Thank God for Obama

Just to weigh in on the Obama-Cheney debate on Thursday, Obama defends the America I love, and Cheney disgraces it. From what Brooks says in this column, Cheney's views were rejected even by the Bush administration. Obama says the right things as far as I'm concerned. So what about indefinite detention and other stuff the left worries about? Obama inherited a bad situation. If decent people had been thinking about how to handle this situation, we would never have had Gitmo, rendition, torture, and all the other weird stuff that went against centuries of Western law and tradition.

Cheney says this weird stuff protected the US from another attack. That's like saying that it also protected us from an invasion by intergalactic aliens. When do we give them credit for stopping an invasion, rather than just saying that no one tried to invade? When there is no attack one day after 9/11. After one month? After seven years? There is no way to know. Certainly there were no well planned attacks against the US that were prevented. Some incompetents were caught, and some well planned attacks were carried out in other countries. I guess Cheney doesn't care if some Spaniards or some Brits died on his watch.

Obama faces a tough situation. Of course the real villains are the terrorists, and there are still terrorists out there. But the Bush administration handled its reaction to 9/11, Iraq and the "war on terror" badly. That now makes Obama's job tougher than it would have been if better people had been in charge on 9/11. Better in the sense of more competent (maybe they would have read the intelligence saying bin Laden planned to attack the US) and better in the sense of more moral (no torture, adherence to US and international laws and mores).

Obama, I'm with you. Try to do the right thing.

New Credit Card Law

The new Senate bill regulating the credit card industry no doubt owes much of its success to the financial debacle on Wall Street. People used to think that bankers were people just like the rest of us, albeit with a special job that give them community leadership positions and some wealth. Now, bankers are widely perceived as creeps, men and women who will do anything for money, including destroying the world economy, and impoverishing their neighbors. So, there's not much sympathy for bankers these days, hence the bill.

This Financial Times article compares today's bankers with the kings and queens of yesteryear (Off with his head!), and the Russian oligarchs of more recent times. Not a very pleasant comparison, but one that invites more government regulation. Hopefully this is only the start.

Scarborough & Mika Suck Up to Immelt

On yesterday's "Morning Joe" Eliot Spitzer criticized the New York Fed's decision to have GE CEO Jeff Immelt as a public member of its board. On the show and in his column, Spitzer criticized Immelt for being a public representative because GE had benefited from the US government's largess. In his column, Spitzer says that by participating in program under which the US stands behind GE debt, GE saved billions of dollars that it would otherwise have incurred in issuing that debt. In the public mind, such largess is no doubt perceived as part of the "bailout" whether or not GE actually received cash, or just government guarantees.

Today, Joe and Mika made a totally suck up apology to Immelt for Spitzer's comments that did not actually deal with Spitzer's criticisms. First they talked about how handsome Immelt is. Then they read a GE statement that said GE has received no government bailout, but rather paid money to participate in a program that help liquidity and the commercial paper market. It did not deal with the question of whether by participating in this government [bailout] program it saved billions of dollars.

I was sort of enjoying "Morning Joe," although I was already put off my Mika's frequent unabashedly fawning praise of Joe. Now, they both prostrate themselves before the wonderful, mighty, faultless Jeff Immelt. It's more than I can take. I hope they get big bonuses; they lost at least one viewer. I wonder with Mika's father thinks about what she's doing. I'm sure he's happy she's making money; he may not be proud of her integrity.

Cowardice on Parade

The Congress' refusal to accept Gitmo detainees into US prisons is cowardice at its worse. I'm guessing that most of those voting to keep them in Gitmo never served in the US military. Clearly they have no confidence in their own prisons; they represent states that have incompetent law enforcement agencies; dishonest, stupid judges; worthless state governments that probably gave a start to their careers. They know how bad it is. They know that foreigners scare them to death; the only salvation is to torture them. Most have Newt Gingrich's view of government, that it is worthless; only the private sector can do anything right. Newt knows from experience; he was once the third highest federal government official, and he knows that he was absolutely incompetent to do anything. He hates government because it's made up of cowardly fools like him.

Israel Says Ignore Palestinians, Kill Iranians

During his Washington visit, Israeli Prime Minister Netanyahu tried to turn the discussion from Israel and its oppression of the Palestinians to the need to invade Iran. He successfully deflected a lot of the discussion, refusing to acknowledge the possibility of a Palestinian state, for example, but hopefully he did not beat Obama into embarrassing, fawning submission the way he did Bush and Cheney. In theory his argument is that America is too stupid or too poorly informed to understand the threat that Iran poses. (This begs the question, "Poses to whom?" Israel or America.) But once Netanyahu gets Obama to accept his premise, then his point is, "Send the American military to destroy Iran, or at least important parts of it." Jews love to send Gentiles to die for them. They successfully did it in Iraq, where the predominately Jewish neo-cons sent thousands of Americans to die in Iraq for a threat that was mainly of concern to Israel. In retrospect, however, Israeli intelligence was apparently just as bad as American intelligence on Iraq, and Israel ended up calling in a lot of favors with the Bush/Cheney administration for a war that probably did little to increase the security of Israel. For sure, it did little to increase the security of the US. The self-evident bankruptcy of this policy has caused Cheney to go on a public relations blitz, but while it might change some current opinions, Bush and Cheney will go down in history as some of the worst leaders in the history of the world. They still trail Hitler and Caligula and a few others, but they are in bad company. But Netanyahu, AIPAC, and the rest of the blood-thirsty, Jewish neo-Nazis loved them. (Is this anti-Semitic? I don't think all Jews are blood-thirsty neo-Nazis. There are many wise, decent Jews, John Stewart and Tom Friedman always come to mind, but the Jewish right wing is dangerous, rejoicing the deaths of Gentiles, whether they are Muslim Palestinians or Christian Americans. Comparing Jews to Nazis is supposed to be the ultimate anti-Semitic act, but if they don't want to be compared to Nazis, Jews shouldn't act like them. Richard Perle, William Kristol, Charles Krauthammer, Paul Wolfowitz, AIPAC, you have a lot of Chrsitian blood on your hands, along with fellow-traveler Dick Cheney.)

Another thing is that Obama tried to get Netanyahu to talk about peace, and while he mentioned it, it seems pretty clear from the general discussion that what Israel really wants is territory, i.e. settlements, not peace.

Why is Israel so important? It's a tiny country in terms of geography and population. But Jews are rich, successful, loud and in-your-face. When I was growing up, one of the main concerns about Jews was why they didn't fight back during the Holocaust. There was the Warsaw ghetto uprising, but it was brief and unsuccessful, much less of a threat to the Germans than the main Warsaw uprising, which was also put down by the Germans, but only after a much harder fought battle. Somehow, the Jews have now finessed this question, and nobody asks it anymore. Moreover, they seem to have tried to make up for not fighting during the Holocaust, by fighting the Arabs around Israel. But by moral standards, they're fighting at the wrong time and in the wrong place, and against the wrong people. They are mainly known for killing children, although they kill a lot of adults for every child.

Fortunately, Obama seems much more reasonable than I. The compassion and understanding that he showed at Notre Dame about abortion, no doubt applies to Israel as well. And he has a pretty zealous Jew, Rahm Emanuel, as his right-hand man. I think I was petty oblivious to the whole Jewish thing until two incidents brought it home. First, my dealings over a number of years with Richard Perle and his empire at Defense, where it seemed like we were on opposite sides of any issue that came up. Second, my experience at the American Embassy in Warsaw for the 50th anniversary of the end of World War II, where the ceremonies were all-Holocaust, all the time. Since my dad fought in Europe in WW II, I felt slighted that the American government did not do more to recognize what the American troops did, and basically turned the operation over to the Jewish Holocaust leadership. In particular, I was disappointed that the one rabbi in Warsaw (and I think in all of Poland), whom I worked with and who was a very nice, religious guy, was replaced shortly afterwards with a much more radical, publicity-seeking rabbi, more concerned about vilifying Polish Christians than ministering to Polish Jews.

Maybe Israeli Spies Aren't Harmless

This Sic Semper Tyrannis blog has an example of a new intelligence case, Klingberg, which Israel perpetrated against the US to gain military intelligence. It also mentions the Pollard case, but it doesn't mention the USS Liberty, which is a clear example of Israel being willing to damage the US in order to further Israeli interests.

More on Rahm Emanuel and Israel

The blog "Just World News" has more info on Rahm Emanuel's position on Israel. It says Emanuel has warned AIPAC that failure to make progress on the Palestinian issue will hurt Israel's chances for progress on restraining Iran's nuclear program, although it doesn't explain exactly why. It does say that most American Jews are Democrats who support Obama and thus would be loathe to buck him on this issue. In that case, who does AIPAC speak for? Presumably a lot of Jews with a lot of money, but maybe not George Soros or Rahm Emanuel. So, what are Bibi Netanyahu and Israel's other right wing leaders going to do? Like Nixon's opening to China, they could probably get away with a genuine opening to the Palestinians.

