeport is where the mayor, Richard Daley, makes his home, and Hyde Park is where the top University in the Midwest makes its home. The mayor knows perfectly well that he needs to protect his own home turf and the turf of the Ivy League of the Midwest.

Hyde Park is a gorgeous neighborhood and frankly most Americans would be overjoyed to make their home there, however Hyde Park is not going to help Obama get over his elitist image. Hyde Park defines elitist.

Based on this faulty assumption Fineman proceeds to make several other recommendations related to this. For instance, he says this...

It's not the Ivy League


Then, he says a few more things...


Obama can welcome everyone to Hyde Park. I just don't see how the folks in rural Pennsylvania will be impressed by seeing a neighborhood full of Brownstones and upscale condos.

He then starts speaking in gibberish...

DEFEND THE CITIES. You cannot accept the premise—successfully pushed by Republicans since the days of Ronald Reagan—that our big metropolitan areas somehow aren't in the "mainstream.


But the whole point of America is that there are many mainstreams

If Republicans pushed such an ideology I missed it. Fineman is right that there is no mainstream, but frankly there is not even a mainstream within a city. I live in a neighborhood called LakeView. It may be more elitist and upscale than Hyde Park. Yet, I am only eight miles away from Englewood which is one of the poorest areas in the country. Be that as it may, I don't see what point he is trying to make. Chicago is no less monolithic than the small towns that Obama painted with one brush. Is Fineman really suggesting that he try to explain one unfortunate incident of stereotyping by stereotyping an urban area?


This is all perfectly good and well, however also so nebulous and vague that while it sounds good on paper it will mean nothing in a campaign. If Fineman really understand symbolism himself, he would know what sort of symbolism the home of the Ivy League of the Midwest is.

All of this is the sort of nonsense that only an out of touch inside the beltway partisan that pretends to be objective could heep on a candidate. If I were Barack Obama, I would take Fineman's suggesting and put them all where they the circular filing cabinet.

Thursday, April 24, 2008

Not Justice Here

Let's welcome Ron Marshall, of the Grady Coalition, for another cross post.

A small town in Georgia named Lithonia just like thousands across this planet, next to a railroad track with the reminder of the world passing through daily but the town never changes. Lithonia has a secret that has kept this town in the jaws of corruption for years. The scary thing is that the police department has taken control of the day to day operation from the Mayor for the last three months. I’m sure longer!

I had the experience of being in this town at city hall during its revolution. There was a cue in front of my eyes. It was the Mayor against her own police force and council. The city council most of which have been there for more than four years refused to abide by the rules of governmental order. I have never seen anything like what I saw during this experience, well the city of Mountain Park, Georgia looked familiar. Hint hint! This was a mess but was this just the tip of the iceberg. I would have to wonder why would there be so much resistance when new e yes start looking at a system that has been operating for years in corruption and secrecy.

Look at this:

Lithonia has some serious concerns, one of which involves the chief of police. This guy has his own cash machine working for him. Think about this. After reading through documents in the Mayor’s infested office we found the police chief has been issuing citations, collecting the fines (cash only) and depositing the money in an account only he signs on. Second thing is the police chief hires his own solicitor and judge to place heavy fines on unfortunate commuters who happen into the clutches of this department of misfits, police officers who have been fired or forced to leave other departments and get jobs in these small towns. Ask somebody!

Uncovering more I found the secret land deals that are being conducted in and around the city. You have to look at who’s pushing and attached to these deals? The names involved, even more interesting.

The city has been signing certificates of occupancy (CO) for a subdivision that the city has no development or planning capabilities to perform. This is a DeKalb county responsibility as it is written in the County-Town of Lithonia agreement that for some reason has been ignored for this project. Then you have leasing of city property of which the occupancies have not paid anything, for more than four years. The citizens are also footing the bill for the power being used by these same occupancies.

After taking a step back and looking at the big picture I had to wonder, why are they building six hotels in Stonecrest mall? This is in Lithonia, so is the Lithonia amphitheater. All roads go through Lithonia! Entertainment seems to be the driven force for this area. I suggest you look further into this and stop believing the sensationalism of the media, they only use sound bites to make a story. No real reporting going on here. What deals are being made or have already been made for Lithonia? Now we have the wrong candidate elected and does not fit the scrip. Look back at the other Mayor’s and their families in Lithonia.

