Archive for January 2009

Some Preliminary Thoughts on the Economy

I have promised to write about what has happened to the economy.  I don’t pretend to think anyone but me is reading this, but writing is an interesting and useful exercise to focus, organize, and challenge my thoughts.  So with that caveat, here are some thoughts on how to think about what is going to be the greatest challenge of our lives, the looming depression.  Hope I am wrong by the way about this being a depression, but I think most people are in denial.

To my mind there are really two distinct issues, capitalism in general and its place in the modern world (I call this macro-economics), and what happened to bring down our economy in the specific case of the crisis we are facing (I call this micro-economics).  In the macro-economic discussion, the real issue is what does capitalism look like in the 21st century and can it be controlled.  I think the best book out there on this subject is Paul Krugman’s Depression Economics and the Crisis of 2008.  Although Professor Krugman focuses on the various crisis’s of economies throughout the world since the Great Depression, the whole trend of capitalism becomes much clearer and although he doesn’t offer any solutions, some are fairly self-evident.

On the micro-economic issue, most of us think that the problem came from the housing bubble and greed and that is true as far as it goes.  But this crisis really started back in the 80’s and with an attitude and psychology toward wealth formation and free markets when conservatives and their beliefs became co-opted by Democrats setting us on the road to disaster.  Here I am relying on several sources.

If you are going to read about what happened you have to become conversant in the various financial instruments and lingo of the markets.  Best way to understand the financial instruments in an unbiased view of them is through Frank J. Fabozzi’s Handbook of Financial Instruments (Derivatives, Hedge Funds, Futures, Collateralized Debt Obligations, Credit Default Swaps, puts, takes, long, short, arbitrage, moral hazard, etc.).  Once you are conversant in at least a basic understanding of how these financial instruments work, and the regulatory structure around them, then you are ready to start to understand what really happened in the micro-economic crisis.

But as I indicated above, you also have to understand the psychological environment in which these instruments were employed and that takes some understanding of the conservative revolution that took place beginning with Ronald Regan.  So along with some of the books I would recommend, I will throw in one on the psychology of conservative thinking, The Political Mind by George Lakoff.  In total these books/sources include:

  • Depression Economics – Paul Krugman
  • Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism – Kevin Phillips
  • The Origin of Financial Crises: Central Banks, Credit Bubbles, and the Efficient Market Fallacy – George Cooper
  • The Handbook of Financial Instruments – Frank Fabozzi
  • The Pedator State – James Galbraith
  • Panic – Michael Lewis
  • The Political Mind – George Lakoff
  • The End of the Financial World as We Know It – Article by Michael Lewis and David Einhorn (New York Times)
  • Six Errors on the Path to the Financial Crisis – Article by Alan Blinder (New York Times)

Yes I am a card carrying and charter member of the boring book club.  My wife often asks me if I ever read fiction and her point is that sometimes fiction gets more to the truth than non-fiction.  But I can’t help myself.

In the following weeks, I will lay the foundation for the following conclusions, but I thought you would like to know where I am going in case you don’t want to go there:

  • Capitalism is still the best way to advance the world, create wealth for all, and spur innovation
  • Capitalism as we knew it is over.  With the interconnected markets and complexity of financial instruments, capital’s ability to freely and rapidly flow from one market to another creates a volatility that greatly increases risk that has been underestimated in the past.  Capitalism is inherently an unstable system
  • Tools that we have used to control the economy to smooth out normal cycles are no longer effective, may be counter productive, and the free market will have to be a lot less free if we want to reduce these cycles (requirements for minimum capitalization, limits on leverage, limits on currency speculation, limits on financial instruments)
  • Flow down was a “free ride” theory of the conservatives that in operation has create large income gaps between the rich and poor with a shrinking middle class
  • The philosophy of wealth creation as a measure of good is a bankrupt philosophy that encouraged greed as a worthy value that added wealth to everyone
  • Governments around the world are going to have to cooperate more to stabilize the world economy and the reign of “government is the problem” is over
  • Capitalism and venture capitalism needs to be nourished, but the focus of making money in the financial markets as opposed to investments in companies that create real goods and services other than debt service has to be redirected

Okay, it is a tall order.  But if we don’t learn from this crisis, push partisan dogma out of the way, and face the reality of world we live in, we will simply repeat these mistakes, as many including me would argue we are repeating the mistakes that lead to the Great Depression.   Ah, but only if the world was as simple as it was back then.  This is not going to be easy.

