Wednesday, October 22, 2008

Once Burned, Twice Shy

It has taken me a long look at the policies, promises, and personal characteristics of the Presidential and Vice Presidential candidates to finally decide whom I will support this election. To no one's surprise in my family, I will vote for John McCain and Sarah Palin. And I am at the same time very proud of those in my family who strenuously support Barack Obama and Joe Biden. Voting is a personal right, privelege, and patriotic duty of every qualified citizen, and each should vote for whom he or she believes will be the best President, regardless of other pressures.

That decision, however, has not been easy for me. Obama is clearly the more reasonable, relaxed and skilled organizer and facilitator. I expect him to be very adept at building support in Congress for his agenda and effecting major changes in the political landscape, and to administer with grace and alacrity. And I expect him to win, and win big. The reality of the financial crisis of October has handed Barack Obama the American Presidency on a silver platter, and there is nothing McCain or anyone else can do to assuage the angry wave of voters eager to punish the Republicans for it, though the blame goes back a lot farther than the Bush tenure. When the economic recovery comes, Obama will take the credit, though he will have done little, I fear, to bring it about.

The biggest problem I have with an Obama presidency is that I have too vivid memories of another recent silver-tongued orator who could, like Obama, charm the leaves off the trees with his reasonable tone and sincerity, whom several of my loved ones enthusiastically supported for his two terms, and whom I came to view as an out-and-out scallawag, liar, and man of shallow convictions, changing his positions with the polls of public opinion for political expediency instead of acting out of principle.

I readily admit President Clinton was a likable, warm fellow and a gifted politician. But his vaunted economic surplus after eight years came at the cost to me of most of my money. As a teacher of modest income struggling to raise three children, I saw what had been a slight tax rebate each year before Clinton change to a tax bill of several thousand dollars each year of his tenure in the White House. Bill Clinton, I found out to my chagrin, had his hand in my meagre wallet from day one, and I didn't appreciate it one bit, nor his claim to "feel my pain."

Obama, like Clinton earlier, has promised me the moon this campaign, and McCain has not. Barack says he will give me a tax rebate, affordable health care and much more. McCain tells me straight up he will try to keep the war going, lower entitlements like Social Security and Medicare, and tax my health benefits if I have any. But I believe McCain and I don't believe Obama. I'm not buying Obama's rhetoric as I once did Clinton's. Once burned, twice shy.

Oh, I wish so much we could find a moderate, sensible person to lead the nation instead of pitting flamboyant personalities against vacuuous demagogues. I don't care about color or gender, or even that much about ideology. I just want a decent, honest, fair-minded person with a little humility who's not out to redistribute the wealth or present an unyielding hardheadedness to the world. Maybe it's asking for incompatible qualities in the same person.

But lacking that person, I will vote for John McCain and hope like the dickens that if by some fluke he is elected that he stays healthy for his first term. I'd hate to entrust the Presidency to Sarah Palin, who seems so gosh darn something to the right that she can't learn to be politically adept in Washington--or at least it would take a while. Biden, on the contrary, would be great, but I'd hate the tragedy it would take to have him step in. Of the four figures involved, I probably admire Joe Biden the most. Had he been the Democratic candidate instead of Obama, I think I would have voted Democratic this time, because despite my ideological disagreements with him, I trust and believe him and have respect for his ability and experience. Why must we always seem to elevate the wrong candidate to the top of the tickets? Is it possible we vote for the best campaigner or the best speaker or the best entertainer instead of the best President? I wonder.

Saturday, October 04, 2008

Ben Stein Right On about the Financial Crisis

I've tried to speculate on what caused our October financial crisis from various writers who sought to blame the Democrats or to blame the Republicans or the Bush economic policies or greedy investors, lenders, banks or other groups. I was looking for a single cause, a single group to blame.

But the best comment I've found so far was Ben Stein's commentary this morning on CBS's Sunday Morning show. It seemed so insightful and on target that I taped it and transcribed his main points pretty much verbatim below:

  1. Liberals pushed lenders to make loans to clearly unqualified borrowers.
  2. Conservatives demanded no regulation of financial markets.
  3. Wall Street lied like mad about the true value of securities they were selling.
  4. Toxic bonds were sold all over the world.
  5. Speculators used fear and massive capital to drive down markets further then sell them short.
  6. Congress was unwilling to investigate or punish fraud.

