Tuesday, January 27, 2009

Presidential Honeymoons A Messy Process

Howard Fineman, the Washington-based political columnist writing for msnbc.com, contends the honeymoon between President Obama and Congress is over.

Not so fast, Mr. Fineman, whom I consider one of the better political observers in the media. A political honeymoon is the brief period the president gets what he wants from Congress with almost no questions asked. That's a political urban legend. Ask any bride and groom.

Obama's $825 billion stimulus plan is being challenged not only by Republicans but so-called "blue dog" Democrats. That's as it should be. Congressional legislation is a messy process, honeymoon or not.

No one expects Obama to "change Washington's business as usual" approach overnight. As Fineman argues, he's setting out on the right path by meeting with Republican congressional leaders.

Obama's task is to stick to it. To continue reaching out for opposition party support. If he doesn't, he will be no better than former President Bush whose conciliatory gestures lasted about a week in office. He quickly learned pulling the Texas state legislators together paled by comparison to the Congress in the nation's capital.

Otherwise, Fineman was right on target. He writes:
  • President Barack Obama is launching his first diplomatic mission. It’s not overseas; it’s local, 1.6 miles east of the White House. The president is heading to the U.S. Capitol to meet privately first with House, then Senate, Republicans. Did he have to make the trip? Not really. At the very least he could have insisted that the GOP members come “downtown.”
  • Does he need GOP votes to pass his economic recovery plan? Probably not many: maybe four or five in the Senate if there is a filibuster.
  • But is he wise to make the gesture, one that his predecessor would never have dreamed of making? Absolutely. If Obama wants to achieve a roaring, Canaveral-like lift off for his plan — and for his presidency — he needs to show that we have jettisoned “business as usual.” Bipartisan support is the way to do so.
  • It won’t be easy. It may not even be possible. I have been struck so far by the LACK of bipartisan goodwill on both sides. It’s only a week into the Obama presidency and things quickly seem to be degenerating into the same old, same old spats and thrusts.
  • In terms of tone, no one is blameless. Democrats, enjoying their largest majorities in decades, generally are in a my-way-or the-highway mood. Republicans, in a defensive crouch, are without well-known elected leaders, leaving Rush Limbaugh with his Golden Microphone as the loudest and most famous voice.
  • Even though the country is behind Obama as he starts — he has the highest approval ratings on record — the sense Inside the Beltway is rather fizz-less. There are a number of reasons. Obama essentially started governing the economy weeks ago, so his “honeymoon’ was over — at least among the political and chattering classes here in Washington — before he was even inaugurated.
  • And though the country is hurting, badly, the president is in the odd position of having to convince voters that the situation is about to get much, much worse. It’s a task F.D.R. didn’t have in 1933, when the unemployment rate was near 25 percent when he was sworn in.
  • Obama’s plans are themselves part of the problem: they are not sufficiently radical to blow up the familiar, paralyzing partisan axis of argument about the role and size of government in our lives.
  • It’s not so much a matter of the plan’s size — though some economists do think it’s not big enough — as it is the lack of imagination and shrewd strategy. In haste to spend, he and his aides in too many cases simply looked for programmatic spigots to turn on.
  • Lack of focus? Rather than carefully watering each plant with care, Obama seems to be turning a fire hose on an entire desert. Even America doesn’t have enough money for that. The lack of focus allows critics on the right to pick off one or another line item, stoking outrage among the tax-cut, spending-cut crowd.
  • And it is clear that Obama is going to ask for even more than the $825 billion he is asking for in his recovery plan, and the $350 billion in bank-salvage money that Congress authorized two weeks ago.

Monday, January 26, 2009

Shame On Blagojevich And The Rest Of Us

The idea of defamed Illinois Gov. Rod Blagojevich skipping his impeachment trial and appearing on the tabloid news shows makes me barf. Shame on him. Shame on the television producers. Shame on the American public watching this crap.