Celebration of a Beautiful Life – Brooke Colvin

For those who could not be there:

On a beautiful day along the banks of the American River in Lotus, California I would guess 400 or more people gathered to celebrate the life of Brooke Colvin.  It was a fitting location as she loved the river, the outdoors, and the people she met and worked with there.  It is just impossible to imagine someone so full of life to be gone from it.

Brooke’s mom and dad spoke of her.  Her bothers spoke of her. Thad’s parents spoke of her.  Her friends opened their hearts to us on what she had meant to them.  And of course, Thad spoke of her.  What came through was that she was a gift to all of them.  She had a love for life and a compassion for everyone who came into it.  She had a heart big enough for everyone.  Instead of feeling angry for her short life, they were thankful for what a wonderful gift her life had been for them.  She always brought brightness into the room, and it was her gift to us to carry on with her zest for life.  And everyone remembered her beautiful and infectious smile.

Then the community closed ranks around the grieving family.  There was an outpouring of love and support that will be there to help them deal with their and our grieving.  On a beautiful winter day, the river flowed slowly by, the sun shown brightly, and friends and family celebrated a beautiful life.

But the words of Thad haunt me.  He said that about two or three days after the accident he was sleeping in a room with his father when Brooke’s phone rang. He just wanted to stop its incessant ringing so he fumbled with the unfamiliar phone to turn it off.  When he finally managed to find the power button, as it powered off it displayed a smiley face and then the words, “Goodbye”.   How very Brooke.  Goodbye Brooke.  We will carry on.

RELATED BOLGS:  Tragedy, Tragedy Update

Republicans, Who Needs Them?

I have to totally agree with Bob Herbert (The Same Old Song) on this one, why do we care what they think.  Is our memory so short that we don’t remember how we got here?  The Republicans are demanding, in a bipartisan way of course, their way or the highway.  They had their way for eight years and it has almost bankrupt us.  Their spending ways have left us with nothing in the bank to spend our way out of our coming Depression when we now need to spend.  You would never know they got clobbered in the last election because they ran up the deficit and have nothing new to offer for a failing economy except tax cuts that don’t work.  Now they claim they are the force to keep us on the straight an narrow?  Not one Republican voted for the stimulus package after compromises on tax cuts were made in their favor.  One would think that after their twelve years of stewardship in Congress they would see the error of their ways.

Today they were misrepresenting data on how effective tax cuts are on stimulating the economy (not very).  Of course the media, once again not having done their homework, didn’t know the facts so they just let these misguided souls prattle on (see Depression Economics).  Note how we are getting political arguments again as a substitute for news instead of subject matter experts who might actually clarify the issues.  But in the same vein there was Chris (Catholic) Matthews implying that the money in the bailout for family planning was the government trying to control the number of children you have instead of giving poor families choices.  Who doesn’t think preventing unwanted children is an investment in our future and reduces cost in Medicare, childcare, incarceration, food stamps, and welfare?

But what is it about eight years of failed tax cuts that does not enlighten Republicans and those morons that listen to them?  I keep pointing out the GAO study that showed that two-thirds of businesses pay no taxes (CBS News) so why doesn’t any one ask how a reduction in zero taxes is going to help?  Of course our friends in the Republican Party obfuscate this fact also by saying we have the highest corporate tax rate in the modern world.  That is true, but nobody ever asks what the effective rate is (that rate after all those loopholes are applied, hence the two-thirds who pay no taxes).  The cutting tax religion is just that, a religious faith whose underlying belief is not informed by reality.  It didn’t work last time and it won’t work this time, but it fits into their free ride beliefs (we can get out of this without sacrifices by allowing trickle down from the rich if the rich get richer).

So what gives here?  Why can’t they and their conservative base get it?  Well here is the basic difference between conservative (not moderate) Republicans and Democrats.  These conservatives basically believe in their bones that anything government does is done poorly if at all and is an infringement on their freedoms.  This belief is not informed by reality, which is an advantage for the Democrats, but is to their disadvantage because they can’t see that this belief is a religious faith and still think these Republicans can be reasoned with.  The reality is government does some things really well, and other things very poorly.  What it can do well and what it does do well is a function of the talent of its managers and the flexibility we give them to perform their jobs.  But these distinctions are lost on these conservatives.  In their imaginary world the failure of FEMA during Katrina had nothing to do with Brownie or the gutting of the organization.

