Paulson tries another gambit

Isn’t anybody ever going to admit that those in charge of confronting this now global economic crisis don’t have a clue. Henry Paulson now has again changed his mind on how to use his massive $700 billion slush fund (see http://www.nytimes.com/2008/11/13/business/economy/13bailout.html?hp.) It galled us all weeks ago to have watched how quickly the Congress, the talking heads on the tube, the Presidential candidates all capitulated and lined up behind such as a breathtakingly and appalling large figure. Think back in the past over all the ugly animal noises that emanated from both house of Congress over proposals to spend “paltry” little sums like $25B or so on spending packages that would given money to pre-schools programs or veterans or aspiring college students or whatever. And if and when any of these were finally grudgingly passed, they were immediately vetoed by his imminence ,“The Bush”, whining that we can’t afford it. Think how we once agonized over the costly Iraqi debacle running up some $ 2B a month and maybe hitting a trillion $ eventually. And now suddenly they turn around and almost instantly come up with 700 fucking billion dollars (and more) to bail out a bunch of greedy bankers (an maybe more for inept automakers)! And from where?

Somewhere in implementing the gargantuan exercise of shoveling money at the ailing financial sector by buying up the toxic debt someone realized that, ‘Hey this sucks!’ We are buying bad debt at some arbitrary price to try to stop a free fall in the value of the debt instruments when the source of the problem is somewhere else - the debt instruments are linked to mortgages on plummeting home prices.

As we now know the banks blew it big time and loaned into a classic bubble economy that fucking popped (which for years was predicted to happen.) Now the taxpayers have to bail them out. At this point the problem is the banks, big and small, don’t trust each other because they confidentially know how bad things are in their own bank. So we a get a monumental credit freeze which leads to equity sell offs in stock markets worldwide, which of course feeds on itself and thus this downward spiral. Ah yes, everything is interconnected. Once stock prices start to collapse traders get caught short and have to cash in their positions in other markets, like commodities and so commodities join equity stocks in the commode. At least oil prices also took a nosedive, so we won’t have that source of cost-push inflation - at least for a while.

Economists liked to talk about the “wealth effect”, the idea that with rising home values and juicy 401K people felt ‘fat and sassy’ and spent not unlike drunk sailors, foolishly draining equity out of the (inflated) home value and running up their credit cards (that carry usurious interest rates) to buy goods and services they could have maybe done without. But we now have the reverse of the “wealth effect”. People who have not even yet been directly impacted in terms of their day-to-day disposable income (they still have jobs) now suddenly feel a hell of a lot poorer – and they are! So they buy less stuff that they don’t really need, and aggregate demand falls, manufacturers cut back production due to rising inventories and lo and behold: layoffs. Now real cuts in disposable income start to occur with another round of reduced spending – and so it goes. So many feedback loops in a capitalist economy, loops within loops and they are all connected.

So after realizing maybe exchanging good money for garbage wasn't such a hot idea Paulson and the boyz upped and gave money to all the big banks whether they needed or not (they couldn’t give it only to the ones that really needed it and point out the real losers or they would have triggered a run on those outfits.) The idea was 're-capitalizing' the banks would free things up and lending would be forthwith. But greed has no limits. The banks just chuckled and used the money to do what they pleased. You see the real problem for the banks is their stock price are in the toilet. They want them back up there where they think they belongs. They (the bankers) personal fortunes depend on it. With this meltdown the really, really rich are now only really rich, and they don’t like it. In other words the bankers (and corporate ownership class in general) generally don’t give a rats ass about the about aggregate economy as a whole. It’s their particular firm (and personal fortune) that matters. Of course they must realize on another level that we all they we all sink or swim together. We are are naturally conditioned to look out for numro uno first, then secondly maybe the entire edifice.

Since the big bankers are such self-serving pricks (which Paulson should have known as he one of them), he is now redirecting his slush fund in other direction maybe even to the actual borrowers. Maybe they should have thought of that sooner. Whatever they are doing , it doesn’t seem to have lessened the pessimism as the Dow fell like a rock again today - over 400.

A Grim Dystopian Science Fiction Novel

It's a dark times for capitalism indeed. It's like out of some grim dystopian science fiction novel. The Dow Jones fell over 1000 in one week. And then popped back 900 a few days later. And then fell 700 plus again. It again fell over 500 yesterday (10/22) now it's up a 172 today. As Steven Colbert said the other night it's like a roller coaster except you vomit money. All over Europe and Asia markets are churning viciously. Whole countries are stone broke. No one knows what to do. The US now has a slush fund of some 700 billion dollars originally to buy the so-called toxic debt that has triggered the crisis/panic. But continually beaten back by worldwide pessimism and a frozen credit market, they almost daily reconsider and float new grand schemes to see how the markets reacts. But no one is sure including the government officials who plead for the money or the Congress who grudgingly granted it are sure if they are not simply throwing good money after bad.

We thought that September 15^th was a bad day. In a previous post I called it a ' bad day at Black Rock' after the famous western. Little did we know that it was merely a precursor far way worse things to come – what could be a full scale global economic collapse. Maybe not. But they sure wouldn't tell us in advance. Back went it started last month it seem like a few investment banks were on the rocks. But so what. It was kind of entertaining in a vicarious way to watch the financial sector temporarily seize up. And later as the drama played out many we thought (naively) that if Uncle Sugar came to the rescue, somehow conjuring up hundreds of billions of dollars (from God know where) and bailed out a few of these bastards (which everyone hardily resented) that eventually this credit constipation would dissipate. It hasn't! Now trillions are being erased worldwide as markets plummet. Every single market is being hammered as panic sets in everywhere as everyone tries to cash out of their investments and traders try to cover their margins. Plus lots of opportunistic short selling no doubt.

What is so infuriating is that a shadowy elite of really big time wheelers and dealers - investment bankers, hedge fund managers and the really rich for whom they worked , have made obscene amounts of money while truly hosing up the entire global banking system in the process. They couldn't just make their zillions on ordinary financial legerdemain. No their greed got most of them at they included high risk action into the mix. All of this as we now know was being recycled and repackaged from the originating banks into some vague stratosphere of international capital as (risk minimized) financial instruments know as “derivatives”, ½ a trillion worth

Not satisfied to just merely peddle overvalued real estate , these greed heads started including mortgages specifically designed for those who could not afford them often simply for the commission. Already the preponderance of recent home buyers could only barely afford their mortgages since the spread between salaries in most jobs didn't anywhere near match the ¼ to ½ million dollar price tag for an ordinary tract home. But it was the nature of a deregulated market to expand indefinitely until some externalities eventually kick in. These new so-called “subprime mortgages” was their undoing. They become time bombs that were neatly hidden into the whole bloody package. A pack of surreptitious Bolsheviks could not have done a better job. Again the money was too good to turn down and there were no cops on the beat. Wall Street and those who took their lead from the USA, financial biggies world wide, all climbed aboard this financial Titanic. They were assured they had invented a perpetual motion machine. After all complex algorithms, complex legal language defining the priorities repayment upon default , special insurance, high bond ratings assured all parties involved that everything was cool at least for the time being.

It all begin to unravel when the rising tide of home values eventually peaked sometime last year and the began , alas, to retreat. Once these marginal “homeowners” who had zilch equity suddenly discovered they owned more on than their place than it was worth, they simply walked. And now it has all come tumbling down. Now day after day the stock markets as well commodity markets world wide as plunge ever further downward in repeated rounds of panic selling. And billions of Dollars, Pounds, Yen, Rubles, Francs vaporize.