AIPAC Still a Problem

This posting from Sic Semper Tyrannis raises my hopes that this administration may not roll over and play dead in negotiating with Israel, like the last one did. Maybe they will consider Israel to be a separate country from the US and deny a visa to an Israeli who spied on America using the AIPAC employees against whom criminal charges were recently dropped, and who apparently "ran" Pentagon employee Franklin. If they deny the visa, they will get tremendous pressure from Jewish Americans like Senator Joe Lieberman and Congresswoman Jane Harmon, who consistently put Israel's interests ahead of America's. If push comes to shove, it will be interesting to see whose side Lieberman, Harmon and company come down on.

What about Rahm Emanuel as a Jewish-American; as Obama's chief of staff won't he look out Israel's interests? His family is very pro-Israel. It sounds like he actually served time in the Israeli Army, although not in uniform so as not to mess up his American citizenship. I don't know. Perhaps he is Israeli enough not to be subject to the wildly right-wing attitudes that characterize AIPAC and other American Jewish organizations, except perhaps J-Street. There is much healthier debate and much more difference of opinion in Israel than among American Jews. Or, perhaps because of the potential conflict of interest, Emanuel and Obama have an agreement that Emanuel will keep hands off Middle East policy. Obama has shown himself to be concerned about maintaining a high middle ground on most issues, and it's conceivable that he's done this or something like it with Emanuel.

Why Change US Commander in Afghanistan

Firing Gen. McKiernan and replacing him with Gen. McChrystal in Afghanistan has been described as the first such command change during wartime since Gen. MacArthur was fired during the Korean War. I don't know if that's media hype, or whether the Pentagon is pushing that interpretation to emphasize a change in policy. If it's meant to be something big, as the press is saying, then as this blog asks, what does it mean?

To me the main difference is between sort of an old-fashioned, big Army fight, and a new style, guerrilla, counter-insurgency fight. I'm not a military expert, but I think the former strategy wins wars, while the latter one wins battles. That raises the question, what is our end-game in Afghanistan? If it's something less than a tradition victory, which we probably haven't won since World War II, then this change makes sense. The Russians tried for an old-style victory in Afghanistan, and it didn't work out too well.

Israel Objects to Truth about Its Nuclear Capacity

Israel is in a tizzy because the US has stated publicly that Israel has nuclear weapons and has called on Israel to join the NPT. This FT report is just factual, while this JTA report is more alarmist. The Israelis appear worried that the US will try to make Israel adhere to the same treaty requirements that it is trying to make Iran adhere to, in order to reign in Iran's nuclear program. Israel does not believe it should be subject to the same regime as most other nations in the world. There are only a few holdout who refuse to join the Non-Proliferation Treaty, including North Korea, Pakistan, and India, as well as Israel.

Maybe the US was preparing for this by releasing information earlier about Israel's nuclear capability.

AIPAC Should Register as a Foreign Agent

This blog makes a good argument that AIPAC should register as a foreign agent. I suppose that American Jews believe that Israel's interests and America's interests are identical, and therefore AIPAC is not working for a "foreign" state. But not everyone accepts the hypothesis that Israel is a 51st state. If AIPAC did what it does for Russia or Iran, for example, rather than Israel, there would be a huge outcry about what it does. Maybe the Iranians will start their own AIPAC, but their "I" will stand for Iran. I presume the US government would give it even-handed, "fair and balanced" treatment vis-a-vis the Israeli AIPAC, let it do the same things.

Why Did US Drop AIPAC Case?

The US will not prosecute the two AIPAC employees who were accused of spying on behalf of Israel. This was the case that sucked in Rep. Jane Harmon recently for promising some "Israeli agent" that she would try to protect them from prosecution.

It was always a strange case and a surprise that the US would actually treat Israel as a foreign country that spied on the US, despite the experience of the Israel attack on the NSA spy ship Liberty in 1967. So, it's not really a surprise that the US is dropping the case, but the question is why?

Is it because AIPAC and the Jews control the US? Probably not, but Jane Harmon, Joe Lieberman, Raum Emanuel, Larry Summers, and various other powerful Jewish interests no doubt played a role. Maybe dropping the case is better than pursuing it and losing, but if the case had been pursued, some really bad things might have come out about AIPAC and Israel even though they would have won the case. This way it all stays covered up.

US Army Confirms Israeli Nukes

I'm including this report that Israel has nuclear weapons just for the record, since everybody knows it, but maybe Israel's game of plausible deniability is wearing thin.

A Kindred Spirit on Jane Harmon

This post on Sic Semper Tryannis is more outspoken than I.  As it says about Rep. Jane Harmon, "From the Israeli perspective, she would have been their spy....  She agreed to help an agent of a foreign government and was to be rewarded with advancement...."  She would have been paid to some extent by Haim Saban, the dual national Israeli-American billionaire who already controls the Brookings Institution's Center for Middle East Policy, which bears his name.  Saban's funding has basically turned the Center into an Israeli lobby headed by Martin Indyk, an Australian who worked for AIPAC, the premier Israeli lobby, before he became US Ambassador to Israel.  

Can the Fed Manage the Economy?

I have been a big fan of Ben Bernanke, who along with Hank Paulson jumped into the fray to rescue the economy from it's meltdown last fall. I think it is great that he is a student of the Great Depression and is using his knowledge to try to avoid another one. Things seem to be looking up, but there seems to be some question about whether the green shoots that are springing up will be viable.

In a way, however, despite the fact that Bernanke has done things the Fed has never done before, what he is doing now is the easy part. In general, people are not going to complain too much when you are handing out free money. There will be complaints from the people who are not getting it, which we are seeing now, but it's not like sucking money out and making life harder for people, not just making some people comparatively poorer by handing out money to others. Although their Wall Street neighbors are rich and getting government handouts, regular people are better off than they would be if the Fed had done nothing. It's just that maybe they get to keep most of their jobs, while Wall Street not only gets to keep its jobs, it gets huge bonuses to boot.

Although this course of action seems correct, you have to wonder why the solution to the current meltdown is the same medicine that caused the meltdown -- low interest rates, more consumer spending, freely available mortgages, etc. Doesn't this encourage the same bad risk borrowers to borrow more? They say that refinancing is way up because mortgage rates are at their lowest rates ever. Are these just people turning their homes into ATM machines who missed the last go-round? Instead of more profligate spending, don't we want to encourage more responsible conduct? Ridiculously low interest rates do not do so. People are saving more, but if the interest paid on their savings is virtually nothing, that's not encouraging them to save. If people genuinely expected deflation, that would encourage them to save, because even zero interest is valuable if each dollar buys more at a later date. Yet, the Fed has said it doesn't want deflation either.

The future is more of a problem. If the Fed doesn't turn off the money spigot at the right time, perhaps at exactly the right time (which is hard to determine in real time), then inflation may take off. When it turns off the money spigot, people will experience real financial pain, not just envy. The one person who's done this is Paul Volker. Under him a 14% mortgage was a good interest rate. Will Bernanke be willing to do this? How much political pressure will he come under not to do it? Will he know when to do it?

Who Is To Blame for the Financial Crisis?

Who is to blame for the world financial crisis -- Jews, WASPs, others? Brazilian President Lula said that it was caused by white people with blue eyes.

Jews have come in for a pretty good drubbing because of their traditional involvement in the financial markets and the major role they play on Wall Street. But there also seem to be a lot of WASPs, or at least people of Anglo ancestry; I'm not so sure about the Protestant part. You don't hear much about WASPs anymore, perhaps in part because of the decline of the old line Protestant churches -- Episcopalians, Methodists, etc. In the old days you could count on the Rockefellers, Fords, Morgans, Vanderbilts, etc., to be WASPs.

I would guess that in general the WASPs on Wall Street are more politically conservative than the Jews, e.g., George Soros. But it's not so clear. I don't know who has been more reckless in taking on too much financial risk.

Jewish Goldman Sachs alumnus Robert Rubin was Treasury Secretary in the Democratic Clinton administration, but he and his Jewish colleague Larry Summers oversaw the elimination of banking regulations that eventually led to the financial meltdown, a move favored by the political right wing.

Later, WASP Goldman Sachs alumnus Hank Paulson was Treasury Secretary in the Republican Bush administration, but he oversaw the massive government intrusion into the financial industry to rescue it from the results of the liberalization initiated by Rubin, a move that horrified the political right wing.

But in most cases the characters are white, and maybe blue-eyed. Former Citigroup CEO Richard Parsons, who is black, is an exception, and I'm sure there are many others.

Jews Need to Fix Israel

Jews claim that Israel is unjustly criticized, that it is much more moral than other countries who are not criticized to the same degree. See for example this op-ed by Brent Stevens in the Wall Street Journal.

But like it or not, Jews are held to a higher standard. First, it is a religious state, the Judeo part of the Judeo-Christian faith. Russia makes no claim to such religiosity. Italy conveniently stuck the Vatican in its own, separate country. Saudi Arabia as the keeper of Mecca does make a somewhat similar claim, and it is increasingly caught between its Islamic leadership status and its desire to be just one of the guys when it comes to dealing with the West. But because of its religious character, Israel will always be held to a higher standard than most other countries, and it should be. The US, as the "city on a hill" that Reagan loved faces a similar problem, which is currently illustrated by our debate about torture. Russians don't get criticized for killing kids in Chechnya like the Israelis do for killing kids in Palestine, and they don't get criticized for using torture like the US does. If the Jews renounced their God and accepted all the Arabs in Israel (including the West Bank and Gaza) as equals, they would get a lot less criticism. They would be more like an ordinary run of the mill country.

