Monday, September 22, 2008

Wall Street Mushroom Cloud

Like a modern-day Paul Revere, Treasury Secretary Henry Paulson went on the talking-heads shows on Sunday, Sept 21 to raise the alarm and to gain support for his $700 BILLION plan to bail out America’s moribund financial sector. The most striking thing I take away from his efforts is his strong desire to see it passed “quickly” as a “clean” bill without any enumerated protections for the American taxpayer. He wants us to just trust him. We’ve been down this road before with the Bush Administration—in Iraq—and with disastrous results to our national security. And now we’re expected to put our economic fortunes in the hands of the same people who brought us incompetence and cronyism in what they, themselves, considered their strong suit—military policy.

It seems that Secretary Paulson’s plan needs to be passed quickly without too much debate because the Administration can’t afford to have people question the methods and motives behind it. The fact that this needs to be done with all dispatch—and undoubtedly a minimum of debate—sounds like the specter of an economic mushroom cloud, just like the one Condoleezza Rice used as a club to get the Democratic majority in the US Senate to vote to authorize the use of force in Iraq—just before an election. I fear that the stock Bush sentiments of “be afraid” and “trust us” will win the day and ram through Congress a cure that could very well be worse than the disease.

Secretary Paulson wants a blank check without any additional regulations above what is already on the books. He also doesn’t want the plan debased by compensation caps for the gambling-addict executives of companies needing to be bailed out. He speaks of the need for it to be clean of other provisions, to prevent anything from standing in the way of getting it passed quickly. “Just sign the damned contract already! We don’t have time for you to read it!”

Here is my prediction: People within the Administration, who want to see no consequences for the firms and non-existent independent oversight of the management of the bailout, will come up with an economic version of “weak on terror” which will cause the Democrats to once again show their yellow bellies and turn tail from protecting the American people. They will genuflect before the altar of fear created by yet another Bush-era catastrophe that has become so time sensitive that there is no room for reflection and sensible action. ACTION NOW is what is needed, not thought, Paulson is essentially advising Congress. And Congress will accept this and dutifully obey. And write that blank check.

Once that check is written, Congress will go back to their districts to campaign for re-election. When the new Congress convenes in January, there will be rancorous calls for regulatory reforms that were postponed because of the severe nature of this crisis—and the doomsayers’ claims of immediate economic collapse without a “clean” bill. But those calls for reform will be stifled by K Street lobbyists seeking to prevent regulatory reform from touching the firms that caused this very expensive threat to our national security.

There will be no meaningful reform because the $700 BILLION package will see firms that were on the brink of collapse suddenly flush with new capital that they can funnel to K Street to watch over their interests in Washington. That taxpayer-funded lobbyist slush fund will in turn fill the 2010 re-election coffers of their Corporate Congressional Cronies.

Aside from the well-documented fact that Congress will always choose to protect private special interests over the greater good, there is an even more sinister aspect to this plan: It gives the Treasury “wide latitude” in making decisions that market forces would normally decide. And it allows the Treasury Secretary to appoint private companies in the management of this massive bailout fund. It takes very little imagination to envision a scenario in which Mr. Paulson would conclude that Wall Street banks are the only private firms with the expertise needed to handle this unwieldy sum of money. The example of crony corporations taking no-bid profit from our efforts in Iraq for doing poor (or no) work should create a great deal of misgiving at this part of the proposal. You can’t put enough lipstick on this pig.

Finally, given George W. Bush’s history of executive overreach, do we really want to give him–and the next president—this much unchecked power over our national livelihood? At the end of the day, a bailout may be the only solution to this mess. I don’t like it, but I’m willing to accept the possibility. But it would be a terrible mistake to surrender to fear and accept a blank-check method of correcting the excesses of greedy Wall Street firms, when a few days of calm, rational thought could create a plan that is workable and corrects many of the wrongs that created this problem in the first place, and with the proper checks on the way it is administered.

For further reading, Chuck Collins of The Nation has some very sensible options that should be considered by congress to pay for this grotesque abuse of the public trust:

Sunday, September 21, 2008

Sept 20 Editorial

This was the editorial I read live on Shared Sacrifice Internet Radio on Sept 20, 2008. You can listen to the show's archive at

On the topic of the financial crises which began to unfold this week on Wall Street, John McCain has flip-flopped more than the cooks at IHOP. On Monday he said that the fundamentals of the economy were sound and then on Tuesday he proclaimed that we were in a crisis but shouldn’t bail out AIG. On Wednesday, he changed his mind and said it was OK to bailout AIG. On Friday he was back to proclaiming that the bailouts had to stop. Barrack Obama was correct when he said that McCain is in a panic over the situation.

