My So-Called Marxism.

Just in time for Halloween, a little post on what seems to scare Americans (or at least, Palin’s brand of “Real Americans”) most: Socialism and Marxism.

*SHUDDER!*

No, really. Okay. A couple quick points.

• I haven’t read Das Kapital, but I have wanted to rather badly for the past six months. But I’d like to quote the author of Das Kapital: a Biography, Francis Wheen: “(A wall street banker to a friend of his): Oh, yes, we all read (Marx) on Wall Street.  No one understood Capitalism better.”
• Marx was deeply conflicted, in his work, because on one hand he was describing that Capitalism was more powerful than any other system in the world, and knew it wouldn’t go away completely, but his books seem to be his wishful thinking that it would. (i.e. even Marx found Marx to be a little over dramatic.)
• News Flash: Marx wasn’t a “Marxist” in the sense that most people mean it. From Russia to Albania, his work has been “reinterpreted” (i.e. totally ignored except for the revolution parts).
• Marx’s own motto was – hmm, similar to Buddha – “Question Everything.”
• Rand totally destroys socialism/Marxism in its purest form in a parable in Atlas Shrugged.  But AS is itself a parable about Capitalism in its purest form, and I could tear that down in five minutes.  Writing silly stories about PURE political systems is irrelevant, and I wonder why only the Repugs can get away with it — or at least, are the only ones who are taken seriously; when I hear some smelly guy with a duct tape wallet in a coffee shop ranting about Scary Capitalism, he makes me want to slap him, not attend his rallies…

Having more than a passing interest in Marx and/or Socialism is not a crime.  And frankly, someone who knows a lot about a system that – YES, in its purest form does not work – but is the diametric opposite of the the system that we are in, THAT IS COLLAPSING RIGHT NOW AS WE BLOG, would be a fan-freaking-tastic asset to have in our government, let alone in the White House.

All right, I’m gonna hit “Publish” now and wait for Michelle Bachman’s Anti-American Evil-Doer Finding Squad to come get me…

More on Marx here.

 

That’s not the issue.

Pollster.comis now saying Ohio has moved from “tossup” to “lean Obama”. Slate has a great flash map that shows the current status of every state. To sum up, our boy Obama is doing pretty well for himself.

What amazes me is how many formerly red states are changing to “tossup” or “lean Obama”. Colorado and New Mexico are leaning blue and the polls indicate Obama has a fighting chance in Missouri, North Carolina, Virginia, and Indiana. This is quite a change and I think we have the economic crisis to thank.

I haven’t been hearing much about abortion or gay rights or flag burning lately. Ditto for affirmative action or welfare. I’ve been watching Grandpa and Caribou Barbie (apologies to Stephanie Miller) flog the same tired “Obama palls around with terrorists. Obama wants to lose the war. Obama is a black guy.”

Here’s the thing; Bill Clinton was right – it is the economy, stupid. That’s the first, last, and middle issue. Nothing clarifies the matter like an economic meltdown. We’ve had a luxury in this country for the last 30 years. We really haven’t had many major recessions. There was one in 1991-92 and look what what happend to George H.W. Bush —> gone. See ya. Wouldn’t wanna be ya. 

With all this (relative) economic peace*, people have allowed themselves to be confused about what the issues actually are. The GOP teamed up with the Fundies to hide their pro-business, screw-the-worker agenda. And it worked for a very long time. 2004 was a fine example of that. For 30 years, God, Guns ‘n Gays have been the only issues.

Now it’s turned back to cash, check or charge. People are scared and pissed off. 401(k)’s are destroyed, home equity is gone, unemployment is rising. No one cares about creationism, they have to worry about making their next house payment or credit card payment, both of which will be ballooning in the coming months thanks to some very pro-business legislation.

You know what I have to say? Thank God. It’s about freaking time. People complain that Washington was asleep at the switch while this mess was brewing. Well, the electorate was as well.

 

*I don’t actually think the past 30 years have been good economically, but that’s the subject of another post.

 

Help is on the way.

So very glad the bailout passed and saved the market.

oh…wait. It didn’t work. The Dow fell 800 points today. Maybe the markets think this bailout won’t work. Funny, all those people who called their congresspeople thought the same thing.

Final step in the abject failure of the Bush Administration.