How could the finest financial minds of our time working for the worlds preeminent financial institutions and the august and powerful government authorities charged with overseeing this complex process allow this to happen? The answer again lies in ideology. . We have had 30 years of political support for a bogus and highly opportunistic economic ideology known by the confusing term of Neoliberalism. Neoliberalism as an economic mindset and basis for policy across our (narrow) political spectrum which ironically came into its own as just as the term “liberalism” became a popular pejorative to throw at anyone politically left of Ghegis Khan. Once the Soviet Union imploded, “red baiting” went out of style. So derisively calling someone a liberal had to suffice. Neoliberalism provided credibility and ideologically support for right wind populist the anti tax rebellion and (an air-headed) libertarian small government movement. (It termed neo liberalism because liberalism in its formal definition is a term for those pro free market “progressives” of colonial times who were at the time at war with something called Merchantilism, a defunct import/export economic ideology. It started in late 1970s when Republicans, and so called conservatives and libertarians with only feeble resistance from the Democrats argued that the US standard of living was falling because we were overtaxed and our businesses were over-regulated. When in fact in the 1970s the entire capitalist edifice was suffering an aggregate fall in the rate of profit (a normal tendency of capitalism over time according Marxists) hence lower wages. Lower profits, lower wages equals social unrest.

So in rides the neo liberal right with an easy answer – blame Keynsian economics for the inherent defects of capitalism. Keynsian economic theory had dominated since the Great Depression. In fact it was essential in saving capitalism was it was implemented to the scale necessary in WW II. The brilliant idea of the political right, who always resented the Democrat FDR and his successes, was to remove the regulatory apparatus as much as was politically possible, that is any mechanical governor on the engine of capitalism and let it run unrestrained. Forget the bearings, forget oil changes, forget preventative maintenance - run it full blast without any controls. It's actual academic credentials came from the anti-Keynesian rebellion led by economist Milton Friedman, out of the University of Chicago. To Friedman government spending as a tool of economic counter cyclical policy should be phased out if not eliminated and manipulation of the money supply would suffice for controlling the business cycles. Fiscal policy (gov spending to manage business cycles) was out and monetary policy (fussing with the money supply through the Federal Reserve) was in. This as the military-industrial complex consumes 1/3 of our national budget and totally inter penetrates our economy. So it was always bullshit. No one really believed it. It was used by corporations and Republicans and bankers as they lobbied opportunistically for wholesale deregulation of the US economy including the key banking and financial sector .

Now all of that is history. Neoliberal ideology and the policy mix it wrought we would hope is now throughly discredited. Two centrist candidates, one center right (McCain) representing the military-industrial complex, failed Bushian neoliberalism and a tragically failed geopolitical agenda called neoconservative, and one out of the tradition of the pro-business, quasi-progressive, identity politics (gays, blacks, feminists) center-left (Obama) vie for the US presidency amidst the worst financial panic in 70 years. Neither have yet said how they will confront it.

Something is very out of whack

Everyone intuitively including the people pushing this bailout realize something is very, very out of whack here. It just doesn't compute that we as taxpayers have to pay for this massive cleanup. Whats more they, the 'designers' of it, are deeply embarrassed to have to do it. It totally contradicts and makes mockery out of the entire Reaganian ideology of deregulation and free-for-all market driven economics to which they ascribed to and from which Poulson personally benefited. And as Birk T. J. Birkenmeier shows (see below) even the a "piddly" $85B for the AIG bailout directed back at US citizens would have an incredible direct effect. But $700B? It boggles the mind. What the fuck is going on?

In a time when we've gotten used to pissing money away at astronomical rates (see the ‘burn-rate’ for the Iraq Occupation at http://www.nationalpriorities.org/costofwar_home) this figure, $700B, still blows everyone away. There is never money for anything: health care, bridges, schools, college tuition assistance, states budgets. When some modest spending bill passes Congress for 2 or 3 "measly" billion, Bush fucking vetoes it. "Can't afford it" he says. Then low and behold we now have to fork over nearly 3/4 of a trillion dollars or else everything goes down the tube. And what is galling beyond words is that the very people that got us in this mess (and got way richer in the process) are saying unless the US taxpayer (meaning the US middle class) bails us out, we will let everything collapse in a 1929 style gotterdammerung.

As far as I can tell these guys, Poulson and Beranake are winging it. One day they bailout a big investment bank, the next day they let one collapse, then they rescue a big insurance company. But nothing works. Now they are coming up with the "700 billion dollar gamble." They just try different shit to see how the stock market and credit markets worldwide react. The markets liked the big bailout idea. So now the big boys are now holding out for this massive mother of all one time expenditures. Today it looks likes going through so the Dow is up, surprise, surprise.




A modest proposal from:

Birk T. J. Birkenmeier, A Creative Guy & Citizen of the Republic


I'm against the $85,000,000,000.00 bailout of AIG. Instead, I'm in favor of giving $85,000,000,000 to America in a We Deserve It Dividend. To make the math simple, let's assume there are 200,000,000 bona fide U.S.

Citizens 18+. Our population is about 301,000,000 +/- counting every man, woman and child. So 200,000,000 might be a fair stab at adults 18 and up.. So divide 200 million adults 18+ into $85 billon that equals $425,000.00. My plan is to give $425,000 to every person 18+ as a We Deserve It Dividend.

Of course, it would NOT be tax free.

So let's assume a tax rate of 30%. Every individual 18+ has to pay $127,500.00 in taxes.

That sends $25,500,000,000 right back to Uncle Sam. But it means that every adult 18+ has $297,500.00 in their pocket.

A husband and wife team has $595,000.00. What would you do with $297,500.00 to $595,000.00 in your family?

Pay off your mortgage - housing crisis solved.

Repay college loans - what a great boost to new grads Put away money for college - it'll be there Save in a bank - create money to loan to entrepreneurs.

Buy a new car - create jobs Invest in the market - capital drives growth Pay for your parent's medical insurance - health care improves Enable Deadbeat Dads to come clean - or else Remember this is for every adult U S Citizen 18+ including the folks who lost their jobs at Lehman Brothers and every other company that is cutting back. And, of course, for those serving in our Armed Forces. If we're going to re-distribute wealth let's really do it...instead of trickling out a puny $1000.00 ('vote buy') economic incentive that is being proposed by one of our candidates for President. If we're going to do an $85 billion bailout, let's bail out every adult U S Citizen 18+! As for AIG - liquidate it. Sell off its parts. Let American General go back to being American General.

Sell off the real estate. Let the private sector bargain hunters cut it up and clean it up. Here's my rationale. We deserve it and AIG doesn't. Sure it's a crazy idea that can 'never work.' But can you imagine the Coast-To-Coast Block Party! How do you spell Economic Boom? I trust my fellow adult Americans to know how to use the $85 Billion We Deserve It Dividend more than do the geniuses at AIG or in Washington DC.

And remember, The Birk plan only really costs $59.5 Billion because $25.5 Billion is returned instantly in taxes to Uncle Sam. Ahhh...I feel so much better getting that off my chest.

Kindest personal regards,

Birk T. J. Birkenmeier, A Creative Guy & Citizen of the Republic

PS: Feel free to pass this along to your pals as it's either good for a laugh or a tear or a very sobering thought on how to best use $85 Billion!!

Bad Day at Black Rock

Monday September 15th was a ‘bad day at black rock’ for Wall Street - and probably all of us. When two major investment houses fall in one day, one to the ignominy of bankruptcy, Lehman Brothers, and the other being forced to allow itself to be eaten by a bigger fish as BankAmerica gobbles up Merrill Lynch, it is indeed worth noting. But other than damaged careers and besmirched reputations, most of the guys responsible for this mess will land on their feet financially. They might have to fall a couple levels down from super rich to merely being ‘very well off.’ But they all no doubt saw this coming years ago and protected much of their own personal wealth. At the operational level the 13,000 jobs Lehman Brothers are in question, whereas BofA will probably keep most of Merrill Lynch’s 18,000 financial advisors and become the preeminent source of “experts” on financial matters (even as these ‘experts‘ participated in one of the biggest financial disasters in American history.)

The problem is not that there was shakeup on Wall Street and some biggies bit the dirt. The problem is that all of these operations were incestuously interconnected in a giant financial clusterfuck. The housing bubble has been long since acknowledged but was conveniently ignored by the both the players and government regulators, the neoliberal free marketeer controlled government agencies and the (as usual) corrupt Congress. There was simply too much easy money being made by all. Granting mortgages once meant using the aggregate of depositors’ money, saving accounts and such, as a reserve against loaning larger amounts on a real estate, that is real property that had some kind of underlying quantifiable value. With people’s homes as collateral they only defaulted if they absolutely could not avoid it. And property values slowly appreciated hence equity increased both by paying down the principal and enjoying the normal appreciation in value. That had worked well for years and was well understood and regulated.

