Opinion and Editorials2008-07-23T12:11:22-06:00ExpressionEngineCopyright (c) 2008, StaffA Time for Urgencytag:therochesterdemocrat.com,2008:ee/index.php/35.439322008-07-23T12:09:01-06:002008-07-23T12:11:22-06:00{summary}2008-07-23T12:09:01-06:00Staffeditor@TheRochesterDemocrat.comWhat Others Say
NY Times Editorial
July 23, 2008
In the nearly two weeks since he announced a plan to rescue Fannie Mae and Freddie Mac from insolvency, if need be, Treasury Secretary Henry Paulson has insisted that it is vital for Congress to approve the proposal quickly, preferably, this week. To help ensure quick approval, it has been attached to a larger foreclosure prevention bill that Congress is finalizing.
Unfortunately, support for swift passage is mixed from one important quarter: Mr. Paulson’s boss, President Bush.
On Monday, the White House renewed its threat to veto the foreclosure prevention bill if it contains a $4 billion block grant program for states to buy up foreclosed properties. The veto threat is misguided, first, on policy grounds. Mr. Bush wrongly portrays the grant as a handout to speculators when its main thrust actually is to protect communities from a destabilizing buildup of abandoned, unsold homes.
The veto threat also is a bad idea politically. Mr. Bush has not objected when the big firms and rich executives of Wall Street have been on the receiving end of federal assistance, but now he is threatening to block a measure to aid hard-hit neighborhoods filled with ordinary Americans. Worst of all, at this juncture in the year-old financial crisis, when perceived weakness of Fannie Mae and Freddie Mac threaten global financial upheaval, Mr. Bush’s veto threat undermines the urgency that his treasury secretary is rightly seeking to convey. That complicates passage of the rescue plan and presents a picture of policy disarray to the rest of the world.
The purpose of the rescue proposal — which would allow the Treasury Department to use taxpayer dollars to buy obligations and securities of Fannie Mae and Freddie Mac, if needed, to keep the companies afloat — is to restore confidence in the United States’ ability and commitment to contain the financial crisis. If Mr. Bush himself is a roadblock — and lawmakers, following his cue, find their own reasons to delay and finagle — confidence will be damaged, not bolstered.
Mr. Paulson must also acknowledge, more clearly than he has so far, that he is asking Congress to approve a plan that puts taxpayers at great risk. He has been playing down that risk to date, feeding public insecurity rather than reducing it.
In an interview on Tuesday with reporters and editors at The Times, Mr. Paulson said the risk of taxpayer loss was lessened because Fannie and Freddie had “good” collateral for any loans they may receive. But the audit of the two companies by federal regulators is not yet complete, and, in fact, questions remain about the quality of the assets the companies hold and guarantee.
On Tuesday, the Congressional Budget Office reported that 15 percent of their portfolios —$780 billion — is composed of assets that are subprime or Alt-A, the level just above subprime. The budget agency believes that there’s a better than 50 percent chance that the government would never have to step in to bailout the companies. But if it had to, the sums could be huge.
Mr. Paulson should be upfront with Americans about the risk and explain that the best way to deal with it is to develop a comprehensive response. He should also be frank about the far worse risks of delay and inaction. Foreign purchases of Fannie and Freddie obligations comprise a big chunk of the billions of dollars that the United States needs every day just to balance its books. Confidence in the companies is inseparable from confidence in the dollar itself.
The president must lead and Congress must act, and in a timely way. The nation’s leaders bear enormous responsibility for their inaction as the financial crisis developed. They should not compound that sin by failing to take the necessary, if politically unpopular, steps to clean up the mess they helped to create. And they must take those steps soon.
]]>Progressive Ponderings: Too Big to Failtag:therochesterdemocrat.com,2008:ee/index.php/35.439202008-07-22T19:37:00-06:002008-07-22T19:41:36-06:00{summary}2008-07-22T19:37:00-06:00Staffeditor@TheRochesterDemocrat.comProgressive Ponderings
by Joe Mayer
July 22, 2008
Oops! The free-market myth-makers, ideologues, gurus, and practitioners have taken it from the shorts and are fighting back with non-free market strategies.
But first, we are experiencing a perfect example of the falsity of the conservative economic agenda and its idea of governing. Since Reagan they've promoted the "market solves all problems" myth that achieved its apex in the past seven years. The myth and its resulting policies have created the largest economic divide since the Great Depression. The myth faithful jumped right on the mortgage problem by rescuing one of the largest investment banks in the nation.
Now Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Association) are in the spotlight as Treasury Secretary Henry Paulson argues before Congress that the two mortgage giants are "too big to fail." Fannie and Freddie are unique hybrids, the creation of a corporatized government. Stockholders own and control them and receive the economic benefits but they are backed by you, the taxpayer, who guarantees any losses. Heads, they win; tails, you lose. Paulson, with Bush and conservative backing, is pushing Congress to increase taxpayer commitment.
Thus, we have the free-marketers asking the "evil" government to guarantee their loses. It's really tough to admit that they seek a bailout. So tough, that Pres. Bush needed to say, "this isn't a bailout because they're still owned by stockholders." Duh?
The second part of the "bailout" is more hushed – the corporate-owned mass media didn't believe it worthy of "we the people's" knowledge. On July 15, the SEC (Security Exchange Commission) issued an emergency order to enhance investor's protection against "naked" short selling in the securities of Fannie and Freddie and seventeen other primary dealers – commercial and investment banks – foreign and domestic. This took effect July 21 and terminates July 29. The SEC, charged with the protection of ordinary shareholders, has played "Rip Van Winkle" for the past seven and one-half years. When the "big boys" started to hurt, Rip awakened in righteous indignation. SEC Chairman Christopher Cox stated, "Today's commission action stops unlawful manipulation through "naked" short selling that threatens the stability of financial institutions. We will continue our vigorous commitment to investors by working within the SEC and in close cooperation with our regulatory counterparts to promote the continued health and vibrancy of our markets."
I love his choice of words, "vigorous commitment," "regulatory counterparts" (that had to hurt using regulatory), and especially "unlawful"- it's almost a Bushism. If "naked" short-selling (selling stock you don't own; it's a common market strategy and a 'free-market principle) is "unlawful," why is the SEC order only for nine days – July 21 to July 29? Answer – it gives the impression of doing something to a gullible public.
The effect of the SEC order was immediate and dynamic. Fannies and Freddie stock prices, which had been in a nose dive, recovered 90% and 50% respectively within the first five days of this order. Of course, some of the biggest holders of these shares are the officers and directors along with the owners of powerful financial institutions. Also, Fannie and Freddie are among the most generous Congressional campaign donors and lobbyist hirers.
The stocks of the other seventeen financial institutions mentioned in the SEC order reacted very positively but not as dramatically. One of these, UBS AG is the bank of which Phil Gramm, McCain's now-resigned economic advisor, is vice chair. This bank is also charged by the IRS with helping wealthy American patriots hide income from U.S. taxation.
This mortgage crisis is a repeat of the S & L crisis of the 1980s when taxpayers once again were asked to bailout the rich. In that crisis, John McCain was one of the "Keating Five," pushing legislation favoring the rich and their institutions.
Free-market mythology works until it doesn't. Then corporatized government bails out the rich with middle class taxes. Pity the conservatives - How to hide this 3-4 months before an election!
]]>Collin Peterson: Farmers fear McCaintag:therochesterdemocrat.com,2008:ee/index.php/35.439152008-07-22T15:38:00-06:002008-07-22T15:41:38-06:00{summary}2008-07-22T15:38:00-06:00Staffeditor@TheRochesterDemocrat.comOp-Ed Column
Minnesota Post
Guest Op-Ed Columnist
July 21, 2008
Winning the farm vote is always tricky.
On one hand, people living in rural communities tend to be socially conservative, and their voting records reflect that. That said, farmers are fiercely protective of the New Deal era government programs that bolster their businesses, and bad-mouthing those subsidies tend to make rural voters run in the other direction.
That dynamic is already playing out in Minnesota, where more than 27 million acres are dedicated to farming. (PDF)
Of the two, McCain is going to have the hardest time wooing rural voters, said U.S. Rep. Collin Peterson, D-Minn. As House Agriculture Committee Chairman, he just saw his $289 billion farm bill signed into law.
"Farmers in my state are scared to death of McCain," he said. "He's never liked anything that we've done. I think he's going to have a hard time with farmers."
Opposed farm programs
McCain, who voted against the 2002 farm bill, has never been afraid to voice his distaste for agricultural programs; he says they are bad for international trade and bad for taxpayers. And though he didn't show up this spring to cast his final vote on the new measure, McCain called it a "a bloated piece of legislation that will do more harm than good for most farmers and consumers."
Minnesota Farmers Union President Doug Peterson said that when it comes to farm policy, McCain won't differ much from Bush. For example, both have criticized a plan that would divert excess sugar to ethanol production for being an expensive give-away to the sugar industry.
"When you start looking at his voting record, he's not much in favor of what's popular in farm country," Peterson said, adding that McCain's stance on sugar supports won't play well with the state's sugar beet growers.
McCain and Obama have a lot to learn about the farm industry, said Kevin Paap, president of the Minnesota Farm Bureau. He points out that farmers have a major stake in the debate over energy prices and alternative fuels as well.
"Both of them need to better understand that we're not part of the problem, we're part of the solution when it comes to energy," Papp said.
Obama on farm measures
For his part, Obama doesn't have much of a record on farming issues. In 2002, when the last measure was passed, he was not yet in office. And this year he did not show up for the final debate, though he did support the measure. Save a plan on his web site to help rural communities, Obama has taken a relatively low-key approach to farming issues during the campaign, focusing instead on the war, the economy and health care.
In the meantime, Peterson said the Farmers Union has invited Obama to the group's annual Farmfest in August, an event that helped spawn House Speaker Nancy Pelosi's reputation as a friend of the farmer after she attended last year.
But so far, Peterson said, he's not heard back from the campaign.
"It's hard to schedule these presidential types," he said.
]]>Drill more now, pay less at the pump? Not so fasttag:therochesterdemocrat.com,2008:ee/index.php/35.439122008-07-22T11:58:00-06:002008-07-22T12:02:06-06:00{summary}2008-07-22T11:58:00-06:00Staffeditor@TheRochesterDemocrat.comPerspectiveExpanded oil exploration and drilling could have a big impact -- in the long run.
By PAT DOYLE,
Star Tribune
Last update: July 21, 2008
With high gasoline prices jolting summer travel and the economy, many members of Congress are pushing to open up an Alaskan wildlife refuge, the nation's deep-sea reserves and oil-shale fields for exploration, drilling and mining.
Few proponents have been more vocal than Rep. Michele Bachmann, R-Minn., who says expanded drilling and mining could provide "immediate and lasting" relief and slash gas prices to $2 a gallon.
Yet even as public opinion shifts in favor of more energy production, public and private analysts doubt that it would significantly reduce prices, at least any time soon.
The Alaskan National Wildlife Refuge (ANWR) holds too little oil to reduce gas prices more than a few cents per gallon, and new sources of oil could take decades to develop, according to government analysts.
Oil shale in Western states might be significant enough to one day exceed imports from Saudi Arabia, but it faces tough technological hurdles to become reality.