This whole mess needs outside intervention and believe me when I say we’ve already asked the, county, state and federal officials to step in, as usual nothing. Somebody not connected to the past or present planned activities must step up but also, not be afraid to make a just decision. People we must stop forgetting so fast the events that have transpired over the years. The dates change but not the intent. Money and administrative power!

Nothing has changed. We have Grady, PDK, Clayton County School District, The City of Lithonia, etc. all fighting for a seat at the table of the business lords while maintaining their secrets.

We have lost control of our federal, state, county and city governments, as for the media, it’s all about the numbers. Lithonia is not alone. We are so conditioned to believe what is presented to us via the media, it’s the gospel truth! We know about the gospel. The new found administrative power grab has paralyzed the citizen’s ability to think on their own. I heard so and so say. Get the facts for yourself. We the people must remember who is in charge!

Re Examining the Role of the Fed

Steve Forbes recently wrote a fascinating piece about the role of the Fed in the recent housing crisis and what lessons we should take from it. Many of the things that Forbes said I have been echoing prior to the article. He agrees with me that the Fed lowered rates far too low at the beginning of the decade and this was a precursor to problems ahead. Forbes sees the action differently than I do though...

Since World War II most countries have regarded monetary policy as a critical instrument (the other biggies being government spending and taxation) in regulating the economy. If economic activity is slowing, so the thinking has gone, the central bank should rev up the printing presses: The extra money will stimulate growth. Conversely, if the economy is growing too quickly, the central bank should tighten up on money creation, slowing things down to avoid the economy's careening off the road in the equivalent of a car wreck. The longest-serving Federal Reserve Chairman, William McChesney Martin Jr., liked to say that it was the Fed's job to take away the punch bowl just when the party really gets going.

This is a misbegotten view of what central banking's main mission should be. The Federal Reserve should have two key tasks--and only two: preserving the integrity of the dollar and dealing vigorously with financial panics to limit unnecessary damage.

While I saw Greenspan's action as an overreaction to a problem he should have been trying to solve, Forbes saw Greenspan as trying to solve something even the Fed has no control over. In Forbes' estimation trying to manage the direction of the economy is something even the "all powerful" Fed cannot do. Instead, Forbes sees the role of the Fed as much more narrow...

Greenspan's woes came about precisely because he lost sight of the Fed's prime job: ensuring a stable dollar. In the late 1990s Greenspan inadvertently tightened up. The most sensitive barometer of market mistakes is gold. During that time the yellow metal plunged to a low of $250 an ounce. Other commodities crashed, with oil dropping to nearly $10 a barrel. For a time the dollar became too dear, which contributed to the 2000--01 recession. When it became clear--just before George W. Bush was sworn in as President on Jan. 20, 2001--that the economy was skidding, Greenspan realized his mistake and started to reverse gears. But he stayed too easy, even when the economy was back on track. In 2004 gold began to surge well above its 12-year average, and oil began its long, rapid ascent, as did all other commodities. The dollar weakened not only against gold but also against other currencies, such as the yen, the Swiss franc and the pound. With money easy, the already buoyant U.S. housing market began to go berserk as lending standards started to decline precipitously.

Now, here is an idea that I must admit had never crossed my mind. In my estensive study of the Fed, I was always under the impression that monetary policy should be used to smooth out the natural movements of the economy. Forbes sees the role of the Fed as stabiliizing our currency. (clearly he sees the current chair as failing in this endeavor)

This is a concept that has some validity in my mind however I have a very grave concern. In managing the economy, the Fed's action is fairly simple. If you want to slow the economy down raise rates and vice versa. The relation between monetary policy and the currency, on the other hand, appears, to me at least, to be a lot more nebulous. Most people agree that the aggressive rate decreases have lead to contributing to a weak dollar, however I am not so sure that the relationship is quite that simple.

Still, one thing I know is that the Fed's power is understood by far too few people considering the enormous power it has. Forbes is on the right track if not exactly there is specificying a myopic view of the role of the Fed. One of the biggest fears of everyone should be the enormous new power that everyone wants to grant to an organization with far too much power already.

The Many Problems of the NC Ad (Updated)

By now, everyone has probably heard about this particular controversial advertisement. There is a growing bru ha ha over its use. Most of the conservative media is un in arms over John McCain's demand that it be taken down. First, let's take a look at some of the commentary from the right. Here is one view from Michelle Malkin.