So we have the spectacle of the President trying to bring them on board and in the process, watering down the stimulus package to make it less effective, and the result was that it was a waste of time.  House Republicans live in narrowly defined districts that are inhabited by their base, the Know-Nothings.   The game isn’t over yet as Senate Republicans have to appeal to a broader audience and therefore must be a little more reasonable, but if it were up to me, I would change the bill to be as effective as possible (move much of the tax cuts to infrastructure), dump the concessions, and get a bill that might actually work.  I think you can still change the tone in Washington without compromising your values and catering to failed ideas.

Sooner or later we have to just say it.  Conservative economic theory has run its course and compromising to cater to their ideological needs is making our situation worse.  We can’t afford to fail.  It is time to march in a different direction and leave the Republicans to stew in their juices.  Besides, they have Rush Limbaugh to lead them to a world I would not want my children to grow up in.

Oh, and one last thought:  when the Republicans were grabbing microphones that our media obligingly provided them without any critical analysis of what they were saying, did you see anything but white people?  We are a mixed race nation, but the Republican party and their ideas are squeaky white.  It is a world that doesn’t exist anymore.  Somebody ought to tell them.

The late Molly Ivings, that great columnist and humorist from Dallas Texas, was once asked how a girl brought up in the South in the Republican Party could be so liberal.  Her answer went something like this, “When I realized they were lying about race, I wondered what else they were lying about.”  Conservative belief in their ideology is tightly engrained in their pyschy.  They can’t afford to let it go or they would have to ask themselves what else they have been wrong about.

Gutless America

President Obama in his inauguration address told us what we all should know:  “But our time of standing pat, of protecting narrow interests and putting off unpleasant decisions — that time has surely passed. Starting today, we must pick ourselves up, dust ourselves off, and begin again the work of remaking America.”

Apparently the message was lost on many who want an easy road forward.  They missed the whole point about this not being easy and even more important, they missed the point that the world has changed:  “What the cynics fail to understand is that the ground has shifted beneath them — that the stale political arguments that have consumed us for so long no longer apply. The question we ask today is not whether our government is too big or too small, but whether it works…”

What demonstrates this very clearly is the same old Republican obstructionism in their complaints about the economic stimulus plan.  They want to be in charge, they want to do the same stuff that brought us here and was rejected in the last election, and they think that if President Obama doesn’t roll over there is no bipartisanship.  But you expect no less from these low-life scoundrels.  Just keep reminding yourself who got us here and even though the bailout bill is not perfect (see The Economic Stimulus), it is a start.  But what is coming to the forefront is that we are not ready for the hard work, courage, and bold action necessary to bring about the change necessary to save us.  Here is my evidence:

  • The Democrats are working way too hard to achieve bipartisanship agreement on the stimulus package when the compromises they make with the Republicans further waters it down and makes it less likely to succeed after passage.  The tax cuts in this bill are a bone thrown to the Republicans, but a big one of 37% of the total package.  They are inefficient for stimulating the economy and give us nothing for our money spent.  Democrats need to have the courage of their convictions and write a bill they think will really help (move the money to infrastructure).  As it is they are giving the Republicans a chance to water down their bill and then claim victory if it fails to stimulate the economy because it is too timid.
  • When President Obama signed his executive order to close Guantanamo and to end torture, the cries went up that we would not be safe.  I have addressed this in detail in my blog (What Part of Get Rid of Guantanamo Don’t You Get), but to make long story short either we have values or we don’t.  Those who want to throw out the law so they can feel safe are moral cowards.  They don’t have the guts to stand by their values and except the consequences.  There is no other way to look at it.
  • President Obama not only asked EPA to revisit allowing states to set their own greenhouse gas limits, but moved to raise the mileage standard by 2011.  Let the shrieking begin.  The auto industry, you know, those guys who have run themselves into the ground with poor decisions, starting shrieking how this would be their downfall supported by their paid for politicians.  This is just too much to bear in these hard times.  So when do you guys come into the 21st century and retool with a car we want?  When it was the good times you made the same argument.  Hard decisions don’t wait and those that can make this transition will be around for a while, and those that can’t wouldn’t be here anyway.  Just exactly what were they going to do with the bailout money, continue building their gas hogs?  The climate and our dependence on foreign oil won’t wait any longer.  What part of this don’t you get yet?  Recovery is a bitch isn’t it? (New York Times)
  • Energy policy is producing some dissidents in the Democratic Party.  Republicans by definition are dissidents.  The argument is quite frankly who are the winners and who are the losers.  The mid-West, dependent on coal and manufacturing, wants a much more slow moving program that does not disrupt their economic life.  The West and East want, well, you have seen California’s approach to capping green house gases.  It would seem at first blush to be prudent to move carefully, but global warming and our dependence on foreign oil are not moving carefully.  Sooner or later we have to make hard decisions to move us away from our failed path and in those decisions some will be losers.  So far we have not shown the moral courage to face the hard consequences of hard decisions.  We are still addicted to the Republican free ride. (New York Times)