"It [oil shale] is sort of meaningless in the sense that it's such a large resource base and we're so far from producing it," said Philip Budzik, an oil and gas analyst at the U.S. Energy Information Administration. "It's not going to be tomorrow, and it's not going to be in 10 years."
Even an advocate of expanded drilling and mining says it should be done in tandem with an aggressive government effort to lower consumption, which he says is the quickest route to lower gas prices.
"The low-hanging fruit is not energy production, it's conservation," said Robin West, an energy consultant who ran the U.S. offshore drilling program while assistant secretary of the Interior under President Ronald Reagan. "The simplest way ... is enforce the speed limit ... and then drop it."
West also favors government action to require greater fuel efficiency than a 35 miles-per-gallon target recently approved by Congress, and more spending on mass transit.
Drilling in the restricted areas, West says, is a long-run strategy.
"Long term it could have a lot of impact," he said. "Near term it will have very little impact. But by that logic, you shouldn't ... save for your retirement." He added that alternative energy sources, which opponents of drilling often promote, also could be years away from having a major impact.
Shifting opinion
The push for more drilling has intensified in an election year amid evidence that more Americans support the idea. A Pew Research Center poll released this month showed that 47 percent now rate energy exploration as a more important priority than conservation, up from 35 percent in February. The proportion saying it is more important to increase energy conservation and regulation has declined from 55 to 45 percent.
Scores of U.S. House members are backing bills calling for developing ANWR and restricted areas of the Outer Continental Shelf and Western oil shale. Rep. John Kline, R-Minn., has joined Bachmann in supporting six measures, two of which also include provisions to expand oil refineries and nuclear, wind and clean-coal technologies.
"We ought to be doing more to develop American energy," Kline said, adding that technological advances have greatly reduced environmental hazards offshore and in Alaska.
Rep. Collin Peterson, D-Minn., joined Kline and Bachmann in supporting a measure allowing drilling in ANWR on condition that some of the revenue from the new oil leases be invested in alternative energy.
Generally, however, Democrats are more inclined to emphasize conservation over drilling in restricted areas and argue that oil companies have failed to drill where it's already permitted.
U.S. Senate candidate Al Franken, a DFLer, makes that argument in opposing drilling or mining in any of the restricted areas. Sen. Norm Coleman, a Republican, opposes drilling in ANWR but favors doing so in offshore areas and opening new lands to oil shale mining.
Both favor more stringent fuel efficiency standards. Coleman says he'd consider lower speed limits while Franken opposes it.
DFLer Elwyn Tinklenberg, who is challenging Bachmann for the Sixth Congressional District seat, opposes drilling in ANWR but favors offshore and oil shale development. He opposes a lower speed limit but favors raising fuel efficiency requirements.
"We are not going to be able to manage the energy crisis from an oil-only solution," said Tinklenberg, who emphasizes alternative energy and conservation.
Long-run potential
Bachmann, like Kline, sees production as the answer. She opposes both lowering the speed limit and raising fuel efficiency standards to conserve. "We can conserve and conserve and conserve, but that won't get us out of the situation we're in without expanding energy supplies," she said.
By opening restricted areas and fast-tracking drilling permits, "very quickly, we can see this energy coming on line so we can get Americans back to $2 a gallon gas," she said.
Bachmann was expected to visit ANWR today to underscore her desire to drill there. But opening the refuge to drilling "is not projected to have a large impact on world oil prices" or the price of gasoline, said Budzik of the Energy Information Administration (EIA). Tapping the refuge could cut the cost of a barrel of oil by perhaps 2 percent and shave 1 cent to 3 cents off the pump price of a gallon of gas, he said.
As for the Outer Continental Shelf, the EIA said it "would not have a significant impact" on oil prices before 2030.
Referring to oil shale, Bachmann wrote recently that there is "enough energy locked away in Colorado, Utah and Wyoming to offset all of our imports from Saudi Arabia." The Argonne National Laboratory confirms that the theoretical potential is great.
But the EIA said there are major technical hurdles to extracting oil shale. "It is not clear that the lifting [federal restrictions] would have a significant impact on projected oil shale production" for the next two decades.
The role of speculation
Bachmann contends that enacting a comprehensive drilling plan would immediately drive down prices because oil futures traders would anticipate greater supplies in later years. Others doubt this because futures contracts will expire before the new oil becomes available.
Futures traders "do a terrible job pricing ... how much is available 10 years from now," said Nate Hagens, who edits the Oil Drum, an online energy forum.
A broader question has been whether speculators are to blame for some of the rise in oil prices in the past year.
U.S. Deputy Treasury Secretary Robert Kimmitt was quoted recently by Dow Jones Newswires as saying: "We just don't see speculation having a major impact."
Yet others in the industry see speculation by pension funds and other institutions as influencing as much as 30 percent of current oil prices.
Congressional Democrats are pushing for a law to curb speculators and Republicans propose a milder version that also allows expanded drilling. Both Franken and Coleman said they would support restrictions on speculators.
Washington bureau correspondent Emily Kaiser contributed to this report.
]]>Poverty’s Real Measuretag:therochesterdemocrat.com,2008:ee/index.php/35.439102008-07-22T11:52:00-06:002008-07-22T11:53:26-06:00{summary}2008-07-22T11:52:00-06:00Staffeditor@TheRochesterDemocrat.comWhat Others Say
NY Times Editorial
Published: July 22, 2008
For some 40 years, the nation has used the same formula for calculating poverty, using the cost of food as a gauge and applying a single poverty threshold across the nation — from Boise to the Bronx. After a year of work, Mayor Michael Bloomberg of New York has presented a new formula for measuring poverty that creates a far more realistic view of life in the city. It should stand as an example to other cities — and, ultimately, the federal government.
Recasting the federal formula that has been in place since the 1960s, the Bloomberg administration found another 400,000 poor people in New York City and came up with a poverty rate of 23 percent, compared with about 19 percent. That result was tempered by fewer extremely poor people (those whose incomes are half of the poverty threshold), which may be explained by the reach of programs like temporary assistance to needy families.
But the city found that 32 percent of the elderly are poor — far higher than the 18 percent under the former measure. Out-of-pocket medical costs were a consistent big drain on the wallets of residents 65 or older.
No formula would be perfect, but Mr. Bloomberg’s employs common sense. It is absurd, for example, that the poverty threshold in New York City, one of the most expensive, has been the same as the least expensive: $20,444 for a family of four. The mayor raised New York’s poverty ceiling to a more believable $26,138.
Washington’s obsolete measure looks only at the cost of food relative to income. Mass production and other efficiencies have generally made food less costly, while housing, transportation and energy costs have risen. The mayor’s formula, taken from recommendations by the National Academy of Sciences, factors in those big-ticket items, as well as government assistance.
Mr. Bloomberg’s approach is rightly getting attention from other cities and Capitol Hill. The campaign of Senator Barack Obama has endorsed it. The next step, which should be taken quickly, is for the mayor to use what he has learned — and what we already knew — to get more help to New York’s many poor.
]]>It’s the Economic Stupidity, Stupidtag:therochesterdemocrat.com,2008:ee/index.php/35.438762008-07-20T16:54:00-06:002008-07-20T17:05:42-06:00{summary}2008-07-20T16:54:00-06:00Staffeditor@TheRochesterDemocrat.comOp-Ed Column
By FRANK RICH
NY Times
July 20, 2008
THE best thing to happen to John McCain was for the three network anchors to leave him in the dust this week while they chase Barack Obama on his global Lollapalooza tour. Were voters forced to actually focus on Mr. McCain’s response to our spiraling economic crisis at home, the prospect of his ascension to the Oval Office could set off a panic that would make the IndyMac Bank bust in Pasadena look as merry as the Rose Bowl.
“In a time of war,” Mr. McCain said last week, “the commander in chief doesn’t get a learning curve.” Fair enough, but he imparted this wisdom in a speech that was almost a year behind Mr. Obama in recognizing Afghanistan as the central front in the war against Al Qaeda. Given that it took the deadliest Taliban suicide bombing in Kabul since 9/11 to get Mr. McCain’s attention, you have to wonder if even General Custer’s learning curve was faster than his.
Mr. McCain still doesn’t understand that we can’t send troops to Afghanistan unless they’re shifted from Iraq. But simple math, to put it charitably, has never been his forte. When it comes to the central front of American anxiety — the economy — his learning curve has flat-lined.
In 2000, he told an interviewer that he would make up for his lack of attention to “those issues.” As he entered the 2008 campaign, Mr. McCain was still saying the same, vowing to read “Greenspan’s book” as a tutorial. Last weekend, the resolutely analog candidate told The New York Times he is at last starting to learn how “to get online myself.” Perhaps he’ll retire his abacus by Election Day.
Mr. McCain’s fiscal ineptitude has received so little scrutiny in some press quarters that his chief economic adviser, the former Senator Phil Gramm of Texas, got a free pass until the moment he self-immolated on video by whining about “a nation of whiners.” The McCain-Gramm bond, dating back 15 years, is more scandalous than Mr. Obama’s connection with his pastor, the Rev. Jeremiah Wright. Mr. McCain has been so dependent on Mr. Gramm for economic policy that he sent him to newspaper editorial board meetings, no doubt to correct the candidate’s numbers much as Joe Lieberman cleans up after his confusions of Sunni and Shia.
Just two weeks before publicly sharing his thoughts about America’s “mental recession,” Mr. Gramm laid out equally incendiary views in a Wall Street Journal profile that portrayed him as “almost certainly” the McCain choice for Treasury secretary. Mr. Gramm said that the former chief executive of AT&T, Ed Whitacre, was “probably the most exploited worker in American history” since he received only a $158 million pay package rather than the “billions” he deserved for his success in growing Southwestern Bell.
But no one in the news media seemed to notice Mr. Gramm’s naked expression of the mind-set he’d bring to a McCain White House. And few journalists have vetted the presumptive Treasury secretary’s post-Senate history as an executive at UBS. The stock of that banking giant has lost 70 percent of its value in a year after its reckless adventures in the subprime lending market. It’s now fending off federal investigation for helping the megarich avoid taxes.
Mr. McCain made a big show of banishing Mr. Gramm after his whining “gaffe,” but it’s surely at most a temporary suspension. When the candidate said back in January that there’s nobody he knows who is stronger on economic issues than his old Senate pal, he was telling the truth. Left to his own devices — or those of his new No. 1 economic surrogate, Carly Fiorina — Mr. McCain is clueless. Even Arnold Schwarzenegger, a supporter, said that Mr. McCain’s latest panacea for high gas prices, offshore drilling, is snake oil — and then announced his availability to serve as energy czar in an Obama administration.
The term flip-flopping doesn’t do justice to Mr. McCain’s self-contradictory economic pronouncements because that implies there’s some rational, if hypocritical, logic at work. What he serves up instead is plain old incoherence, as if he were compulsively consulting one of those old Magic 8 Balls. In a single 24-hour period in April, Mr. McCain went from saying there’s been “great economic progress” during the Bush presidency to saying “Americans are not better off than they were eight years ago.” He reversed his initial condemnation of mortgage bailouts in just two weeks.
In February Mr. McCain said he would balance the federal budget by the end of his first term even while extending the gargantuan Bush tax cuts. In April he said he’d accomplish this by the end of his second term. In July he’s again saying he’ll do it in his first term. Why not just say he’ll do it on Inauguration Day? It really doesn’t matter since he’s never supplied real numbers that would give this promise even a patina of credibility.