A second issue, however, is the fact that Israel was created by the United Nations. It's not as if the state of Israel had occupied the land of Palestine for the last 4,000 years. They were missing for the last 1,000 years or so. What Israel has done is not unlike what the US did in slaughtering the Indians and occupying the American West, but this is a different time, and attitudes have changed. What was more or less acceptable in the 1800s is no longer acceptable in the 21st century. It might be unfair, but it's a fact. So the Israelis and the beneficiaries of this largess of the world through the UN, should seem more grateful and should try to live at peace with their neighbors. Granted the neighbors are unhappy, that's a challenge for Israel; make them happy.

Finally, the main reason the world gave Palestine to Israel was because of Jewish suffering int he Holocaust during World War II. The idea that the Jews in Israel should then turn around and do the same sorts of things to the Palestinians just is off the charts in terms of human decency. Jews should be models of compassion and understanding. When they turn out to be anything less, the world is horrified, not because what they do is so terrible on the scale of oppression, but because it shouldn't even be on the scale at all.

American Jews should be demanding that Israel behave better, not defending Israel's failures more vocally than the Israelis themselves. There are many wonderful Jews in American, but at the moment, they are all damned by the Jews who defend any reprehensible action that Israel takes.

Loyal Jewish Americans?

The story in the NYT and other media about Congresswoman Jane Harmon's involvement with AIPAC, Haim Saban, and perhaps an "Israeli agent," raises questions about the loyalty of American Jews. Harmon, a senior member of the House Intelligence Committee, is Jewish and apparently put Israel's interests ahead of America's. From the hazy reporting on the matter, the "Israeli agent" may simply be someone from AIPAC, not a Mossad spook. On the other hand, NSA is not supposed to wiretap conversations between Americans. If a conversation does not involve somebody overseas, then an agency other than NSA should be doing it.

In any case, the report does raise questions about the loyalty of American Jews vis-a-vis Israel, starting with Harmon, including billionaire Saban (a dual US-Israeli national), and certainly AIPAC, which claims it is not an Israeli lobby, despite the fact that the case that Harmon was talking about involved the transfer of classified information to Israel by employees of AIPAC.

I don't think all Jews are disloyal Americans. One of the most loyal Americans we have at the moment is Jon Stewart (nee Jonathan Liebowitz), along with Tom Friedman, and many others like Ben Bernanke and Paul Volker. But on the other hand, you've got Joe Lieberman, who represents Israel much more forcefully than he represents Connecticut.

Meanwhile, today you have the furor over criticism of Israel by the UN Human Rights Commission. No doubt Ahmadinejad's criticism of Israel was way off the mark, but you would think that a country founded as a result of the suffering of the Jews in the Holocaust would be more concerned about the suffering of the Arabs displaced by the creation of Israel. Palestine may have been a Jewish country 2,000 years ago, but it wasn't Jewish in 1945. The US has become an apologist for Israeli acts that many Westerners find horrifying. It's a shame that so many decent Jews are tarred by what Israel does. The crushing embrace in which many American Jews hold Israel does a disservice to more conscientious, moral, thinking Jews.

This episode with Jane Harmon is only the most recent. The US Congress marches in lockstep with AIPAC, just as it does with the NRA, now the defender of supplying Mexican drug gangs with powerful guns used to kill everyone from children to law enforcement officers. To look at the US Congress is to see cowards on parade. They are following in the footsteps of the Roman senate, described as follows by Wikipedia: "... [U]nlike the senate of the republic, the senate of the empire was not politically independent. With the loss of its independence to the emperor, it lost its prestige and eventually much of its power."

Goldman Cashes In

Goldman Sachs is taking maximum advantage of government freebies, while at the same time poormouthing them. It's possible that Goldman didn't really need or want bailout money, but was forced to take it to mask other banks who desperately needed it. Once it got it, however, it didn't wait to profit from the taxpayer largess.

One of its biggest benefits was indirect. Goldman was owed money by AIG; exactly for what is not clear to me, but AIG paid Goldman about $12 billion. Goldman knew it was making a bad bet on whatever trade it made with AIG as a counterparty, but the government bailed it out at 100 cents on the dollar. Shouldn't it pay some penalty for making a bad bet, say making only 80 cents on the dollar? That would have whiped out its $1 billion profit for last quarter, although Goldman argues that it would not. There are even more questions about Goldman's tax year accounting. But in any case it came out smelling like a rose thanks to the taxpayers.

Today's NYT reveals that Goldman is cashing in on another taxpayer subsidy that guarantees its debt for free, even as it touts its withdrawal from the TARP. This program apparently helped it raise the capital that it says it will use to replace the TARP money. The NYT points out that this program could bankrupt the FDIC, but we'll all hope that it won't.

Prof. Mearsheimer on Amb. Freeman

For the record, here's an article by John Mearsheimer on Chas Freeman's being blackballed by the Israel lobby.  

Republicans, Back Off on Christopher Hill

While I'm on the subject of destroying America by being obstructionist on every issue, what about the Republicans blocking the confirmation of Christopher Hill to be Ambassador to Iraq? The opposition is being led by John McCain and Lindsey Graham, two men who claim to be military patriots. This article in Foreign Affairs says that they are seriously upsetting the US military that wants an ambassador in place to take some of the burden for running Iraq off of the military.

Hill was a loyal diplomat for Bush, but because he worked on North Korea, the Republicans want his head. It's the same kind of McCarthyism directed at the State Department that destroyed career diplomat Chas Freeman's nomination to head of the CIA's NIC. Republicans are just not happy unless their killing children, or getting the Israelis to do it for them. I thought John McCain was supposed to be some kind of moderate. I don't think so. He must be extremely bitter about his loss in the Presidential election and has just decided to destroy America, since it didn't vote for him.

Republicans, Back Off on Geithner!

The Republicans need to back off on calling for Treas Sec Geithner's head. As this FT editorial says, he deserves to be given a chance. Geithner didn't cause this crisis, the Republicans did, with all their pro-business legislation (or lack thereof) during the last eight years. Geithner may not have covered himself with glory, but he's working hard, and he has little help, because all the Wall Street tycoons who should be helping him in senior Treasury positions can't or won't because of their criminal conduct working on Wall Street.

By calling for his ouster or even by screaming criticism at him, Republicans are trying to get rid of or immobilize the captain of a ship while it is caught in a hurricane. Even it he's not the best captain, he understands the situation, and he's all we've got. We're in a situation where we don't even have a first mate. Calling for Geithner's ouster is tantamount to calling for the destruction of the American economy. It's grossly irresponsible.

Immoral Elites and Obama's Cabinet

The talking heads are decrying Obama's difficulty in filling cabinet and sub-cabinet positions. I don't think it's mainly Obama's fault. The problem is the immorality and greed of the elite leaders who would normally take such positions. We see potential nominees dropping like flies because they didn't pay their taxes. I agree with Joe Biden that paying taxes is a patriotic duty. So, if these people didn't pay their taxes, then we know what they think of the United States. It's me first, country second (or third or fourth or whatever).

The other problem is pay. Government salaries are peanuts to the elites who should be government leaders. This just shows how out of whack the class and pay system is in the US. Almost all the nominees have to make enormous financial sacrifices to take jobs that would pay well for the great mass of Americans. Decent men would be willing to serve their country, but today, while greed is endemic, men who hold high positions in private life are unwilling to enter public service.

More on Chas Freeman's Withdrawal

The Chas Freeman scandal of character assassination by the Jewish “Israeli lobby” will probably end soon. There may be one last gasp; I heard that Freeman is supposed to appear on Fareed Zakaria’s CNN show. Meanwhile, there has been some outcry in the mass media, most notably David Broder’s column in the Washington Post, “The Country’s Loss,” and Stephen Walt and Paul Pillar in Foreign Policy. The defense of Freeman has been small in comparison to the Jewish onslaught, including Jonathan Chait of the New Republic, Michael Goldfarb at the Weekly Standard, Jeffrey Goldberg of the Atlantic, Gabriel Schoenfeld (writing on the op-ed page of the Wall Street Journal), Jonah Goldberg of National Review, Marty Peretz on his New Republic blog, and former AIPAC official Steve Rosen.

Walt’s Foreign Policy comment makes all the important points. For me the most important is the dire implication for intellectual honesty in intelligence analysis. All analysis affecting Israel is guaranteed to be characterized by self-censorship and political correctness. As Walt points out, it indicates that Israel’s supporters do not believe that Israel’s relationship with the US can survive honest scrutiny.

I thought the New York Times report of Freeman's withdrawal was pretty straightforward, although it managed to have a tone that said, "We love Israel," even if it didn't say it in so many words. After all, the Jewish-owned, usually intellectually honest NYT doesn't want to suffer the same fate at the hands of the Israel lobby that Freeman and the CIA did.