The man is a disgrace. Blagojevich tarnishes everything that is good about government. He's in this position for himself and only himself. He says the impeachment is a kangaroo court. Some observers following his bizarre ordeals say he is tainting the jury pool whenever U.S. Attorney Patrick Fitzgerald brings his case to trial.

There is no reason to listen to the governor in his ridiculous bid to twist the court of public opinion in his favor. The only court that matters is the federal trial court which he is due. As far as I'm concerned, regardless of that verdict, he's still a jerk.

What is dismaying is that we in the media play right into his hands, breathlessly recording every word he utters no matter how bizarre. On one of the morning shows today, he said he once considered Oprah Winfrey as an appointment to the senate seat vacated by President Obama. Right, B-Rod, she's got plenty of dough to fill your pockets.

And, the reason we follow his every word is because he is great copy. As a story, he is the gift that keeps on giving. The TV people love him for he's good for ratings. The public loves to gossip about his perceived criminal escapades because it makes terrific water cooler conversation at work and wonderful chit-chat at dinner.

Among the shows he scheduled to appear on today was ABC's Good Morning America, The View and Larry King Live. For once in my life, I would love to have Bill O'Reilly conduct an interview with the man.

Meanwhile, back in Springfield, Illinois, where the impeachment began, the trial in the senate is expected to last only several days since Blagojevich said he will not testify. If at least 40 of the state’s 59 senators vote to remove the governor, he would be immediately replaced by Pat Quinn, the lieutenant governor.

Oh, well. What do I care. I'm from California.

Sunday, January 25, 2009

The Case To Buy Toxic Assets

If you ask a thousand economists how to solve the banking crises, you'll probably receive 999 different solutions.

One of the earliest endeavors announced by former Treasury Secretary Henry Paulson was buying up all the bank system's toxic assets. After several weeks pushing his $750 billion financial sector bailout, he nixed the idea deeming it a can of worms. Unraveling the paper trail of whom owned the defaulted mortgages was akin to solving a Rubik's Cube blindfolded.

The $350 billion of the first Troubled Asset Relief Program (TARP) spending proved a disaster in accountability and a failure to abate the cancer. Perhaps it is time to readdress those toxic assets.

David Ignatious, a New York Times columnist, put the problem to Eugene Ludwig, a former comptroller of the currency who has been warning about the seriousness of this crisis for nearly two years.

Ludwig said Obama's $825 billion stimulus package should be expanded to $2 trillion, change the financial rules restraining the banks from loaning and place the toxic assets in a government holding tank as it did with the bad loans during the savings and loan pratfall in the late 1980s.

Writes Ignatious:

  • This detox approach seems far more sensible than nationalizing the banks. The Treasury Department's actions over the past year have amply demonstrated that government officials can make dumb mistakes just as easily as private CEOs. Treasury pushed Bank of America to buy Merrill Lynch over a rushed weekend last September without any due diligence to discover the gremlins that were hiding in Merrill's trading book. Earlier, some at Treasury believed that Citigroup could rescue the financial system as Lehman was going down. That was dumb.
  • A look at Citi's latest financial report shows that the damage is concentrated in a few areas, even though the fear has become pervasive. The financial giant recorded a net loss of $18.7 billion for last year. The loss in North America was $24.6 billion, offset by gains elsewhere. And a chilling $19.9 billion in losses came from trading with big institutional clients; Citi lost only $3.6 billion on its consumer banking business.

  • Treasury Secretary Paulson tried to stop ... giving the banks new capital through his Troubled Asset Relief Program, in the hope that the recapitalized banks would start lending again. But as the economy contracted and more loans went bad, the banks had to keep posting additional losses -- eroding their capital position by more than the government's new infusion.

  • Ludwig suggests a "capital holiday" in which the current standards for "adequately capitalized" would, for the period of the downturn, satisfy the higher "well capitalized" requirements. That would help unfreeze the lending pipes.

  • Another mistake is an accounting rule that forces banks to take big "mark-to-market" losses on assets they plan to hold to maturity, if those assets are judged to be "other than temporarily impaired," or OTTI in financial jargon.