Mr. McCain’s plan for Social Security reform is “along the lines that President Bush proposed.” Or so he said in March. He came out against such “privatization” in June (though his policy descriptions still support it). Last week he indicated he isn’t completely clear on what Social Security does. He called the program’s premise — young taxpayers foot the bill for their elders (including him) — an “absolute disgrace.”
Given that Mr. McCain’s sole private-sector job was a fleeting stint in public relations at his father-in-law’s beer distributorship, he comes by his economic ignorance honestly. But there’s no A team aboard the Straight Talk Express to fill him in. His campaign economist, the former Bush adviser Douglas Holtz-Eakin, could be found in the June 5 issue of American Banker suggesting even at that late date that we still don’t know “the depth of the housing crisis” and proposing that “monitoring is the right thing to do in these circumstances.”
Ms. Fiorina, the ubiquitous new public face of McCain economic policy, adds nothing to the mix beyond her incessant display of corporate jargon, from “trend lines” to “start-ups.” Before she was fired at Hewlett-Packard, its stock had declined 50 percent during her five-plus years in charge. She missed earning projections — by 23 percent in one quarter — much as she now misrepresents both the Obama and McCain records. This month she said Mr. McCain wanted to require insurance plans to cover birth control medications along with Viagra, when in fact he had voted against it.
Ms. Fiorina received a $42 million payout (half in cash) from H.P., according to a shareholders’ subsequent lawsuit. With this inspiring résumé, she now aspires to be Mr. McCain’s running mate. So does the irrepressible Mitt Romney, who actually was a business whiz before serving as Massachusetts’s governor. Beltway wisdom has it that the addition of such a corporate star will remedy Mr. McCain’s fiscal flatulence.
But Mr. Romney, while more plausible than Ms. Fiorina, is hardly what America wants at this desperate time. His leveraged buyout dealings as co-founder of Bain Capital induced plant closings, mass layoffs and outsourcing. If Mr. McCain truly intends to “put our country’s interests” above politics and reach across the aisle to move the nation forward, as he constantly tells us, why not go for a vice president who’s the very best fit for the huge challenges at hand?
The obvious choice would be Michael Bloomberg — who, as a former Republican turned independent, would necessitate that Mr. McCain reach only halfway across the aisle, and to someone who is his friend rather than a vanquished rival he is learning to tolerate.
Romney vs. Bloomberg is not a close contest. Bloomberg L.P. has roughly three times the revenues and employees of Bain & Company, where Mr. Romney ultimately served as chief executive. Mr. Romney rescued the Salt Lake City Olympics while running it in 2002, but Mayor Bloomberg revitalized New York, the nation’s largest metropolis, after the most devastating attack in our history. The city he manages has more than twice the budget of Mr. Romney’s state.
Yes, Mr. Bloomberg is a closet Democrat and an alpha dog who doesn’t want to be a second banana. And his views on gay civil rights and abortion would roil the G.O.P. base. But Mr. Romney shared some of those same views before he flip-flopped, and besides, these are not ordinary times. Millions of Americans are losing their homes and jobs. Whole industries are going belly up. The national crisis at hand, not yesterday’s culture wars, should drive the vice-presidential pick.
Mr. McCain reminds us every day how principled he is. That presumably means he’d risk a revolt by his party’s dwindling agents of intolerance and do everything in his power to persuade Mr. Bloomberg to join his ticket in the spirit of patriotic sacrifice. The politics could be advantageous too. A Bloomberg surprise could impress independents and keep the television audience tuned in to a G.O.P. convention that will unfold in the shadow of Mr. Obama’s address to 75,000 screaming fans in Denver.
But this is fantasy political baseball, not reality. Mr. McCain, sad to say, hung up his old maverick’s spurs the day he embraced the Bush tax cuts he had once opposed as “too tilted to the wealthy.” And Mr. Bloomberg? It’s hard to picture a titan who built his empire on computer terminals investing any capital, political or otherwise, in a chief executive who is still learning how to do, as Mr. McCain puts it, “a Google.”
]]>Patience Will Pay Offtag:therochesterdemocrat.com,2008:ee/index.php/35.438752008-07-20T15:06:00-06:002008-07-20T15:08:29-06:00{summary}2008-07-20T15:06:00-06:00Staffeditor@TheRochesterDemocrat.comOpinion
Paul Munnis
It needs to be mentioned that the recent deal with Physicians refusing to treat patients because they can get paid more elsewhere and from insurance plans other than Medicare is not going to be a factor when Universal healthcare comes into play.
By definition there will be a rate book and fixed payment schedules and all people will fall under it. Thus if physicians do not like the rates then they will have to use due process to get them revised. There will be due process and it will work quickly.
For this reason Congress is wise to just back off, give-in to those refusing the revised payment schedule, and just wait it out. There is nothing to be gained from short-term confrontation.
In due time there will be a Congress ready to address the new legislation and if it passes then that will be it. Congress will have lost a battle in 2008 but will it will win the healthcare battle in 2009.
That is they will if you come out and vote in November. Summer is moving fast and in just a few months we will cast our votes.
Universal Healthcare is just one of the important matters needing your support and approval this November. Commit yourself to voting in this important election.
]]>Living on Plastictag:therochesterdemocrat.com,2008:ee/index.php/35.438742008-07-20T15:03:00-06:002008-07-20T15:04:30-06:00{summary}2008-07-20T15:03:00-06:00Staffeditor@TheRochesterDemocrat.comOpinion
Paul Munnis
Credit cards are an area of our economy that is increasingly worrisome. As people lose their jobs they cannot pay their credit card debt. As gasoline soars, more and more of it is being placed on credit cards. As the credit card bubble grows – it is in danger of bursting.
The explosion will be significant to banks. They have been extending credit card debt to people who are financially problematic and charging outrageous rates of interest. Congress has not been doing its banking oversight role and thus a dangerous consumer credit card based economy has developed as American business runs on plastic. Should it explode then America will then have some serious problems on its hands adding to the banking and home crisis and further threatening our economy.
Many people, who are being squeezed by the bursting housing bubble, are increasingly relying on their credit cards to live. Since the spigot to the home equity money has run dry, and their lifestyles are not changing, or circumstances like lost jobs or medical hardships cause them to continue to rely on credit cards, there is no end in sight to how much additional debt John Q. Public will take on. At some point, the dam has to burst, and a lot of people are going to drown. Estimates of American credit card debt total more than $2 Trillion of unsecured credit card debt.
Who knows how many people lived beyond their means during the last few years, extracting the temporary wealth in their real estate, only to spend it on luxuries like vacations, and lavish weddings in Tuscany? How many people transferred unsecured, credit card debt to their real estate, only to risk it to foreclosure if they miss a few payments? How about the people who thought the value of an already overpriced home would continue to increase and took out teaser rate mortgages, hoping to refinance with the profit in a couple years, and are now stuck with a mortgage that has doubled and no way to pay for it?
Now that the game is over, those people are turning to their credit cards to survive.
People were "hooked" by teaser rate mortgages and now find they are unable to pay the "real" mortgage payment. Many are going into default on the mortgage, and keeping current on the credit cards. Some are using them like an ATM, maxing them out to their limit, as well as constantly applying for the barrage of new cards that grace their mailbox.
They are living in a fantasy land if they think the missed mortgage payments won't hurt their credit. Give it a month or three, and when the credit cards see that you are missing mortgage payments, they jack up your interest rates to 25%+ and then you are, excuse my French, "screwed." Most of your payment will be wasted on interest, and it could take 10-100 years to pay the debt off.
The card companies know people will do anything to stay current on cards, and that people need cash. Requirements to get a credit card are at there lowest in 10 years according to a Fed survey; if you have a pulse, you can get a credit card. They even give credit cards to peoples pets.
What is needed to fix things?
First a usury law is needed setting an upper limit on credit card interest rates. People have to be given a method to retire their debt if they make an earnest effort at it.
Second, banking laws and regulations are needed, in spite of GOP assertions to the contrary, to regulate who can borrow how much as a percentage of their verified income.
Third, risky customers have to have their credit cards frozen such that they cannot increase the debt amounts until they get total debt below a certain threshold of their income.
Fourth, when people find themselves unemployed and out of work, some manner of managing their debt must be offered to them without making it appealing for people to give up their jobs so as to get out from under the debt load.
Fifth, like it or not we will see more dollar devaluation and a cheapening of the dollar. That will assure recession and bring on higher rates of inflation that could become hyper inflation. People living on fixed income will be adversely hurt.
We do not have to await disaster to address these matters. Congress must move soon or they will have a mess on their hands making the mortgage bubble seem like a Sunday school picnic.
Many are not asking if the bubble will burst, rather they are asking when the bubble will burst. That is bad news.
With 70% of the U.S. economy predicated on the consumer and his spending then we cannot afford to treat credit cards in so cavalier a manner.
In closing I will point out that the GOP has put the nation into hock and has States like ours living on credit and on borrowing rather than on a pay-as-you-go system. That is worrisome for that debt is backed by taxes and with so many people headed for disaster they will soon be unable to pay their taxes. That will hurt income and damage government in significant ways. Our federal government has a deficit that is just awful and much of it is owed to foreigners.
]]>Hagel for VP—Really?tag:therochesterdemocrat.com,2008:ee/index.php/35.438732008-07-20T14:58:00-06:002008-07-20T15:01:40-06:00{summary}2008-07-20T14:58:00-06:00Staffeditor@TheRochesterDemocrat.comPerspective
Paul Munnis
As we look at the calendar it becomes clear that with the Beijing Olympics is coming and the Democratic National Convention folows right behind thus in the next two weeks Obama will soon name his VP choice.
The next V.P. is going to have to be a heavyweight on managing the economy for major changes will be needed as the economy is stressed to the limits. We are going to see more problems with mortgages, more problems with banks failing, and a credit card explosion that will presage the ability of consumers to keep up the pace that was fueled by plastic sales. Job losses will mount and poverty will increase.
Gas prices are high, dollar devaluation was severe and will continue to erode, recession is upon us and inflation is on a 26% percent up-tick. We are in deep yogurt and we need to pick a VP that can lead us in economic recovery.
Doing that is a bipartisan issue in America for government gridlock is not the answer to our problems. We need Congress to build a consensus and then make it happen. We do not need a lot of GOP negativity.
Thus as we watch GOP Senator Chuck Hagel of Nebraska accompanying Barack Obama on his trip to the mid-east then we dare to speculate on what it will mean if he is elected as V.P.
As you know, the V.P. presides over the Senate and he is the tie-breaking vote when deadlock happens. He is the 101st Senator. Making such a person a Democratic V.P. puts together a bipartisan Administration to be sure. It will do much to cool down the effects of the neo-cons to government compromise on key issues and it is thus risky for Democrats to let a Republican be the tie-breaking vote.
Or is it?
When things are so tied and deadlocked that a one vote margin is the difference between passage or rejection then we have a situation that is not properly compromised by Congress. It really needs to go back to Congress for more consideration. So then a veto will be likely used if the unwanted Bill passes by a tie breaker. So, maybe the risk is not as profound as one might at first think.