What started it all was a sustained and delightful steep appreciation in home values, probably kicked off by normal supply and demand factors, but inevitably amplified by old fashion speculation. The whole thing might have been contained had not mortgages become not simple financial instruments in and of themselves but elements in larger more complex financial instruments. They become embedded in packages that were not handled by regular banks but big time investments banks like Bear Stearns et. al. and sold widely. And this eventually included the newer, higher yield but also higher risk animal – the now notorious “subprime loan”. This is a mortgage that by all rights should never have been granted in the first place. The debtor can’t afford it and/or the terms are misunderstood or misrepresented. Also often little or no down payment was required – a perfect recipe for many to bail at the first opportunity. Furthermore, they were marketed in an unregulated and McDonalds hamburger type way along with massive numbers of home equity loans, once quaintly known as “second mortgages.’

By the early 2000s the economy essentially ran on credit much of it derived from people pulling equity out of their homes for consumer spending (along with ubiquitous and usurious “plastic” - credit cards) as well as, of course, buying homes they couldn’t afford. The risk of subprime mortgages was supposed to be engineered out by all kinds of complex arrangements and the risk spread evenly like insurance risk. However, when the crash came and they were defaulted on, the reverse happened they infected everything they had contact with. The result is a near worldwide financial meltdown. And here we stand. The investment banks are falling like dominoes going hat in hand to each other and the government for handouts. If the government acquiesces, it falls absolutely into a contradiction to its ideological principals of lassie faire capitalism. Plus it sends the wrong signal to a future generation of players. But in the worse problem is it is liable to further erode the dollar causing a possible run and trigger hyperinflation.

The stock market is well aware of all of this and responded by going into full in panic mode, falling a disastrous 504 points. The amount of wealth that vanished in the clicking of mice is probably more than GDP of good number of whole countries. When everybody sells at the same time nobody gains except the first few rats off the ship – or of course all the guys ‘selling short” which I’m sure was a large chuck of the action. But what about the 401 K plans based stock ownership? Retirement for the baby boomers (a term I detest but use anyway due to laziness) looks bad. There are going to be a lot of old geezers in the workforce holding on to their jobs until they retire feet first.

Blame it on the ‘Green Meanies’ - demagoguery works

Webster defines a demagogue as a leader who makes use of popular prejudices and false claims and promises in order to gain power.

OK I ask you, if the Republicans have the answers then why do they need to continually resort to abject blackguard demagoguery in every stinking election? If they have facts and rationality on their side, why is it necessary to appeal to the lower instincts of the populace to get votes? We know in recent presidential election it is the so-called swing voters that provide their small margin of victory in the so-called swing states (assuming, of course, that there was no election malfeasance there, a valiant assumption.) Anyway, at this stage of things the base of each party has nowhere else to go and it’s all up to the undecided, the uncommitted. In other words ‘it’s the swing voters, stupid!’ Or it is the stupid swing voters? Are these characters all that bright? They can’t decide whether they are Democrats or Republicans, Left or Right wingers, conservatives or liberals, progressives or reactionaries. And some are so gullible and/or craven that they fall for the transparently obvious ploys by cynical Rovian-style campaign consultants every fucking time? They seem to be just waiting to be “swift boated” into voting, yet again, against their own best interests? These are the people who rely on TV advertising and slick partisan campaign literature to decide who and what to vote for - and the Repubs know it!

The latest one of these such Republican ploys is this absurd but apparently appealing idea that opening the continental shelf fully to oil exploration will somehow immediately lower gas prices at the pump. It’s always easiest to blame the ‘green meanies’ for everything. The environmentalists are preventing us from achieving “energy independence. Yet why did everyone run off and buy 16 MPG gas hogs in the last ten years? Did they think oil would stay at 40 dollars a barrel forever? Why have the oil companies and their boys in Congress not been beating the drum and pushing for offshore access especially back when the Repubs controlled Congress? Until now, it was only drilling in ANWR in Alaska that was their golden fleece? Did they think that an endless war(s) in the Middle East would not adversely affect oil prices. Why have coastal state Republican governors like Arnold Swartzenagger and Jeb Bush both been steadfast opponents of “coastal drilling?” Why was Sen. John McCain previously opposed to offshore drilling and now as a Prez candidate he is steadfastly in favor of it? The answer is simple: demagoguery works. A quick fix is to gratuitously appeal to the masses of pissed off drivers, like the stupid idea of ‘gas tax holiday.’ Scapegoating is a favorite of demagogues - blame the environmentalists, blame Nancy Pelosi and the Democrats for keeping all that good US oil out of our pipelines. Give the oil companies what they want: more leases in sensitive marine areas and wildlife preserves. Forget about the larger issue of global warming and the fact that any oil found would not be available for a least 10 long years “Energy independence” is the new holy grail of the Right, a new apple pie nationalistic buzzword.

During my college boy years I lived in the Seal Beach/Huntington (named after the oil baron Samuel Huntington) Beach area. I lived where the ocean horizon was punctuated by huge multistory oil rigs. They were a normal part of an urban coastal oceanscape and we grew accustomed to them. Sure there were occasional leaks and spills. I remember seeing pictures in the newspaper of surfers covered with oil sometime in the early 60’s. Sometimes we would have use kerosene to clean oil blobs off our boards. But it was not until the huge spill off of Santa Barbara in 1969 when a Union Oil platform blew and eventually leading to a rupture in five places along an underwater fault that the potential for catastrophe of this industrial coastal arrangement hit home with a vengeance. It took a full week and half to staunch the leaking. There was a huge loss of marine life. After that the platforms would never be looked upon as benignly, and coastal states especially Florida and California from then on resisted expansion of oil leases – until now.

The SF Chronicle reported yesterday that by a small margin even Californians favor offshore drilling as a placebo to $4.00 a gallon gas. Again, demagoguery works!

A run on the banks?

A run on the banks? Where is this all headed? Are we on the brink of another big one? The Great Depression of the 1930s was first kicked off by a particularly bad day on the stock market. There have had some other days even worse than Black Thursday October 24^th 1929 with stock values falling 17% in one day. But in the plunge continued and stocks continued downward well into the next week with a Black Monday and a Black Tuesday. Stock values never fully recovering until the mid 1950's. As we know it was so bad that stockbrokers jumped out of windows. But the real problem manifested itself a little later when there was a run on the banks. Sound familiar? Back in 1929 as the pessimism spread people lost confidence in those granite pillars of respectability, the banks, and wanted their money out immediately if not sooner.

Banks always have more outstanding claims on their assets than they have as real cash in their vaults. That is there function; banks not only hold money they create money. Amazingly enough they are allowed to generate money out of thin air by simply making loans. It’s all a confidence game in a way. So when the depositors all want their money on the same day or week, there is, hey, not enough there to go around. This because banks are legally allowed to create money by loaning amounts based on a percentage of their deposits. It’s called their Reserve Requirement. This is set by the Federal Reserve Board. This along with several other mechanisms for controlling the money supply, the most important being the Prime Rate are the way the money supply is managed, and in turn the entire economy -theoretically anyway. But unlike the 1930s today we have have a safety net, something called the Federal Deposit Insurance Corporation (FDIC) which exists as a direct result of the problems causing by previous bank runs. This government funded corporate entity allows depositors to rest assured that their saving and checking accounts are safe, at least the first $100,000.

