McCain and Charlie Black

The NYT features lobbyist Charlie Black's prominent role in John McCain's presidential campaign. I didn't know that he got his start with Jesse Helms, Lee Atwater, and other assorted right wing zealots. Not a good sign for me, since Jesse was a virulent hater of the State Department and an author of the Helms-Burton Act, which was one thing that encouraged me to get out of the Foreign Service.

While I was assigned to the US Embassy in Rome, an Italian contact whose little daughter had been denied a US visa under the Act remarked to me about how it penalized the children of those it targeted. I found its operation to be very similar to the way the Nazis targeted Jews in Italy during World War II as described by Herman Wouk in Winds of War and War and Remembrance. I was not happy that the US was punishing children for the "sins" of their parents.

Plus, as I said earlier, I am not happy about lobbyists having big roles in presidential campaigns, especially of someone like John McCain, who claims to be the king of straight talk. The Black connection seems to indicate that McCain has swung hard to the right. I worry that although he has a history as a maverick, he was neutered by George Bush in the 2000 campaign when Bush beat him in South Carolina by claiming that McCain's adopted daughter was actually a black bastard conceived out of wedlock. Now, to see McCain fawning over Bush is more than I can take. Plus, I hate seeing him get his Middle East policy whispered in his ear by Israel hawk Joe (Bomb Iran) Lieberman.

Barack, Hillary and the Deer Hunter

All of this political talk about Obama's description of Pennsylvanians as turning to religion and guns because they are bitter about how life has treated them sounds like it's straight out of the movie "The Deer Hunter." I find it strange that none of the talking heads I have heard have mentioned the movie. It's probably because it's about the Vietnam war and nobody except John McCain was involved in it. McCain's experience was hardly typical; he had little in common with the characters in the movie although they also were POWs. McCain came from a patrician family; his father and grandfather were admirals. Like John Kerry (not one of my favorites) he became a Congressional military aide when he came back from Vietnam. He didn't go back to a working class family in a steel mill town. As a returning hero, he didn't have any moral qualms to deal with when he came back, unlike the average grunt who was fighting in the jungles of Vietnam one day and back on his hometown streets two or three days later amongst cohorts who had avoided service in Vietnam. I don't think there are many ordinary Vietnam vets among the talking heads on TV. One is Sen. Chuck Hagel, but he's the exception who proves the rule, and I don't think he was on today. I think it is significant that he has not endorsed McCain, a fellow Republican and Vietnam vet.

If Hillary knew about the movie, she would probably see herself as the Meryl Streep character, but she is more like the wealthy Meryl Streep character in "The Big Chill," who owns the ante-bellum plantation house in South Carolina where the movie takes place.

Anyway the Deer Hunter is certainly about Pennsylvania and guns, and to a lesser extent about religion. Ironically, Obama doesn't seem to know about it either. He could simply reply to Hillary that if she doesn't understand what he is talking about, she should watch the Deer Hunter.

House Value Graph

Just for anybody who missed it, here's the Shiller graph of the bubble in house prices. It looks like something unprecedented has occurred, so that unwinding or popping the bubble may take a while and be fairly disruptive.

The Fed and the Markets

Although I have been critical of the Fed for not worrying more about inflation, there's no doubt that its main concern should be to avoid a financial meltdown that could lead to a depression or a breakdown of the financial markets. My main complaint is not with the Fed, but with Congress and the Administration for cutting taxes on the wealthy so drastically while waging very expensive wars in Iraq and Afghanistan. They are shuffling money by the handfuls from lenders in China to Republican war profiteers, including Dick Cheney.

The Fed may have prevented the onset of a major financial crisis due to the subprime mortgage situation. Nevertheless, America is still sitting out there -- exposed because of its huge indebtedness. Runaway inflation will reduce the size of the indebtedness over time, but not in the short term (hopefully). Therefore, we remain at the mercy of the Chinese and the Arabs, our largest creditors. It's unlikely that they want to destroy the US for financial reasons; they would stand to lose a lot of money by doing so. But if the political/military situation goes downhill, they might try to destroy the US economy for geopolitical reasons. China is now feeling a lot of international pressure over Tibet, as well as the traditional US pressure over Taiwan from the Republican right. There is some small risk that China could retaliate by dumping all of its US dollar investments, triggering a collapse in the dollar's value and perhaps pushing American interest rates into the stratosphere.

Alan Greenspan claims in the Financial Times that he's not responsible, and he's not the worst culprit, although the FT columnists have some legitimate gripes about his performance. But one thing he did which was very bad was to come out in favor of the dangerous Bush tax cuts because he claimed he was afraid that America would end up paying off its debt. In retrospect his claimed fears had no merit, and were no doubt expressed to please the political powers, Bush and company. By sacrificing his integrity for political expediency, he ensured his share of the blame for America's financial debacle.