The blame, then, was shared by both political parties, banks and investment houses, securities exchangers, investors, and both the executive and legislative branches of government.

I agree that all the above were probably culpable. But I would add the insatiable spenders and borrowers who sought to live the American Dream of big houses and expensive lifestyles bought entirely on credit and loans by others instead of by the fruits of their own labors and skills.

After all, no one makes anyone else buy anything. The buyer or borrower himself bears the ultimate responsibility to make prudent choices, and if he does not he has no one but himself to blame. A democracy demands people think intelligently for themselves. If they let others do their thinking for them, they aren't living in a democracy.

The Incorrectness of Political Correctness

It was a warm and fuzzy feeling to feel the nation's smug satisfaction in having nominated the first African-American Presidential candidate this summer. We were good folks after all, and it looked like maybe we were ready for a real change--until he started beating the sox off the white candidate in the polls following the financial crisis last week.

The financial crisis unleashed an even uglier crisis as crowds showing up at McCain's rallies calling Obama every evil name they could think of: "terrorist", "Arab" (I still don't understand what's demeaning about that) among others, and forcing McCain to defend his opponent's Americanism, honor, and patriotism at the very time he seeks an advantage through encouraging political mistrust of his opponent.

In other words, it was clear there are limits to what many Americans are willing to keep quiet about. The racism and bigotry hasn't disappeared at all. It has merely been held quiet for the sake of political correctness while all seemed under control. Now that Obama appears to be a breath away from actually being the next President, those voices have surfaced in all their ignorance and secret bigotry.

It will be interesting to see how the campaigns handle this newly-vocal, hard-to-believe element among the electorate. Racism has always gone into hiding when threatened to be exposed for the evil it is. That's why klansmen wore sheets. And it's why Hillary supporters, upset when Obama defeated her for the nomination, complained they'd vote for McCain before they'd vote for Obama. But people thought that was just sour grapes their candidate got beat. Maybe those who said it tried to see it that way as well. After all, none could admit they're just not ready to elect an African-American as President. But many would be more honest to admit it.

For all our "progress" in race relations, for all our surface cooperation with politically correct utterances, when things aren't going the way the white majority of this country thinks is to its liking, out come the slurs, the threats, the names and the racism in all it ugliness. So I wonder how far we've really come after all. If things reverse politically and McCain pulls back ahead before the elections, we may never know. After all, everyone wants to feel they are not prejudiced. But I suspect Obama--the uncannily effective organizer, speaker, fundraiser and campaigner who seems certain to win by the electoral numbers no matter what McCain does, He may even have to win by a Supreme Court decision in his favor. For I suspect there are more bigots among us who will claim they support Obama but will vote for McCain in the privacy of the voting booth than anyone imagines. I suspect Obama may win with a substantial electoral vote victory but a very lopsided popular vote minority.

So I wonder if political correctness is really better than unfettered truth, even if it hurts or offends. Maybe it would be better for ignorant bigots to be voicing their ridiculous slurs all along and be shouted down by more rational voices than to put a lid on their views till they won't be contained any longer. I've long believed people have to internalize their values for themselves; they can be encouraged by others but not forced. The proponents of political correctness have gotten legislatures to legally ban prejudice and bigotry in all its public forms, but I fear all they have done is just force it into the secrecy of the heart.

Who Has the Old Maid Now?

My apologies to any matrons I might offend, but the erstwhile popular card game of Old Maid is surely no more insensitive to mention than the now-politically-incorrect lyrics of Stephen Foster's "Old Folks at Home" or Mark Twain's common racial slurs in Huckleberry Finn.

The Old Maid in the card game was the one card you didn't want to hold at the game's end, or you lose. Many games have a jinx or gamebreaker property that defeats all the strategies and holdings a skilled player may otherwise amass throughout the game. In pool, for example, you must sink all the balls, but if you inadvertantly sink the 8 ball before the others, you lose, as your opponents cheerfully yell "Scratch!" in derision. Other games of acquisition like Uno, Monopoly, orEuchre penalize you for your properties or card values held at the end of the game. I'm not sure where the expression someone was "left holding the bag" came from, but it represents the symbol of scorn, the "white elephant" no one wants in the end.