However, banks again are starting to experience ‘the runs’ even with the FDIC in place. As we have seen last week IndyMac Bankcorp had to be rescued by the FDIC. This rescue took a big bite out of the FDIC’s total reserves, as much as 10% of their $53 billion cache. And that's just one bank. IndyMac is the fifth US bank to fail this year - and its only July. It's classified as a ‘retail bank’. There probably won’t be a run on retail banks. IndyMac bank was big into subprime mortgages and has been under scrutiny for some time. But the real problem is with the next level up, the so-called investment banks. These banks create “money” for the big boys – corporations, hedge funds, pension funds. They do this by creating financial instruments like equities and securities that can be traded internationally. These include the recently nearly bankrupted Bear Stearns investment bank. Since they are investment banks, not regular commercial or retail banks, there is no FDIC and very little regulation – ah yes, the benefits of deregulation. Besides FDIC's 100K safeguard is chump change in this crowd. In fact to them millions are small potatoes. They wheel and deal in billions. And what has everyone concerned is that other investment banks are also on the ropes. Bear Sterns, which was recently taken over, that is eaten by a bigger fish, JP Morgan Chase, with government support. This happened with the unprecedented event of the Federal Reserve, that is the US government, "guaranteeing" the massive $32B buyout of Bear Stearns by JP Morgan. It was entirely necessary as Bear Sterns could have easily been the first domino in a long ugly chain of collapses. No one gains from a worldwide financial meltdown.

Why are Bear Sterns and other investment banks failing? Is it because they became too greedy and irresponsible during the gravy years of “free market” deregulatory madness? Were they like all compulsive gamblers unable to know when to 'cash in their chips'? Did they think they could permanently engineer all risk out of loaning to poor people at high interest rates (like the credit card companies have done?) They sliced and diced risky low grade ‘subprime mortgages’ and embedded them into financial instruments known as CDOs (Collateralized Debt Obligations.) The subprime loans were supposed to remain safely buried deep inside a mix of solid and not so solid mortgages, using high interest subprimes to pump up the returns but offset by the safer mortgages. These things were then sold to big players like hedge funds, insurance companies, pension funds, etc. Cool idea for making quadzillions. One hedge fund manager made over three billion dollars last year (and paid income tax on it at a rate far lower than your mailman pays.) Until the housing market went south these buried subprime mortgages pumped up the CDOs taking advantage of the high interest rates the poor saps eventually would get stuck with once their Adjustable Rate Mortgages (ARM) reset. But, alas, as the everything imploded and home values slid below mortgage value, these new homeowners began 'to walk'. So the subprime mortgages instead of bolstering eventually contaminated the CDOs in which they were embedded.

When an investment becomes questionable it gets dumped first by the sharpies, the Warren Buffets of the world, then as word gets around, survival instinct takes over and there is a mad rush to the exits. So now the mighty investment banks are in the toilet, a credit crisis threatens and the US economy slides inexorably into recession - and it might be a really bad one. This is because the standard counter cyclical tools, monetary and fiscal policy, in a downturn require expanding the already looming federal deficit. This will in turn weakens the dollar, which (alas) pushes up the price of oil thus more inflation and less money for consumer durables and so it goes. Inventories accrue leading to layoffs (maybe in China, too) resulting in even less disposable income available for consumption, and so on. Feedbacks loop r us. Stagflation, anyone? Runaway inflation, anyone?

Of course the overheated US housing sector had been in a near bubble bursting state for some time now. So its actual puncture was no surprise to anyone. But the problem is that it has been propping up the whole US economy for years. What now? Even Fannie Mae and Freddie Mac, the privately owned but government backed holder of mortgages, are now both in trouble and need rescue. They were indirectly burned by the subprime crisis. They hold trillions, yes trillions, in regular mortgages, much of it in Southern California where home values are sinking like rocks. Consequently Fannie Mae and Freddie Mac, normally solid as rock (again that tired simile,) have seen their stock hit the skids as their profitability goes into the red. They will need an injection of liquidly from Uncle Sam or all hell will break loose.

The system as usual was gamed. Irresponsible abuse of credit ran rampant. Everybody played, big boys and little fellas. Wall Street's investment bankers went wild as we have seen. But the middle class also participated in this hog wallow. Those who owned houses with plenty of equity used them to leverage themselves into ever bigger, newer, fancier ones. Or they simply felt wealthier (known as the "wealth effect") and spent profusely. Other more entrepreneurial types made big bucks 'flipping house' - buying and selling them in short succession as they rapidly appreciated, and then buying others. Those lower the down food chain or merely less enterprising simply refinanced often drawing out equity each time for SUVs, plasma HD TVs or vacations in Mexico, or else they irresponsibly took out ‘equity loans’ (once known derisively as 'second mortgages') foolishly consuming their hyper inflated home equity (for many their main asset) and adding it to ever heftier mortgages. This process was fine for a while especially when it involved solid mortgages on ever appreciating real estate. It was a avarice-driven phenomena typical of finance capitalism and it worked to pull us out of the downturn following the last bubble popping, the Dot Com bust.

All this was cooking along with no end in sight. But what about all the lower income working class types who also wanted to participate in the American Dream, home ownership and the realization something for nothing - real estate created wealth? With real income flat for blue collar and service sector jobs and the once unionized manufacturing jobs having been globalized to 'low wage platform' countries, many full time families with both parties working simply could not afford a home. They could neither come up with the traditional 20% down nor the stiff monthly payments on a multi hundred thousand mortgage. The inflated value of the housing, old and new, sent the value of even older tract homes into the stratosphere at least those near jobs. But not to worry, the banks had an answer - “creative financing” . All sorts of new loan packages were conjured up - adjustable rate, no interest, negative amortization and all without that annoying, intrusive documentation.

These new fangled mortgages were marketed like hamburgers or Fords. Amazingly enough hundreds of thousand dollar loans were floated without even verifying the info on the loan apps like actual employment. It all worked because the value of owner occupied homes kept zooming up. The sky was the limit. If people were worried about ballooning payments when the ARM reset or their ever-growing mortgage on interest only deals, they were told “when that happens, just refinance dude.” Of course, all of this irresponsibility pumped up the bubble ever more - and kept the US economy cooking right along. But it had to pop. And it now has. But so much else was going on – an unpopular inept President involving us not one but two wars, global warming actually happening, torture as official US policy, Constitutional shredding by a power mad administration and so on. How to could we be concerned about merely a possible real estate meltdown?

How close are we to a “big crash”? No one who really knows. And if so, they wouldn't be telling us. The role of the people who let this happen, who a run the Dept of Treasury and the Federal Reserve is not to acknowledge the seriousness of things but to placate and bamboozle us into acquiesce and passivity. That is simply because so much of this is psychological rather simply than logical. Panic selling (busts) and buying frenzies (booms) are two sides of the same coin. They are based on herd mentality. But if you are caught in herd running off a cliff, it’s pretty difficult not to get pushed over the cliff yourself by the mass of other crazed beasts. No use encouraging a stampede.

In any case, economists right, left and center agree we are in big trouble. We have definitely stepped into some serious shit. Generally in these situations by the time there is enough political support to do something drastic and steadfastly move away from what is obviously not working, more damage is done than was necessary. The dithering is dangerous. Yet moving resolutely in the wrong direction using superannuated ideologies as did the Hoover administration did in the early years of the Depression can be even worse. They did dumb stuff like plowing under crops to drive up ag prices up while people went hungry. An recent example of this was the pathetic attempt to goose the economy back ion track by luring consumers into going 'back to the mall' by giving everybody a measly $600 “tax rebate”. Like that is going to turn around a trillion dollar economy.