Chas Freeman's Statement on Withdrawing from NIC Appointment

Charles W. "Chas" Freeman Jr.'s statement:

To all who supported me or gave me words of encouragement during the controversy of the past two weeks, you have my gratitude and respect.

You will by now have seen the statement by Director of National Intelligence Dennis Blair reporting that I have withdrawn my previous acceptance of his invitation to chair the National Intelligence Council.

I have concluded that the barrage of libelous distortions of my record would not cease upon my entry into office. The effort to smear me and to destroy my credibility would instead continue. I do not believe the National Intelligence Council could function effectively while its chair was under constant attack by unscrupulous people with a passionate attachment to the views of a political faction in a foreign country. I agreed to chair the NIC to strengthen it and protect it against politicization, not to introduce it to efforts by a special interest group to assert control over it through a protracted political campaign.

As those who know me are well aware, I have greatly enjoyed life since retiring from government. Nothing was further from my mind than a return to public service. When Admiral Blair asked me to chair the NIC I responded that I understood he was “asking me to give my freedom of speech, my leisure, the greater part of my income, subject myself to the mental colonoscopy of a polygraph, and resume a daily commute to a job with long working hours and a daily ration of political abuse.” I added that I wondered “whether there wasn’t some sort of downside to this offer.” I was mindful that no one is indispensable; I am not an exception. It took weeks of reflection for me to conclude that, given the unprecedentedly challenging circumstances in which our country now finds itself abroad and at home, I had no choice but accept the call to return to public service. I thereupon resigned from all positions that I had held and all activities in which I was engaged. I now look forward to returning to private life, freed of all previous obligations.

I am not so immodest as to believe that this controversy was about me rather than issues of public policy. These issues had little to do with the NIC and were not at the heart of what I hoped to contribute to the quality of analysis available to President Obama and his administration. Still, I am saddened by what the controversy and the manner in which the public vitriol of those who devoted themselves to sustaining it have revealed about the state of our civil society. It is apparent that we Americans cannot any longer conduct a serious public discussion or exercise independent judgment about matters of great importance to our country as well as to our allies and friends.

The libels on me and their easily traceable email trails show conclusively that there is a powerful lobby determined to prevent any view other than its own from being aired, still less to factor in American understanding of trends and events in the Middle East. The tactics of the Israel Lobby plumb the depths of dishonor and indecency and include character assassination, selective misquotation, the willful distortion of the record, the fabrication of falsehoods, and an utter disregard for the truth. The aim of this Lobby is control of the policy process through the exercise of a veto over the appointment of people who dispute the wisdom of its views, the substitution of political correctness for analysis, and the exclusion of any and all options for decision by Americans and our government other than those that it favors.

There is a special irony in having been accused of improper regard for the opinions of foreign governments and societies by a group so clearly intent on enforcing adherence to the policies of a foreign government – in this case, the government of Israel. I believe that the inability of the American public to discuss, or the government to consider, any option for US policies in the Middle East opposed by the ruling faction in Israeli politics has allowed that faction to adopt and sustain policies that ultimately threaten the existence of the state of Israel. It is not permitted for anyone in the United States to say so. This is not just a tragedy for Israelis and their neighbors in the Middle East; it is doing widening damage to the national security of the United States.

The outrageous agitation that followed the leak of my pending appointment will be seen by many to raise serious questions about whether the Obama administration will be able to make its own decisions about the Middle East and related issues. I regret that my willingness to serve the new administration has ended by casting doubt on its ability to consider, let alone decide what policies might best serve the interests of the United States rather than those of a Lobby intent on enforcing the will and interests of a foreign government.

In the court of public opinion, unlike a court of law, one is guilty until proven innocent. The speeches from which quotations have been lifted from their context are available for anyone interested in the truth to read. The injustice of the accusations made against me has been obvious to those with open minds. Those who have sought to impugn my character are uninterested in any rebuttal that I or anyone else might make.

Still, for the record: I have never sought to be paid or accepted payment from any foreign government, including Saudi Arabia or China, for any service, nor have I ever spoken on behalf of a foreign government, its interests, or its policies. I have never lobbied any branch of our government for any cause, foreign or domestic. I am my own man, no one else’s, and with my return to private life, I will once again – to my pleasure – serve no master other than myself. I will continue to speak out as I choose on issues of concern to me and other Americans.

I retain my respect and confidence in President Obama and DNI Blair. Our country now faces terrible challenges abroad as well as at home. Like all patriotic Americans, I continue to pray that our president can successfully lead us in surmounting them.

Obama and the Markets

Obama is not responsible for the stock market’s daily ups and downs. Before this week, the pundits were blaming Obama for the stock market going down. This week they should be praising him because it went up, but the financial community is responsible for its own fate. Obama inherited a huge mess. He’s working to get out of it, but it’s going to take a while to dig out of the hole that the Republicans left for him. The financial executives just don’t want to take responsibility for their own failures.

Who knows why the market goes up or down. They claim it went up this week because big banks, starting with Citi, announced that they were making a profit so far this year. But what about all those toxic assets? They are still out there. Plus, as Jay Leno or somebody said, “Wow, we gave CitiBank $40 billion, and they made $8 billion profit.”

Plus, what’s going on in the rest of the world? If something goes wrong in some unexpected place, it may well affect the US market. On Fareed Zakaria, Niall Ferguson warned that the next problem might be the disintegration of Ukraine and some other eastern European countries that will allow Russia to reclaim some of its “near abroad.” Meanwhile, today China expressed concern about its investment in the US. To some extent we and China are tied together in a form of Mutually Assured Destruction because of the enormous amount we owe China. China can’t sell off its holdings without driving down prices and hurting itself, but it is certainly in a position to wreak havoc if it wants to.

The Jews Got Chas Freeman

This WSJ op-ed by Bret Stevens, formerly of the Jerusalem Post, is just one example of the Jewish attack on Amb. Chas Freemen, who was nominated to be head of the CIA National Intelligence Council. Freeman is a good, decent man who was maliciously maligned by the Jewish lobby. He's not bigoted, but even if he were, what do the Jews fear so much? Was it just to show their power? Do they know that Israel is involved in such dastardly activities that truthful intelligence about it would be greatly damaging in the world's eyes? I don't know, but I do know that the Jews screamed for blood and they got it. Freeman has withdrawn his name.

The following is more or less the text of an email I sent to my Colorado senators and my congressman:

I have just heard on CNN that Chas Freeman has withdrawn his name to be head of the CIA National Intelligence Council.

I served with Amb. Freeman at the US Embassy in Bangkok, Thailand, before I retired from the Foreign Service. I believe that he is a good man. I think it is terrible that he has been so viciously attacked by Jewish interests because he served as US Ambassador to Saudi Arabia and might be somewhat evenhanded in his consideration of the Arab-Jewish/Israel-Palestine-Iran-Syria-Egypt-Iraq-Jordan... issue. In essence, he was damned by the United States of America because he was not a Jew.

This is not why I fought in the Army in Vietnam or why I served almost 25 years as a Foreign Service officer. This was a witch hunt, just like the ones carried out by Sen. Joe McCarthy years ago. I am outraged!

The WSJ also earlier printed a letter from several ambassadors, one of whom I worked with, Amb. Tom Pickering. They supported the choice of Amb. Freeman.

Raise Income Tax on the Rich

Obama said that he will limit CEO salaries. It's going to be hard to do. They get money so many different ways -- straight salary, stock options, bonuses, retirement largess, golden parachutes, etc. It's not only the bank CEOs that we are worried about anyway. It's all those obscenely compensated CEOs.

Plus, America has not in the past liked hereditary, moneyed royalty like the Rockefellers, Kennedys, Hiltons, etc. So, tax them when they make obscene amounts of money. A year ago some hedge fund guy named Paulson (not the Treasury Secretary) made over a billion dollars. Nobody needs to make more than say $50 million per year. After $50 million, increase the tax rate to 75% or more. From $10 million annual income the tax rate could be 50%, which is still less than it would have been 50 years ago. If most of the income goes to Uncle Sam, maybe CEO's won't work quite as hard to soak their shareholders, customers and employees. Another test would be the difference between CEO salaries and employee salaries. If a CEO makes more than 100 times what an average worker in his company makes, tax the overage at 100%.

Richard Perle's Ineffectiveness

While the WSJ on Wednesday was publishing the op-ed bashing Amb. Chas Freeman for not being Jewish, another columnist was ridiculing Richard Perle in the WSJ for an article in The National Interest claiming that the neo-cons had no influence on George Bush. Thomas Frank says Perle claims he cannot be "held responsible for the Bush administration's failures." Perle has had few rivals within the US government as a Jew who was one of the most hawkish defenders of Israel. Perle's article and his defense of it prompted the Washington Post headline, "Prince of Darkness Denies Own Existence." It's remarkable that men who were so powerful in George Bush's and previous administrations are now so thoroughly discredited. William Kristol, who was VP Dan Quayle's chief of staff, but who has now lost his column at the NYT, shares this distinction with Perle.