From a Democratic Liberal viewpoint Hagel has a voting record that is not good. It gives progressives heartburn. Many websites are carrying Hagel’s voting record and it is anti-liberal in the extreme. On the other hand, many people have left the GOP and joined the Democratic Party making it more centrist and thus Hagel becomes a balancing act that embraces these folks and their mind-set. So debate over Hagel based entirely on his past record is a largely fruitless shouting match.
The question is then what could we expect of Hagel if he were offered the job?
Some of that would depend on Obama. He could make him a weak VP and effectively muzzle him. On the other hand he could make him a strong player and bring him solidly into presidential confidence thus making him a deliberator and forcing him to argue his case at Cabinet meetings. Such argument would give the GOP a voice at the Executive Level of government and at least assure that the valid part of the GOP arguments (not only the ideological case) is heard and dealt with up-front. That could lead to better government.
In the end much of it comes down to Hagel himself. Does he want to be a part of the solution or a part of the problem? If it is the latter then it is goodbye Hagel. If it is the former then he could be chosen as the Democratic Party V.P.
The next two weeks will tell the story.
Here is the negative side of the Hagel voting record from The Democratic Underground:
------------
*Voted NO on $100M to reduce teen pregnancy by education & contraceptives. (Mar 2005)
*Voted YES on recommending Constitutional ban on flag desecration.
*Voted NO on repealing tax subsidy for companies which move US jobs offshore. (Mar 2005)
*Voted NO on shifting $11B from corporate tax loopholes to education. (Mar 2005)
*Voted NO on banning drilling in the Arctic National Wildlife Refuge. (Mar 2005)
*Voted NO on funding for National Endowment for the Arts. (Aug 1999)
*Voted NO on favoring 1997 McCain-Feingold overhaul of campaign finance. (Oct 1997)
*Voted YES on prohibiting lawsuits against gun manufacturers. (Jul 2005)
*Voted YES on limiting medical liability lawsuits to $250,000. (May 2006)
*Voted YES on reauthorizing the PATRIOT Act. (Mar 2006)
*Voted NO on raising the minimum wage to $7.25 rather than $6.25. (Mar 2005)
*Voted YES on permanently repealing the ‘death tax.’ (Jun 2006)....
*Rated 0% by NARAL, indicating a pro-life voting record. (Dec 2003)
*Rated 36% by the NEA, indicating a mixed record on public education. (Dec 2003)
*Rated 0% by the , indicating anti-environment votes. (Dec 2003)
*Rated 100% by the Christian Coalition: a pro-family voting record. (Dec 2003)
*Rated A by the NRA, indicating a pro-gun rights voting record. (Dec 2003)
*Rated 12% by the , indicating an anti-public health voting record. (Dec 2003)
*Rated 8% by the AFL-CIO, indicating an anti-union voting record. (Dec 2003)
*Rated 22% by the , indicating an anti-senior voting record. (Dec 2003)
And, finally, the right-wing pièces de ré•sis•tance:
*90% conservative voting record; 95% support of Pres. Bush. (Dec 2006)"
Already Obama is facing tough choices.
]]>Changing the Dynamics of Afghanistantag:therochesterdemocrat.com,2008:ee/index.php/35.438722008-07-20T14:56:00-06:002008-07-20T14:57:40-06:00{summary}2008-07-20T14:56:00-06:00Staffeditor@TheRochesterDemocrat.comOpinion
Paul Munnis
Senator Obama has put his finger right on the pulse of the problems in Afghanistan and the region.
He said that the nation is hurt by: “Fighting, Poverty and Corruption.” Indeed those are the three problems to be solved if peace is to have a future in Afghanistan. By association we can also say the same is true for Pakistan and Kashmir. A regional solution is needed. India has hope as it industrializes but their neighbors are in really deep trouble.
What is needed then is a regional initiative that transforms the dynamics of war into a regional initiative at solving the three problems that are the underlying causes of war.
Fighting is mainly based on religion and the U.S. is at war with the Taliban, an Islamic group bent on restoring strict adherence to the Islamic code. In the process of adherence women are being kept in virtual slavery. The fix is religious freedom and strict separation of Church and State. If membership in a strict religious sect were made voluntary then the charges of female servitude would end. Ending it isn’t quite enough though for a body of laws assuring civil rights to women and a Court and legal system to enforce them, including rights to divorce, are also needed. There is no reason though that America couldn’t work with the people of Islam to establish these reforms in a cultural context that would work for them yet not be a western solution..
Poverty is a big, big problem in a region where opium is the key crop. Opium is to this region as corn is to the U.S.
Agricultural crop conversion is needed and that is a possibility worth considering as ethanol plants can be installed cheaply and effectively in the region and corn or switch grass would produce a cash crop with less risk than the region is now enduring with opium. The companion to it is a refinery where oil can be refined, blended, and exported, to a region hungry for gasoline. The products would also be exportable. A compliment to this would be cereal processing plants that would generate good jobs and income as well as producing good food. If one doesn’t like these approaches then name some cash crops that could replace opium -- the fix remains the same.
Corruption can only be fixed by establishing a Constitution with a check and balance system and strict laws that are enforced.
What has to unify all of this is a notion of joint nation building and participation by all of the warring parties to create hope for the future of the people of this region. Until that is done then war is the only option for people.
It is going to take a capable diplomatic corps from the U.S. to be a spark plug at organizing the warring parties and redirecting their energy away from war and towards creating a future for the people of the region. Yet it is the only way of winning this regional war – just ask the Russians – they too have tried and failed. Even as Obama tries diplomacy the hard war has to be concentrated upon and Obama has pledged continuing support.
Obama is going to have a tough job ahead of him as he takes office but if anyone can do it he can. As for John McCain – the likelihood of his accomplishing any of this is seen as being highly unlikely.
By WILLIAM J. FALLON
NY Times
Published: July 20, 2008
THE prospect of a long-term security arrangement between the United States and Iraq has become a lightning rod for criticism. Yet such an agreement — which the White House believes could be completed this month now that the two countries have agreed to set a “general time horizon” for reducing the number of American troops in Iraq — would be in the best interests of the governments of both countries, and of the people who live in a region of the world that urgently needs stability.
The United Nations Security Council resolution that authorizes coalition operations in Iraq expires at the end of this year. But the calendar is not the most important reason for the United States to enter into a long-term pact with Iraq. The opportunity presented by the improved situation on the ground begs to be exploited lest it disappear in the ever-shifting sands of Middle East strife.
Are the desires of the American people and the Iraqi people different? I don’t think so. During my year in command of all American forces in the Middle East, I met often with Iraqis of all walks of life. Discussions with people — from Prime Minister Nuri Kamal al-Maliki to clerics, governors and generals to men in the streets of Baghdad and towns and cities throughout the country — left me with several strong impressions. The top objective of both countries is security and stability in the region. Letting Iraq’s security forces assume responsibility for their country is another mutual goal. Withdrawing the vast majority of American and coalition troops from Iraq as soon as possible is a clear priority.
Why is achieving these aims so difficult? The most significant obstacle is war weariness. The war has dragged on so long that people are fixated on yesterday’s many negative aspects and are not aware of the profoundly different and improved situation in Iraq today — which is very different from only a few months ago.
Another major challenge is the continuing tendency to view anything to do with Iraq in the polarizing terms of yes or no, in or out. The prudent and rational approach is more nuanced, and more likely to achieve both countries’ mutual goals.
There are two key aspects of the bilateral security accord that has been proposed. The first is a status of forces agreement, which is a detailed compilation of the procedures and legal protections that govern the presence of foreign troops in another country. The second element is a higher-level strategic framework agreement, in which the two parties agree on the principles that will guide their mutual actions to create long-term security in Iraq. This more important part of the accord focuses on major policy issues like the roles and missions for each country’s military, the control of forces in various security situations, procedures for detainees, and the transition of responsibility.
Objections and objectors to the agreement are numerous. From the American side, we hear that it would tie us to an open-ended commitment to defend Iraq from external threats; that it would continue to drain resources from a faltering domestic economy; and that it violates Congressional prerogatives enshrined in the Constitution.
Some Iraqis, meanwhile, complain that any continued American presence in their country perpetuates what they see as an occupation and an infringement of their national sovereignty. They and other skeptics in the region object to the potential for long-term military bases, and they denounce America’s alleged hegemonic intentions.
And Iran objects to every aspect of continued American-Iraqi cooperation while promoting instability and supporting attacks on coalition forces in Iraq by providing arms and training to Shiite extremists and criminals.
These objections are obscuring what may be a one-time opportunity to achieve the goals so keenly desired by the majority of Americans and Iraqis, who care about peace and stability in the world. Most of the concerns involve worst-case possibilities that play to the fears of the poorly informed. For example, the security accord would define future commitments rather than perpetuate the perception of an “open-ended” engagement. The United States needs access to bases in Iraq to support the current level of operations. As responsibility for security passes to Iraqi forces, the need for bases will diminish.
Negotiators can sort through the issues. Given their recent history in Iraq, contractors and their rights and protections are a controversial topic. But civilian contractors perform a wide range of essential tasks, and the terms of their future service needs to be included in the agreement. Control of Iraqi airspace is another important component that will require clearheaded negotiations to preserve our military’s ability to ensure the safety of the many airplanes flying over Iraq and the timeliness of combat air support for troops on the ground.
The benefits that could be achieved are considerable. The agreement could reap dividends similar to those gained over the past year through the sacrifice and efforts of so many who have carried out an enlightened counterinsurgency strategy.
The number of incidents of violence nationwide in Iraq is less than a tenth of what we were experiencing in the spring of 2007. The casualty rate among American troops is the lowest in more than four years and continues to improve. Ethnic and sectarian violence among the Iraqi population has declined to levels not seen since the early days of the war.
Iraq’s security forces, with only modest coalition support, have demonstrated unprecedented initiative by taking control and assuming security of previously insurgent-dominated areas like Amara, Basra, Diwaniya and Sadr City. These actions signal a more confident and capable Iraqi leadership and military.
The government of Prime Minister Maliki has assumed an increasingly large share of the cost of Iraqi security, paying $3 for each American dollar contributed, and is on track to assume near total responsibility next year as revenues from oil exports continue to rise. Economic activity in Iraq is accelerating. Major oil companies are signing development contracts to improve the infrastructure.
The government of Iraq is eager to exert its sovereignty, but its leaders also recognize that it will be some time before Iraq can take full control of security. They are acutely aware of Iran’s behavior and of the need for continued cooperation with the United States.
This is a pivotal time. The aspirations of the hopeful could come to fruition: a stable Iraq, with a modern oil industry and substantially increased export capacity, that is part of the growing regional economic and political cooperation in the Middle East. This is not wishful dreaming but a very real possibility.
But it will happen only if security in Iraq is maintained. And a long-term arrangement with the United States is key to Iraq’s future security.
Reasonable objectors to the security pact, in both countries, must jettison the rhetorical and emotional baggage of the recent past. Forget the errors and bad decisions and deal with the present. Real progress has been made, and this positive momentum must be maintained.
Compromise, of course, will be essential. But confidence will be, too. The Americans need to trust Iraq’s security forces, and the Iraqis need to trust America’s intentions. The United States must give the Iraqi government an opportunity to demonstrate sovereignty over its territory while the government of Iraq must recognize its continued, if diminishing, reliance on the American military.