The problem we have now is that the tools that worked to get us out of the 1930s Depression (eventually), deficit spending on a grand scale (WW II) have been abused, misused and dulled for over 60 years. We have used it rain or shine, on the upside and or downside of the business cycle. We have used it like heroin and our tolerance as ever increased. The irony is that the Republicans who resisted such methods during the Depression and restrained Roosevelt from full application of counter-cyclical deficit spend in the 1930s, went hog wild with them in 1980s under Ronald Reagan and in the 2000’s and under George W. Bush went absolutely insane – pushing the deficit into the trillion dollar stratosphere. Since the positive effects of Keynesian deficit spending only came about only as a result of massive armament spending during WW II, it became acceptable by the Republicans and the libertarian right - but never acknowledged. They made it article of faith that social spending was "liberal tax and spend" apostasy and bad for everyone. Yet in the economic theory of John Maynard Keynes, that underpinned liberalism got us of out the Great Depression. The theory is that the business cycle endemic to capitalism, can be countered by deficit spending in downturns and recessions and recouped during upturns and booms (as Bill Clinton managed to do.) However the deficit, pump priming, spending that Keynes envisioned was to be for domestic needs ) – infrastructure, health care, welfare for the poor, education, etc. Yet WW II was no sooner over than we engaged in an arms race, the Cold War, with the Soviet Union and to a lesser extent the Peoples Republic of China. "Warfare Keynesianism" become the underlying mechanism that drove the fiscal policy but was never acknowledged. In fact as the Republican right took over from Reagan onwards, it continued to function but for guns not butter, even as 'liberalism" went out fashion and right wing, neoliberal, 'free market', deregulatory mania reigned supreme.

What next? It will probably take a major crash in one or more of the following -the US economy and/or the world economy, the biosphere, the USA as a superpower, confidence in monopoly capitalism, a belief in reactionary fundamentalist religion ideologies (we wish) and other hoary institutions of modern life to turn this mess around.

Hanging on by her fingernails

How little surface does Hillary need for her fingernails to remain engaged to the ledge? Apparently not much - only a measly 2% margin of victory in Indiana. This is in a red state much like the ones she usually takes in a brisk walk. It’s in the same rust belt neighborhood as Ohio and Pennsylvania. The Clinton camp has to be disappointed. With Obama’s campaign being pummeled every direction by his showboating ex-minister and the Clinton campaign’s no-holds- barred, down and dirty Republican style tactics, as well as the talking heads puditacracy hammering Obama nightly, they only managed a crummy 51/49 victory in Indiana and got trounced in North Carolina by a double digit spread.

Obama is now in an ascendant mode again. With the wind at his back he should soon pick up more of the wavering, wind direction sensitive super delegates and hammer a few more nails in the coffin of the Clintonian hope of dynastic glory. The numbers have been against her for a long time but there was always the perennial hope of a monumental Obamaian fuck up or freshly dug up smelly new canard disinterred and then amplified by the talking head jackals-with-bullhorns on the tube.

How far the Clintons will try to push things is now the question. Will they try to change the rules to seat delegates from the two disqualified states (Florida and Michigan?) Do they have some October surprise to detonate underneath Obama’s bus? Can they convince the uncommitted super delegate to line up behind Hillary because some recent polls now show (which didn’t in the pre-Wrightgate days) that she stands a better chance against McCann than Obama? Not likely. From now it is shear inertia (and draw down of their life savings) for Hill ’n Bill.

The numbers are simply not working for them. They are not losing by a lot but by enough. But that should do it. Everyone is sick of this thing. We have had too many debates and too much sterile analysis and windbag pontification. We’re bored. They are not different enough in their policy nostrums for it to be a real argument and thus interesting. Let’s move on. Sure Hillary can play alpha male and almost schizophrenically shape shift to alternately ingratiate, charm, intimidate and finally stoop to conquer by pandering. But who cares. If she wasn’t a Clinton it might have worked. She would have been a new phenomenon on the political scene – like Barack Obama. But she is a Clinton. Her name recognition via marriage to ex-President Slick Willie is both her best political asset and her Achilles heel. We already had our Clintonism - 8 years of it. His triangulation and pro business neo liberalism in a lot of ways paved the ideologically for our descent into Republican de-regulatory and privatization madness (of course Bill Clinton seems like Abe Lincoln compared to the clown in there now.)

The thoughtful sectors of the Democratic Party - the (non-Republican) educated upper middle classes, the left intelligentsia, the college kids and the African-Americans all agree – at this juncture Barack Obama for better or worse is our best bet. Let’s get on with it.

A Meltdown?

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The case for Obama - sort of

Barack Obama as president of the United States may very well disappoint us. He is essentially a mainstream member of a center-right political party. His cautious record in his short tenure in the Senate, his proposals on foreign policy, Iraq, health care and the economy are in many ways almost indecipherable from Hillary Clinton's. It almost takes a policy wonk to parse and tease out their differences. However, his association with a fire-breathing black minister is vastly unimportant as is his past associations with shady rascals like the indicted Tony Rezko. In Obamba's meteoric rise to political stardom he had to make nice will all sorts of unsavory characters – they all do. But he is not a racist for having listened for years to Reverent Wright's vitriolic sermons (which to me is are rather entertaining.) In fact in attending Trinity United Church of Christ gives Obama a sort of 'street cred' among African Americans. The law abiding ones go to such churches. It's no big deal. Plus his speech in defending himself was a masterpiece in oratory and honest political communication (and he did it without tossing his old preacher over the side.)

Obama has done something remarkable. He has bridged a gap between blacks and whites. He is a black politician but without recourse to “identity politics” - that bane of the left. Compare his style to Jessie Jackson or Al Sharpton. They are never for a minute not a black politician, never a minute without a totally racial oriented agenda lurking just beneath the surface. It's part of them. It defines them. And turns it off most non-blacks. Obama can be that if wants but most of the time he is something else - a politician with a message for change. And he is not any more or less corrupt than any other US politician for having known some Chicago 'operator' or a secret hater of whites for having gone to Rev. Jeremiah Wright's church. Serious politicians must rely powerful connections (and the campaign donations they lead to) like regular ordinary people rely on air. His past (as with everyones) simply leaves chinks in his armor that are there to be exploited by enemies and opponents.

The question at this point is how much collateral damage has been inflicted by the stubborn, recalcitrant Clinton forces in their rear-guard, last ditch battle for the nomination? And how much of Clintonian dirt can be recycled by a formidable Republican slime machine later in the year? Remember what the legitimate media, which is bad enough, won't quite do (even Fox), a whole coteries of GOP allied hate mongering bloggers and “independent” right-wing ad hoc hit teams will gladly do. And once in circulation the scandal-whore corporate media will take up full force. Many fear it could make the cranky old warhorse, John McCain, an actual contender.

In any case the hope with Barack Obama is that he represents a major departure, symbolically if nothing else, from our imperialistic, corporatist, neoliberal, neocon, neofascist (yes, we have all at the same time) recent ugly Bushian past. Unfortunately there is no real evidence that he is willing to actually take on the corporate-right wing monolith, that is the military-industrial state its variants. Sure he is a riveting speaker and pushes all the right emotive buttons. Yes he seems to be promising to end our disastrous and grindingly expensive occupation of Iraq, but he will leave troops there (the enduring dream of Iraq becoming a compliant 'US client state' in the Mideast is still alive and well in both parties.) He appears to be uncritically pro-Israel, which make serious Mideast negotiations difficult. Also he says he will expand the military – great, it already eats up over half our national budget. His universal health care proposal is not single payer (as all other developed countries' systems are). In fact his proposal is weaker than Hillary's as it will leave participation voluntary. In fact according to economist Paul Krugman his proposals are actually less progressive than Hillary's.

Yet who can stand the thought of President Hillary Rodham Clinton? Ugh! Her and Bill's inherent decency and basic character have been called into question as they take the low road in a last desperate grasp for the nomination. It's ugly. And who wants a re-run of the triangulating Clintons – always grabbing at right wing policy positions and isolating their progressive left flank. Sure, Hillary would face a different political milieu than Bill did; and a Democratic president would be able do more and would not have to pander so much to the right. But anyone (even McCain) would be a breath a fresh air after eight long dark years of monumental Bushian blunders and a frenzy of Constitutional shredding. People now want change. They are sick to death with Republican ideologues (except, of course, the ever lower taxes part.)

