The Bank Job

Why is that wrinkled old man frowning in the corner? Well...the long predicted housing bubble has burst. Wall Street is in utter disarray. Financial giants Lehman Brothers (bankrupt) and Merrill Lynch (sold on the brink of bankruptcy to BofA) are history. Washington Mutual (the nations largest savings and loan) is rumored to be in danger of collapsing as well. And who is considering a bid to acquire Washington Mutual? Citigroup -- who narrowly avoided their own collapse ten months ago resulting from the sink-hole in the sub-prime mortgage market through a $7.5 billion dollar bail out from the Abu Dhabi Investment Authority.

And to stem the riptide of financial calamity, the Bush Administration, which has already taken control over Bears Stearns ($30 billion dollar bailout of one of the world's largest investment banks, securities trading and brokerage firms), AIG ($85 billion dollar bailout of the world's largest Insurer), and Fannie Mae and Freddie Mac (the nation's largest mortgage lender), proposes a $700 billion dollar rescue package under the guidance of Secretary of Treasury, Henry Paulson. By buying up all of these bad loans and investments, the Secretary of the Treasury will directly manage these assets and hopefully resell then at some point for aprofit or reduced loss.

Where is the money to support this roughly trillion dollars in financial bailouts coming from? In large part from new debt we are taking on by borrowing money from foreign governments and non-U.S. financial institutions. We've borrowed an additional two trillion since 2007 alone and our total foreign debt stands at thirteen trillion dollars. Ultimately this is debt covered by U.S. taxpayers. The same U.S. taxpayers already on the hook for funding the two trillion dollar wars in Iraq and Afghanistan.

I recently said that perhaps the biggest thematic angle of the upcoming election was Energy Policy. And without hesitation events conspired to bat that supposition aside and tell me, "No, it's still the Economy, Stupid."

Economists and financial advisers constantly warn U.S. consumers that you have to start saving, you have to establish a budget you can stick to, you have to learn to live within your means and borrow responsibly. Yet our consumption society continues to plunge into deeper debt. And our government too ignores this advice and does the very same. Neither party has established a position of thought leadership on this issue, but it is somewhat ironic that the Republican party, whose mantra is less federal regulation, smaller government, and fiscal responsibility, is forced to a reckoning with their own reckless spending, deregulation of banking and financial markets, and now is creating massive new government institutions and agencies to attempt to recover from this mess.

How did we get here?

If people are looking for a scapegoat, more and more eyes are turning to Alan Greenspan. Yeah, Alan Greenspan. The guy we all felt had such a steady hand of the wheel of the economy. The Federal Reserve Chairman who served for eighteen years under both Republican (Reagan, G.H.W. Bush and G.W. Bush) and Democratic administrations (Clinton). Core to Greenspan's philosophy was deregulation. Deregulation spawns financial growth in the markets. But it also spawns higher financial risk. And leaves the institutions and markets more vulnerable to corruption, fraud, and malfeasance. How many folks remember that Alan Greenspan also pushed for and helped obtain banking deregulation on behalf of Lincoln Savings & Loan, which was at the center (perhaps the worst offender) of Savings and Loan crisis of the late 1980's and early 1990's during which more than 1600 savings and thrift institutions failed. The cost to U.S. taxpayers to bail out the insolvency of those institutions...$125 billion dollars. John McCain was implicated in that scandal and reprimanded by Congress.

But even if Greenspan played a significant role is creating the mess we're now in, it's not helpful to simply point blame. Perhaps we got what we asked for. In 2002, in a speech in London before being knighted by Queen Elizabeth II, Greenspan said, "The extent of government intervention in markets to control risk-taking, is a trade-off between economic growth and its associated potential instability, and a more civil but less stressful way of life with a lower standard of living." His point..."You want win big, you have to risk losing big and the stresses and instability that go with it. You want safe and steady, then you can have a civil life, low-stress life, but a lower economic standard of living that goes with that."