For his 26 years in Congress, Mr. McCain has been a fervent de-regulator. Now, in the span of a few days he has claimed that we need real oversight because of the crisis that deregulation has caused. I’m glad he’s seen the light that unfettered gambling with our pensions and manipulation of our financial markets are bad things. I don’t believe this is a case of too little too late, though. I believe this is a case of someone who doesn’t understand his own culpability in our current dire circumstance saying whatever his advisors think needs to be said to get elected. The Maverick McCain is no more.

This crisis, as Mr. McCain calls it, is proof of the weakness of unfettered financial markets. It was bad enough when our newly-created centralized government Commissars of the economy ordered American taxpayers to underwrite the sale of Bear-Stearns and to bailout Fannie Mae and Freddie Mac, but this week we were also ordered to secure a failing insurance company—which, unlike the banks, is not even regulated or insured by the federal government. Yet John McCain wants to put your health care choices squarely in the market, on what he previously said was a model based on the financial industry.1 His plan would force you to bargain with insurances companies by yourself. According to rigid right-wing ideology, the market is the most efficient method of delivery for ALL goods and services. Right. If that were true, the markets would not need a socialized bailout right now.

Matt pointed out weeks ago on this show that John McCain’s plan would remove the tax exemptions your employer receives for providing you with a group health care plan. Obviously, this will lead many employers to decide that it is too expensive to provide coverage for you and your family. That’s what Mr. McCain and his insurance industry lobbyist-advisors want: To force you to deal directly with the insurance companies, because they know that an individual faces FEWER choices when dealing with an insurance company than he or she would have if they get group coverage. So, you will end up paying more for less. That’s the real intent. But just in case you work for a company that understands its social obligations and continues to provide you with group health care coverage, the IRS will consider that benefit to be taxable income to you.

For those out there that might think I’m being one-sided, let me point out that John McCain’s plan does provide an offsetting tax credit of $2500 for those that go out to the marketplace to buy their insurance. In my personal case, the premium my employer pays for my coverage is more than $400 a month, which means in the unlikely event that I could find the same coverage for the same premium, my health care insurance out-of-pocket expense would net out to be $2300 a year more after the end-of-year credit. That actually sounds like a tax increase to me, when you consider the fact that I just bailed out with my tax dollars the world’s largest insurer. And now John McCain wants me to pay more for my health insurance coverage? I guess the philosophical justification is that profit going to the stockholders of insurance companies would offset the loss from my wallet; somebody gains-somebody loses—that’s the market in John McCain’s deer-in-the-headlights understanding of economics.

The bailouts already in place and those being designed are nothing more than single-payer universal health care for corporations at Emergency Room rates—and the American taxpayer is picking up the tab. Naturally, the proponents of universal healthcare will hold the need for corporate bailouts up as examples of the bankrupt ideology of the Republican right. The markets have failed, and now they need government intervention; it could be accurately argued that the health insurance market has failed and also needs intervention, not because profit is imperiled but because American lives are.

Opponents of universal health care have lost a big club. They used to be able to just shout “socialized medicine” whenever the topic of universal health care came up and the other side of the argument would seem to fade away. But now, with socialized financial markets, that non-argument won’t hold much weight. The greatest argument they will have now is that we simply cannot afford it, because the corporate bailouts are going to cost so much. They might actually have a point there, but that merely proves that the right-wings ideological wars to destroy choice in this country have been successful.

Oh, by the way, don’t fool yourself into believing that the US government taking a 79.9% equity stake in AIG in exchange for bailing it out will actually happen. The shareholders of AIG are already rallying to stop that, and given our Congress’ spineless inability to stand up to the private interests of money, they will win. We hear a lot of talk today from Congressmen saying that the bailouts (notice the plural)—which will undoubtedly total more than $1 trillion of your dollars—must look out for the American taxpayer. Don’t be fooled, as soon as K-Street gets involved (and they will), the whole exercise will turn into a giant bottomless pork-filled trough, complete with bridges to nowhere and make-work projects across the country that we can’t afford.

Because George Bush’s plan to privatize Social Security failed and thus didn’t provide the trillion dollars in profit that Wall Street was aching for, the current situation gives them the perfect opportunity to simply wipe a trillion dollars of bad debt off their books. Same difference. Either way, Wall Street walks away with a trillion dollars of taxpayer money. And the American public will soon forget this fiasco and corporations will scream for deregulation again—and politicians who are afraid of losing valuable corporate campaign sponsors will give in—again.