What now exists now is a unique and important, historical opportunity to actually turn things around. The whole world is watching. A young, mixed race articulate leader could bring us together globally. He could start to repair the damage to US credibility and image. He could be a real world leader. Maybe if Obama gets in, he will suddenly tear off his rubber mask and low an behold we will have Che Guevara or somebody like that, somebody really radical in the best sense of the word. What with global warming, a possible economic collapse, a shredded Constitution and being mired in not one but two wars, it will take some real to-the-roots originality. Thomas Jefferson is supposed to have said that we need a revolution every 20 years. Aren't we are sort of overdue? If not Che Guevera, maybe at least Obama could 'metamorphosize' into an African American version of FDR and we could crank up another New Deal – the Green New Deal 2.0. Maybe we are on the cusp of something big. I sure hope so.

Will Nader spoil Obama's Party?

Ralph Nader announced today that he would again run for president. This will make many so-called “progressives” angry. They see Ralph as a spoiler. He 'steals' votes from the Democratic candidate especially in close presidential election like the last two. On the Huffington Post blog the Nader announcement garnered 508 comments. All the ones I read (that floated to the top) were hostile and demeaning of Nader. These whining fools still blame Ralph Nader for Al Gore's loss in 2000. They can't resist the received wisdom from the Democratic Party hacks who helped Gore run his pathetic campaign almost into the ground. They still believe that it was the foolish Nader voters in Florida who tipped the scales for George W. Bush. First of all Gore did not lose the election – it was stolen from him by a reactionary cabal by the way of a right wing Republican dominated Supreme Court who gave Bush the election. Gore also as I recall didn't even push for the whole state to be recounted – only several heavily Democratic counties like Dade County. Post election research by newspapers discovered Bush would have won had things been counted properly. But if you read the entire report all sorts of crooked voter suppressing legerdemain was uncovered like 'caging' (challenging voter registration of potential Democratic voters), and knocking thousand of non-felon Afro-American voters with similar names to felons off of off the roles by computer. Plus Gore with Joe Lieberman as his running mate (of all people to choose) ran a weak, uninspired campaign always with his eye on the 'undecided voters', those shallow-thinking airheads who so distort American politics, rather trying to energize the Democratic base (as Obama has). Also Bill Clinton was still in the dog house then (as he is again now) for nearly being impeached for getting a blowjob. So Clinton couldn't really be used to lend legitimacy and gravitas to the his erstwhile VP's presidential run even though Clinton had presided over a fairly successful presidency (aside from being an incorrigible Lothario) presiding over a robust economy.

Don't these so called progressives understand that Ralph Nader's laborious and symbolic runs for the presidency are not meant to place him in the position to be a real candidate? He is in there to keep our eye on the ball. Even if the points he makes seem inconvenient and ,yes, tiresome. These points are not tiresome becomes they are hackneyed and boring. They are tiresome because nothing every gets done to address them by either party, and they have to be brought time and time again. As the NY Times article in announcing his candidacy states “..Nader also criticized Republican candidate John McCain and Democrats Barack Obama and Hillary Rodham Clinton for failing to support full Medicare for all or cracking down on Pentagon waste and a "bloated military budget..” Nader know better than anybody else that the country is in the hands of a Janus faced single party. We have a single party with two right wings as Gore Vidal says. The problem is that whole spectrum has shifted so far to right since the Ronald Reagan years, the 1980s, that a moderate and reasonable European style Social Democrat type like Ralph Nader now looks and sounds like a left wing radical. Ralph has not slipped into the realms of the politically impractical (but maybe someday possible) visions of the real left. No it's the “It's the movies that got small”. The whole country has drifted year by year even while Clinton was in ever further into the dark arms of the corporate capitalist radical right. The seven miserable years of the megalomaniac George W. Bush with his clumsy mismanagement and geopolitical blunders has finally opened most eyes. The American have people finally collectively realized things have gone too far. Ralph Nader, the straight, suit wearing, consumer advocate has stayed pretty much in the same place. It's just the backdrop has shifted into 'cuckooland.' His calm demeanor and smooth empirical reasoning has not changed. The subject of it has.

Progressives should not resent Nader's entry into 'the race.' Just as Dennis Kicinich and finally John Edwards in the primaries did, he will serve to prod the Democratic presidential candidate to confront some realities. Otherwise the dialog with old warhorse McCain will be about who can be the most effective imperialist. Nader's involvement in the debates (if they let him in) should have a positive and salutary effect on the Barack Osama (or very unlikely Hillary Clinton) platform and will force them to get real on the military budget – among other things. The US at this late stage simply cannot afford guns and butter – not 'guns' at the trillion dollar price tag we are now dealing with. We simply cannot properly and responsibly address the long laundry list of accumulated needs without taking on the power players like the Pentagon, the Pharmaceuticals, the energy giants. John Edwards understood this, maybe Hillary does. Does Barack Obama? Really confronting global warming with a sustainable reconfigured green economy, providing a fully functional universal health care system and rebuilding our aging infrastructure while confronting residual poverty will not be possible if we have to continue to support a global military apparatus that almost as big as the rest of world's combined. Something has to give. Ralph is just there to keep their eyes on the ball, to keep things real. Also, and this is important, as the Democratic candidate confronts the Republican machine and mean old man McCain, he or she can afford to move further into a fully progressive direction as Ralph will be there to seemingly define the outer limits of discourse. In other words with Ralph there at the table the Demos will have some elbow room on their left.

Which Demo candidate for Prez to vote for in the Primaries?

As the California Primaries draw ever closer we will all have to decide which of one of these characters we want to vote for: Hillary Clinton, Barack Obama or John Edwards. At this point in the process it is certainly more of a horserace than ever (and the media loves it.) Will it be Hill ‘n Bill or Barack Obama with the golden tongue - style with little substance or John Edwards, the newly reconfigured raging populist? No clear winner has yet emerged, which is good. The whole thing is still interesting. It is not yet a total media event of mindless adulation one moment and a destructo pile-on the next. Does it make a difference as to which one gets in, anyway? They are all establishment-connected mainstream Democrats. They all are relying on the contributions of rich people and corporations - big-buck buckaroos - to that keep their incredibly expensive campaigns on track. They all claim to rely on contributions of people like and you and me (well not me, I haven’t given any of ‘em a penny yet) to keep in the race. Obviously whichever one gets in, he or she will face the same intractable problems and probably react in very predicable and disappointing ways. But at least none of them will be George W. Bush. That strutting, barely articulate phony of the first order will be history.

As things are now shaking out the Democratic Party is again being compartmentalized into factions specifically those of the racial and gender variety – identity politics. Ever since the 1970s identity politics have been the bane of the Democratic Party and the US Left in general. It leads to endless, pointless, sterile infighting. In any case it appears that many the rank and file of ‘professional Democrats’ and their acolytes will be inclined toward Hillary. These are the same people who let Nancy Pelosi and Harry Reid lead Congress into a weak-kneed, non-confrontational relationship with a power hungry presidency more dangerous than even Richard Nixon (see Naomi Wolf's recent article at Huffington Post.) These are the same people who could not gather forces to confront and disable this criminal regime with either impeachment hearings or budgetary hardball? These ‘professional Democrats’ were too busy salivating at the prospect of getting control of the executive and legislative branches in 09 and didn’t want to take any chances.

Hillary Clinton represents this element in the Democratic Party – the loyal opposition. These people thrive on cleaning up elephant shit. That is what Bill Clinton did. He got things all ship shape for the Republicans and the corporations to take it back over - without making any real changes. In fact Mr. Bill borrowed from their playbook especially with respect to Reaganesque ‘welfare reform’ in which programs like AFDC were shut down and the former hapless single mothers were forced into crummy minimum wage service sectors jobs that did temporarily exist during the cyclical upswing of the dot com boom. These so called “entry level jobs” have now more or less vanished into the undocumented worker populated underground economy. Mr. Bill also reduced enough government programs and regulatory muscle to actually end up with “a budgetary surplus” – just what Republicans had always pretended to aspire to but never seemed able to achieve. This so the next Republican president can waltz in and piss it away plus trillions more. Bill Clinton set in motion the neoliberal globalization process (CAFTA, NAFTA, etc) that has resulted in the further de-industrialization of the US. He was a better Republican than they were. That’s why they hated him so. What about Global Warming? I don’t remember any real confrontation (with his later Noble prize Global Warming fighter Vice President Al Gore in tow) with the automobile or energy leviathans in those critical years when the other industrialized nations were all ‘getting religion’ on global warming.. These were years of dithering, critical years. Now a decade later things are undeniably worse.