What is the big freaking’ deal? The RNC and John McCain are spanking the North Carolina GOP for running an ad against the state’s Democrat gubernatorial candidates titled “Extreme.” It points out Barack Obama’s longtime association with America-basher Jeremiah Wright, notes that both Dem candidates have endorsed Obama, and deems them too radical for voters.

Here is how LGF sees it.

Republicans in North Carolina are not happy with John McCain’s politically correct decision not to mention Rev. Jeremiah Wright, and they’re rejecting his call to cancel their advertisement: NOTE TO RNC - Stay Out of Our Business!

Here’s the ad, and I have to agree with the NC people. I have no idea what John McCain thinks he’s going to achieve by refusing to use Rev. Wright in GOP ads; it’s perfectly legitimate to criticize Obama for his connections to this racist lunatic. Does McCain actually want to win the election?

That is essentially the view from most of the conservative media. The ad is legitimate and McCain should keep his nose where it doesn't belong.

I see several huge problems with this ad and unfortunately they taint McCain and thus it is his business. First, if we are to treat this ad straight, we would believe the two gubernatorial candidates, Bev Perdue and Richard Moore, are themselves extremists because they support Barack Obama. One would come to this conclusion because Barack Obama is himself an extremist because of his long term relationship with his extremist pastor. Of course, this is plain nonsense. This would take reaching and guilt by association way too far. If the only evidence you have of an individual's extremism is who they endorse for President, that isn't much evidence at all. Of course, this ad shouldn't be taken straight. The only reason this ad is up is an excuse to run more of Wright's most incendiary comments in a loop. The placement of the two gubernatorial candidates, each mentioned once and forgotten, is nothing more than a red herring. This is all an excuse to pound Obama with Wright again. The voters are not stupid and this opportunism will be sniffed out.

The second problem has to do with this simple bit of political wisdom

don't try and kill your opponent when they are committing suicide

Wright is doing plenty of damage on his own to Barack Obama. McCain and the Republicans need to stay away from him as far as possible. Instead, the NC GOP inserted themselves in the middle of him. Wright will have a significant interview aired tonight and has several upcoming appearances. In order for Obama to be most damaged, the media must focus maximum attention on him. Instead, some of the media oxygen has been diverted to this ad. All this really does is blunt some of the natural negativity of Wright onto Obama, and turn it into politicking.

Finally, this ad spells of the problems of partisanship. I was on a blogger conference call with McCain today and most of the questions were politely asking

Why the he&& can't we have this ad

Most of the partisan conservatives just don't see that the rest of the country doesn't have their venom toward Obama. While this all seems like perfectly appropriate to bitter opponents, the independents will squirm watching this ad and naturally draw sympathy toward Obama. Again, just like the other two problems, this ad becomes counter productive on this level.

Wright is causing more than enough damage to Obama without the Reps forcing it on people and saturating the issue. Instead of letting the story run its course naturally they are force feeding it to the public when it gets more than enough couverage on its own. This is again, not only not necessary, but ultimately counter productive. This ad is not only in terrible taste but done with a total political tone deafness.

Zimbabwe and Fan Umpires

Have you ever watched a baseball game when an umpire totally blew the call? You have thousands of screaming fans acting as umpires. Invariably, you will have an announcer proclaim that there is only one opinion that counts, the real umpire. That's what I thought of when I read this piece.

South Africa — The Zimbabwean opposition leader won his nation's disputed presidential election, the top U.S. envoy to Africa told reporters Thursday.

The opposition has claimed its leader Morgan Tsvangirai beat Zimbabwean President Robert Mugabe outright March 29. Independent Zimbabwean observers also say Tsvangirai won, though not by enough to avoid a runoff. Meanwhile, Zimbabweans still await the results, with the opposition accusing Mugabe of withholding them while he plots how to keep power. The octogenarian Mugabe has led Zimbabwe since independence in 1980.

If you have been following the aftermath of the Zimbabwean elections, it should come as no surprise that the opposition leader did in fact get more votes, if votes were counted fairly. Of course, he did. If Mughabe had won, the results would have been announced immediately. On the other hand, he didn't win and thus more than three weeks later results are still not in. Thus, we have the top U.S. envoy saying something close followers already know. Yet, just like with the bad call in baseball, there is only one opinion that counts and that opinion hasn't been rendered.