But the political posturing in pursuit of short-term gains must cease. All interested parties should cooperate for the general good.
We have come a long way in Iraq. It is in the mutual interest of the United States and Iraq to continue the transition to Iraqi forces and the drawdown of American troops in circumstances most likely to provide for stability. Certainly there is some risk involved. But the opportunity is unprecedented and the potential vast.
William J. Fallon, a retired admiral and a fellow at the M.I.T. Center for International Studies, was commander of the United States Central Command from 2007 to 2008.
]]>Changing the Dynamics of Afghanistantag:therochesterdemocrat.com,2008:ee/index.php/35.438572008-07-20T11:57:01-06:002008-07-20T00:58:54-06:00{summary}2008-07-20T11:57:01-06:00Staffeditor@TheRochesterDemocrat.comOpinion
Paul Munnis
Senator Obama has put his finger right on the pulse of the problems in Afghanistan and the region.
He said that the nation is hurt by: “Fighting, Poverty and Corruption.” Indeed those are the three problems to be solved if peace is to have a future in Afghanistan. By association we can also say the same is true for Pakistan and Kashmir. A regional solution is needed. India has hope as it industrializes but their neighbors are in really deep trouble.
What is needed then is a regional initiative that transforms the dynamics of war into a joint effort at solving the three problems that are the underlying causes of war.
Fighting is mainly based on religion and the U.S. is at war with the Taliban, an Islamic group bent on restoring strict adherence to the Islamic code. In the process of adherence women are being kept in virtual slavery. The fix is religious freedom and strict separation of Church and State. If membership in a strict religious sect were made voluntary then the charges of female servitude would end. Ending it isn’t quite enough though for a body of laws assuring civil rights to women and a Court and legal system to enforce them, including rights to divorce, are also needed. There is no reason though that America couldn’t work with the people of Islam to establish these reforms in a cultural context that would work for them yet not be a western solution..
Poverty is a big, big problem in a region where opium is the key crop. Opium is to this region as corn is to the U.S.
Agricultural crop conversion is needed and that is a possibility worth considering as ethanol plants can be installed cheaply and effectively in the region and corn or switch grass would produce a cash crop with less risk than the region is now enduring with opium. The companion to it is a refinery where oil can be refined, blended, and exported, to a region hungry for gasoline. The products would also be exportable. A compliment to this would be cereal processing plants that would generate good jobs and income as well as producing good food. If one doesn’t like these approaches then name some cash crops that could replace opium -- the fix remains the same.
Corruption can only be fixed by establishing a Constitution with a check and balance system and strict laws that are enforced.
What has to unify all of this is a notion of joint nation building and participation by all of the warring parties to create hope for the future of the people of this region. Until that is done then war is the only option for people.
It is going to take a capable diplomatic corps from the U.S. to be a sparkplug at organizing the warring parties and redirecting their energy away from war and towards creating a future for the people of the region. Yet it is the only way of winning this regional war – just ask the Russians – they too have tried and failed.
Obama is going to have a tough job ahead of him as he takes office but if anyone can do it he can. As for John McCain – the likelihood of his accomplishing any of this is seen as being highly unlikely.
]]>Uncomfortable Answers to Questions on the Economytag:therochesterdemocrat.com,2008:ee/index.php/35.438642008-07-20T11:36:00-06:002008-07-20T11:39:56-06:00{summary}2008-07-20T11:36:00-06:00Staffeditor@TheRochesterDemocrat.comPerspective
By PETER S. GOODMAN
NY Times
Published: July 19, 2008
You have heard that Fannie and Freddie, their gentle names notwithstanding, may cripple the financial system without a large infusion of taxpayer money. You have gleaned that jobs are disappearing, housing prices are plummeting, and paychecks are effectively shrinking as food and energy prices soar. You have noted the disturbing talk of crisis hovering over Wall Street.
Something has clearly gone wrong with the economy. But how bad are things, really? And how bad might they get before better days return? Even to many economists who recently thought the gloom was overblown, the situation looks grim. The economy is in the midst of a very rough patch. The worst is probably still ahead.
Job losses will probably accelerate through this year and into 2009, and the job market will probably stay weak even longer. Home prices will probably keep falling, shrinking household wealth and eroding spending power.
“The open question is whether we’re in for a bad couple of years, or a bad decade,” said Kenneth S. Rogoff, a former chief economist at the International Monetary Fund, now a professor at Harvard.
Is this a recession?
Officially, no. The economy is not in recession until a panel at a private institution called the National Bureau of Economic Research says so. Unofficially, many economists think a recession started six or seven months ago, even as the economy has continued to expand — albeit at a tepid pace.
Many assume that if the economy expands at all, then it isn’t a recession, but that’s not true. The bureau defines a recession as “a significant decline in economic activity spread across the economy, lasting more than a few months.” If enough people lose their jobs, factories stop making things, stores stop selling things, and less money lands in people’s pockets, it is probably a recession.
Whatever it is called, it is a painful time for tens of millions of people. Indeed, this may turn out to be the most wrenching downturn since the two recessions in the early 1980s; almost surely worse than the recession that ended the technology bubble at the beginning of this decade; perhaps worse than the downturn of the early 1990s that followed the last dip in real estate prices.
But, despite what some doomsayers now proclaim, this is not the Great Depression, when unemployment spiked to 25 percent and millions of previously working people woke up in shantytowns. Not by any measure, even as your neighbors make cryptic remarks above dusting off lessons passed down from grandparents about how to turn a can of beans into a family meal.
How bad is housing?
Bad in many markets, awful in some, and still O.K. in a few.
The downturn has its roots in the real estate frenzy that turned lonely Nevada ranches into suburban ranch homes and swampland in Florida into condominiums. Speculators drove home prices beyond any historical connection to incomes. Gravity did the rest. After roughly doubling in value from 2000 to 2005, home prices have fallen about 17 percent — and more like 25 percent in inflation-adjusted terms — according to the widely watched Case-Shiller index.
Even so, most economists think house prices must fall an additional 10 to 15 percent to get back to reality. One useful measure is the relationship between the costs of buying and renting a home. From 1985 to 2002, the average American home sold for about 14 times the annual rent for a similar home, according to Moody’s Economy.com. By early 2006, home prices ballooned to 25 times rental prices. Since then, the ratio has dipped back to about 20 — still far above the historical norm.
With mortgages now hard to obtain and speculation no longer attractive, arithmetic has replaced momentum as the guiding force for housing prices. The fundamental equation points down: Even as construction grinds down, there are still many more houses on the market than there are people to buy them, and more on the way as more homeowners slip into foreclosure.
By the reckoning of Economy.com, enough houses are on the market to satisfy demand for the next two-and-a-half years without building a single new one.
The time it takes to sell a newly completed house has expanded from an average of four months in 2005 to about nine months, according to analysis by Dean Baker, co-director of the Center for Economic and Policy Research.
And many sales are falling through — more than 30 percent in some parts of California and Florida — as buyers fail to secure financing, exacerbating the glut of homes, Mr. Baker said.
No wonder that in Los Angeles, San Francisco, Phoenix and Las Vegas, house prices have in recent months declined at annual rates of more than 33 percent.
When will banks revive?
So far, they have written off more than $300 billion in loans. Many experts now predict the toll will rise to $1 trillion or more — a staggering sum that could cripple many institutions for years.
Back when home prices were multiplying, banks poured oceans of borrowed money into real estate loans. Unlike the dot-com companies at the heart of the last speculative investment bubble, the new gold rush was centered on something that seemed unimpeachably solid — the American home.
But the whole thing worked only as long as housing prices rose. Falling prices landed like a bomb. Homeowners fell behind on their loans and could not qualify for new ones: There was no value left in their house to borrow against. As millions of people defaulted, the banks confronted enormous losses in a bloody period of reckoning.
In March, the Federal Reserve helped engineer a deal for JPMorgan Chase to buy troubled investment bank Bear Stearns. Many assumed the worst was over. But, this month, the open distress of Fannie Mae and Freddie Mac — two huge, government sponsored institutions that together own or guarantee nearly half of the nation’s $12 trillion in outstanding mortgages — sent a signal that more ugly surprises may lie in wait.
To calm markets, the government last weekend hurriedly put together a rescue package for Fannie and Freddie that, if used, could cost as much as $300 billion. The urgent need for a rescue — together with another round of billion-dollar write-offs on Wall Street — has unnerved economists and investors.
“I was a relative optimist, but I’ve certainly become more pessimistic,” said Alan S. Blinder, an economist at Princeton, and a former vice chairman of the board of governors at the Federal Reserve. “The financial system looks substantially worse now than it did a month ago. If the Freddie and Fannie bailout were to fail, it could get a hell of a lot worse. If we get more bank failures, we have the possibility of seeing more of these pictures of people standing in line to pull their money out. That could really scare consumers.”
In one respect, Mr. Blinder added, this is like the Great Depression. “We haven’t seen this kind of travail in the financial markets since the 1930s,” he said.
More than two years ago, Nouriel Roubini, an economist at the Stern School of Business at New York University, said that the housing bubble would give way to a financial crisis and a recession. He was widely dismissed as an attention-seeking Chicken Little. Now, Mr. Roubini says the worst is yet to come, because the account-squaring has so far been confined mostly to bad mortgages, leaving other areas remaining — credit cards, auto loans, corporate and municipal debt.
Mr. Roubini says the cost of the financial system’s losses could reach $2 trillion. Even if it’s closer to $1 trillion, he adds, “we’re not even a third of the way there.”
Where will the banks raise the huge sums needed to replenish the capital they have apparently lost? And what will happen if they cannot?
The answers to these questions are unknown, an unsettling void that holds much of the economy at a standstill.
“We’re in a dangerous spot,” said Andrew Tilton, an economist at Goldman Sachs. “The big threat is more capital losses.”
Banks are a crucial piece of the economy’s arterial system, steering capital where it is needed to fuel spending and power growth. Now, they are holding tight to their dollars, starving businesses of loans they might use to expand, and depriving families of money they might use to buy houses and fill them with furniture and appliances.
From last June to this June, commercial bank lending declined more than 9 percent, according to an analysis of Federal Reserve data by Goldman Sachs.
“You have another wave of anxiety, another tightening of credit,” said Robert Barbera, chief economist at the research and trading firm ITG. “The idea that we’ll have a second half of the year recovery has gone by the boards.”
Is my job safe?
Economic slowdowns always mean job losses. Unemployment already has risen, and almost certainly will increase more.
The first signs of distress emerged in housing. Construction companies, real estate agencies, mortgage brokers and banks began laying people off. Next, jobs started being cut at factories making products linked to housing, from carpets and furniture to lighting and flooring.
But as the real estate bust spilled over into the broader economy, depleting household wealth, the impacts rippled out to retailers, beauty parlors, law offices and trucking companies, inflicting cutbacks throughout the economy, save for health care, farming and energy. Over the last six months, the economy has shed 485,000 private sector jobs, according to the Labor Department. Many people have seen hours reduced.
The unemployment rate still remains low by historical standards, at 5.5 percent. And so far, the job losses — about 65,000 a month this year — do not approach the magnitude of those seen in past downturns, particularly the twin recessions at the beginning of the 1980s, when the economy shed upward of 140,000 jobs a month and the unemployment rate exceeded 10 percent.