We already have had a dynasty running things and it has been horrible. We do not need to establish a Clinton Dynasty. Much of what went wrong with George W. Bush is the result of his working out psychological issues with the old man – like trying to do him one better on Iraq. What kind of little psychodramas might occur in a Clinton II Whitehouse? Please voters, show a little imagination. Lets not go to the multiplex and endure another remake of a movie that wasn’t that good in the original - just better than the last horrific atrocity of a movie we just had to sit through – The Son of Bush .

So who is left? Barack Obama and maybe John Edwards. The others are either gone or simply leftwing place markers like Dennis Kucinich and Mike Gravel. Gravel is a joke - too cranky and weird to take seriously. And Kucinich simply doesn’t have enough visceral appeal to match his radical platform, which is a shame. We are left with a three-way competition between: Hillary, Obama and Edwards. Although Edwards’ poor showing in Nevada may be the beginning of the end for him. John Edwards’ populist approach and his strong support of labor has made him the best one of the three. Early on he wasn’t afraid to be specific, actually proposing programs instead of simply staying in the safe, unassailable realm of feel good platitudes and anti-Bushian rhetoric. In fact he forced Obama and Clinton to come forward with some actual details (which turned out to be disappointing especially with respect to their universal health care plans.) Edwards as a pugnaciously successful trial lawyer (albeit his modest performance in the Senate) would seem a good choice to lead the donnybrook to come if corporate power in the US (and world) is to be seriously challenged. And anyone who thinks it can be a win-win situation when confronting these corporate 'greedmeisters 'and their mouthpieces in the media is a fool. That’s where I hope Obama is just being politically adroit and not picking another fight while he is fighting for his candidacy.

Obama, being a riveting speaker and good at not overplaying the race card, it appears will continue to prevail over Edwards. Unless Edwards can pull off some kind of major victory he will only be around to split the more progressive voters in confronting the Clinton juggernaut. Remember if you add anti-Hillary votes, Obama plus Edwards, she would not be ahead. How many John Edwards supporters (or especially the Lefties for Dennis Kucinich) would ever vote for Hillary over any of the others?

So if comes down to voting for who has the best chance of actually winning against Hillary - Obama or Edwards, we have to be careful. If it looks like Edwards still has a chance of overtaking or outlasting the leaders, Clinton and Obama, then it might make sense to vote for him in the state primaries, otherwise we had better back Obama. There is an outside chance that the negativity and animosity that the Clinton and Obama camps spew out at each other in their struggle for dominance will sour enough voters that John Edwards could be rediscovered and his campaign rejuvenated. But his pretty boy $400 hair cut, white boy persona and his predicable harping about his humble mill worker origins just can’t seem to compete with Obama’s natural talent as a speaker and smooth style, or against the well-oiled Clinton machine. Plus as identity politics sets in Obama will soon have most of the African-American vote while Hillary will probably corral many of the old-line feminists. The younger women may go for Barack? But a problem for Obama that is never discussed in polite company is that the two most down trodden ethnic groups Blacks and Latinos don’t much like each. So Hillary may get a lot of Latino votes.

So it goes like this. Only Kucinich represents a real departure from the RepubloCrat conundrum we are stuck in. But he stands a snowball in hell’s chance of the nomination polling in the single digits – functioning simply as a protest vote for lefties. Edwards would probably make a more effective president than Obama as he stronger on substance rather than style and appears to be more of a realist in dealing with the corporate powers that be. Obama would be better than Hillary as he can tap into the emerging appetite for real change in the electorate (and would have a better chance than Hillary against the Republican hate machine that will be cranked up.) But Hillary (and Bill) would be worlds better than any one of the clowns running in the Republican Party - if she could win.

The Democrats could let us down again...

Be prepared to be disappointed even if the Democrats take over in 2009. Even with a filibuster-proof margin in the Senate, a solid majority in the House and ownership of the White House, the Democrats could still let us down. Of course, the White House is still an 'if' since the Repubs still have their ace-in-the-hole: demagoguery. They can and will play their racism/xenophobia/nativism, hole card under the rubric of the “problem of illegal immigration.” This may or may not cut it depending how easy it will be to target a scapegoat during a recession when the “illegals” will be either heading home in droves and/or gobbling up last the few remaining low wage jobs.

In any case if under the present circumstances, with arguably the most inept, irresponsible and misguided individual to ever be President of the United States coupled with his relentless drive to transform our Constitutional into soggy, soiled toilet paper, the Democrats can't inspire and hearten us by just not being Republicans, then we indeed have a problem! And so far they haven't. The Pelosi-Reid Congress have most definitely has not inspired and heartened anyone. But the pathetic performance of Democrats in Congress aside, the lack of an aggressive forward looking program coming from any of the three real presidential candidates is even more disconcerting. The lack of much to hang your hat on on from : Hillory Clinton and Barak Obama aside from pious generalities does not bode well. Of the viable candidates John Edwards comes the closest to hammering home a message that gets to the point – the corporate overlords must be confronted. Clinton's and Obama's reluctance to commit to much of anything specific or very drastic speaks volumes about what we have in store when and if the present pack of Bushian Brownshirts are finally given a much deserved bum's rush. Actually these war criminals deserve more than simply being run off the premises. If there were any justice in the world and the US Congress was serious about preserving the Constitution, the top rung (Bush, Cheney, Rice, and whoever hasn't yet jumped ship) would be immediately impeached, and if found guilty driven from office, arrested and imprisoned.

Since the Pelosi-Reid Congress steadfastly refuses to consider impeachment, then the only other thing to do is to force the presidential candidates to get serious. Two interlocking problems should be on the table. One is the questionable GOP controlled election machinery that still persists in many so called 'Red States' ( by the way what is it with this stupid color coding of the States?) Two Presidential elections were essentially stolen by the Republicans by both transparent and opaque machinations in at least two of the so-called “battle ground states”, Ohio and Florida. Banana republic style election maneuvers were essentially ignored (or lampooned) by the corporate controlled media. Election irregularities in the Ukraine got more attention that they did in Ohio. Both Al Gore and then John Kerry, four years later, both wimped out big time and refused to fight back when the presidency was stolen right out from from under their noses. This serious concern of election integrity interlocks with a second more long term institutional problem – fact that the Democrats are a essentially a center-right party and are only marginally more progressive than their ostensible adversaries, the Republicans. As the Republican Party has dragged the entire political spectrum drastically to the right, the Democrats passively accepted this new (mal)alignment. Richard Nixon, who supported the establishment of the EPA (environmental regulation) and Family Assistance Act (welfare), would have been classified as a raving socialist by these new standards. Part of the reason for ignoring this recalibration of the political spectrum is that as we know the Democratic Party is in bed with the same corporations and their lobbies that have been essentially running the country under George W. Bush. Bush-appointed agency heads have been functioning like puppets on strings, strings pulled and jerked by the very corporations they are supposed to be overseeing and regulating – and everyone know it. And Democrats up until recently have only issued a few weak squeaks and whines in a egregious situation in which the regulators and regulatees are one.

The front running Democratic presidential candidates' tepid, platitude filled language and detail-less proposals reflects their corporate/ruling class perspectives and Washington consensus driven inclinations. Things need be kept vague and nonspecific so that new party coming in will not stray too far off of the farm once they get into power. If at this present juncture with the US on the brink of an economic meltdown, two ongoing budget busting military quagmires and a restive electorate crying for change composed of many who are experiencing serious downward class mobility (the American Dream in reverse); if under these circumstances the Democrats can't energize and excite their base for drastic and fundamental change, what is it going to going to take? And if they are this restrained in the heat of the campaign, what will they be like when the actually assume office?