Richard Perle was at the pinnacle of power when he was Assistant Secretary of Defense under Reagan, where he and his minions were my nemeses, pursuing some kind of America-only foreign policy that abhorred any kind of treaty. There is a lot of schadenfreude felt here. Poor Richard! May you endure many more days of ridicule!

Amb. Chas Freeman Attacked for Not Being Jewish

An op-ed in Wednesday's Wall Street Journal criticizes Obama's choice of Amb. Chas Freeman to head the National Intelligence Council because Freeman has "distincitive political views and affiliations, some of which are more than eyebrow-raising." One of these is his presidency of the Middle East Policy Council, which the op-ed calls "an influential Washington mouthpiece for Saudi Arabia," were Freeman was ambassador. One of MPEC's most egregious faults was to publish "an 'unabridged' version of 'The Israel Lobby and U.S. Foreign Policy' by professors John J. Mearsheimer and Stephen M. Walt." Of course the article by these well-respected professors has been published by others, such as the New York Review of Books, and expanded into a critically acclaimed book. The op-ed continues, emphasizing its core point, "Mr. Freeman has views about Middle East policy that differ rather sharply from those held by supporters of the state of Israel."

Amb. Freeman was DCM (#2) at the Embassy in Bangkok while I was there. He had zero interest in my job as embassy systems manager (head of IT), but he was completely professional and certainly not a bigot. His main qualification for the NIC job is no doubt his service as Ambassador to China, which is developing into our most important bilateral relationship. His service as Ambassador to Saudi Arabia, one of our most important oil suppliers, is also a good reason to name him. I have no doubt that he will be even handed and fair in all of his dealings with Israel, which may be the reason for the WSJ attack on him. The article by Mearsheimer and Walt points out how Israel is accustomed to preferential, not even-handed, treatment.

Hooray for Obama for pursuing honesty and integrity in intelligence analysis. Maybe if we had had more of that under Bush, we wouldn't have gotten all the hyped-up intelligence claiming that Iraq had weapons of mass destruction. It was certainly in Israel's interest to have us invade Iraq, at least that's what Israel thought then. In fact, the US invasion of Iraq has probably unexpectedly strengthened Iran to Israel's detriment.

Gregg Withdrawal, Patriotism and the Census

Obama has tried to form a team of rivals to deal with the national economic emergency, but the Republican rivals don't want any part of it. Until recently my main complaint has been about John McCain, who has been a particularly ungracious loser, fighting Obama tooth and nail. I have written this off to McCain's stupidity. He obviously doesn't understand economics, something he demonstrated when he left his campaign to devote all of his efforts to working on the first bailout bill. He was a disaster. He clearly doesn't understand the enormity of the problem, despite the fact that the most recent intelligence briefing listed the world economy as the greatest threat to the U.S., greater even than terrorism. You would think that McCain as an old military man would pay attention to intelligence warnings, but apparently if they contain numbers, he can't handle it.

Now Judd Gregg has come along to supplant McCain as the leading anti-American Republican. He decided that he can't work with Obama, despite the fact that America faces its worst economic plight in three or four generations. It looks like a patriotic American would want to do what he can to rescue America from its trials and tribulations, but not Gregg. He just wants to stick his finger in Obama's eye and make it more difficult for Obama to try to save America.

Interestingly, one of Gregg's main complaints was about the census. Apparently Republicans hate the census and see it as politically motivated. Joe Scarborough pointed out this morning that the 2000 census changed Georgia's congressional delegation from being predominately white Republican to predominately black Democratic.

So, apparently the census is just a political sham unrelated to the truth about the American population. Gregg and Scarborough would argue that when the census taker or the census form arrives at your house, lie! They argue that the census is a totally dishonest, politically motivated sham. It's another example of how Republicans hate America and discredit its institutions. Republicans don't want no stinking census, just like they didn't want no stinking regulation of the financial industry. As Ronald Reagan, their saint, said, government is the problem, not the solution. If American shot itself in the head, the Republicans think it would be much better off. Gregg didn't shoot America in the head, but he did stick his finger in her eye, and John McCain loves him for it.

More seriously, Gregg probably dropped out at least partly because of pressure from his Republican colleagues, like McCain, McConnell, Graham, Shelby and various other mentally challenged Senators, who are more concerned about partisan politics than about saving America. They are counting on the fact that their fat-cat supporters have enough gold stashed away in the Cayman Islands, Bermuda, Luxembourg, or some other foreign haven to take care of them when the U.S. craters as a result of their obstructionism.

Obama Recognizes Vietnam Vets

Obama won me over, although I was already a supporter, when he mentioned Khe Sahn in the same breath with Concord, Gettysburg and Normandy in his inaugural address. Typically, Americans look down on Vietnam veterans, probably because most Americans, like George Bush and Bill Clinton, did not go. There are probably very few Vietnam vets on Wall Street. So, to mention a Vietnam battle in a positive context along with other famous battles is another ground breaking step by Obama. Thank you.

My impression is that he is much more concerned about our military and veterans than Bush was, although Bush was always very public about praising them. If he had really cared about them he would have done more to increase the size of the Army and Marines, would have shortened their tours in Iraq and Afghanistan, and would have increased their time at home between tours. Plus he would have done more to make sure they had the best equipment. Instead of raising taxes to provide better equipment, he and Rumsfeld just went to war with what they had. They didn't try to improve the forces. I think Obama takes his job as commander-in-chief seriously and will do more for the troops, as well as for veterans. Appointing Shinseki as VA Secretary is a good first step. Shinseki may not know much about medicine, but he cares about his troops. Thank you.

Take Over the Banks

I like the proposal for a central bank given in the NYT's Anonymous Banker's proposal. First of all, the analogy to a used car dealer is one I thought of myself. We would all think bankers were stupid if they bought cars that didn't run; instead they bought obscure securities that didn't have the value the bankers paid for them, which somehow seems less stupid, although it's probably more stupid because bankers are supposed to be experts on securities, but not on cars. The idea of buying "toxic assets" is good for taxpayers only if the government pays what they are worth, which won't help the banks. Bankers are screaming to get rid of the "mark to market" rule, i.e., the rule that makes them carry on their books only the actual value of their assets. They are saying that the current market value is too low. It's like students complaining about grades. If you're failing, you don't want grades; if you're doing well, you don't mind grades; you might even want them, so that other people, e.g., your parents, will know how well you are doing. The bankers are like failing students.

I hadn't really thought about shareholder value, but the idea of preserving shareholder rights, but keeping them on ice until the bank comes out of the "central bank" seems like a good one. I can see lots of bookkeeping problems, however, if the stock is on hold for 10 years. People will die, get divorced, etc., and figuring out who gets what when the bank re-emerges will be tough.

Since I proposed it earlier, I especially like the idea of limiting the size of the banks when they re-emerge and renewing Glass-Steagall, or something like it to prevent the banks from become too big to fail again. The government could create three, four or five roughly equivalent regions and then limit any bank to just one region.

Break Up the Banks

In this huge Op-Ed in last Sunday's NYT about the financial crisis, I thought there was only one really good idea: Break up the banks that are too big to fail, so that next time they can fail without destroying the US financial system. We should probably allow interstate banking, but put some kind of cap on the size of banks.

Wall Street Was Ponzi Scheme

Both Paul Krugman and Tom Friedman have written columns along the lines that the whole Wall Street bubble over subprime mortgages, derivatives, credit default swaps, etc., was just like Bernie Madoff's Ponzi scheme. There was no "there" there. It was all smoke and mirrors. The money went to the people who came up with the schemes to sell worthless paper; they did not create any productive activity. The salesmen just got their commissions up front, before people realized that they were selling worthless paper, illustrated by this Washington Post article about AIG's descent into chaos.

Gaza Strip War with Israel

I think it's likely that Israel invaded Gaza now because it wanted to do so while Bush was still President. In a few weeks, Obama will be President, and although he has talked a good game in support of Israel, the Jews may be worried that he will not be as supportive as Bush. Bush as clearly given them the green light to do whatever they want. Hence the Israeli decision to invade while Bush is still in office.

Idiots in Charge of America and the World

The Financial Times columnist Munchau is right when he says, "I am sceptical of the Fed's new policy of quantitative easing. We do not have a liquidity crisis, but a solvency crisis...." There have been a lot of complaints from bankers about the "mark to market" requirement, which means they should carry assets on their books at the price at which they could be sold in the market. The problem is that their assets are junk, similar to but much worse than Michael Milken's "junk bonds."

What we have is a bunch of huge banks who went out to talk to the day laborers in front of Home Depot and said, "How would you like to buy a 5,000 square foot house? We'll give you a mortgage at 1% or even a negative percent, if you can't afford 1%." So, a lot of the day laborers and their friends took the banks up on their offer. They could buy a 5,000 sq. ft. house cheaper than they could rent a 1,000 sq. ft. apartment on a monthly basis. In theory they signed away their lives when then completed all the mortgage paperwork at the mortgage broker's office, but in fact because they put nothing down on the house and were not held to any standard of honesty for the background information on income, etc., that they gave; they incurred no obligation when they signed the documents. In essence what the banks got in return for lending trillions of dollars in such transactions were bunches of worthless IOUs for which there was no enforceability other than possibly getting the house back some day. The banks want these IOUs to be carried on the books at face value, but it fact they are worth only a few cents on the dollar. Because they are not negotiable in normal, open markets, nobody really knows exactly how much they are worth. Why are they not negotiable? Because they are a bunch of almost worthless IOUs with little legal enforceability. So, when the bank threatens to foreclose and take back the house, the day laborer says, "Fine, take it; I didn't like the color of the media room anyway."