There will of course be more to come and the whining and shrieking will commence again, “It’s too hard, we can’t do it now, it hurts too much.”  So I will ask you all, if not now, when?  We already lost eight years.  Every day we lose is a day we lose.  It is now or never.  It is going to hurt and some apple carts are going to get over turned.  Isn’t that what President Obama said?  Where the hell is our courage?  Do I sense some gutless wonders out there hoping for gain without pain?  That is what we got from the Republicans with trickle down economics and it has been a disaster.  Didn’t you all say we were on the wrong path?  Where is your courage to face change?  What I see is a bunch of gutless wonders.

Resisting Change

I am amazed at how failed ideas seem to have a life of their own.  What is it about being wrong that is so hard to admit and to finding new possibilities?  The lessons here came in three doses this weekend, all from our out-of-touch conservatives who think they can somehow recreate yesterday.  My only hope is that I am overreacting and that the mainstream media is being ignored by our younger generation that will inherit these catastrophes if they are allowed to gain any traction.

First up are the Republicans on the stimulus package.  Try to focus here:  The Republicans have cut taxes for the last eight years, created the largest deficit in our history primarily due to these tax cuts, and the federal interest rate is now zero and their answer is to, oh you guessed it, cut taxes.  It has worked so well so far.

We have the minority leader of the House, John Boehner (R-Ohio), my definition of a mental moron because he spends his life misstating facts and failing to learn from his mistakes, telling us:  “Right now, given the concerns that we have over the size of this package and all of the spending in this package, we don’t think it’s going to work.”

Of course his plan for fixing the economy is best stated by another brain dead Republican, John McCain: “We need to make tax cuts permanent, and we need to make a commitment that there’ll be no new taxes.  We need to cut payroll taxes. We need to cut business taxes” (New York Times).

Isn’t that what we have been doing under their leadership for the last eight years and what we got for it is a failed economy and the largest deficit in history?  But let’s do it some more until it works.  Brain dead is being far too kind.

What is really driving the train here is that if government spending instead of tax cuts does help the economy, these guys are up the creek in a canoe without a paddle, so to speak.  If their economic theories, which are really the basis of the total conservative belief system, don’t work, then they really are superfluous and they know it.  So they will continue the fight to defeat the stimulus package, or to at least make it as ineffective as possible so they can claim victory.

The thing you might want to ask them is why not give the stimulus package and government spending stimulus a try?  We have tried it their way (with the Democrats going along for the ride) for twelve years so how about we try something new?  But as noted earlier, they can’t let that happen.  Paul Krugman’s column, Bad Faith Economics, chronicled how they are using misdirection and lies to muddy the waters.

In the vein of misdirection, I was watching CNN’s Your Money and one of the pundits was explaining how some economic indicators indicate that the economy is already starting its rebound and the economic package isn’t necessary.  This is denial at its height and zenith.  I opened the paper today to news of more and more layoffs and the banks shrinking further from the markets.  I wonder what planet of wishful thinking he is on?  It is so hard to admit reality when the reality makes everything you know obsolete. It does no good if the market is strong and no one has a job.  Maybe the market is not the sole indicator of our economic health.

So what else could these bad boys be doing to hold us back?  Well in Texas the social conservatives (and you can bet they are not Democrats) are at it again trying to question evolution and getting their textbooks and curriculum to question good science (New York Times).  It appears that their book buy could effect other states so this denial of what the curriculum experts and scientists have recommended by the social conservatives on the board of education could impact the teaching in many other states.

Here we are in a world that is competitive and continually changing, and we still have this group of people who think under educating or dumbing down our young to meet their religious goals is a good idea.  And you wonder why I want to jettison all the Red States.   This nation could be so much further along if we had ignored the know-nothings a long time ago.