We must start now from a position of demanding a total housecleaning. First we must demand a sweeping, ambitious environmental program to make the US a world class model for environmental responsibility. This must be done. It is now no longer a partisan matter. Even the those Republicans who are not brain dead have grudgingly admit that it is getting warmer, and it is a problem. The global corporations that benefit by externalizing their costs by befouling and destroying our Commons, locally and globally, must be brought to heal. But whole industries are at fault. It will be a battle royal. And this program must address both global environmental and global poverty issues simultaneously - otherwise it will fail. Turmoil and recourse to reactionary religious ideology is germinated where their is desperate poverty and corrupt autocratic regimes – many propped up by the US. The new president must immediately negate and reverse every single element of Bushian-GOP dogma. It's all wrong. They must totally change the extant frame of reference especially this stupid so called “Global War on Terror (GWOT.”) It should now be clear now that the GWOT is merely an excuse to jettison civil liberties and put us on a permanent warfare footing – a neo-Cold War. Really confronting the appeal of reactionary militant Muslim religious ideology would involve confronting global poverty in a full-on serious way including the inexcusable poverty in oil rich nations as well the more resistant form in the many hapless overpopulated hellholes where there is nothing much to sell but their future and our future (i.e. destruction of the remaining tropical forests which serve as carbon sinks.) In fact we must jettison this whole “war on whatever” mentality. 'War is not the answer' as the bumper stickers used say. For instance the so called War on Drugs has not produced anything more than bloated bureaucracies, police corruption, over zealous politically ambitious prosecutors and a self perpetuating prison-industrial complex. Just as many people get high as ever. Drug abuse (aka addiction) is a personal problem not a criminal act. The Democratic Party establishment must stop worrying about their right flank. Corporate funding of right-wing Murdochian type media is a worldwide phenomena. The shrill, yammering, prevarication spouting talking heads on Fox, CNN and others can be negated by simply getting truth and reasoned analysis out. With an independent honest, truth seeking government funded alternative media, their lies and spin-meister driven programming can be easily disarmed and exposed as it is in the Blogosphere. With an intelligent alternative, a revitalized and a gutsy public broadcasting system, the profit-driven non Murdochian corporate media outlets would be shamed into providing better investigative journalism as well as factual, contextual coverage of critical issues. The 'tits and ass' and 'if it bleed it leads' stuff can still be there for libido challenged airheads but it doesn't have to be front and center 24/7 as it is now.

The real question we must ask ourselves - is real reform possible? Obviously fundamental structural change (confronting the contradictions of capitalism) is out of the question for now. But it is possible to go beyond the present dominate ideology of the ruling class – Neoliberalism wedded to 'Warfare Keynesianism' which what we have had since WWII? Regardless of all the claptrap about Monetarism and Supply Side economics from academic opportunists, we have been depending on government spending to float the economy every since the Great Depression. Can we at least move into a mode of tamping down the excesses of pedal-to-the -metal “free market” capitalism in which the only 'free market' is the freedom of corporations to rip us off while trashing the environment? Of course, the last time this power was challenged was in the 1930s. The whole economy had collapsed due to rampant speculation, and then ill advised lazzie faire government policies (again under the a Republican, Herbert Hoover) had made things much worse. But American capitalism was saved by FDR and the Democrats over the (politically) dead bodies of the Republicans and their supporters, propertied classes, the real beneficiaries of the system - and they never forgave them for that. But where is the next Roosevelt? It could be John Edwards if he could break through of his corporate media defined pretty boy persona and really resonate with the voters. His candidacy must catch fire. Hillory Clinton and Barack Obama, both creatures of the establishment, must cancel each other out. The whole thing is still up in the air. So many things are out of whack and everyone knows it, yet the campaigns seem to deal in generalities and personalities not aggressive new proposals.

The prospect of moving from an economy driven by military expenditure to one driven by building a totally green, sustainable economy must be placed before the people in a forthright way. But in order do this a president will have to turn away a half century of Warfare Keynesian policy and return to real Keyesianism the real model that John Maynard Keynes had in mind – public spending that benefits everyone especially the poor that primes the pump and gets things running again. It's called counter-cyclical deficit spending. Will it work when are already deep in the whole from Bushian excesses - a looming federal deficit? That is a good question?

In any case such a policy by whoever means confronting a whole host of strong institutional adversaries – essentially the whole military-industrial complex, the medical-industrial complex and the prison-industrial complex and its hand maidens in both parties. It will be a tough uphill battle. And the right wingers and Neocons will go ballistic especially in the mass media that they control.

We face major domestic problems while inextricably entangled in dual expensive geopolitical military quagmires – Iraq and Afghanistan (with Pakistan now imploding into civil war, too) with a backdrop of a growing international perception of the US having become an imperialistic warmongering, resource-hogging bully of a nation. We face an ever worsening health care system hat sucks up ever

more money while leaving millions with either inadequate or no health care at all, a shrinkage of our middle class through the continued loss of living-wage manufacturing jobs to low wage platforms, and an ignored and angry under employed, uneducated underclass who have a created to ghetto gangster subculture. And all this while storm clouds gather for a major recession. If the economy turns down sharply all of the tools for recovery will which have dulled and damaged by by eight years of quintessentially irresponsible voodoo economics - massive military spending while reducing the federal revenue stream by lowering taxes for the already filthy rich. Recovering from the tyrannical Bushian/GOP siege of the last eight years will be difficult. It will be more difficult than even what faced Bill Clinton in the post-Reagan years, especially if the global economy crashes Clinton eventually presided over a high-tech boom brought on by the maturing of the Internet. The options the Democrats will have once in power may be sharply limited. And there is a danger that the American public, ahistorical by nature and confused by context-less mass media presentations, will blame those who take the reins of power for whatever transpires regardless of the predetermined realities they inherit.

Yet unlike the Clinton years when the lurch to right was still in full swing and Slick Willie had to roll with it, now most people are pretty much burned out with all of the hollow sanctimonious rhetoric of the hypocritical and corrupt Republican bible-thumper supported right wing. People really are ready for change. They really would like a departure – honest leadership even if it is by someone who could be placed in that was once dreaded political category - “a liberal”. Taxes are still unpopular; they always will be. But lying about the incidence of the tax (who pays, who doesn't) will no longer cut it. Everyone knows now that the upper 1%, already rich as Crocus, got massive reductions in their taxes while everybody saw no real change. And all the investment by the big boys which was supposed to flow from their reduced taxes ended up in speculation, off shore accounts or in invested in factories in wage slave countries like China. Whatever limited prosperity that did occur in last few years was not due to the magic of “supply side” economics or the wonders of “privatization.” It was due to the normal functioning of a what is know as a “mixed economy”- government spending interlaced with private investment - and lots of credit. Of course as we now a new crisis emerging as a result of the misuse of credit on all levels but most specifically massive levels of irresponsible loans on real estate – billion of dollar worth. The old financial markets are being rattled to the core.

Now we are at an incredibly important juncture. And the US Democratic Party is our only hope. So far its recent performance has been to say the least disappointing. Not since the late 1960s have Americans been so ready for change – real change. This time it is not just the young people as it was in the 1960s when the college kids, intellectuals, artists and young working class rebels were in open insurrection but the WW II generation was still in power and dragged their heals in firm opposition voting for Nixon twice . This time the discord cuts through all, ages, all social classes and all political perspectives. The moment must be seized. It is not a revolutionary moment but it is something akin. A deep malaise infects the country. It is akin but not identical that which occurred and undermined the presidency of Jimmy Carter (which he honestly acknowledged but was politically skewered for.) But Jimmy Carter was a conservative Southern Democrat at a time when the Republican Party was in the doghouse with American public due to the spectacular (and highly entertaining) slow motion implosion of one the Nixon presidency but otherwise people were burn out on change. Carter was a caretaker not a activist. The 1970s were an era of diminishing energy and increasing cynicism.

Now after nearly three decades of reactionary Republican agendas, shameless cynical pandering to religious troglodytes and wide scale corruption, the time is ripe for some fresh new energy – a new progressive, green, strongly left of center agenda. And everyone knows it – except the professional Democrats. What will it take to get them off dead center?