And now we come to the sudden, staggering financial crisis of Wall Street, Main Street, New York Washington, world markets--everywhere--coming out of nowhere, taking all the banks and financial firms of Wall Street and all the politicians of both parties (and both Presidential candidates, who were apparently clueless as well) by total surprise and without apparent warning rearing up to ruin our credit, plunge us into homelessness and joblessness, general destitution and deep recession--perhaps depression, perhaps the end of capitalism and free market economy before it's over. We're being forced close to socialized medicine and health care, pushed toward government-controlled energy policy and production and, and now we may be pushed into socialized, government-run economic policy as well, if the trillion-dollar bailout mess doesn't buy the Old Maid card.

Make no mistake, the Old Maid card is the toxic, overvalued mortgages banks greedily made as loans-for-a-day to anyone with a pulse. Never mind whether the sub-prime, low-to-average income borrower understood them or had the faintest hope of making mortage payments; the lender quickly sold them to thirsty investment banks in bundles, passing the Old Maid around the table to somebody else, and getting more money to make more bad loans every week. There was no bad conscience in the lender's heart; the borrower got a nice big home, the mortage company got some good mortgages in the bundle along with the chancey ones and spread the risk, quickly rebundled them and sold them off in mortgage-backed securities to Fannie Mae and Freddy Mac, and the Old Maid went on around the table. Everyone was willing to overlook the unattractiveness of the Old Maid in the bundle they held, everyone was willing to say she was beautiful and continue to increase her dowry to suitable suitors as if she were the most beautiful card in the deck.

Then came the mortgage meltdown, the failure of the mortageholders to be able to make their house payments in the face of skyrocketing gas prices along with higher property taxes and insurance premiums based on inflated home prices. Ten thousand homes per day go into foreclosure; two million homes nationwide in foreclosure, jobs lost, factories closing, unemployment lines growing--. It's not that sudden, this crisis. It's the coming to a head of many crises since 9/11. But it was happening to someone else. Someone else had the Old Maid, not us.

Finally someone decided the Old Maid wasn't worth putting more asset risk into and stopped the credit flow. The effect was devastating as one investment firm after another sheepishly admitted they held Old Maids in their hands, and we witnessed the fall of giants: iconic firms like Bear-Stearns, Lehman Brothers, Merrill-Lynch, AIG, and finally Freddie Mac and Fannie Mae themselves, which were created after World War II to make sure home loans would be available to everyone, especially GI's returning from the war. They all failed, and their CEO's scurried off with the good cards in multimillion-dollar golden parachutes.

It took the fall of these giants to awaken the stock market to the crisis the rush to pass on the Old Maid to someone else had caused. And when the Congress failed in its frantic call by the Treasury Secretary to pass a 700-billion-dollar bailout to purchase all the Old Maids from all the banks left standing so the credit could flow again, the stock market lost over a trillion dollars in one day with the largest single point drop in history.

It took a week to make the timid representatives come around and rescue the plan, and they still did so reluctantly, only because of pork sweeteners they could offer their constituents to appease their anger with their own re-elections looming, and only after reassuring themselves about their own careers and fortunes. I think many realized it would be better to face the loss of their political seats than the loss of their own derrierres and personal fortunes in a financial armageddon.

Friday the House of Representatives passed the modified bailout. What it did was agree to take the Old Maid cards from the banks and investment houses--the federal government would hold the bad card through purchase of the toxic mortgage-backed securities from any firms which wished, for a discounted price which would provide immediate relief to revenue flow so that credit could once again flow freely and the nation could avoid a total panic and collapse into another Great Depression that might make the 1929 one seem pretty mild.

When times got better (?) the Treasury could sell them at at least the value paid or perhaps greater price, for after all the homes did not disappear and many had very substantial value and would be attractive to private and institutional investors to buy and sell and live in again, and the revised mortgages could enable many to refinance, stay in their homes, and stem the tide of foreclosure by overanxious, credit-strapped banks and other lenders. The Government was the one place which could afford to wait for several years for a chance to pass the Old Maid on back to the lenders which had originally created her, with a much-improved chance the game would not end before she could be paid off. The bailout this past week bought time for the game to go on, for the Old Maid isn't a threat to anyone so long as the game continues. Only if the game ends does she obtain.

But in the meanwhile, who holds the Old Maid in the deck? Every taxpayer. Welcome to the mysteries of the financial world, neighbor.