Despite the incomprehensible amount of money siphoned into a sinking ship. it must be said that the S&L's government Resolute Trust Fund was successful and taxpayers recovered more than they paid.

The problem facing the financial gurus in the Obama administration is that buying preferred shares as taxpayer collateral smacks of nationalization with nothing to show for if banks continue to fail or under perform.

Saturday, January 24, 2009

Throw Some Meat At The GOP

If President Obama wants to see his $850 billion stimulus package approved by 80% of Congress, perhaps he should throw dissident Republicans and conservative Democrats a morsel of meat to nibble.

That would be House Republican leader John Boehner's call for deeper tax cuts. Boehner proposes lower federal income tax rates in the two lowest brackets rather than provide a $500 per worker tax credit, as Obama wants to do. The Republican plan would also give tax breaks to small businesses, home buyers and the unemployed. The difference between the two plans is marginal when billions of dollars are at risk.

Unless the Democrats' initial plan is changed, seniors surviving on Social Security and those with incomes too low to pay income tax would receive federal rebate checks. That's nice but it was proven in the last dole out it didn't improve consumer buying power.

The point is, somewhere in this process, Republicans must be given something to chew. We know Obama told his critics "I won" but that doesn't mean all their proposals are dead on arrival.

Boehner doesn't help his own cause when he carps the stimulus package will spend millions buying contraceptives. Republicans playing to their base fail consistently on the national playing field.

In his first video Saturday address, Obama made the case that the package would help students go to college, protect workers from losing health care, lower energy bills and modernize schools, roads and utilities. About two-thirds of the $825 billion is reserved for spending over the next decade and the rest for tax breaks.

The White House also envisions using loan guarantees and other financial support to leverage $100 billion in private sector investment in so-called clean energy projects over three years.

The plan would lay 3,000 miles of new or upgraded transmission wires for a new electric grid.The plan would help 8.5 million Americans keep health care coverage by providing workers who lose insurance with tax credits to pay for continuing coverage under the federal law known as Cobra, and by expanding Medicaid coverage for low-income Americans who lack access to Cobra. The Medicaid formula would be adjusted to protect 20 million Americans whose coverage might be in jeopardy because of state budget shortfalls.

The plan would modernize 10,000 schools, improve security at 90 ports and build 1,300 wastewater projects. It would bolster Pell Grants to help 7 million students and offer a new tax credit for 4 million college students. And it would increase food stamp benefits for 30 million Americans and increase Social Security benefits by $450 for 7.5 million disabled and elderly people.

Republicans oppose the cost of the plan since it will be passed on to future generations to pay for.

Boehner said “All told, the plan would spend a whopping $275,000 in taxpayer dollars for every new job it aims to create." Excuse me? Yesterday Republicans said each job created would cost $223,000.

In his speech, Obama said he knew that some worried about the size of his plan. “I understand that skepticism, which is why this recovery plan must and will include unprecedented measures that will allow the American people to hold my administration accountable for these results,” he said. “We won’t just throw money at our problems; we’ll invest in what works.”

Both sides are guilty of playing the numbers game.

At this stage, the critical thing is getting it done now and down right. Lots a luck, guys.

Mexican Drug Wars A Form Of Genocide

The depravity of the Mexican drug wars has surpassed the horrific and bizarre. The Mexican military Friday said they arrested a man for dissolving at least 300 bodies in acid for one of the cartels for $600 a week over the past decade.

Mexican officials in Tijuana paraded the man, identified as Santiago Meza Lopez, in front of reporters and said he had confessed. They prodded him when he mumbled as he told them he dumped the bodies in graves, poured acid on them and let them dissolve underground.

One of the graves they said was adjacent to a concrete building where the press conference was held. Officials offered no other evidence to substantiate the statement including the type of acid used.

In one case last year, authorities said they found human teeth and other remains inside barrels of acid left on a Tijuana street. Officials did not say whether Meza was suspected of involvement in that case.