I proudly proclaim that I am a liberal. Yet I cannot stomach the government existing to create make-work projects. If our social contract was a form of socialism, I would think differently, but I was raised and educated in an environment that talked about personal responsibility. And I fervently believe that Americans can make things happen by sheer will and hard work. But our politicians who mouth those words don’t believe it, otherwise they wouldn’t want endless earmarks for pet projects in their districts—earmarks designed to funnel money back to their home districts in order to put people to work. Ask yourself, besides during desperate economic times and war, when was the government’s mission ever to put people to work?

President Eisenhower warned us in his farewell address to beware of the military-industrial complex. That complex is addicted to make-work programs and they decentralize their contracting centers to ensure that a maximum of Congressmen have a vested interest in funding them. Our politicians’ blind self-service has directly led to the situation we are in right now. Don’t expect them to accept any sort of plan that doesn’t specifically siphon off money from your household to prop up reckless companies and encourage more market inefficiencies.

The Democratic and Republican parties talk constantly about values. On the economy, Republicans like to talk about market fundamentals and self-correction. And to their credit some are even holding to that and openly stating that we should let the companies fail, even if the results are “brutal”, according to ranking Republican member of the Senate Banking committee, Richard Shelby of Alabama. I’m a liberal and I agree with him.

The shareholders of these companies need to be held accountable for their lack of oversight. The most obvious method is the loss of their investment. It is the responsibility of a corporate Board of Directors to find the best talent possible for the day-to-day management of a publicly-traded company. And it is the responsibility of shareholders to elect the right people to the Board to oversee that management. If the shareholders are negligent in their duty, they have only themselves to blame. And the American people should not be called upon to bail them out.

FDR observed that Americans prefer soft living. Maybe America needs a wake-up call to the reality that self-governance is hard and takes effort and intelligence. If the bailout plan currently being designed turns out to just put off the pain for later, we have to face up to this NOW and take it on the chin. This is a problem of our collective making, and we have no right whatsoever to pass it off to future generations.

It’s time for a new generation of leaders in this country with the foresight and open-mindedness needed to lead us on a path to a better future. The leaders with the “me-first” attitude that we have repeatedly elected over the past 30 years have led us down this costly cul-de-sac and now the bills are coming due. It is impossible to deny. My true fear is that our country will not survive this. We are a strong country, but what sacrifices have we recently shown we are ready to take for each other? Besides those who put on a uniform, we have shown remarkably little appetite to sacrifice anything for our fellow countrymen. Can we survive as a nation when we just pile debt on top of debt on top of debt and expect someone else to deal with it down the road? This is our responsibility and if we continue to shirk our duty to each other and to future generations, we will lose the promise of a better tomorrow on the altar of greed. Hard times are around us and in front of us. The sooner we recognize that we must take responsibility for our politicians’ failures and make the sacrifices necessary, the sooner we will put the pain behind us. Matt?

1. Retrieved Sept 20 from:

Thursday, August 28, 2008

This is the editorial I presented on Shared Sacrifice Internet Radio on Saturday, August 23. You can listen to the show at

With this summer’s oil price spike, the thought that there might be market manipulation by speculators in the oil market was on many people’s minds. Corporate free market apologists immediately tried to stamp out that thought by saying there was no evidence of such manipulation. They were right about one fact: At the time, there was no readily available evidence of market manipulation—because it had been hidden from regulators. The Washington Post reported this past Thursday, August 21, that there is in fact evidence of extensive manipulation by speculators in the oil markets, on the level of the market manipulation of electricity supply by Enron before their criminal operation failed. If regulators had just accepted the argument to “move along, there’s nothing to see here” that the corporate free market fundamentalists were trying to feed them, today we would not know of this oil market failure.

Free-market theory is based upon a simple assumption: It’s called perfect competition. This assumption states that all players in the market have all of the same information and that goods in the market cannot be differentiated (a raw commodities market is usually assumed to be as close as we can get to perfect competition). True free market adherents would not try to cover up market manipulation, but instead would want strong controls to ensure that vital information is freely available to all interested parties.

Futures markets grew out of the need for raw material suppliers and people who need the raw materials to guarantee a given quantity at a given price to be delivered at a predetermined date in the future. For example, if you’re a baker, you want to be able to predict the costs of wheat so you can budget for the expense and if you’re a farmer you want to be able to guarantee a price for your wheat. So farmer and baker get together to make a contract in the spring for the delivery of the wheat at an agreed-upon price when the wheat is harvested in the fall.