Finally back here in California, with the news of President Obama lifting the restriction on California and other states regulating greenhouse gases, a Republican legislator is proposing that in these tough economic times we repeal the state law that would limit global warming emissions and gas mileage restrictions.  He says we can’t afford it.  I say we can’t afford not to afford it.  Talk about short term thinking.

Here is his thinking and in a nutshell is the failed thinking of conservatives:  Times are tough so let’s go back to doing things the way we use to that have created the problems we are facing.  These people are a study in lacking moral character and forethought.  It is a new day, the world has changed, and we have to start thinking in different ways.  What part of this don’t they get?

Ah, but vested interest and fear of the future where what you know may be obsolete makes the “little people” cling to false hopes and old ways of dealing with our world.  It is time to jettison these “little people” and move into the world that really exists.  If we don’t, welcome to the third world.

Tragedy Update

I have had quite a few hits on our tragic loss of Brooke Colvin.  Although I have put this in the comments, those that want to attend her celebration of life or send a card or note, here is the information:

The official Celebration of Life will be in Placerville, CA on Thursday, January 29th at 12 noon at Camp Lotus (5461 Bassi Rd Lotus, CA 95651).

We are asking that anyone who wishes to give a donation in Brooke’s memory send it to her unit at Providence hopital. Please send/make checks payable to:

Providence Portland Medical Center
Attn: Chris Taylor
4805 NE Glisan Street
Portland, OR 97213

Your donation will go towards the “Brooke My Love” fund to help support the unequalled care the “5G” nurses deliver to their patients. ( email from Jed & Sara Colvin)

For contacting both for Thad and the Colvins at least for the near term use this address (Brooke’s parents):

Dennis and Robby Colvin
2854 Bennett Circle
Placerville, CA 95667

What Part of Get Rid of Guantanamo Don’t You Get?

For most of us, closing Guantanamo is the first step in redemption.  I know, I know, it is just a place, but it epitomizes all the values we lost on the way to “winning the war on terrorism’, which of course is unwinnable.  You can’t win a war against a tactic.  It has been in use since the beginning of time, but I digress.  President Obama has issued an Executive Order (REVIEW AND DISPOSITION OF INDIVIDUALS DETAINED AT THE GUANTÁNAMO BAY NAVAL BASE AND CLOSURE OF DETENTION FACILITIES) in accordance with his campaign promise and they are coming out of the woodwork saying it can’t be done.  “Be afraid America, these are very bad people.”  “You can’t put them in my state.”  “Maybe they ought to go to Alcatraz” (Representative John Boehner). Boehner also repeated the bogus number of 61 detainees who have returned to the battle field.  More about that in a minute.  It is pure fear tactics all over again.

First and foremost let’s remember we started with 800 detainees and have now cut it down to less that 300.  Most had nothing to do with terrorism and have been horribly treated because we threw out the rule of law.  The stated figure of 61 detainees claimed to have returned to the battlefield, only one has been unquestionably identified as a fighter for al-Qaeda (Wikapedia).  There may be more, but it certainly is not the 61 they are using to scare you. But before you are shocked, shocked, shocked that a few have returned to the battle ask yourself a couple of questions:

  • First considering their treatment, wouldn’t you hate the United States?
  • Second, ever consider the recidivism level from our own prisons?  If you don’t think we are releasing very dangerous Americans to our own streets you are in la-la land.
  • Third consider who most of these guys are in Guantanamo:  Ignorant, not well-educated peasants.  I am quaking in my boots.  You should be much more afraid of those who were recruited from the better-educated Muslim societies because we established Guantanamo and used torture.
  • Finally consider why these guys were released if we know they are so dangerous?  Could we not support the charges and why not?

Okay, lets get to the heart of the matter, the really dangerous ones which are probably countable on one or at most, two hands.  The argument goes that we know they are criminals but cannot use the evidence we have because it is badly tainted and they might go free.  Therefore we must come up with a way to preventatively detain these bad guys.  I don’t buy it and neither should you.  First, if the only evidence they have may be disallowed because of the improper way it was obtained (torture), it is highly unreliable anyway.  If they can’t rebuild their cases with real evidence and try them in a real court, these people need to be released, period.