But Goldman Sachs assumes unemployment will reach 6.5 percent by the end of 2009, which translates into several hundred thousand more Americans out of work.
These losses are landing on top of what was, for most Americans, a remarkably weak period of expansion. From 1992 to 2000 — as the technology boom catalyzed spending and hiring — the economy added more than 22 million private sector jobs. Over the last eight years, only 5 million new jobs have been added.
The loss of work is hitting Americans along with an assortment of troubles — gasoline prices in excess of $4 a gallon, over all inflation of about 5 percent, and declining wages.
“In every dimension, people are worse off than they were,” said Mr. Roubini, the New York University economist.
Are consumers done?
That is a major worry.
The fate of the economy now rests on the shoulders of the American consumer, whose spending amounts to 70 percent of all economic activity.
When people go to the mall and buy televisions and eat out, their money circulates through the economy. When they tighten their belts, austerity ripples out and chokes growth.
Through the years of the housing boom, many Americans came to treat their homes like automated teller machines that never required a deposit. They harvested cash through sales, second mortgages and home equity lines of credit — an artery of finance that reached $840 billion a year from 2004 to 2006, according to work by the economists James Kennedy and Alan Greenspan, the former Federal Reserve chairman. That allowed Americans to live far in excess of what they brought home from work.
But by the first three months of this year, that flow had constricted to an annual rate of about $200 billion.
Average household debt has swelled to 120 percent of annual income, up from 60 percent in 1984, according to the Federal Reserve.
And now the banks are turning off the credit taps.
“Credit is going to remain tight for a time potentially measured in years,” said Mr. Tilton, the Goldman Sachs economist.
This is the landscape that has so many economists convinced that consumer spending must dip, putting the squeeze on the economy for several years.
“The question is, will it get as bad as the 1970s?” asked Mr. Rogoff, recalling an era of spiking gas prices and double-digit inflation.
Long term, Americans may have no choice but to spend less, save more and reduce debts — in short, to live within their means.
“We’re getting a lot of the adjustment and it hurts,” said Kristin Forbes, a former member of the Council of Economic Advisers under President George W. Bush, and now a scholar at M.I.T.’s Sloan School of Management. “But it’s an adjustment we’re going to have to make.”
Who’s to blame?
There is plenty to go around.
In the estimation of many economists, it starts with the Federal Reserve. The central bank lowered interest rates following the calamitous end of the technology bubble in 2000, lowered them more after the terrorist attacks of Sept. 11, 2001, and then kept them low, even as speculators began to trade homes like dot-com stocks.
Meanwhile, the Fed sat back and watched as Wall Street’s financial wizards engineered diabolically complicated investments linked to mortgages, generating huge amounts of speculative capital that turned real estate into a conflagration.
“At the end of this movie, it’s clear that the Fed will have to care about excesses,” Mr. Barbera said.
Prices multiplied as many homeowners took on more property than they could afford, lured by low introductory interest rates that eventually reset higher, sending many people into foreclosure.
Mortgage brokers netted commissions as they lent almost indiscriminately, offering exotically lenient terms — no money down, no income or job required. Wall Street banks earned billions selling risky mortgage-linked securities around the world, aided by ratings agencies that branded them solid.
Through it all, a lot of ordinary Americans borrowed a lot more money then they could afford to pay back, running up enormous credit card bills and borrowing against the value of their homes.
Now comes the day of reckoning.
]]>The Way Throughtag:therochesterdemocrat.com,2008:ee/index.php/35.438632008-07-20T11:31:01-06:002008-07-20T11:32:33-06:00{summary}2008-07-20T11:31:01-06:00Staffeditor@TheRochesterDemocrat.comWhat Others Say
NY Times Editorial
Published: July 20, 2008
Recent postcards from the financial edge: A bleary-eyed Treasury secretary announcing on a Sunday evening that the government would bail out Fannie Mae and Freddie Mac if need be. The next day, in Southern California, long lines of depositors waiting to withdraw their money from a failed savings and loan.
Secretary Henry Paulson’s appearance last Sunday marked the second time this year that top federal officials scrambled through the weekend to avert a feared Monday morning meltdown in the financial markets. In March, the Federal Reserve used its emergency powers — and tens of billions of dollars in taxpayer-backed guarantees — to prevent the bankruptcy of Bear Stearns and to shore up other major Wall Street firms.
The Fed’s first intervention calmed the markets for a while, and it appears that Treasury’s intervention on behalf of Fannie and Freddie, the mortgage giants, may do the same. The cold reality, however, is that the financial system will be crisis prone and the economy will be weak until house prices stop falling and the mortgage losses are all accounted for. That will not happen soon.
In the meantime, a crisis could derail the markets and the economy. The worst would be a disorderly decline in the dollar, which would cause prices and interest rates to spike, and could result from a loss of investor faith in policy makers to rectify — or even muddle through — the current problems. At best, the deteriorating condition of the financial system will constrain lending and hamstring the economy for a long time.
And that brings to mind the other image of depositors queuing up outside IndyMac Bank branches throughout Southern California. IndyMac, one of the nation’s largest savings and loans, had been seized by federal regulators the week before, the biggest such failure in more than two decades. It was one of just a handful of seizures so far this year, but surely not the last.
As real estate loans continue to sour and as rising unemployment and rising prices provoke defaults across an array of other loans, analysts expect up to 150 banks to fail in the next year or so. That, in turn, could force the Federal Deposit Insurance Corporation to raise more money from surviving banks to replenish its $53 billion reimbursement fund; the IndyMac failure alone could take up to 15 percent of the F.D.I.C.’s fund. The potential need to raise money does not call into question the soundness of that safety net, but it is indicative of the challenges that confront both banks and policy makers.
In the short run, Congress should grant the Treasury the authority it seeks to bail out Fannie and Freddie if necessary, by including the proposed measures in the pending foreclosure relief bill. That bill is an essential attempt to stop spiraling house price declines.
Lawmakers are correct to question the Treasury’s plan; it would represent a hasty extension of government powers and could put taxpayers at risk. But they need to resolve their worries, by suggesting alternatives or compromises, rather than wasting time with election-year chest thumping over the evils of bailouts. No one ever wants a bailout. The question is whether there is a better idea than the Treasury plan to prevent the even greater harm that would result from the failure of Fannie or Freddie. Doing nothing is not an option.
It is not enough, either, to focus only on the short run. Today’s financial crises were years in the making, as Americans, awash in tax cuts and easy money, lived beyond their means to an unprecedented degree, and the Bush administration, while cutting taxes, pursued wars and vast new spending. The next president must level with the people, explaining that bolstered savings, by individuals and by government, will involve sacrifice — delayed gratification of consumption in order to build a better foundation for the future.
The message is complicated. The economy, in the near term, needs stimulus, interventions and perhaps bailouts. But at the same time, the nation must prepare for slow, steady and painful changes to get the economy back on track for the long haul. That means tax increases and government spending cuts, as soon as a break in the economic clouds indicate it is safe to enact them — not only to restore fiscal health, but to channel resources toward neglected areas, like universal health care and infrastructure repair.
What the candidates say about fixing the immediate problems is largely theoretical. But it is not theoretical for them to talk about what they would do, over four to eight years in office, to restore true economic stability.
]]>Help for Victimized Childrentag:therochesterdemocrat.com,2008:ee/index.php/35.438442008-07-19T11:59:01-06:002008-07-19T12:00:03-06:00{summary}2008-07-19T11:59:01-06:00Staffeditor@TheRochesterDemocrat.comWhat Others Say
NY Times Editorial
Published: July 19, 2008
Of the some 1.5 million children who will run away from home this year, tens of thousands will spend time working for sexual predators and selling their bodies on the streets. According to one federal estimate, the average age of a child first used as a prostitute is between 11 and 14, but victims as young as 9 are not uncommon. Many of the sexually exploited runaways have been neglected or abandoned by families that will never report them as missing.
These battered children would have a much better chance to build normal lives if the country stopped treating them as criminals and began to see them as the victims that they clearly are.
States need to stop reflexively charging children as young as 13 with prostitution and locking them up. And Congress must rework the federal Trafficking Victims Protection Act to make sure that states and localities provide sexually exploited children born in this country with the same protections and services that are routinely granted to international victims.
Some states are beginning to wake up to the problem of child prostitution. New York’s State Legislature passed a farsighted bill under which children arrested for prostitution would be presumed to be victims of sexual trafficking and given protection and social services — except in cases where the child is a repeat offender or has failed to comply with previous court orders.
The bill provides for counseling services, short-term safe houses and long-term housing that would be run by nonprofit agencies that work with sexually exploited children. By some estimates, this could cost about $25 million a year. But that’s a small price to pay for saving some of New York’s most vulnerable children. Some of the money could be redirected from elsewhere in the state’s bloated juvenile justice system. Gov. David Paterson should sign this bill.
The California Legislature has recently passed a more modest bill that would create a pilot program for helping sexually exploited children. This bill, too, deserves to become law. But California still needs a more ambitious plan for helping exploited children.
A study released earlier this year by The Barton Child Law and Policy Clinic at the Emory University School of Law exposes the full sweep of this problem. Nearly all states allow children of just about any age to be prosecuted for prostitution — even though children are too young to consent to sex with adults.
By charging children with crimes, the report notes, the system compounds the harm done to them and deepens feelings of guilt and worthlessness that inevitably haunt victims of sexual exploitation.
The real crimes in these cases are committed by the adults who push children into selling their bodies and the adults who knowingly patronize them. The country needs to invest in proven outreach, treatment and education for these children — their only hope for viable lives.
]]>Black Marks for the Red Crosstag:therochesterdemocrat.com,2008:ee/index.php/35.438432008-07-19T11:46:01-06:002008-07-19T11:47:24-06:00{summary}2008-07-19T11:46:01-06:00Staffeditor@TheRochesterDemocrat.comWhat Others Say
NY Times Editorial
Published: July 19, 2008
One thing Americans do not want to hear when they are injured or facing surgery is that blood from the American Red Cross may actually harm them. So it was unnerving, to put it mildly, to learn that the Red Cross, which collects and distributes some 43 percent of blood given to patients in this country, has failed to follow quality-control measures ordered by a federal court 15 years ago.
The organization’s sloppy procedures and its lethargy in investigating possible harm have put untold numbers of Americans at risk. These failures have been identified in reports and investigations by the Food and Drug Administration, which regulates the safety of the American blood supply, and summarized in The Times on Thursday by Stephanie Strom.
The F.D.A. found shortcomings in the way the Red Cross screens donors for possible exposure to infectious diseases, failures to swab arms properly before inserting needles, failures to test for syphilis and failures to discard potentially risky blood, among other deficiencies.
There is little or no evidence that recipients of the blood have been harmed; the skimpy record doesn’t allow an assessment. Regulators say the Red Cross no longer routinely releases unsuitable blood, as it did in the late-1980s and early-1990s. Blood supplied by the Red Cross is generally considered among the safest in the world, and the organization is praised for doing a good job of testing for the AIDS virus and hepatitis B, two of the most feared infections.