 

Assessing blame for the housing meltdown

There is a consistent message out there in RightWingLand regarding the housing crisis. In a nutshell it goes something like this:

First from the Lovely and Delightful Ann Coulter

Under Clinton, the entire federal government put massive pressure on banks to grant more mortgages to the poor and minorities….

Instead of looking at “outdated criteria,” such as the mortgage applicant’s credit history and ability to make a down payment, banks were encouraged to consider nontraditional measures of credit-worthiness, such as having a good jump shot or having a missing child named “Caylee.” 

Column here.

And from the Suave & Debonaire Larry Elder:

The Community Reinvestment Act, passed in 1977, mandated that lenders lend to high-risk borrowers — or else.

Column here.

The talkers and the pundits have again boiled an exceedingly complex economic problem into simple talking points. With ease, they boil it down to “Everything is the fault of Bill Clinton and his Democratic Cronies (great name for a band).”

It’s not my intention to explain the entire crisis. I imagine Ph.D students will be writing disertations about it for years. However, I do wish to make a couple of bullet points for use against the RightWingLand theory.

• A major cause was the huge increase in speculative or vacation home purchases. According to the National Association of Realtors in 2005 40% of all residential transactions were for a second or investment property. In 2006 the speculators left the market and amazingly, residential real estate prices started to collapse.

 

• This speculation was mostly caused by the availability of easy credit. Credit that came from two main places: historically low interest rates (Thanks Allen Greenspan!) and non-traditional securtization (Hello CDOs!) These two items created an incentive for banks and non-bank entities to originate loans and sell them off in the secondary market. Hence the famed NINJA (no income, no job, no asset) loans. Aside from Greenspan flooding the economy with cheap credit, the federal government had nothing to do with this. Oh, except they didn’t regulate CDOs and require transperancy.

 

• Regarding the Community Reinvestment Act: according to testimony given in the House of Representatives only 20% of all subprime loans were given by institutions that fell under the CRA’s jurisdiction.

 

• According to the same testimony, 35% of the people with subprime loans could have qualified for a traditional loan. Yes, people need to get second opinions and research their options, but this points to predatory lending. 

 

• Finally the CRA was passed to eliminate redlining. That is, the practice of excluding entire areas regardless of the credit worthiness of any individual borrower. It did not mandate loaning to high risk individuals. I will agree that the act’s purpose has been modified over the years, but that was the primary purpose.

Hopefully this will help you out as you face the Dittoheads. The holiday season will be here soon and a lot of us have to face our conservative families. I’ll do my best to keep us prepared.

 

Madame Speaker

I’ll get to the bailout in more detail, but for now I will say I am pleased it failed. Many Republicans are blaming the failure on a partisan speechgiven by Nancy Pelosi.

My take on the speech is a wee bit different. An excerpt

When President Bush took office, he inherited President Clinton’s surpluses — four years in a row, budget surpluses, on a trajectory of $5.6 trillion in surplus. And with his reckless economic policies, within two years, he had turned that around.

And now eight years later, the foundation of that fiscal irresponsibility, combined with an anything goes economic policy, has taken us to where we are today.

Good point Madame Speaker! George Bush singlehandedly mangled the economy beyond recognition. He ruined the budget and deregulated everything he could get his brush-clearing mitts on. He ruled with an iron fist with no checks or….

Oh wait…something about this is sounding strange….

My question to Nancy Pelosi: where the f*ck were the Democrats? You have been the majority party for nearly two years. In that time you have bent to Bush’s will on nearly everything. The war being the most notable act of treason. The voters put you into office to stop or at least slow down the juggernaut toward the apocalypse Bush administration. You have done nothing.

To be clear, I do believe the Bush philosophy is wrong. I believe there needs to be regulation. But I’m mostly pissed at the Democrats. The wars are still going on. Billions of dollars are being wasted every month. There has been no movement toward any kind of healthcare reform.

No wonder your approval ratings are lower than Bush.

 

Head of Skate.

This is the best thing I have seen all day.

Sarah Palin Disney Trailer

 

The art of not-doing.

What’s the difference between a pit bull and a hockey mom?

When pit bulls can’t control themselves, we are allowed to euthanize them.

Watch Palin’s recent interview with Couric.

My first reaction, besides wincing, was, “Wow, that looks like… someone’s mom trying to perform as a politician on the national scene.”

And then I realized that reaction shouldn’t surprise me at all.  Because that’s all she is.  Hell, that’s all she’s billed herself as: the mom of quite a lot of someones.  And soon, she’s be someone’s grandma.