Think about it this way.  If we decide that there is a certain class of people who don’t deserve the rights and protections we hold so dear, who draws that line about who does and does not deserve them.  “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights….”  Our basic values say all men, not just the ones who are specially chosen.  If we deny those rights from some subclass of men, we no longer are who we think we are nor are our rights secure.  So when do I do or write something that someone thinks makes me a danger to them (some think that as I currently write) and decides to include me in that subclass that no longer has his basic rights.

I will accept that we do preventatively detain some people deemed mentally incompetent and are deemed a threat to themselves or others.  But the process for doing this is well defined, and we are talking about provable mental impairment, well documented in law.   But when we start incarcerating people because we think they might commit a crime we are starting down the slippery slope of defining subclasses of people who don’t enjoy self-evident truths.  If you believe this is justified then 80% of our own criminals should never be released from our own prisons.

What I see in the scare tactics being used is raw cowardice.  Nobody said being an American and standing up for our ideals was going to be easy.  In order to uphold our principles some dangerous people may get released.  Some innocent Americans may die.  But what the cowards want you to do is throw away what you stand for so you won’t be afraid.  I find it highly ironic that those that support the continuation of Guantanamo and preventative detention are the first to wave the flag and the last to want to suffer the hard consequences of our beliefs.  In other words they are cowards because they lack the courage of their convictions. They are afraid to stand up for the very American Ideals they tout.

Simply put:  Charge them, try them, or release them.  It is who we are.  If they come back as terrorists on the battlefield, they will die as terrorists on the battlefield.  But if we can keep our values in tact, they will have a hard time justifying their hostility toward us and those that paid the ultimate price defending us will have died for something important.

The Economic Stimulus Package

I have been doing my homework reading books on what has happened to our economy and our way forward (Return of Depression Economics – Krugman, Bad Money – Phillips, Panic – Michael Lewis, The Predator State – James Galbraith, The Hanbbook of Financial Instruments – Fabozzi, and numerous articles).  In the coming week or two I will try to distill what I have learned.  But I will give you a preview.  There are really two stories here, one of microeconomics describing what happened in the financial markets, and one of macroeconomics, looking at capitalism and world markets as they now exist and work.  Yes they are interrelated, but when you look at what is and did go wrong with both, I think the causative factors are very different.  Anyway, more about that later.  Right now we need to stop our shrinking economy or at least slow it down and what is on the table is the Obama Economic Stimulus Package (American Recovery and Reinvestment Bill of 2009).

What is happening is that people are spending less: there is less demand for goods and services; there is less tax revenue created; and we are in a cycle of layoffs, less spending, and more layoffs.  In the past, part of the problem was that much of the spending may have been propped up by borrowing.  Once borrowing dried up, the spending spree was over.  Actually it is a lot more complicated than that, but the conventional wisdom is that we need to reverse this shrinking trend by growing spending.  Now comes the tricky stuff, which is how to stimulate the spending and reverse the economic downturn.

Conservatives think that government spending is evil and develops a dependence on that spending, and therefore they would prefer tax cuts to stimulate private spending.  Progressives reject the tax cut approach as not getting much spending bang for the buck  based upon the results of the last tax cut to stimulate the economy, and that private spending is not going to be enough to kick-start the economy.  That is where the Obama Stimulus Package comes in and it may be a compromise to nowhere.

The package as it is currently configured breaks down kind of like this (roughly, sort of):  43% direct aid to states for social services and education, 37% in tax cuts, and 20% in infrastructure.  Much of the tax cut spending came out of the infrastructure percentage.  Let’s take each one and look at the pluses and minuses of the proposed spending.

Tax Cuts $306.3B, 37% – Conservatives don’t think this is enough and progressive (myself included) think this is wasted spending.  Both sides want to see a quick injection of cash into the economy to spur spending.  But the question you might want to ask is spending for what?  Conservatives will tell you that the government should not be directing how you spend your money while progressive will point out that last time we cut taxes to stimulate the economy most of the money went for either consumer electronics (that went overseas) or went into savings.  In other words, very little bang for the buck.  If this is our money, shouldn’t it be spent on something that will not only put money into the economy, but invest in something that will produce returns in the future?  The other issue is whether this kind of cash inflow is anywhere near sufficient to simulate the economy if you assume private spending will be enough to do just that.  From my point of view this fails on both points.  It is wasted money that won’t be invested in our future, and is not near enough to prime the pumps.