The U.S. envoy can state the obvious but in the meantime Mughabe refuses to release the official results. He is doing this likely because there will be a runoff and there are three weeks between the official results being released and the runoff. In the meantime, he is intimidating and killing so that the run off elections have a different result than what the U.S. envoy sees from the initial elections.

Olmert to Cede the Golan Heights?

Recently, I hypothesized tha having the high ground of the Golan Heights is in and of itself a de facto peace accord with Syria. I proclaimed that under no circumstances should Israel ever give up the Heights because it gives Israel such a strategic military advantage that by extension it leads to peace.

On another note, Ehud Olmert is the first Israeli PM with little military background. That may explain why he is willing to trade the peace that comes from a natural military advantage for a worthless piece of paper.

ISRAELI Prime Minister Ehud Olmert has notified Damascus of his readiness to withdraw completely from the Golan Heights in return for peace, a Syrian cabinet minister declared yesterday.

Expatriates Minister Buthaina Shaaban said Mr Olmert had delivered his message to Damascus via Turkish intermediaries.

"Olmert is ready for peace with Syria on the grounds of the return of the Golan Heights in full to Syria," she declared. Israeli officials declined to confirm or deny the report.

The statement by Ms Shaaban, who frequently serves as spokeswoman for the regime of President Bashar al-Assad, was preceded earlier by two Syrian press
reports along the same line.

Obviously, reports like this have a built in dubiousness, however if this is true, this will eventually lead to nothing less than an unmitigated disaster for Israel. Just like Hamas which also asked for the high ground in exchange for peace, Syria can use the high ground in many different ways and many of them could be used and still maintain peace. There are plenty of Syrian surrogates, like Hezbollah, that could use this very high ground to attack Israel while Syria technically holds up their end.

If these reports are true, it will ironically be the biggest threat to peace in the Middle East in a long time.

Wednesday, April 23, 2008

Sherrod Brown's Trojan Horse On Free Trade

Sherrod Brown came out with a defense of he and his colleagues who have come out against several free trade agreements. He mentioned several issues...

The supporters of our trade policy rarely mention our exploding trade deficits. In just 15 years, our annual trade deficit has mushroomed to over $800 billion from $38 billion in 1993. With Mexico, our trade surplus evolved into a $90.7 billion trade deficit. With China, our trade deficit jumped to $250 billion today from about $22 billion. President George H.W. Bush once estimated that a $1 billion trade deficit represents 13,000 lost jobs. Do the math.


Advocates of free trade rarely want to debate the fact that unregulated trade with China has recently allowed toys with lead paint, contaminated toothpaste and poisonous pet food into this country. We take for granted our clean air, pure food and safe drinking water. But these blessings are not by chance: They result from laws and rules about wages, health and the environment. Trade agreements with no rules to protect our health, the environment and labor rights inevitably create a race to the bottom and weaken health and safety rules for our trading partners and for our own communities.


But cheerleaders for current U.S. trade policy, while mostly shrinking from a debate about the issues that matter to middle-class America, insist that those of us who want more trade – but trade under a very different set of rules – are protectionists.

Now, let's take these issues one at a time. First, in the time period Brown mentions, our economy also grew exponentially and the unemployment rate stayed below 5% more than it stayed above. His doom and gloom scenario simply doesn't mesh with the facts. If free trade with Mexico cost as many jobs as he suggests, then without it we would have had more than full employment. Since that is not actually possible, his doomy outlook is overstated.

That's because free trade is not a zero sum game as Brown suggests. A trade deficit also means that our consumers were given more choice since it indicates that Mexican goods enjoyed a healthy market in the United States. By offering more choice to U.S. consumers, U.S. consumers were by extension able to buy more stuff in general and thus boosting our economy. Furthermore, this $38 billion trade deficit was part of an economy that was north of 10 trillion. Thus, the entire allusion to the trade deficit is nothing more than a trojan horse. Our government spending alone is over one trillion yearly, and yet Brown proclaims that opposing free trade is perfectly reasonable because we added $38 billion to our trade deficit. While he makes that misleading arguement, he fails to mention all of the positives that negative trade deficit brought. (our consumers were given more choice, our companies were allowed to be more efficient, and of course our companies gained access to new markets)

Second, he extols the dangers of our trade arrangement with China which according to him has no rules. This is in and of itself nothing more than a trojan horse as well. That's because later on he says this...

