Bits & Pieces #14

I keep hearing people say that TARP and the Stimulus were failures. Only if you’re a Republican or someone too dumb to understand what actually happened with them. TARP was probably one of the best ideas the Bush administration ever came up with. Unfortunately they weren’t bright enough to demand, that as part of the deal, the banks actually had to lend out the money they had been given for that purpose.

The Stimulus was an even better idea. It might have worked brilliantly except that the Republicans demanded that it be underfinanced and Obama didn’t have the stones to tell them to go to hell. The Stimulus needed about $2 billion. It got only about $700 million and all of that went to pay for the Bush tax cuts and an extension of unemployment insurance, so there was nothing left over for the original goal, employment creating infrastructure building. If not for both we might now be in a depression to end all depressions.

Of course we may still get there. If America is to come out of the current economic woes and face a future defined by growth and prosperity it must first figure out a way to compensate for the brain dead debt ceiling settlement and then come up with a plan that calls for and encourages innovation, the growth of new industries and the development of cutting edge technology. The question is how to do that with the catastrophic mess left by the Tea Party imbeciles and their hard right know-nothings.

The Republican solution of lowering corporate taxes to encourage business spending has been proven wrong for almost seventy years. I find it hard to believe that no Republican knows how to read history but that seems to be the unavoidable conclusion. The Democrats solution is to create federal investment in research, development and infrastructure by spending money to pay for or at least guarantee payment through an Infrastructure Bank. The greatest advances in technology in the last seventy years have come from government investment in research, especially through the Department of Defense, which brought out the semi-conductor, NASA which developed the computer, DARPA which all but created the internet and the Military which developed GPS. Based on the historical fact of these technological developments, we should be doubling Federal research & development every year if we want to continue to compete in the global marketplace.

***

David Frum, a Bush speechwriter and a guy I usually despise, expressed a very insightful view of the current situation on Fareed Zakaria’s show a couple of weeks ago. He made the point that the Republicans were now the party of the senior citizens and that conversely all their current policies were aimed at reducing entitlements that were the main concern of senior citizens and could only be provided by big government, the target of the Republicans. No it doesn’t make sense to me either.

***

In the world of hutspa, Standard & Poors and Moody’s, the worlds two largest ratings agencies have now taken over the hubris championship.  First these clowns almost sank the country by giving AAA ratings to all the garbage mortgages that the banks and mortgage companies were issuing and now they threaten to drop the country’s rating from AAA if certain goals aren’t achieved to their satisfaction. Is that stones or what? These guys are lucky they’re not in jail and here they are threatening the country with higher interest rates if we don’t live up to their standards. What standards? Where were those standards when they were sucking up to the banks by ignoring the junk mortgages they were rating AAA?

Maybe it’s time the Attorney General looked into how a company with so much integrity that it can challenge the worth of the United States, could have come up with all those criminally incorrect ratings. The question becomes; are Moody’s, S&P, Fitch and the other ratings agencies just incompetent or was something else going on? Maybe there are people at the ratings agencies that belong in jail.

***

The Republican’s claim that the big banks aren’t lending and big business isn’t investing because they can’t get a line on what their tax obligations will be going into the future. What a crock! They aren’t lending or investing because, consumption is down and if no one is buying there is no reason to make things. Why is consumption down? Because a lot of consumers are out of work and when you don’t earn a salary you don’t have money to buy anything but the essentials. Most of our consumption is made up of non-essentials.

Okay so consumption is down because of unemployment. How do you create employment? You build plant. But if you build plant with no product in mind because there is no consumption you go broke. So what else is there to do?

The last resort; you build infrastructure because there is a built in consumer base for infrastructure. Who is that consumer base? Everyone; all the people who use it. The money for infrastructure normally comes from the government, not private investment, either in actual payments or in guarantees. That way you let the big banks keep their money, which they are really gong to need.

Why will the banks need a lot of money? Well, the mortgage crisis is now approaching the litigious stage. If things go the way they should the banks are going to need every penny that they have hoarded just to pay off their debts and stay afloat. If all goes well the banks big investors, the ones that lost huge sums on these bad mortgages will soon be in court in enormous numbers. It is now common knowledge that most of the mortgages were handled atrociously and almost all the paperwork is improperly produced or missing.