Aid to States/Social Programs $358.7B, 43% – Everyone agrees that as state incomes fall, and now 47 out of 50 States are showing shortfalls in their budgets, the federal government needs to help the states maintain their social programs, and help those who are losing their jobs.  But the conservatives raise a valid concern in that these types of federal programs develop a life of their own and the states become dependent on this cash flow.  No one believes that we should just abandon the young, old, or homeless, but this type of spending may be much better utilized if states are forced to reform their own systems as a condition for receiving this aid.  Here in California there was a article in the paper that we might expect $21 billion in help.  But California is the poster child for how not to run government and until government is reformed, this money will just allow the failed systems to fester.

Infrastructure $160B, 20% – The smallest part of this stimulus package is the most important part and will leave us something in the future to build upon.  Conservatives argue that these types of programs take too long to get money flowing in the system to rescue us.  I would also add that the other problem is that states will rush to get their share of these funds by building projects that don’t reflect our changing world (like highways instead of high speed rail).  In my mind it is way too small and not properly focused.

So to make a long story short, the economic stimulus package is a throwback to old ways, doesn’t have a unifying strategic goal other than to spend as quickly as possible, and is way too small to make a major impact on what is becoming a global crisis.  It will not succeed and will just set us up for Phase II of another round of spending.  The real way forward is an understanding that it cannot be piece meal.  Health care reform is part and parcel of the problem.  The banks holding toxic investments have to be addressed and some need to go under.  Home foreclosures have to be drastically reduced.  And then we must pump money into our economy in a way that doesn’t just stimulate spending as an end result, but is part of a strategic plan for investing in our future.  I challenge anyone to tell me what our strategic plan forward really is.  I am in good company here as even conservative columnist David Brooks found no strategic plan (The First Test) and liberal economic columnist Paul Krugman found it a muddle (Stuck in the Muddle).

The conservatives have the edge here because their dogma of tax cuts requires no planning or strategic thought, and they can use the fear card of growing deficits to bolster their arguments.  The problem is that it has not worked in the past and will surely fail now, but it is an easy sell for a populace who is used to not making sacrifices.  The proof is in the cry, “Where is my bailout?”

Progressives have their work cut out for them because not only do they have to get an agreement on what investments will be most productive, but they must overcome the very real fear of deficits out of control.  I personally feel strongly that the only way forward is the progressive way, but much like FDR when he buckled to growing worries about the deficit, shrunk the economy and threw us back into a deep recession, it is going to have to get a lot worse before people are willing to really do something different.  When that happens, we will understand the strategic purpose of our spending and have agreed to a way forward.  Right now we are floundering in halfway land.  Progressives need to remember they won the election and not fall for the call to bipartisanship when it really means incorporating failed conservative ideas into your plan.  Trust me on this, if the tables were turned, they would not compromise with us.  There idea of compromise is their way or the highway.  That is why we are in such a mess today.

A Tragedy

This will be a hard blog for me to write.  It drags up emotions I don’t want to confront, the loss of one of your children.  Friends of ours are facing that reality this morning when their daughter, Brooke Colvin, was killed Wednesday in a freak accident on Mount Hood (Clakamas County News).  I did not know Brooke well, but I know a kind, gentle, beautiful soul when I see one, and she was so full of life and its possibilities.  The ending of her life is a loss of profound depth to her husband, her family and all those that loved her.

Now the question is what can I do to help those that really can’t be helped.  If I learned anything from the loss of my own daughter, there are no words.  Some try to make sense out of this loss.  I won’t go there.  If someone in their own grief can find some solace wherever they can, then please give them that relief. I know what it is like to wake up in the morning and have that emptiness in your heart and know your world has changed forever.   It is just hard to accept that some times bad things happen to good people.

I remember some of the things people said to try to console me, and I know it came from the kindness of their hearts, but I wished they would have just changed the subject.  I never knew what to say back.  I guess it was just nice that they cared.  But then maybe other people aren’t like me.  Maybe all the activity generated by caring friends was the distraction one needs not to be swallowed up by our own grief.

There are many things that cross my mind that one might say or do to help.  She definitely lived her life to the fullest.  She was loved by everyone who knew her.  She brightened the lives of many, many people.  Her life made a difference.  She truly was a beautiful person.  Yet in the end, there is just that emptiness that just won’t go away.  I guess I could tell them that it does get better after awhile, tolerable anyway.  But then I know none of that makes any difference right now.  Maybe the only thing I can offer is that we have the family in our thoughts and we will be there to help to do whatever we can do.  But I know deep in my heart, nothing helps.  It is just going to take a long, long time.  And then I am always conflicted by whether what I am doing is to help them or me.  I guess we all just do what we can and hope it helps.