But Washington is all upset that their goal of getting everyone living in America, citizen or not, into a new, expensive house is threatened by the foreclosures. So, Ben Bernanke at the Fed says, "What do I have to do to get you back into this luxurious house? I'll push mortgage interest rates to zero. I'll forgive any negative equity that you have; we'll reduce your mortgage to whatever value an honest appraiser (who was missing in the original transaction) says it's worth, and we'll reimburse the banks for any loss they incur as a result."

So, Munchau is right when he says the problem is not liquidity (banks' unwillingness to lend) but insolvency (banks' lacking money to lend). Their assets are worth far less than the loans that they already are committed to; the banks have no assets to draw on to make additional loans. The Fed says, "No problem, we'll buy the worthless assets from Fannie Mae and Freddy Mac, so that they have real, Fed supplied assets to make new loans from." This is in essence what Hank Paulson originally proposed to use his $700 billion for. But then he followed Britain's example of just giving the money to the banks to shore up their balance sheets, leaving them their unmarketable toxic assets plus whatever additional capital the government gave them to make new loans from.

It's a house of cards, but Bernanke and Paulson are running around trying to close all the doors and windows to keep drafts from blowing all the cards down. I wish them luck, but why did the future of the United States come to depend on a house of cards? In the old days, they used to talk about investment bankers being the "smartest guys in the room." Now they look like the dumbest. On the other hand, they all became millionaires; they just did it by sucking the blood out of hard-working, ordinary Americans. Wall Street is the vampire capital of the world. Maybe that's why vampires are so trendy now.

Repercussions for Republicans?

Will there be any repercussions for Senate Republicans who blocked passage of the interim auto bailout bill two weeks before Christmas?  They basically said to America, we don't like you; so, we are going to put coal in your stocking for Christmas.  The White House, Treasury and the Fed may save the day for average Americans, or maybe not.  The Republicans apparently don't care if GM goes bankrupt on Christmas Eve.  Scrooge would be proud!  Mitch McConnell, Richard Shelby, and company plan to take Tiny Tim's crutch and beat him over the head with it.  Merry Christmas!

Auto Bankruptcy

The auto bankruptcy is too big just to use the regular bankruptcy law. These are not just any companies. The auto industry is the foundation of American industry. So why shouldn't Congress pass an industry specific bailout law that would contain many provisions of ordinary bankruptcy, which could also have specific requirements for executives' and workers' salaries, hybrid mileage requirements, etc. In addition, some people say the credit crisis will prevent normal bankruptcy from functioning as it should because there will not be sufficient credit available to allow the companies to operate under Chapter 11.

Idiots on Wall Street

The Financial Times reports that the price of credit default swaps, insurance for corporate debt, has been going up again.  The FT interprets this as meaning that the credit crisis is worsening.  I interpret it as meaning that Wall Street, London's City, and the other financial markets are finally learning what they are doing when they make credit default swaps.  They are insuring that a company will pay its debts, and they are saying, "If that company doesn't pay, we will."  For years they have been blithely issuing these swaps as if they were just cheap ways to make money with no consequences.  The horrendous failure of AIG due to the issuance of these CDS's shows that they do have consequences.  Finally, after years of failing to understand the business model for CDS's, Wall Street is learning.  As a result, CDS's are becoming more expensive as they should have been for the last decade, or however long they have been around.  The markets may be bad, but for years the CDS's were priced incorrectly by idiots who did not know what they were doing.  The whole credit crisis was created not so much by the sub-prime mortgages, but by the ridiculously under priced CDS's sold to cover them, which now have the issuing institutions on the hook for trillions of dollars.  The banks don't have enough capital to stand behind these promises; so, the Federal Government has had to step in to prop them up.  

More Housing Pain to Come?

The stock market is now down about 50% from its recent highs. The stock market decline is supposed to be an effect of the housing market bust. Meanwhile, the prices of houses, which are much less liquid and slower to adjust, are only down about 25% from their highs.

This would indicate to me, even allowing for the fact that panic enters the stock market much more quickly than the less liquid housing market, that the worst is yet to come for housing.

I'm not pleased about a big 3 auto bailout, but if they go under, I think it might the tipping point that takes the US into something like a depression, certainly a serious, long recession. The old Mel Gibson Mad Max movies will in actuality take place in post-depression Michigan and Ohio, rather than in post-war Australia. But Congress says, we don't care; Honda, Toyota, BMW, VW and Mercedes will take good care of us. World War II is finally over, and the Axis won. Alabama's Sen. Richard Shelby is waving the white flag as hard has he can to help all those Japanese and German auto plants in Alabama.

Rahm Emanuel Apologizes for Father's Anti-Arab Comments

Kudos to Helena Cobban for calling on Rahm Emanuel to repudiate his father's anti-Arab comments to the Ma'ariv newspaper, and for reporting that he has done so. Like her, I am not crazy about having a dual national Israeli-American as chief of staff to President Obama. I think he ought to renounce his Israeli citizenship. He should be be 100% loyal to America.

Tom Friedman on Patriotism

Thank goodness that Tom Friedman has the sense to see that paying taxes is patriotic. I don't understand why Republicans don't want to pay to defend America, why they hate the troops fighting for them in Iraq and Afghanistan, why they don't want roads and bridges. clean water, sewers. I guess they want to privatize it all, have Blackwater fight our wars, private contractors build toll roads for profit, etc. But while McCain and Palin may hate the American government, there are people like Tom Friedman and me who love it and are willing to pay something for what it gives us. I can only imagine that the greedy SOBs who created the financial mess that we are in were mainly Republicans. Thanks Tom.

Rep. Shadegg Says McCain Killed First Bailout Bill

On CNN's Situation Room today Arizona Rep. Shadegg said that John McCain was responsible for torpedoing the first bailout bill. According to Shadegg, in the Cabinet room, McCain said that the bill was not a good bill and that the House Republicans had a good idea. He thus encouraged the House Republicans who did not like the bill to oppose it, rather than holding their noses and going along with it. What a horrible, horrible man, a man who clearly put his political campaign ahead of the country's good! He is a moral derelict. He made some points with the arch conservatives in his party, but at what a cost! He is willing to bring America to its knees in order to get elected.

The House Democrats have poked fun at the Republicans for saying that Nancy Pelosi's speech was the reason they opposed the bill. Barney Frank said they decided not to act in the best interests of the country because their feelings were hurt. But this is not the first time that has happened. Apparently Newt Gingrich shut down the US Government in the 1990's because President Bill Clinton made him disembark from Air Force One through the rear door. Newt was perfectly capable of punishing America for dissing him, and so are the House Republicans.

John McCain, Newt Gingrich, the House Republicans, and Ronald Reagan would never say those feared words, "I'm from the government, and I'm here to help." They say, "I'm from the government, and I'm here to punch you in the face."

Another letter to Congressman

I commend you for voting for the bailout yesterday.

I am disappointed at the stock market rise today (almost 500 points on the Dow), which essentially was Wall Street saying, “We don’t need no stupid bailout.” I think, though, that if the experts think there is even a 25% chance of a serious recession/depression, then the bailout is probably worth it.

I have become concerned about a new issue: bank size. With their recent acquisitions, properly done to help the economy in this crisis, several more banks are becoming “too big to fail,” as AIG was. JP Morgan Chase, CitiBank, and Bank of America have all swallowed up large, troubled banks, thus pushing themselves into the “too big to fail” category. Meanwhile, Wall Street darling Goldman Sachs has switched from being an investment bank to an ordinary commercial bank. Once this crisis is over, the government should look at the antitrust implications of these mergers, perhaps a partial revival of Glass-Steagall, or some other approach to limit the risk of these huge banks getting into trouble.

People say that the stock market is not a good indicator of the current problem with the economy, which is the credit market. However, the problem with the credit markets freezing up is that they might produce a recession/depression. By going up 500 points today, Wall Street is saying it expects continued good times, not a recession. One standard for judging a reasonable stock price is the price/earnings ratio. If earnings go down, then the price (and the Dow) should go down. Wall Street is saying that even if there is no bailout, it does not expect earnings to go down. That view certainly supports those who voted against the bailout.

I think we are fortunate to have experienced hands like Paulson and Bernanke at the helm of our economy, and if they still strongly support a bailout, then I say do it, although at the moment it seems to go against the majority opinion on Wall Street as well as Main Street.

How Bad Is the Financial Crisis?