The thing is, if that "win big" policy never changes, you will eventually lose big. In 2006, Greenspan walked away from the table, but he also left the entire U.S. Economy there gambling on black. The roulette wheel just stopped on red. Greenspan bet that the nation's tolerance for risk was high. Is it? If you are a twenty-seven year old MBA grad, yeah, perhaps it is? If you are a retiree on a fixed income, I doubt that's true. And our boomer nation has skewed more heavily to the latter category for the past two decades. Hindsight is twenty-twenty. And plenty of Americans have benefited from the economic boom experienced during the 1990's under Greenspan's leadership of the Federal Reserve. But I'm not sure Greenspan ever stated his policy philosophy so clearly to the American people, as he did in that speech in London before the Queen.

So how do we get out of this mess?

Well, to start with our politicians have to stop talking in absolutes -- "Regulation bad"; "Taxes bad"; "More government bad". I'd like to think that the American people are smarter than that. And the current administration and a bipartisan Congress finally stopped bickering and now say, "It's going to take more regulation, more government, and new debt (read future taxes) to get out of this mess." There government may have had no choice but to step in and bailout these firms to prevent an even more devasting financial collapse, so I'm not questioning those decisions. I do question the decisions and policies over the past twenty years that allowed things to get this bad. And as for the massive new debt we are now taking on as a nation, if you don't think that your taxes have just been raised, you're kidding yourself. So the next time you hear a Republican shout that the other guy wants to raise your taxes, think about this moment.

The Better Left Unsaid "Stream-of-Consciousness" Index

Wall Street...Financial Calamity...Foreign Debt...Deregulation...Alan Greenspan...Savings & Loan Crisis...Taxes

Energy Crisis

It occurred to me last night while watching the endless hurricane coverage that there was something slightly karmic about Hurricane Ike laying waste to a swath of Texas which serves as home to the oil industry, and which of course is the state of origin to our current President. The same President who fumbled the response to Hurricane Katrina.

Before Ike had even made landfall, gas prices were spiking upwards of fifty cents a gallon. I half expected the Hurricane itself to stand on that stranded oil tanker being buffeted off the coast of Galveston, Texas and declare, "Mission Accomplished!"

The 1992 election between George Herbert Walker Bush and Bill Clinton was best summed up by the phrase, "It's the economy, stupid." And my instincts tell me that this year's election should be summed up by the phrase, "It's the energy, stupid." Because the candidate who has the right energy policy can improve our nation's standing on multiple fronts. Energy diversity and energy independence will enhance our national security; stimulate new industries which will help our economy; are necessary to protect the environment and respond to global warming; and as much as we talk about releasing our nation from the tightening grip of foreign oil producing nations, we equally need to release the tightening grip of oil companies on the operations and policies of our government. And the next President's energy policy will be central to changing that dynamic.

To give a sense of how bad things have gotten, perhaps you too saw the news a couple of days ago about an Interior Department investigation of it's own Minerals Management Service (MMS) -- which issues the offshore oil drilling leases Republicans are clamoring for. The Interior Department uncovered that the government employees of this agency were frequently partying, accepting free gifts and trips, using cocaine and other drugs, and having sex with the oil company executives who were seeking the licenses they issued. And that a culture of promiscuity and ethical failures had consumed the agency. Drill, baby, drill indeed.

But I'm facing an energy crisis of a different kind at the moment. See, a good friend of mine was visiting recently and accidentally knocked over a cup of coffee on my remote control. Remember the Pepsi Syndrome? Think of this as the Starbucks Syndrome. Coffee and a remote -- good. Coffee on a remote -- not so good. The central nervous system of my multi-media existence is in meltdown. Put another way...I have to get up and go to the TV to change the channel. Let me repeat. I have to get up off the couch and walk over to the TV and push buttons on the top (or maybe it's the bottom, I forget) to adjust the volume and change the channel. And in my high definition, cable access, 700 channel universe that is painful. I don't have the energy to be walking to the TV every time I get bored with Larry King. Which means I now rarely change the channel. I live with what happens to be on. And suffer in quiet dignity. I'm watching COPS right now. In quiet dignity.

Maybe I too need a new energy policy. Maybe I too need to identify alternative sources of...uhhh...mental fuel. Or maybe I just need a really long stick that will reach the channel changer on my Sharp AQOUS.