The victims are believed to be rivals of Teodoro Garcia Simental, an alleged former lieutenant of the Tijuana-based Arellano Felix drug cartel, authorities said. Drug violence claimed more than 5,300 lives last year. So far this year there have been 57 homicides in the Tijuana border area alone.

Also Friday, two human heads were found inside coolers near police stations in Celaya, a city in central Guanajuato state, said state deputy Attorney General Armando Amaro. Hours later, police found the bodies with their hands handcuffed. A message was left with the heads threatening allies of a drug cartel knows as "La Familia," Amaro said. It was signed by Zetas, a group of hit men for the Gulf Cartel.

One can only guess the veracity of Meza's confession. Mexico is guided by Napoleonic law in which the arrested is guilty until proven innocent and civil rights protections fall far short of U.S. standards.

One also wonders when the American people will awaken to this outrage which in some respects is bad guys committing genocide on bad guys with a lot of innocent people part of the collateral damage.

Friday, January 23, 2009

Stimulus Plan A Huge Gamble

If haste makes waste, then the Democrats' proposed $825 billion economic stimulus bill if approved in its present form is in for a barrel of troubles.

President Barack Obama after meeting with Congressional leaders Friday said the stimulus plan is on target for passage by Feb. 16. No question there is a need for speed as the economy continues to spin in a downward spiral.

But the House, and especially the Senate, is ill-equipped for intelligent rapid-fire decisions. Case in point: the first $350 billion bailout of the financial sector with zero accountability.

Obama conceded the stimulus plan is opposed by some Republicans and will require "some heavy lifting." He cautioned "the recovery package that we're passing is only going to be one leg in at least a three-legged stool." He said it has to be "part and parcel of a reform package" aimed at ensuring transparency and accountability in the way taxpayer dollars are managed as part of the stimulus effort.

Americans received the first glimpse of the stimulus plan earlier this week from the Congressional Budget Office.

Its analysis found that most of the approximately $355 billion in proposed discretionary spending on highways, renewable energy and other initiatives wouldn’t be spent before 2011. The government would spend about $26 billion of the money this year and $110 billion more next year, the report said. About $103 billion would be spent in 2011, while $53 billion would be spent in 2012 and $63 billion between 2013 and 2019, the report said. Republicans said the analysis showed that the plan won’t get money into the economy quickly enough.

The stimulus plan is aimed at helping lift the economy out of recession through tax cuts for families and businesses and $550 billion in new spending on programs including expanded unemployment benefits, aid to state governments and increased funding for scientific research.
The CBO report analyzed only the discretionary section of the bill, omitting the $275 billion in proposed tax cuts and approximately $195 billion in mandatory spending increases.

The analysis suggests that much of the stimulus may not come until after the economy has begun to recover. The CBO has previously said it expected a “slow” recovery to begin later this year and that the economy will expand by a “modest” 1.5 percent in 2010. The plan in its present form does not have a closure clause once the economy shows significant gains.

Republicans are seeking deeper tax cuts than the proposal contains and question whether $550 billion in new federal spending for roads, bridges and other projects can stimulate the economy quickly enough. Some conservative Democrats are joining Republicans in complaining that the package is too big and some of the spending plans too wasteful.

David Brooks, the conservative columnist writing in the New York Times, argues the stimulus bill "is a muddled mixture of short-term stimulus haste and long-term spending commitments. It is an unholy marriage that manages to combine the worst of each approach — rushed short-term planning with expensive long-term fiscal impact." Continues Brooks:

""The bill has three essential failings. First, it lacks any strategic vision. This $825 billion bill has to be passed within weeks. There’s no time for fundamental rethinking or new approaches. Instead, there’s a sloppy profusion of 152 different appropriations — off-the-shelf ideas that mostly create costlier versions of the status quo.

"The committee staff took the kernel of President Obama’s vision — infrastructure programs to create jobs — and surrounded it with an undisciplined sprawl of health, education, entitlement and other spending. There’s money for nurse training, Medicare, Head Start, boatyard support, home weatherization and so on. Eleven of the programs in the bill account for the vast majority of the actual job creation. The rest may be worthy or not, but they have little to do with stimulus. The total package is so diffuse, it costs $223,000 to create a single job.