I don’t know about you, but I only like my hot grandmas when they are in comedy films about virgins.

Enough jabs on Palin. (Oh, who am I kidding: there can never been enough jabs on Palin!! But I still have to move on to the rest of the post.)

I have been watching the pathetic drama on the McCain Campaign front the past few days, and they are really tiring themselves out with all this crazy campaign suspension and flying to Washington stuff!  Whew!  I wouldn’t have thought they had any need to panic like they are.  I thought the so called “Palin/McCain” ticket was riding high.

Oh, sure, Couric ripping Palin a new one might not change some die-hards who think having someone “real” in the campaign is just the cat’s pajamas (read: all those fundie God ‘n’ Guns freaks.)

But I’m hoping some people who are trying to make an informed decision will see that Palin lacks just that: information.

Now, on to the other side.  I tend to agree with Slate that Obama performance lately has been “gutless and vapid,” but it seems all of a sudden like there is some sense to his lack of movement in the face of the pathetic flutterings of Grandma and Grandpa.

I am not saying, mind you, that this was the strategy.  I really don’t give the Obama campaign advisors that much credit.  I think it is mostly turning out to be a happy accident.

But Obama might do well to keep on with with his zen-like “not-doing” for another week, and then hammer it home in October with some great events, and bring back a couple of great speeches he’s known for.  Let the other side’s last swings finish, and then one knock out punch to win.

(Oh, uhm, also, Pit Bulls are adorable and don’t frighten me deeply. And most importantly, you can spay them.)

 

Unemployment: Red vs. Blue

I have seen this kind of post before. The theme: blue states have worse economies than red states. The usual culprits are trotted out; high taxation, burdensome regulations and closet-Marxist liberals.

A few examples to get us warmed up. First from The View from Alexandria

Red states continue to experience healthy economic growth, while blue states are in recession. 

But the people in the blue states aren’t blaming their own Democratic leaders for the high taxes, crippling regulations, and generous government spending that hold their economies back.

full post.

Next; Pajamas Media.

If you’re looking for troubling times, visit the blue states. You’ll find plenty.

Looking for high unemployment?

• First, go to California (Kerry by 10% in 2004, Democrat-dominated legislature, and might-as-well-be-Democratic governor). Its seasonally adjusted August unemployment rate was 7.3%, up from just 5.4% a year ago.

• Then go east to Michigan, where things have gone from bad to really bad during Democrat Jennifer Granholm’s tenure. Wolverine State July unemployment was 8.5%.

• Move on to Ohio, which went from pseudo-red under Bob Taft to blue in 2006, with the election of a Democratic governor, who has been aided and abetted by a mostly complacent GOP legislature. July unemployment: 7.2%.

 So if there is indeed a recession taking place, blame it on the blue states and blue regions, with their high-tax, high-regulation, high-giveaway environments.

Well as much as I like just taking things at face value, I thought I’d throw some actual analysis at the problem and see what I found out.

A few notes on my methods.

People are way too simple when it comes to a Red vs. Blue states. Tom Blumer over at Pajamas Media used a mix of 2004 election results, governor’s offices and state legislature to determine whether a state is red or blue.

 I used four data points to determine if a state was red, blue or split. My four data points; 2004 Presidential Election results, current governor,  current state senate & current state house. If a state had three or more blue data points, I designated them blue. If they had  two and two, I called them split and so on.

A few other assumptions:

I designated Washington D.C. a state. I used the mayor and city council to determine the red/blue status.

Nebraska has a unicameral legislature. It didn’t really matter because the other 3 data points were red.

I compared unemployment for July 2008. My source was the Federal government’s official BLS numbers.

Here’s what I came up with.

1) 20 states had a July unemployment rate that was higher than the national average.

2) Of those states, eight were red, eight were blue, and four were split.

So yes, I think I have to agree. There is a clear correlation between party affiliation and unemployment. (That’s sarcasm for you kids at home).