But it’s not like that anymore. Now we have speculators, who enter the market not to be able to compete to take possession of the commodity for processing, but just to wager on the price. Some of these speculators are so large—or there are so many of them—that their very presence creates artificial pressures on commodity prices. This in effect takes the commodity itself out of the equation and the bets are just on which way the price will go. Winner take all. And those that need the commodity, the baker in my example, will have to pay a large premium in order actually get it the needed resource. The baker will, of course, have no choice but to pass the higher cost onto his customers.

If this were just happening in the oil market, it would be bad enough. But it’s not limited to oil. Virtually every commodity that trades on an exchange is subject to this type of manipulation. When you aggregate this over the commodity needs of an entire economy it can be devastating to the poor—because food costs will rise and the poor have very low and often fixed incomes. It can also lead to inflationary pressures for everyone. All of this because of the greed of market manipulators who, in the words of the Washington Post article, exploit “their political influence and gaps in oversight to gain exemptions from regulatory limits and permission to set up new, unregulated markets”. The Washington Post article goes on to note that, “commodities have been good business for big Wall Street brokerages. Its commodity trades helped keep Goldman Sachs profitable during the credit crisis…”

But the so-called market fundamentalists in America aren’t actual, true market fundamentalists, they are elitists who find the WORD competition convenient, but they have no respect for the concept. They constantly strive to have the government protect them from the ravages of the marketplace, but insist vehemently that the government should not tax their profits. After all, profits are their RIGHT. They expect government to protect their private operations at the expense of economy-wide economic efficiency. And the government dutifully obliges. To American corporatists, government is a great private investment—it can be bought for a relatively low price and then ordered to create barriers to entry or artificial obstructions to information, which result in larger profits or even direct payments of taxpayer dollars into their pockets.

As I said before there is very little daylight between the two major parties, Democratic and Republican. What light that can be seen can be described in a manner of degree rather than in substance. Both parties are rabid corporatists. Whereas the Republican Party actively seeks to entrench corporate control over American private and public life, the Democrats seek to defend corporate encroachment in order to protect the corporate money flowing into their coffers.

Dennis Kucinich and Ron Paul are considered fringe elements within their respective parties. But the irony is that they are fringe only when viewed through the corporatist prism through which the parties see. These two patriots will not cow-tow to corporate interests at the expense of America’s greater good. They were considered unviable presidential candidates because they would not adopt corporate interests ahead of the interests of the country.

Along with Mr. Kucinich and Mr. Paul, several former party insiders have sought and received third-party nominations to run for President of the United States in 2008. I believe it speaks to the weakness of the two dominant political parties when former party insiders abandon the parties in favor of their own principles. Congressman Barr and Congresswoman McKinney both served their constituents and their parties from elected federal office, but then saw the betrayal of their principles by those parties. They saw another approach and embraced a third-party way of thinking.

When two such influential people leave their parties in order to accept the challenge of confronting a broken system from a new perspective, it proves the time has come for third parties to be given serious consideration in this country. That’s what this debate is about: Offering the American people a new way of thinking; to move beyond the irrational fear of “throwing their votes away” on someone from other than the two major parties.

On this show, I have previously endorsed and then retracted an endorsement for a presidential candidate. At this time, none of the Shared Sacrifice producers have formal endorsements in place for any campaign. Speaking only for myself, I can say that I will not endorse, nor will I cast a vote for, either of the major party candidates. The parties are now corrupt and beyond redemption. They must be replaced, or at least relegated to irrelevancy by democratic forces—and those forces already exist if We The People would merely use the tools available to us. Namely, those tools are the existing third parties.

The one overarching goal we need to adopt this year and in coming political seasons is to break the duopoly. The greatest threat to our safety is not from some outside skulking terrorists, it is to allow these two corrupt parties to retain control within our own system. I think it matters little who actually wins the presidency as long as the Democrats and Republicans lose—their continued oligarchical stranglehold on our political system is the greatest single threat to national security this country has faced since the founding of our Republic.

Believe it or not, the thought that people should no longer succumb to politics at the point of a gun, as my co-host Matt Stannard is fond of saying, has finally reached the mainstream. On the Glenn Beck show this week (Wednesday, August 20), Penn Jillette of Penn & Teller made the point that people do have choices. You WILL NOT throw your vote away if you choose someone other than Obama or McCain this year.
We must recognize that the power rests with us and that we can only be held hostage by these two dying political parties if we accept their contention that they are the only game in town. As Penn said on the Beck show, “nowhere in the rules does it say it has to be one of those two.”

Wednesday, August 6, 2008

There Is No Coin

The following is the editorial I read on the Shared Sacrifice Internet Radio program ( on August 2, 2008:

Since the Reagan Revolution, the GOP has sought to remove choice from America. There are the obvious examples of abortion and gay marriage, but it goes much deeper than that. They have proven to be so radically ideological that the paramount concern for them is to remove choices not only from those currently living, but also from generations yet to come. To that end, they have run up a record national debt with the simple minded goal of making sure that future generations have only the ability to pay for military budgets and interest on the debt they have incurred in our name.