After listening to people talk about the crisis for days, I'm not so sure that it's as bad as I first thought it was. It should be pretty bad to warrant a $700 billion bailout. I thought people were talking about avoiding a depression; now they only seem to be talking about avoiding a recession. It it's a shallow recession, and there is no actual recession at all yet, then it may not be worth $700 billion. We've been through recessions before. We've only been through one depression in the last century. The fact that Bear Stearns, Lehman, Merrill Lynch, Fannie Mae, Freddie Mac, and AIG disappeared is unusual, but except for Lehman, they didn't really cease to exist; they just changed names or owners. Even part of Lehman was snapped up. So, how many jobs were lost? A few thousand at Lehman, and bonuses at some firms may be reduced a few million dollars. Nothing serious.

The talking heads are saying that agreement on a bailout bill is close today. At the moment, the stock market is up almost 300 points. On CNBC they have been saying that the credit markets are still acting badly. I'm not sure what that means, although some of it seems to be that banks are still demanding big interest rate spreads to loan money.

So, now I think this bailout may be overkill. Bush did not scare me sufficiently.

And John McCain is politicizing this crisis, if in fact it is one, for all it's worth, which may not be as much as I thought a few days ago. It's pretty clear that his plan was to attack Bush and the Republican leadership in Congress as soon as they approved a bill. The Republicans called his hand on it, because they don't want to go into elections with their party leader, McCain, calling them traitors to the Republican Party. So, instead McCain now claims to be riding to the rescue of the plan, rather than keeping hands off to attack it later.

One thing he is not doing: he is not putting country first. He's putting John McCain first. He has a tough choice. He has been a free-marketeer all his life. Now, does he violate all of his principles and support the bailout bill socializing Wall Street, or oppose it and run the risk of being responsible for the ensuing depression, if there is one? Obama has clearly been more presidential by taking Paulson and Bernanke at their word and pledging to support them with some caveats.

Although as a private citizen I am now skeptical, if I were in a position of power, and Paulson and Bernanke told me there was a genuine chance that the US could fall into a depression, I would support the bailout bill.

Another letter to congressmen re financial bailout

I think we have to do something to prevent the US financial system from self-destructing. Therefore, I support doing something along the lines recommended by Sec. Paulson and Fed chief Bernanke. However, it seemed to me from their testimony this morning that their plan is to have the US government buy mortgage-backed securities from troubled firms for much more than their current market value in order to keep the banks solvent. So, I expect the US to lose a lot of money and the banks to make a lot of money. It is welfare for rich people, but the alternative is poverty for everyone.

Nevertheless, the $700 billion plan is highly inflationary. Bernanke has apparently given up worrying about inflation, which is understandable. It’s sort of like saving someone’s life today by giving them a drug that will kill them in a year or two. Most people would choose to live until tomorrow.

We know the solution for inflation – high interest rates and high taxes. We can’t institute those now, but we should promise to institute them as soon as the recession/depression ends. I would recommend that as a down payment you get Bernanke to promise to raise the Fed rate by 0.25% now and that you raise income tax rates by 1% now, just to remind people that there is a huge bill coming due.

You should not ignore the fact that Paulson was CEO of Goldman Sachs, the troublemaking institution (by dealing in these questionable securities) that has so far come out smelling like a rose. This goes double because Pres. Bush lied to us about WMD in order to get the US to invade Iraq. As a politician, you should remember that Sen. Clinton probably lost the Democratic presidential nomination because she was duped by Bush’s war justification. Although I don’t trust Bush, I think that Paulson and Bernanke are patriots and not purposefully misleading the American people, although these issues are so complex that probably no one understands them completely.

No More Superpower

The economic collapse on Wall Street may be the beginning of the end for the United States’ superpower status, coming about 15 years after the Soviet Union lost its superpower status, also mainly because of economic failures. The US will continue to be a powerful country, and will maintain parity with the EU and other large countries, but will eventually cede its leadership position to China. A sad day for America. Wall Street traders are short term winners, but America as a country is a long term loser. Some time soon it will be time to pay up, mostly to China, and it will be painful. I am particularly saddened because I don't feel that I participated in the excesses that led to this debacle. If I'm going to help pay for an extravagant gambling trip to Las Vegas, I should at least have been there.

America's real loss of prestige and power will probably not become apparent until inflation runs rampant, which is on the horizon, although exactly when is hard to say. Inflation will produce its own winners and losers. I saw this first hand in Brazil a few decades ago, but the country will be a loser. Perhaps we can take comfort from the fact that Brazil after its bouts with inflation is still out there striving to become a great power. The old saying still holds, however, that "Brazil is the country of the future, and always will be." Perhaps the US will become the country of the past that is always trying to regain its stature.

The only good news is that Republican laisse-faire economic theories have been totally discredited. The Republican icon Ronald Reagan turns out to have been wrong. We had a baby boomer generation of good times freeloading on the hard work of World War II's greatest generation.

A Bridge Loan Too Far

Paulson and company have decided to insure money market accounts up to $50 billion. That's too much for me. Granted, a couple of money market funds have "broken the buck" and have lost so much money that they can't return a dollar for every dollar invested. So, Paulson will make up the difference. And in the process he will destroy regular, hometown commercial banks. Why would anyone keep money in a low interest bank account when higher interest money market accounts are guaranteed by the government? Just debit your money market account once a month to some credit card and pay all your bills over the Internet using the credit card. Destroying local banks will, of course, move almost all banking activities to Wall Street, to the people who created this crisis through their poor management. Paulson will destroy conservative local bankers to help his risk-taking friends at Goldman, Sachs. He is truly turning the banking industry on its head, destroying the strong to help the weak.

The problem with bailing out the money market funds is that this is problem that they and their investors created themselves. There are many kinds of money market accounts: some which buy questionable corporate bonds (close to junk bond status) and pay high rates of return, and others which buy government bonds or only high quality corporate paper, and which pay lower interest. One of the funds in question is in trouble because it bought Lehman bonds. Why did it buy Lehman bonds? Because Lehman was in trouble and had to pay higher interest to get people to buy its bonds. So this fund knew it was buying risky bonds; the high interest was a dead giveaway, and the investors in the money market fund knew that they were taking a risk, because the fund was paying higher interest. Everybody involved could see there was a risk, and they decided to take it.

Now the government comes along and says, "You poor dears! Never mind your mistake, we'll give you the money you lost." These weren't people who were tricked; they were just a little too greedy. They should not be bailed out, especially when it means the end of local banking as we used to know it.

So, now Paulson and Bernanke have lost my support. They are just going nuts with the government credit card. They are saying that they don't care a whit about inflation. America is doomed to becoming a banana republic. Paulson saved his buddies at Goldman, Sachs, and he saved his own fortune which is no doubt closely tied to Goldman, Sachs fortunes. I'm guessing that Bernanke will quit the Fed soon and his Jewish friends on Wall Street will take care of him in grand style for bailing them out. America be damned!

But Nancy Pelosi can continue to wear her diamonds and South Sea pearls, and John McCain can continue to flit around in Cindy's private Cessna Citation jet, because Paulson and Bernanke will make sure they don't suffer any financial losses. Well, maybe Pelosi did take a $500,000 hit, but she probably won't have to sell her pearls.

Biden Is a Patriot, McCain Is Not

John McCain has attacked Biden for saying that is patriotic to pay your fair share of taxes. McCain lost me totally, because I agree with Biden. McCain is against supporting the troops in Iraq. It's tax money that buys their flack jackets, their armored humvees, etc. McCain would let them die so that he and Cindy can buy another mansion and a private jet. Poor America!

Letter to the President

I have just read that the government is going to bail out AIG. At this point there may be no alternative if our financial system is going to survive. But you have presided over a massive transfer of wealth from the middle class to the super-wealthy upper class. Under the Bush administration taxes were reduced on the upper classes to the lowest rates in generations, beginning the transfer of wealth. What thanks did we get? The rich virtually destroyed the financial system. But to (hopefully) avoid the total destruction of the financial system, the government has undertaken a further massive transfer of wealth to the rich to bail out their investments. As they say, you have privatized the gains and socialized the losses. You have negated “moral hazard.”

The United States is significantly weaker than it was before the financial crisis. By failing to control the greed on Wall Street, you have undermined our national security, while poor rednecks are fighting two wars far from our shores. The government has betrayed our soldiers. Because of low taxes, particularly on dividends, capital gains, and other investments, the rich didn’t even contribute their fair share to fighting the wars. This bailout is now being done with money borrowed from China, the Middle East, and Europe, most of which will have to be repaid by our children and grandchildren, although I suspect that at some point the government will let inflation run wild so that we can repay today’s huge debts with tomorrow’s worthless dollars.

The government’s further contribution has been to run an expansionary fiscal policy of low taxes and deficit spending during years when the economy was not so bad. The Bush administration inherited a budget in surplus. Now, with the economy in shambles, it will probably be difficult to raise taxes for years to come, making the obscenely wealthy even more obscenely wealthy and virtually destroying the middle class. The entire burden of dealing with the financial debacle has fallen on monetary policy managed by the Fed and Treasury, because corruption and incompetence have destroyed the usefulness of fiscal policy.

On 9/11/2001 Osama bin Laden tried to destroy the U.S. financial system by attacking the World Trade towers. He failed. In September 2008, you finished the job for him. I’m sure Osama is rejoicing and thanking you in his cave.

I am outraged. You have failed America! You should hang your head in shame!