Instead, we have a trade agreement that runs nearly 1,000 pages and is chock full of giveaways and protections for drug companies, oil companies, and financial services companies, and incentives to outsource jobs now held by Americans.

So, on the one hand our free trade agreements have no rules, and yet they run 1000 pages. I suppose in those 1000 pages there were absolutely no rules.

The last part of his piece is yet another trojan horse. That's because the Colombian free trade agreement languished in the legislature for more than two years. In fact, it was amended multiple times to acquiesce those that were concerned with civil rights and environmental issues. Still, the House simply refused to pass it. If this was merely about making the free trade agreement better, why didn't proponents spend the last two years plus doing that. Instead, Pelosi et al have simply killed it. He can't at one end claim that he only wants improve our agreements, and yet disregard that his colleagues killed the agreement outright. If the trade agreement needs to be improved, then improve it. That isn't what happened. They killed the agreement. They didn't improve it.

Furthermore, Brown not only impugns a great ally but frankly misleads if not outright lies about it.

The Colombia Free Trade Agreement is being shopped around Congress by an overzealous White House. Let's put aside, for now, the debate about rewarding a country that has done little to stem the tide of rampant labor abuses and human rights violations – including dozens of murders.

I guess by overzealous he means a White House that proposed this agreement in 2006 and waited to 2008 to demand it get signed. Furthermore, I guess reducing kidnapping and murder by nearly 80% is not stemming the tide of rampant civil rights abuses. Brown refuses to acknowledge that the Uribe government has nearly transformed a country once at the mercy of tyrants and drug dealers, and put it on the path toward peace. He does this for nothing more than naked partisanship.

Obama on the 2nd Amendment and Abortion

Among many of Obama's positions, two that haven't been explored nearly enough are his duel positions on abortion and the 2nd amendment. I have explored each in several different pieces, however there is an interesting, and in my opinion, disturbing dichotomy that no one has really explored. (let alone challenged Obama on)

On abortion, Obama's views are rather cut and dry. He believes that abortion is a women's right anytime during her pregnancy, and any ruling curbing it is a "slippery slope". Here is how he remarked about it. (this is in response to last year's ruling outlawing partial birth abortions)

I strongly disagree with today’s Supreme Court ruling, which dramatically departs from previous precedents safeguarding the health of pregnant women. As Justice Ginsburg emphasized in her dissenting opinion, this ruling signals an alarming willingness on the part of the conservative majority to disregard its prior rulings respecting a woman’s medical concerns and the very personal decisions between a doctor and patient. I am extremely concerned that this ruling will embolden state legislatures to enact further measures to restrict a woman's right to choose, and that the conservative Supreme Court justices will look for other opportunities to erode Roe v. Wade, which is established federal law and a matter of equal rights for women.

So, clearly, even the third trimester practice of partially removing the baby and sucking out its brain should be legal, in the view of Obama, because curbing it would lead to the proverbial "slippery slope".

the conservative Supreme Court justices will look for other opportunities to erode Roe v. Wade

In fact, as Amanda Carpenter points out, Obama even voted in favor of a bill to kill the baby after failed abortions. (long time readers are likely sick of my broken record reference to this piece) Thus, in Obama's view a woman has a right to choose even beyond the pregnancy. The crux of his position seems to be again the proverbial "slippery slope."

Now, contrast that to his view of the second amendment. Obama has said that he believes the second amendment protects an individual's right to own a firearm, however he also believes in "common sense" curbs to the second amendment. He has even pointed to the D.C. gun ban as one he supports.

Now, on any reasonable or logical level, no politician could hold these divergent views. As Obama pointed out, abortion is only legal because of a Supreme Court ruling, Roe V. Wade. The 2nd amendment is found in the constitution. He has absolutely no problem traveling down the perverbial "slippery slope" when it applies to the 2nd amendment of the CONSTUTION. On the other hand, any curb to a right created by the Supreme Court would walk us down the perverbial "slippery slope". To me, this is totally hypocritical and nonsensical. If any right deserves protection from the perverbial "slippery slope", it would first be the one in the constitution, not one created by the Supreme Court.