Newt Gingrich revealed this goal when, after the GOP took majority control of the House of Representatives in 1994, he stated that they would let the Department of Education and other government programs for average Americans “wither on the vine”.

They have so poisoned the well in American political discourse that the prospect of raising—or even paying—taxes to fund wars of choice have become a third rail of politics. Any politician who would dare to say that we need to pay as we go without running up debt would be vilified as someone who wants to raise taxes—and it is used against people who do not want to make so-called temporary tax cuts permanent. Even though the temporary nature of these tax cuts was required to get them passed in the first place.

Of course increasing taxes on corporate profits or on passive income like capital gains is out of the question—the rich should not have to pay to sustain the system that allowed them create their wealth in the first place. Workers should naturally have to pay for everything, after all they wouldn’t have jobs if it weren’t for the rich, right? Corporations and private investors have so unbalanced the system that we have no choice but to work for them. And as this imbalance continues to wreck the economy, our opportunities are increasingly, and deliberately limited. In the mind of the corporatist, only the poor and working-class should have to pay for the system. Rich people are above that indignity. They have transformed the American economy, creating an entire nation of corporate serfs.

The GOP has always reveled in the public perception of their fiscal management skills. They are supposed to be the businessmen of America. But when they take the reins of government, they are unable to act like managers. Once they have the power, they instantly turn that power to their own personal ideological interests—and the financial benefit of their cronies.

Before you accuse me of being lopsided with my polemics, allow me to turn an equally scathing eye to the other side of the corporate/congressional coin.

I used the example that GOP candidates often use the prospect of failing to make temporary tax cuts permanent as an easy and quick way to call their Democratic opponents tax-raisers. And the Democrats have proven that they are not up to the challenge of answering this. They run from it as if they were being called “weak on terror”. But the real reason that they run from that issue, and so many others, is that they implicitly agree with virtually everything the GOP stands for. There is very little light between these two parties, except at the margins, especially when it comes to deficit spending.

While the GOP loves to fight wars with other peoples’ blood and borrowed money, the Democrats are happy to sustain these wars, all the while squawking with faux outrage at the misuse of our national resources. But they won’t do anything to actually stop it.

It would be too generous to simply say that the Democrats don’t know how to frame the argument to persuade the American people to change course—that would be a simple failure of communication. No, it goes far beyond that. The Democrats are no longer an opposition party. The Democrats, while maintaining a different name, have adopted the GOP’s fiscal lack of discipline as their own. Even when we hear that Barack Obama is an agent of change the American people see is so desperately needed, he backtracks and votes to undermine the Constitution to protect GOP corporate cronies and now he says that he is willing to vote for a “compromise” which will allow off-shore oil drilling, which will protect oil company profits.

The Democratic Party has joined the Republican Party lock, stock and barrel in their subservience to narrow corporate interests at the expense of the greater good. For decades the American people have recognized that the GOP is owned by corporate interests. It is now time to accept this reality as it relates to the Democrats as well.

Many people have lamented that their only choice is to vote for a Democrat because a candidate using that label will be better than a Republican, if only marginally. That is a fallacy. The Democrats, have joined the Republicans in having no real concern for the welfare of the American people, and have adopted only one paramount item for their agenda: To attain power and maintain power once they get it, all so they can advance the agenda that every resource available to America should be channeled to the benefit of their corporate masters. Which makes voting for a Democrat no better than voting for a Republican.

Elections in this country are more important than a coin toss. Our duty as citizens requires that we do more than toss a coin in the air and hope that a D or R lands on top. These two parties are the two sides of the same corporate coin. The important thing to remember is, when the chips are down and the hard choices have to be made, a Democrat will respond in the exact way a Republican will—to use the resources of our national government to protect corporate interests first—and only—and leave every other issue to us to solve for ourselves.

We need to recognize that we live in a time of great peril, and risks must be taken if we are going to survive. One risk we can no longer afford to take is to rely on these two morally exhausted and intellectually bankrupt parties. One risk we should pledge to take is to listen to and take and honest look at third-party candidates. The D’s and R’s want to make you fear that you will throw your vote away if you vote for someone other than either of them. But the only risk we run by giving someone else a chance is that nothing will change—which is the outcome we’re sure to get regardless if we vote for a politician sporting a D or R after his name. We have been flipping this same corporate D & R coin for so long we have missed one important truth: There is no coin.