My analysis:

State	July 08  Rate	Deviation from Nat’l Average (5.7%)	2004  Election	Current Governor	State Senate	State House	Status
Michigan	8.5%	2.8%	BLUE	BLUE	BLUE	RED	BLUE
Mississippi	7.9%	2.2%	RED	RED	BLUE	BLUE	SPLIT
Rhode Island	7.7%	2.0%	BLUE	RED	BLUE	RED	SPLIT
California	7.3%	1.6%	BLUE	RED	BLUE	BLUE	BLUE
Illinois	7.3%	1.6%	BLUE	BLUE	BLUE	BLUE	BLUE
Ohio	7.2%	1.5%	RED	BLUE	RED	RED	RED
South Carolina	7.0%	1.3%	BLUE	RED	RED	RED	RED
Alaska	6.9%	1.2%	RED	RED	RED	RED	RED
Tennessee	6.9%	1.2%	RED	BLUE	BLUE	RED	SPLIT
Delaware	6.7%	1.0%	BLUE	BLUE	RED	BLUE	BLUE
Kentucky	6.7%	1.0%	RED	BLUE	BLUE	RED	SPLIT
Nevada	6.6%	0.9%	RED	RED	BLUE	RED	RED
North Carolina	6.6%	0.9%	RED	BLUE	BLUE	BLUE	BLUE
Missouri	6.4%	0.7%	RED	RED	RED	RED	RED
Indiana	6.3%	0.6%	RED	RED	BLUE	RED	RED
Georgia	6.2%	0.5%	RED	RED	RED	RED	RED
Florida	6.1%	0.4%	RED	RED	RED	RED	RED
Oregon	6.0%	0.3%	BLUE	BLUE	BLUE	BLUE	BLUE
Connecticut	5.8%	0.1%	BLUE	BLUE	BLUE	BLUE	BLUE
Minnesota	5.8%	0.1%	BLUE	RED	BLUE	BLUE	BLUE

 

Too big to fail vs. too small to devastate the economy

I’ve spent my lunchbreak checking in on the latest government acquisition; AIG. I don’t know a whole lot about the regulatory environment for insurance, but once again, we have a situation where a company got so big that it could wreak havoc on the financial system. Hence, USA-AIG Inc.

The problem here is Wall Street. I don’t mean the caricatures that are getting thrown around in the media. It’s way too easy to imagine evil Wall Street tycoons twirling their mustaches. McCain is especially playing this up. After all, it’s pretty easy to invent a villain but much harder to explain how things actually work. Witness recent republican electoral victories (including the forthcoming republican victory).

Many managers at publicly-traded firms earn their compensation through the share price or some derivative thereof. Wall Street does not reward companies that do not grow. Traders are looking for the next Google or Microsoft.

This creates a clear and strong message for managers - GROW OR DIE. And the easiest way to grow is through acquisitions. In the olden days there were regulatory limits on acquisitions. Growth was regulated either through government agency or statutory limits. Under the Sherman Antitrust Act (and many others) certain types of mergers and acquisitions have to be approved by the federal government.  

The other kind of regulation are statutory limits. These laws expressly forbade certain kinds of companies from engaging in certain kinds of business. An example I’ve talked about before is the Glass-Steagall Act which separated commercial and investment banks.

Over the past thirty years banking and many other industries have become increasing deregulated. Managers have taken advantage of this and turned Mergers & Acquisitionsinto big business. Toss in a few CEO’s who want to build global empires and well, here you go. We’ve seen massive consolidation in all kinds of industries most notably banking and insurance.

Hence we have a collection of companies that are all too big to fail. And now the federal government is spending money faster that it’s presses can keep up.

There’s a point to all this rambling. E.F. Schumacher said it best, Small is Beautiful. We need to get back to a time when regulation actually existed and companies were smaller. There is scant evidence that any good is derived from acquisitions and business history is littered with failures. AOL-Time Warner, and DaimlerChrysler come to mind.

 Despite this scant evidence, mergers and acquisitions continue to happen. As long as compensation is tied to stock price, there will be a strong institutional push to acquire. Companies will not police themselves. They will continue to M&A themselves to death. The short term rewards of massive bonuses and stock options are too great.

This is why government intervention is needed.

We have massive market failures when the government abdicates it’s responsibility. Examples? Savings and Loan crises, California Energy Crisis of the early 2000’s, the housing crisis, the credit crunch…all of these have their origins in some kind of deregulation.

Go ahead, call me a socialist, but what do you call the current administration? We have deregulated ourselves right into full-bore socialism. Karl Marx would be so proud.

As a postscript, I will agree with hardline free marketers that our regulatory state is very fragmented and confused. It should be made simpler and clearer, but that’s the topic for another post.

 

AIG

The Federales have taken over AIG. The Federal Government is now the world’s largest insurance company as well as the world’s largest holder of mortgages.

Who’s next? My bet is Citigroup……