"Second, the bill has relatively modest short-term impact. Many parts don’t even pretend to be stimulus measures, like funding for basic research, or special ed programs.

"Third, the spending measures in this bill have no sunset..."

"President Obama is clearly going to have to show the hard way that he meant what he said about bringing change. He didn’t run for president just to sign whatever bills the Old Bulls put on his desk. He’s going to have to prove the hard way that he meant what he said about being pragmatic and evidence-based... He’s going to have to show that his plans have credibility, that a stimulus bill is really a stimulus bill, and not a Christmas tree for every special interest desire.

"If he can do that, we’ll look back on this stimulus as a timely, temporary and targeted success. If not, we’ll just remember it as the sprawling mess that kicked up dozens of scandal headlines about $200 million programs to lay grass around the Jefferson Memorial."

Brooks' points are well taken.

The problem is Obama will be forced to sign the bill even with provisions in it considered pork and unessential.

Time is of the essence.

Thursday, January 22, 2009

School Apologizes After 100-0 Win

Anyone playing or watching basketball knows a 100-0 win is impossible. Sorry, sports fans. It happened in Dallas in a girls high school 32-minute regulation basketball game. The winning team has offered to forfeit.

“It is shameful and an embarrassment that this happened,” the head of the school said Thursday on The Covenant School’s Web site. He added that Covenant has made “a formal request to forfeit the game recognizing that a victory without honor is a great loss.”

Covenant, a private Christian school in Dallas, defeated Dallas Academy. A parent who attended the game told The Associated Press that Covenant continued to make 3-pointers — even in the fourth quarter. She praised the Covenant players but said spectators and an assistant coach were cheering wildly as their team edged closer to 100 points.

Dallas Academy has eight girls on its varsity team and about 20 girls in its high school. It is winless over the last four seasons. The academy boasts of its small class sizes and specializes in teaching students struggling with “learning differences,” such as short attention spans or dyslexia.

There is no mercy rule in girls basketball that shortens the game or permits the clock to continue running when scores become lopsided. There is, however, “a golden rule” that should have applied in this contest, said Edd Burleson, the director of the Texas Association of Private and Parochial Schools.

This game played last week epitomizes the moral dilemma facing coaches and parents in regards to youth sports.

The players on the winning team cannot be blamed. They want to win, are coached to win, and if the score gets out of hand, it's not their problem while on the playing field. Some may feel remorse after the fact. That's the competitive nature of sports.

Coaches and parents are at fault when games become 100-0 massacres. What glory is there when the opponent is physically or mentally handicapped?

I'm an old school practitioner. I see no merit in awarding a trophy to a kid just for participating in a sport. Trophies are awarded to winners for the right reasons: They earned it. As for the Texas case, the Covenant coach should be reassigned but the game not forfeited.

Americans are blinded by jock adulation. The Heisman Trophy, the most prestigious award in college football, is named after the Georgia Tech coach who in a fit of vendetta allowed his players to defeat Cumberland College 220-0.


Excuse me if I'm wrong, but isn't that William Ayres, the domestic terrorist Sara Palin said Obama palled around with, sitting about three rows back of Obama during the swearing-in ceremonies? Most of us have seen the TV instant replay and still photos of that particular scene. The guy appears in back of Obama's right shoulder.

If it is Ayres, the more I think about it the more I think "Wow!" Seating arrangements at a presidential inauguration usually are assigned by a pecking order, family and the most powerful closest to the incoming prez. From the camera angle I saw, President Bush was seated further from Obama than the alleged Mr. Ayres.

Now, I have nothing against Ayres. The flap during the primaries and general election campaign Republicans raised by Obama's association with Ayres I felt trivial and something not worth writing about. But, it was a legitimate issue and never believed Obama adequately explained. I reluctantly accepted Obama and, later, Ayres explanations only because the importance of the issue didn't amount to squat as far as Obama's qualifications for president. It was a case of the Republicans throwing slime at the wall, hoping it would stick.