So long Brooke.  You made such a huge impact on so many lives.  Dennis, Robby, Thad, Jed, Sara, Matt, you are in our thoughts.  I am sorry.  It is all I know how to do.

True Colors

Apparently the honeymoon is over.  The conservatives have raised their ugly heads and we are going to see how they will work to make sure that change will not be easy.  Today was the tip of the iceberg, but you can expect much more.  First there was a delay by Senator John Cornyn (R-Texas) of Hillary Clinton’s nomination to Secretary of State.  He got nothing tangible, and she was confirmed, but he probably made points with the right wing wing-nuts that form his base.  Oh his argument sounded minimally reasonable, that he was just protecting the nation from possible influence by contributors to her husband’s activities, but the reality here is that he was probably curing favor among the Hillary haters in his party.  So much for getting a team in place and start working on our problems.

But wait, there is more. President Barack Obama’s Treasury Secretary nominee Timothy Geithner faces grilling by the Republicans.  Now I will give them their due here in that failing to pay income taxes is a big boo-boo, and even more troubling is his part in the original failures in the financial markets and his role in the Bush administration’s bail out.  But the arguments in his favor are that he knows how this system works and maybe how to control it.  So with some dithering, he will be confirmed.  They just want to make it hard under the guise of asking all the right questions.

But here is where the conservative’s real colors come out and that is the confirmation of Eric Holder for Attorney General.  The Attorney Generals Office is where the Bush Administration did real damage to our democracy because they subverted justice.  It needs fixing fast.  This is the office that justified torture, politicized its attorneys, and used the rule of law to try to subvert elections.  Eric Holder was doing fine until he told the truth:  Water boarding is torture.  Unlike his predecessor who they loved, he knows torture when he sees it.  Uh-oh.  Cat is out of the bag.

So what the conservatives really want is an agreement that Holder will not prosecute.  Now the dance they will perform is that good people doing what they thought was right in difficult circumstances should not be punished, let’s move on.  Senator Kay Bailey Hutchinson (another Texas Neanderthal) tried misdirection saying she is concerned about Holder’s stand on guns and the 2nd Amendment, and they need to ask more questions.  This one is total misdirection.  The issue is torture and they want to delay till they get an agreement not to prosecute.  And that would be a great big mistake, but let me explain by letting you hear how I think Mr. Holder should answer their new questions:

Senator Foghorn Leghorn (Senator Mitch McConnell/Arlen Spector, take your pick):  Mr. Holder, do you really think laws were broken?

Eric Holder:  Well Senator Leghorn, like my predecessor Judge Mulcasey who couldn’t really decide if water boarding is torture until he had studied it which you guys seem to like just fine, I can’t tell if laws were broken till I investigate what really happened and I can’t do that till you confirm me.

Senator Leghorn:  Well Mr. Holder, certainly you understand that good people were just trying to do their job and we don’t need to prosecute those that just thought they were following orders?

Eric Holder:  Well Senator Leghorn, I believe that it is my job to enforce the law.  Are you saying that the law doesn’t apply to some people and I should pick and choose which laws I should enforce?

Senator Leghorn:  No, No, of course not Mr. Holder, but surely you understand that people were just trying to do the right thing.

Eric Holder:  I believe that we must investigate what really happened.  Then based upon the facts we will decide who knowingly broke laws and who thought they were following legal orders and then take the appropriate action.  To do anything else would be to ignore my responsibility as Attorney General.  Is that what you are asking me to do Senator?  Don’t you think the law applies to everyone?

Senator Leghorn:  Yes, Yes, of course  Mr. Holder, but I have to tell you that because of your stand on the 2nd amendment I will have to vote against you.

Eric Holder:  But Senator Leghorn, there are no issues before the justice department that impact the 2nd Amendment and the Supreme Court has ruled in the Washington D.C. case.

Senator Leghorn:  Are you challenging my authority?

Well you get the drift.  These guys don’t want to hold anyone accountable, especially if they were carrying out what these guys facilitated.  Truth is a little inconvenient so lets just ignore it.  They really don’t want change.  They want things back the way they use to be.  You have seen nothing yet.  Wait till we get to discussing the bailout package.  At least Rush Limbaugh was honest today when he said he wanted to see President Obama fail.  They are a great bunch aren’t they?