The Better Left Unsaid "Stream-of-Consciousness" Index
Hurricane Ike...It's the Economy, Stupid...Energy Diversity...Minerals Management Service...Pepsi Syndrome...COPS

Shrill, Baby, Shrill

I was up on Cape Cod over the Labor Day weekend spending a long weekend at the beach. I saw no Television. I read no newspapers. And I only found out in passing that John McCain had picked some woman named Sarah Palin, the Governor of Alaska, as his running mate -- and that she shortly thereafter had to hold a press conference to announce her unwed teenage daughter was pregnant, leaving the media and both parties dumbfounded.

Upon getting back into New York on Tuesday, and catching up on the media coverage, I like many people wondered, "Who is this woman?", "Will she buckle under pressure?", and "Has the McCain camp made a massively huge miscalculation?" All would be told when she delivered her big convention speech.

Bottom line...Sarah Palin knocked it out of the park. She passed the first test. She was poised, confident, humorous, feisty, and grounded. It was clear that she successfully reached her audience. That is if you are a small town, white, heterosexual, Republican. Whether you agreed with her points or not, you had to admit she delivered her message really well; that you were witnessing a new Republican star being born -- in much the same way Barack Obama's star was born when he delivered his big convention speech four years ago.

That aside, I found the tone of the Republican convention to be disconcertingly divisive and shrill. It's difficult for me to discern whether this is simply due to my own bias. I'm a Democrat. So of course, much of the Republican message is not going to speak to me. But given that this was John McCain's convention, I guess I expected something different. I wondered if any of the speeches would stir hope in me, the way they did the week before from Denver. They didn't. The Democrats were criticized by pundits for not tossing the delegates enough red meat. The Republicans on the other hand were having a ground chuck food fight. And in the midst of this was a jarringly out of synch speech by Joe Lieberman. You felt the unease in the room as Joe preached his message which seemed to criticize both Democrats and Republicans. You could feel the delegates hesitancy. "Should we be clapping?" they seemed to be asking themselves. And you could almost hear a collective sigh from the McCain Camp behind the curtain which said, "Thank God we didn't let Lieberman happen."

At both Conventions big impressions were made and rousing speeches delivered. Personalities emerged. For the Republicans, Mike Huckabee reminded people that strong character, natural charisma, and warm charm can produce compelling leaders. But Mitt Romney, Rudy Giuliani, and Lindsey Graham went for blood through very personal attacks on Barack Obama. And Sarah Palin lived up to her VP role as attack dog with some pretty sarcastic digs herself (not all of them grounded in fact).

But perhaps what was most unnerving was the personality that emerged from the party itself. The Republican delegates sounded less like an energized party and more like an angry mob. It's a little uncomfortable seeing hockey mom's shouting "Hit him again!" when their sons get into a fight on the ice. But that's what this convention felt like. The overwhelmingly white delegates persistent chants of "U.S.A. - U.S.A" conveyed a disturbing partisan jingoism that I did not sense at the democratic convention the week before. There was a guttural quality to their chanting like they were conspiring to hit the streets of St. Paul and turn over cars and pick fights with the first foreigners they encountered.

And what was with all the signs and buttons declaring "Drill, Baby, Drill!"? Are they serious? Is this the clarion call the Republicans really want to win over the American people? Drill, Baby, Drill? Drill off our shores. Drill in Alaska. Drill wherever we think we can suck up more oil. Put more billions into the hands of big oil. Global warming, global schwarming. Who are they talking to?

If they come away with anything, they certainly come away firmly establishing John McCain as an American hero in a big way. It may be well known that John McCain was a POW during the Vietnam War. But the story has never been told so frequently and so well. And McCain's war story was told at least five times, including by McCain himself.

I don't know. You tell me? One Party declares, "Yes, We Can!" The other Party declares "Drill, Baby, Drill!" Which one do you think speaks to a more hopeful, forward thinking future?

The Better Left Unsaid "Stream-of-Consciousness" Index
Cape Cod...Sarah Palin...Joe Lieberman...Angry Mob...Drill, Baby, Drill...John McCain