Letter to Congressman and Senators

I have just read that the government is going to bail out AIG. At this point there may be no alternative if our financial system is going to survive. But you have presided over a massive transfer of wealth from the middle class to the super-wealthy upper class. Under the Bush administration taxes were reduced on the upper classes to the lowest rates in generations, beginning the transfer of wealth. What thanks did we get? The rich virtually destroyed the financial system. But to (hopefully) avoid the total destruction of the financial system, the government has undertaken a further massive transfer of wealth to the rich to bail out their investments. As they say, you have privatized the gains and socialized the losses. You have negated “moral hazard.”

The United States is significantly weaker than it was before the financial crisis. By failing to control the greed on Wall Street, you have undermined our national security, while poor rednecks are fighting two wars far from our shores. The government has betrayed our soldiers. Because of low taxes, particularly on dividends and other investments, the rich didn’t even contribute their fair share to fighting the wars. This bailout is now being done with money borrowed from China, the Middle East, and Europe, most of which will have to be repaid by our children and grandchildren, although I suspect that at some point the government will let inflation run wild so that we can repay today’s huge debts with tomorrow’s worthless dollars.

Congress’s further contribution has been to run an expansionary fiscal policy of low taxes and deficit spending during years when the economy was not so bad. The Bush administration inherited a budget in surplus. Now, with the economy in shambles, it will probably be difficult to raise taxes for years, making the obscenely wealthy even more obscenely wealthy and virtually destroying the middle class. The entire burden of dealing with the financial debacle has fallen on monetary policy managed by the Fed and Treasury, because Congress’s corruption and incompetence have destroyed the usefulness of fiscal policy at this point.

I am outraged. You have failed America! You should hang your head in shame!

Wall Street Hates America

This Reuters article describes how Wall Street helps foreign investors avoid paying taxes on money made in the US. Clearly they don't care about 9/11, and the poor GIs fighting in Afghanistan and Iraq because of it. No need for them to fund the GIs. To them those dead people in the World Trade Center are just long dead and buried; let the good times roll! Show me the money! Greed is good!

What Did McCain Do In The War?

I've about had it with McCain's incivility. The latest is attacking Obama for using the phrase, "Lipstick on a pig," referring to the McCain campaign's attempt to hijack the theme "Change." McCain tried to imply that Obama was calling Palin a pig, when Obama wasn't even talking about Palin. CNN found an example of McCain's using the "lipstick on a pig" phrase referring to Hillary Clinton's campaign.

OK, so McCain what did you do in the war? How many missions did McCain fly over Vietnam? According to this perhaps biased website, he was shot down in 1967 on his 23rd mission. He then spent 5 1/2 years as a POW. No doubt his years as a POW were awful, but his battle in prison was basically a personal battle; he did not do anything to help the US win the war against North Vietnam. The referenced column by David Hackworth, written in 2000, probably during the campaign when I supported McCain, also says that the many medals received by McCain upon his return from being a POW were basically boilerplate citations, not awards for individual acts of heroism.

So, what did McCain do for America during those 5 1/2 years? Not much. He spent much of it in bed due to his injuries, or in solitary confinement after he recovered enough to get out of bed. Those are extraordinary personal triumphs, but they don't win wars.

So, enough McCain! Shut up about being a heroic POW! Shot up about lipstick!

Speaking of POW. Basically, McCain used his celebrity as a returning POW to win his way into the House and Senate. His Navy career essentially ended when he was shot down as a lieutenant commander, far below his father's and grandfather's rank as four star admirals. He got some subsequent promotions when he was released, but like his medals, they were proforma promotions for any POW. His Navy career was respectable, but not a great success, especially for someone who graduated from Annapolis. However, the fame he acquired when he returned advanced his career outside the Navy.

It no doubt helped him woo Cindy Hensley, the Paris Hilton of her day. She was a rich heiress with a hot body. McCain dumped his old wife, who waited years for him while he was in prison, to marry Cindy and her money. His old wife never speaks; I think it's because he paid her off with some of Cindy's money. He has taken care of his children with his first wife, most recently illustrated by the fact that his son Andrew was a director of a bank that recently failed, and is also a big shot in the Hensley beer business.

Then with Cindy's money and his POW celebrity status, McCain won a House seat in Congress from Arizona, later upgraded to a Senate seat.

In Congress, McCain has been a maverick, which he can afford to be because Cindy has made him extremely wealthy. He doesn't have to worry about kowtowing to the big money lobbyists to get re-election money, which is good. But what about the big deal he makes about earmarks. Sure they are bad and McCain doesn't use them, partly because he has Cindy's money for re-election and doesn't need the dirty money that other politicians get for earmarks, e.g., Ted Stevens. But earmarks are basically an inside the beltway Congressional issue. Why hasn't he done something about them while he has been a Senator. He says he will veto any bill with earmarks, but we know from experience that the earmarks will be inserted in a bill containing appropriations for the troops in combat, or some other essential function. Will McCain be willing to veto that? He should be talking about some serious issues, like the wars in Iraq and Afghanistan, health care, the budget deficit and the national debt, the stability of our financial system, etc. The Republicans have poor records on all of these issues, so McCain avoids the issues and talks instead about personalities, in particular personally attacking his opponents. It works for the election, but it's not good for America and illustrates that McCain doesn't really care about America, despite all his hypocritical campaign slogans like "Country First." McCain is not putting his country first.

McCain Bank Fails

I think it's odd that there hasn't been more talk about the fact that a bank connected to John McCain failed last Friday. Until shortly before its failure John McCain's son Andrew had been a director of the Silver State Bank. Only the Financial Times and the WSJ had brief articles about it. The WSJ implied that the FDIC may have been delayed in closing the bank by Nevada regulartory authorities, giving Andrew McCain time to quit as a director before it was closed.

Hometown Girl or Trailer Park Trash?

Everybody has certainly fallen in love with Sarah Palin. What does it mean?

CNN Showbiz Tonight this morning had a segment on how Sarah has become a bigger celebrity than Obama. Does that mean McCain will have to disavow those commercials comparing Obama to Paris Hilton? Would it be more accurate to compare Sarah to Paris, or to Britney, or to Britney's mom, since Britney's little sister has gotten pregnant?

Unmarried, pregnant, teenage daughter? No problem, "it just makes her more like you and me." Really? Well, we all have problems, but that doesn't mean it's a good thing. People shoot their neighbors on a daily basis, but by and large they don't get congratulated for it. There are a lot of shotgun weddings, and a lot of unmarried, single mothers, but that doesn't mean it's society's ideal. It's a little suspicious that there was apparently no urgency for Bristol to get married to her baby's father until her mother got named vice presidential candidate. Does that mean they didn't care, that they didn't really like the boy, or what? Apparently the religious right in the Republican party says it's okay for teenage girls to have sex and get pregnant, as long as they don't get an abortion. That's a pretty low moral standard. I'm not sure there's a lot of Biblical support for that position, and maybe some criticism, like the Commandment not to commit adultery. Kids today reading Hawthorne's Scarlet Letter probably have no idea what the fuss is about.

In sum, while Sarah may have been an okay governor, she was a less than completely successful mom.

Meanwhile we have the black candidate, Obama, who comes from a tradition where black men routinely desert the women having their babies, but who has tried to have a traditional family relationship with his wife and kids. His wife says she tries to do only campaign day trips so that she can be at home with her kids afternoons and nights. Did Sarah do that while she was working on her career? Or did her career come first, ahead of her family?

Finally, besides wanting to know what Sarah knows about foreign policy, what else does she cares about. She didn't go to a big name school, no elitism there. But does she read? Does she know anything about Plato, Locke, Samuelson, Shakespeare? What music does she listen to? Does she have in-depth knowledge about the economy, or does she get everything in sound bites? Is she more interested in hockey than war and peace? It doesn't take much effort or intelligence to be a hockey mom. It takes more to be vice president, or at least it should. I would like the Vice President to be someone with a little culture, refinement and background. My impression is that in terms of upbringing and social status, she's no Margaret Thatcher.

The problem with people with little education and experience is that they tend to reinvent the wheel, even if they are smart. They don't know what other smart people have thought about similar problems before, and what solutions worked and what didn't. Those who don't know history are doomed to repeat it. While Obama has relatively little executive experience, he is well educated, and so far, no matter what you think of Harvard and elitist institutions, they do tell people important things, and if you learn well, it helps in life. Bush's problem is that he went to Yale but made a point of rebelling against it, as McCain did at Annapolis. Remember that Cheney flunked out of Yale; maybe we should have paid more attention to that before we put him in a position to start a war with Iraq and order the torturing of prisoners.

McCain's Risky Foreign Policy

Gideon Rachman of the Financial Times says McCain would be a risky foreign policy maker. He says McCain is too prone to take risks, as illustrated by his selection of Sarah Palin as his VP. His risk taking may work sometimes, but there is the potential for tremendous damage if it comes out wrong, which is possible when dealing with Russia, which he dislikes. Thus McCain is not the "safe" choice for commander-in-chief. Rachman sees the possibility of an even more aggressive foreign policy than than pursued by Bush.