It is rather interesting then that Obama fancies himself a Constitutional scholar, because one would think that such a scholar would try and protect rights spelled out in the Constitution much more furiously than he would rights granted to us by a Supreme Court ruling. Obama sees the ones granted by a Supreme Court ruling as more sacrosanct the ones the Constitution granted us. In Obama's view there are no "common sense" curbs on abortion. Any restriction is in his view a "slippery slope". The only reasonable restrictions he sees are to the second amendment. Somehow he sees a right granted by the Constitution as one open to "common sense" curbs, but one created by the Supreme Court can't be curbed at all or it is a "slippery slope".

Of course, since no one has ever challenged Obama on these two matters, we don't know why he thinks as such. If I had to guess, he arrives at these duel positions not based on any Constitutional arguement, but rather on a purely partisan and ideological one. Abortion is a liberal issue. The 2nd amendment is a conservative one. If that is his belief, that is fine, however it is then totally disingenuous to proclaim himself post partisan.

Fun With Numbers: The Pennsylvania Primary

I am a numbers person because as they say "numbers don't lie". Usually, this is entirely true, however from time to time, numbers tell everyone exactly what they want to hear. Let's take a look at how political rivals swallowed the numbers from the primary yesterday. Here is a piece from Redstate entitled "Negative Momentum"

State Date Obama Clinton Margin
Pennsylvania 4/22 1,042,297 1,258,245 -215,948
Mississippi 3/11 265,502 159,221 +106,281
Wyoming 3/8 5,378 3,311 +2,067
Texas 3/4 1,358,785 1,459,814 -101,029
Ohio 3/4 982,489 1,212,362 -229,873
Rhode Island 3/4 75,316 108,949 -33,633
Vermont 3/4 91,901 59,806 +32,095
Total 3,821,668 4,261,708 -440,040
Overall% 47.3% 52.7%

Clearly, the implication here is that Obama is losing momentum. Now, let's look at what they say about things on the Kos.

60 and older 28 38
White 34 38
White men 39 44
White women 31 34
Less than $50K 42 46
No college 40 38
College 51 49
Catholic 36 31
Protestant 36 53

The Kos sees building momentum for Obama in every category that the press proclaims that he is struggling in.

In each case, the two sides picked apart the numbers to find what they were looking for. That is one of the problems with the obscene amount of statistics that we all have. There is just enough for everyone to find what they are looking for. Momentum, like everything else, is in the eye of the beholder. If you are a Barack opponent, you see that he has lost most of the recent states. If you are a Barack supporter you see that he has gained in many important classes between Ohio and Pennsylvania.

Just to add my two cents...the Kos analysis is utter nonsense. That's because you have to try really hard to put any good spin on last night if you support Obama. The only spin you really need is that your guy will still win. That said, there will be other times when it is the Republican that will be the clear loser and I will bet his supporters will muddle through the numbers to find a way to spin it positively.

Tuesday, April 22, 2008

Miami: The Microcosm of Housing Lunacy

Of all the areas hit hard by the housing crisis, few are worse than Miami. In Miami, the roots of the crisis are a microcosm of the excesses that the speculative market caused. According to an emailed story from Moneynews, the area is sitting on 24,000 units of condos up for sale. The market only expects to eat up one to two thousand per year. That is a depressed market in the flesh.

What is both fascinating and frustrating is that thousands of these units are priced at one million and above. This is peculiar because Miami is home to the nation's poorest population by income level at just over 24k per year according to the last census.

Developers and realtors tried their own version of gentrification during the housing boom figuring that Miami's beautiful coastline would attract the rich and powerful. In fact, most of these units were advertised in high end magazines. The players figured they could import thousands of wealthy folks and put them into these high priced units using Miami's natural attraction as a selling point. Still, Miami's beauty was the same then as it was years ago. No one asked themselves why it hadn't attracted more rich and powerful before. All of this likely sounded like a good idea when the market is moving, but now it isn't.

Now that the market is not moving, the city is full of condos for the wealthy even though the city is full of poor folks. Trying to important thousands of wealthy people likely seemed like a good idea at the time, but in fact it was dangerous business. Miami is a microcosm of the roots of the speculative market we had in real estate in general. This sort of capitalistic gentrification was bound to blow up, and it was only done because we had a market that everyone thought would continue to rise forever.

No one bothered to ask how they were all going to pull off these million dollar units in an impoverished city because at the time in real estate there were no wrong answers. The kind of questions developers likely should have asked then are the kind of questions they are asking now. Only they are asking them sitting on thousands of million dollar properties in the middle of poverty.