Right now the foreclosure process on all those bad mortgages has been shut down temporarily but what happens to those huge blocks of bank assets if the courts decide, as they should, that the paper trail that is supposed to make the mortgages legitimate, doesn’t hold up? There is still a chance that ownership of these properties could revert to those in actual possession of them. If that happens the banks and mortgage companies stand to lose billions, especially when their investors sue them for their criminally incompetent handling of all those investments.

Even with the three trillion bucks the banks are supposed to be holding, most of them wouldn’t survive. It would be a case of true justice but, unfortunately, it would ruin the economy. That’s what happens when government doesn’t enforce anti-trust laws and allows any business to become too big to fail.

***

Reading David Brooks in the Times. He is that rarest of Republican birds, a brilliantly intelligent man who has not, as has George Will, allowed his political ideology to completely cloud his ability to reason. In a column called “The Magic Lever,” he correctly chides both sides for their ideological immobility but his solution is to hope that those opposing sides realize their folly and somehow come together with the right answers.

This is as great a folly as the one he condemns. David Brooks because of talent, because of intellect, has achieved a bully pulpit of his own and it behooves him and men like him to lay out the path for those who do not or will not see it. David Brooks is not a reporter. He doesn’t need objectivity the way a reporter does. He is one of our penultimate political theorists and commentators and as such it is his responsibility to use his superior intellect to guide our otherwise feckless politicians towards a greater good.

If our politicians won’t govern, maybe guys like David Brooks should.

***

Bradley Manning, the pathetic little creature who the United States government is treating like Benedict Arnold because of his involvement in the WikiLeaks mess, asked a question, which, maybe, puts him in the context of a hero rather than that of a traitor.

“If you had free reign over classified networks for long periods of time and you saw incredible things, awful things, things that belonged in public domain and not some server stored in a dark room in Washington, D.C. what would you do?”

Now I’m not saying Bradley is either hero or traitor, frankly because I don’t know enough about the background or motivations that drove the whole fiasco, but it seems to me that neither do any of the pundits calling for his head or his instant release.

Yes, he is currently the victim of military justice (almost as big an oxymoron as military intelligence) but maybe that’s exactly where he belongs. On the other hand if his motivations were pure, maybe he belongs up there with Woodward and Bernstein.

Those in power, everywhere, have long understood that one of the ways they can maintain power is to create an opacity that keeps anyone from knowing what they are doing. This opacity is one of the main foes of democratic governance. In revealing, as he did, the thousands of files the government sought to conceal, Manning drove a hole in that opacity. Was it a good thing? From at least one point of view; definitely. Another veil of opacity has been drawn over the whole affair by the government’s refusal to bring Manning to trial, so the final answer to that question must wait.

If the “Classified” secrets Manning revealed were in fact secrets that should have been classified, according to the dictionary definition of the word or its logical usage than Manning is probably a traitor. But our government has the unfortunate habit of censoring everything written in multi syllable words as classified just in case there’s something in the document they don’t understand. When, as has been documented, you classify quantities of toilet paper, the only thing you are protecting is the number of assholes in your group and the term tends to lose its viability.

What we need at this point is a reality check. Are the documents seriously important from a military and intelligence POV or just embarrassing from a diplomatic POV.  From what I know of the situation, it seems that the greatest fault lies with Julien Assange, not for publishing the documents but for his failure to edit them. If you want to play big boys games you have to understand that there are rules to be followed or people get hurt and Assange’s rush to get the information into the market place doesn’t excuse him from the responsibilities attached to the material itself.

We need whistle blowers if we are to maintain a free society but they must be informed, intelligent and logical, not just some clown who knows how to put a couple of pieces of reed between his lips and blow.

***

Joe Nocera has a column in a recent edition of the Times where he identifies the thyroid problems that have been a plague to certain areas in Poland ever since the meltdown at Chernobyl. I applaud him for bringing this to light but condemn him for not showing the other side of the picture. Yes, nuclear power, the cleanest source of energy currently available brings with it the kind of threat that was exemplified by Chernobyl and now the disaster in Japan but as I mentioned in an earlier post this is far outweighed by the death and human destruction brought on by the poisoning done by our current most popular fuels for energy manufacture, coal, oil and natural gas. The deaths caused each year, by each fuel, just in this country, far outweighs the total deaths that have resulted world wide from Chernobyl since the accident happened in 1986. That’s right, twenty-five years of accumulated death from the most deadly nuclear accident on record does not equal one years total death from the use of one fossil fuel, in this country alone. Think about that.