What should shame the Red Cross is its repeated failure to investigate potential harm. In 2001, when a patient died of hepatitis that may have been contracted from a Red Cross blood product, the F.D.A. concluded that the organization had failed to perform a thorough investigation. All told, the Red Cross failed to investigate more than 130 cases of suspected post-transfusion hepatitis between 2000 and mid-2002.
Often the problem is bureaucratic. Just this week, the F.D.A. chided the Red Cross for distributing more than 200 blood products that the organization itself had identified as problematic but failed to intercept before distribution. Other times the failure is deliberate. A blood facility in Philadelphia, with approval from a senior national executive, decided not to recall some 600 units of blood that had been collected using improper methods.
What can be done to turn things around is not clear. The Red Cross has already reorganized its blood operations, deployed electronic monitors to improve arm swabbing and invested heavily in a centralized database that should, if it ever gets up and running, make it easier to track down flawed blood products. The organization says that under new leadership it has put in place an aggressive plan to comply fully with F.D.A. regulations.
Some critics believe the Red Cross should sell off its blood banking services and stick to disaster relief, but that might present financial difficulties. The disaster relief activities are said to be heavily subsidized by blood banking revenues, although the organization’s financial systems are so antiquated that even its own top executives do not know for sure.
At a minimum, Congress should explore ways to strengthen regulatory oversight and force the Red Cross to meet the highest safety standards.
In January, a frustrated commissioner of food and drugs warned Red Cross board members that they could face criminal charges for continued failure to bring their organization into compliance with safety mandates.
They need to get cracking.
]]>About Presidents Raising Money for Candidatestag:therochesterdemocrat.com,2008:ee/index.php/35.438262008-07-18T21:58:00-06:002008-07-18T21:59:50-06:00{summary}2008-07-18T21:58:00-06:00Staffeditor@TheRochesterDemocrat.comOpinion
Paul Munnis
There is something wrong about a sitting president using taxpayer assets such as Air Force One to raise money for Party candidates and even for his own re-election.
Bush is doing that now for the GOP Party and he has been doing it for a long time. He also used those assets for his own re-election.
What is more, I think that presidents ought to be forced to abide by campaign donor limits. Bush is an individual in this matter and he should not be exempt from the law.
I think that this is a Party independent issue and it needs to be taken up by Congress.
Some things are plain just not right.
]]>No Friend of the Workerstag:therochesterdemocrat.com,2008:ee/index.php/35.438092008-07-18T11:18:00-06:002008-07-18T11:19:39-06:00{summary}2008-07-18T11:18:00-06:00Staffeditor@TheRochesterDemocrat.comWhat Others Say
NY Times Editorial
Published: July 18, 2008
It should surprise no one, at this point, that an arm of the Bush administration charged with protecting Americans’ rights or safety is not doing its job. Even so, a government report and a Congressional hearing this week painted a disturbing picture of a Labor Department that simply is not standing up for workers.
President Bush has filled top posts across his administration with people who do not agree with the missions of their organizations. His Environmental Protection Agency has failed to protect the environment; his Justice Department has promoted injustice.
To lead the Department of Labor, Mr. Bush appointed Elaine Chao, who took office in 2001 arguing that states should be able to opt out of the federal minimum wage — a terrible idea that would drive down wages for the lowest-paid employees. For more than seven years, Ms. Chao has run a department that has tilted toward employers and failed to properly enforce labor laws.
In a report released this week, the nonpartisan Government Accountability Office took a close look at a sampling of cases handled — or, rather, mishandled — by the Wage and Hour Division of the Labor Department. It found that the division failed to adequately investigate complaints that workers were not paid the minimum wage, were denied mandatory overtime or were not paid their last paychecks.
In one case, a delivery truck driver complained that he was not being paid for overtime that he had earned. The complaint languished for more than 17 months before an investigator was assigned. Then, the case was soon closed because the statute of limitations was about to run out.
The division dropped another case, in which disabled children were allegedly being paid cash by a trucking company to operate large machinery in violation of child-labor laws, because its investigators could not locate the employer. The G.A.O. had little trouble finding a company that appears to be the one cited in the complaint.
The G.A.O.’s findings suggest that the government is not doing its job of going after employers who “cheat their employees out of their hard-earned wages,” said Representative George Miller, the California Democrat who chairs the committee that held this week’s hearing.
The Labor Department responded, as The Times’s Steven Greenhouse reported, that the “Wage and Hour Division is delivering pay for workers, not a payday for trial lawyers.” The department has it exactly backward. By failing to enforce the law, it is creating more work for trial lawyers, who can turn what should be simple administrative procedures into full-blown lawsuits.
Attacking trial lawyers is a classic Republican talking point. Its use in response to complaints from hard-working Americans that they are being cheated is a giveaway that the real problem at the department is not one of competence, but of ideology.
The first step in getting the nation’s laws enforced again will be entrusting enforcement to people who believe in them. We hope the next president will do that.
]]>A Seat at the Tabletag:therochesterdemocrat.com,2008:ee/index.php/35.438072008-07-18T11:08:00-06:002008-07-18T11:09:09-06:00{summary}2008-07-18T11:08:00-06:00Staffeditor@TheRochesterDemocrat.comWhat Others Say
NY Times Editorial
Published: July 18, 2008
We welcome the news that President Bush has decided to send one of his top diplomats to talks on Iran’s nuclear program. That is quite a change from just a few months ago when Mr. Bush denounced as appeasement any effort to talk to “terrorists and radicals.”
It is very late in the game, but we hope this means that Mr. Bush and Secretary of State Condoleezza Rice are learning the lessons of seven years of failed foreign policies built almost completely on isolating (or attacking) America’s adversaries. There is little chance of solving major international problems so long as this country refuses even to have a seat at the table.
We also hope it means that Vice President Dick Cheney and his crew have given up their dangerous fantasy of bombing away Iran’s nuclear ambitions — or at least have been overruled by the president.
It has been two years since the United Nations ordered Iran to stop enriching uranium. Tehran continues to defy that order, and its scientists are getting ever closer to mastering a process that is the hardest part of building a nuclear weapon.
The United States and other major powers (Britain, France, Germany, China and Russia) have tried to use a mixture of incentives and sanctions to get Iran to abandon its nuclear ambitions. But neither the rewards nor the punishments have been especially persuasive.
China and Russia, which have strong economic ties to Iran, have blocked tough sanctions, while the Bush administration has not made a credible offer of improved relations and security guarantees and had refused to sit down at the negotiating table.
Mr. Bush’s decision to send William Burns (Ms. Rice’s third in command and a well-respected former ambassador to Russia) to join the European Union’s foreign policy chief and other top diplomats in talks with Iran makes any incentives package look more credible. It also shifts the diplomatic pressure back to Tehran. And it will make it harder for Beijing and Moscow to resist imposing a new round of sanctions if Iran remains obstinate.
Washington could do even better — with the Iranian people, international opinion and possibly Iran’s leaders — if it followed up with an offer to open an interests section in Tehran.
The administration is grudgingly asserting this is a “one-time-only” deal and that Mr. Burns will not negotiate with the Iranians or hold separate meetings with them. We welcome Mr. Bush’s willingness to try diplomacy for a change. But he might do even better if he didn’t trumpet his ambivalence quite so loudly.
]]>So Popular and So Spinelesstag:therochesterdemocrat.com,2008:ee/index.php/35.437802008-07-17T11:09:01-06:002008-07-17T11:11:00-06:00{summary}2008-07-17T11:09:01-06:00Staffeditor@TheRochesterDemocrat.comWhat Others Say
By THOMAS L. FRIEDMAN
NY Times
Published: July 16, 2008
Much ink has been spilled lately decrying the decline in American popularity around the world under President Bush. Polls tell us how China is now more popular in Asia than America and how few Europeans say they identify with the United States. I am sure there is truth to these polls. We should have done better in Iraq. An America that presides over Abu Ghraib, torture and Guantánamo Bay deserves a thumbs-down.
But America is not and never has been just about those things, which is why I also find some of these poll results self-indulgent, knee-jerk and borderline silly. Friday’s vote at the U.N. on Zimbabwe reminded me why.
Maybe Asians, Europeans, Latin Americans and Africans don’t like a world of too much American power — “Mr. Big” got a little too big for them. But how would they like a world of too little American power? With America’s overextended military and overextended banks, that is the world into which we may be heading.
Welcome to a world of too much Russian and Chinese power.
I am neither a Russia-basher nor a China-basher. But there was something truly filthy about Russia’s and China’s vetoes of the American-led U.N. Security Council effort to impose targeted sanctions on Robert Mugabe’s ruling clique in Zimbabwe.
The U.S. put forward a simple Security Council resolution, calling for an arms embargo on Zimbabwe, the appointment of a U.N. mediator, plus travel and financial restrictions on the dictator Mugabe and 13 top military and government officials for stealing the Zimbabwe election and essentially mugging an entire country in broad daylight.
In the first round of Zimbabwe’s elections, on March 29, the opposition leader, Morgan Tsvangirai, won nearly 48 percent of the vote compared with 42 percent for Mugabe. This prompted Mugabe and his henchmen to begin a campaign of killing and intimidation against Tsvangirai supporters that eventually forced the opposition to pull out of the second-round runoff vote just to stay alive.
Even before the runoff, Mugabe declared that he would disregard the results if his ZANU-PF party lost. Or as he put it: “We are not going to give up our country because of a mere X” on some paper ballot.
And so, of course, Mugabe “won” in one of the most blatantly stolen elections ever — in a country already mired in misrule, unemployment, hunger and inflation. Some 25 percent of Zimbabwe’s people have now taken refuge in neighboring states. (I have close friends from Zimbabwe, and one of my daughters worked there in an H.I.V.-AIDS community center in January.) The Associated Press reported in May from Zimbabwe “that annual inflation rose this month to 1,063,572 percent, based on prices of a basket of basic foodstuffs.” Zimbabwe’s currency has become so devalued, the A.P. explained, that “a loaf of bread now costs what 12 new cars did a decade ago.”
No matter. Vitaly Churkin, Russia’s U.N. ambassador, argued that the targeted sanctions that the U.S. and others wanted to impose on Mugabe’s clique exceeded the Security Council’s mandate. “We believe such practices to be illegitimate and dangerous,” he said, describing the resolution as one more obvious “attempt to take the Council beyond its charter prerogatives.” Veto!
Mugabe’s campaign of murder and intimidation didn’t strike Churkin as “illegitimate and dangerous” — only the U.N. resolution to bring a halt to it was “illegitimate and dangerous.” Shameful. Meanwhile, China is hosting the Olympics, a celebration of the human spirit, while defending Mugabe’s right to crush his own people’s spirit.
But when it comes to pure, rancid moral corruption, no one can top South Africa’s president, Thabo Mbeki, and his stooge at the U.N., Dumisani Kumalo. They have done everything they can to prevent any meaningful U.N. pressure on the Mugabe dictatorship.
As The Times reported, America’s U.N. ambassador, Zalmay Khalilzad, “accused South Africa of protecting the ‘horrible regime in Zimbabwe,’ ” calling this particularly disturbing given that it was precisely international economic sanctions that brought down South Africa’s apartheid government, which had long oppressed that country’s blacks.
So let us now coin the Mbeki Rule: When whites persecute blacks, no amount of U.N. sanctions is too much. And when blacks persecute blacks, any amount of U.N. sanctions is too much.
Which brings me back to America. Perfect we are not, but America still has some moral backbone. There are travesties we will not tolerate. The U.N. vote on Zimbabwe demonstrates that this is not true for these “popular” countries — called Russia or China or South Africa — that have no problem siding with a man who is pulverizing his own people.
So, yes, we’re not so popular in Europe and Asia anymore. I guess they would prefer a world in which America was weaker, where leaders with the values of Vladimir Putin and Thabo Mbeki had a greater say, and where the desperate voices for change in Zimbabwe would, well, just shut up.
]]>Welcome Rout on Medicaretag:therochesterdemocrat.com,2008:ee/index.php/35.437792008-07-17T11:06:00-06:002008-07-17T11:06:52-06:00{summary}2008-07-17T11:06:00-06:00Staffeditor@TheRochesterDemocrat.comWhat Others Say
NY Times Editorial
Published: July 17, 2008
The surprising thing about the intense Congressional struggle over a modest bill to improve Medicare was how quickly it turned from a cliffhanger into a rout. President Bush’s veto was easily overridden as Republicans in droves abandoned his misguided effort to help the insurance industry hold on to its large subsidies.
We hope this means that the next Congress will be emboldened to make more far-reaching reforms in Medicare to help keep the system solvent and able to provide high-quality care for older Americans.
The primary purpose of the bill, supported by both parties, was to forestall a 10.6 percent cut in payments to doctors that would otherwise be mandated under a longstanding funding formula. The cut could have led some doctors to opt out of the Medicare program, and many older Americans would have found it harder to find treatment.
The Democrats sensibly decided instead to find the savings with a moderate reduction in the 13 percent average subsidy lavished on private health plans that participate in Medicare. That was a red flag for Congressional Republicans who want private plans to dominate Medicare — and the primary reason for Mr. Bush’s veto.
Two things turned that around. The American Medical Association used a vigorous advertising campaign against Republican senators who were blocking a vote on the bill, cowing them into retreat. And the ailing Senator Edward Kennedy made a dramatic appearance on the Senate floor to guarantee a Democratic victory, at which point Republicans started switching sides.
Not even an intense advertising and lobbying campaign — shades of “Harry and Louise” — by the insurance industry was able to stem the tide. The House overrode the president’s veto by a thumping 383 to 41, with 153 Republicans defying the president. The Senate vote was a convincing 70 to 26, with 21 Republicans abandoning the White House.
The next Congress should build on this modest success and tackle more deep-seated reforms. It must find a permanent solution to the outdated formulas for reimbursing doctors; the current ones yield cuts so draconian that Congress must routinely scramble to find stopgap patches. And, for the sake of fiscal sanity and equity, Congress should do away with the unjustified subsidies that prop up Medicare’s private plans.
This week’s victory shows that with the right political strategy — and a sensible argument — Medicare reform is not only essential, it’s also possible.
]]>Talking Sense on Iraqtag:therochesterdemocrat.com,2008:ee/index.php/35.437782008-07-17T11:02:01-06:002008-07-17T11:03:24-06:00{summary}2008-07-17T11:02:01-06:00Staffeditor@TheRochesterDemocrat.comWhat Others Say
NY Times Editorial
Published: July 17, 2008
It has been obvious from the start of the 2008 campaign that the wars in Iraq and Afghanistan are the biggest foreign policy challenges awaiting the next president. But there has been precious little detailed discussion of them on the campaign trail.
Until this week, when Senator Barack Obama, the presumptive Democratic nominee, offered a sensible and comprehensive blueprint for dealing with the mess that President Bush created by bungling the war of necessity against Al Qaeda in Afghanistan, which could have made Americans safer, and starting a war of choice in Iraq, which made the world more insecure.
Mr. Obama’s Republican rival, Senator John McCain, is no longer able to ignore the situation on the Afghan-Pakistan border, where Al Qaeda and the Taliban — the true threats to American security — are resurgent. But he has not matched Mr. Obama’s seriousness on Iraq. Mr. McCain is still tied in knots, largely adopting Mr. Bush’s blind defense of an unending conflict.
Mr. Obama has a better grasp of the big picture, despite Mr. McCain’s claim to more foreign policy experience. For far too long, Mr. Bush’s preoccupation with his misadventure in Iraq — which fostered a presence for Al Qaeda where there was none — has dangerously diverted precious manpower, resources and high-level attention from Afghanistan and Pakistan. As Mr. Obama correctly asserted in an Op-Ed article in The Times on Monday and in a speech on Tuesday, those countries, not Iraq, are the real frontline of the war against terrorism.
Mr. Obama said he would withdraw combat forces from Iraq by 2010, shift at least 10,000 more troops to Afghanistan that could be leveraged to persuade NATO allies to also increase their numbers, send more nonmilitary aid to Afghanistan and build a stronger Afghanistan-Pakistan-NATO partnership on the lawless border. He also promised an extra $2 billion as part of an international effort to deal with more than four million displaced Iraqis — a crisis that the Bush administration has unconscionably ignored.
We were encouraged that Mr. Obama embraced a proposal by the leaders of the Senate Foreign Relations Committee — the Democratic chairman, Joseph Biden, and the ranking Republican, Richard Lugar — to triple nonmilitary aid to Pakistan to $7.5 billion over five years. The United States must invest more in building ties with Pakistan’s people and strengthening its democracy. Congress should move quickly to adopt the proposal, which also would require a long-overdue plan to address the lawlessness of the Afghan-Pakistan border.
After arguing that no additional forces were needed, Mr. McCain reversed course on Tuesday and endorsed sending 15,000 more troops to Afghanistan. But he seemed confused about whether they would be American forces drawn from Iraq or an American-NATO mix, leaving us wondering how well formed his ideas are.
And it was distressing to hear Mr. McCain still talking about “winning” the war in Iraq and adopting the tedious tactic of accusing Mr. Obama of “giving up” when he talks about a careful withdrawal of troops.
We have no idea what winning means to Mr. McCain. Mr. Bush initially promised a free and democratic Iraq. After spending $656 billion, his administration has retreated from such grandiose notions and he will be lucky to leave behind a marginally functioning central government in a very fragile and violent country.
Mr. Obama acknowledged that reality, and the fact that Mr. Bush’s decision to deploy more troops last year has reduced the violence. Mr. McCain uses that to justify an unending war. Mr. Obama wisely said that it was time to capitalize on American soldiers’ sacrifices to plan an end to the war. “At some point, a judgment must be made,” he said. “Iraq is not going to be a perfect place, and we don’t have the resources to try to make it one.”
He pointed out that the military cannot sustain Mr. Bush’s troop surge. “True success will take place when we leave Iraq to a government that is taking responsibility for its future,” he said.
The United States cannot just turn its back on Iraq, but that is not remotely what Mr. Obama is suggesting. He proposed keeping a residual force in Iraq for specific missions like fighting Al Qaeda. He also wisely asserted he will make tactical adjustments as needed.
The more the United States insists it will not even consider withdrawal, the less incentive Iraqis have to settle their political differences. Iraq’s leaders have asked for a withdrawal timetable. The next president needs to take them at their word. The candidates need to keep talking about how they will meet that goal and then address the real threats in Afghanistan and Pakistan.
]]>Some Relief At Lasttag:therochesterdemocrat.com,2008:ee/index.php/35.437702008-07-17T03:44:01-06:002008-07-17T03:47:21-06:00{summary}2008-07-17T03:44:01-06:00Staffeditor@TheRochesterDemocrat.comOpinion
Paul Munnis
Where Iraq is concerned it looks to be the beginning of the end. Iraq is saying “Yankee Go Home,” the negotiation for a permanent presence in Iraq has failed, the Status of Forces Agreement is a bust, and economics make it clear that we have to beat feet out of Iraq pronto.
We also need fresh troops in Afghanistan where we are losing the war and Iraq is the supply depot for that help.
For all of these reasons the Pentagon is looking to reduce American forces to 50,000 by spring of 2009. That is a fast paced withdrawal from an occupied territory.
So, American attention is turning towards other matters. One is the war in Afghanistan. In many ways this has been a hidden war that is underreported and lacking in media coverage. Pakistan is a related problem and many are asking what diplomatic initiatives we have to put up in order to end this conflict.
Another attention-getter is China and we need to determine what to do about their adventures in Africa as they compete for oil in spots traditionally British and American turf.
American foreign policy is a mess. The good news is that peace is breaking out between Israel and Palestine but with no thanks to the U.S. or the Bush Administration. The other good news is that a European / Iran Summit is shaping up and the U.S. will reluctantly attend it as observers.
Even better news is rapid deployment of Alternative energy in America and the reduction of foreign oil dependency.
It looks like the awful mortgage crisis is now under control as Freddie Mac and Fanny Mae are assured and so oil is starting to come down in price and the dollar is starting to stabilize against the Euro even as the stock market has stopped its downward spiral. Well, we at least hope that to be the case; we will have to see what tomorrow brings.
We are not out of the woods yet, we have a lot of weak banks and we will have to deal with them in coming weeks. Hopefully it will not impact our readers.
As Bush packs his bags and gets ready to leave Washington a huge collective sigh of relief is being exhaled by the electorate who realized that we have had a bad spell of government and we now need to rebuild our nation. The good news is that we know what we must do and with a November election coming we may be able to rid ourselves of the impediments to doing it, namely Filibuster and Veto, two unwelcome guests at the government table.
I am expecting Barack Obama to soon announce that his policy will be a stable and strong dollar and that will help us even more. Then we have to deliver.
So while we have been badly beaten up from the Bushies we have survived and we can carry on and we will do just that, with your help.
]]>America to the mid-east—Byetag:therochesterdemocrat.com,2008:ee/index.php/35.437512008-07-16T17:31:01-06:002008-07-16T17:35:53-06:00{summary}2008-07-16T17:31:01-06:00Staffeditor@TheRochesterDemocrat.comPerspective
Paul Munnis
As oil prices soar and the oil producing mid-east nations sit in the cat-bird seat the message is clear enough to us – “develop alternative energy or watch our economy go bust.”
The thinking up until now has been that this alternative energy stuff can be evolutionary and transitional and operate at a controlled pace but it’s getting clear that a big rush is on and the mid-east is the loser for slowing the pace down to accommodate mid-east change is no longer an option. At $140 per barrel of oil then alternative energy investment is cheap and produces good returns on investment. Guess where the smart-money is headed? To an alternative energy site located near you.
Wherever central solutions to energy supply can be created then alternative energy will be used. The key word here is “central.” A good example is wind farms. The means of production can be diversified but collection, delivery, and billing is to be kept centralized with the utility company. As long as that is true then no lobby against wind energy comes up and so investment soars. Nuclear power suffers no such problems and is in need of upgrade and expansion and that will happen just as sure as sunrise because it can be controlled by a regulating authority with taxing authority. Also, they sell their product into the energy grid. So for Congress, regulating the energy grid is the name of the game and ENRON and its abuses come to mind.
Solar looks like it can and will follow the same model as what the wind farms are doing and so anyone wanting to install the means of production onto their property is welcome to as long as the product is sold into the grid. The problem has been that homeowners want to first power their homes then sell the excess capacity. That is not what the utilities want and so solar is stuck for the moment as utility companies lobby to try to block the home owner from benefiting. It