It is seeing it in that light is why his appearance, again, if it was Ayres, was an eye grabber. Is it because their association was closer than we were led to believe? Was Obama using the occasion to flaunt those former critics? Was Ayres there as a symbol of Obama's efforts to unite the country as was his choice of the anti-gay Rev. Rick Warren to deliver the opening inaugural prayer?

Obama is such an astute politician one would think the best approach would be out-of-sight, out-of-mind. That seemed to be why he hid his former pastor, the Rev. Jeremiah Wright, in the Illinois state capitol basement when he announced his presidency.

Changing gears...

This is the week that was for former President George Bush and as millions of others, I say good riddance. But, let's not forget some of the few things he got right.

Bush should be commended for his comparatively few number of pardons and orders of clemency. He believed the process was unfair to those who were denied access or did not curry favor with the administration. He insisted pardons were considered only after serving five years in prison. He required both the judge and prosecutor to sign off for presidential pardons. Based on political pressure to do otherwise, Bush granted clemency but not pardons to I. Lewis "Scooter" Libby, Vice President Dick Cheney's chief of staff, for perjury and to the two U.S. Border Patrol agents who shot a fleeing Mexican drug runner and then lied in a cover-up. Those were gutsy decisions by the self-proclaimed decider in chief. Compare that to Bill Clinton's pardon of Mark Rich after his wife donated millions to his new foundation.

Left-wing liberals fail to give adequate credit for Bush's financial assistance to African nations to help fight AIDs and malaria.

They rarely mention Bush's greatest domestic success for providing affordable drugs to seniors under the Medicare Part D plan. (Without such assistance, this writer would be long dead from diabetes-related illnesses.)

Bush himself rates his "No Child Left Behind" school educational program as a great accomplishment. He considers keeping America safe since Sept. 11, 2001, another monumental victory. To argue otherwise would be disingenuous because the education program is still a work in progress and the nation's security is fragile in these times of Islamic fundamental extremists.

It's nice to see a new kid in town to pick up the pieces of Bush's litany of ill-conceived policies and style running the country.

Tuesday, January 20, 2009

A Day To Remember

For me, I did my job as a journalist. I watched Barack Obama's inaugural speech on television. I grasped the splendor of the occasion, a nation beaming with smiles and pride. I downloaded the new president's speech. I wrote the story. Just as in the old days on the newspaper.

Today was special. It is not uncommon for tears to well in my eyes when I observe history. Today was no exception. We may be a young country but the peaceful transformation of power is gut-wrenching sweet. The pomp and ceremony is deserved to the esteem we hold the highest office in the land.

I must confess that when I first saw Barack Obama deliver that magnificent speech at the Democratic National Convention in 2004 I told my brother Larry this guy is a future president of our country. He agreed. Neither of us believed it would be in four years.

What a remarkable ride. It took even Barack's wife Michelle by surprise. In an unguarded moment and not the best choice of words, Michelle said about a year ago never in her life has she been so proud to be an American. The Republican smear machine tried to repudiate her for some kind of comeuppance. I know exactly what she meant. In fact, I will say it:

Never in my life have I been so proud to be an American.

I'm no flag waver. I love my country. Always have. But if you have any sense of history, a young man growing up during the civil rights riots in Birmingham and even a smidgen of empathy for your fellow man, what we observed today was monumental. Truly historic. The impossible dream.

No, Martin Luther King's dream has not been fulfilled. He wanted peace. We're at war with Islamic fundamentalist extremists. He wanted economic freedom for all. We may never get there.

Barack Obama epitomizes the hope that these goals can be reached. His demeanor and cool approach is reassuring. For sure, we will fall short. But for the first time in a generation, the will is there. Unlike George Bush who encouraged us to go shopping after the Sept. 11, 2001, attacks, Obama is asking us to sacrifice, to volunteer, to fight the good fight and to work together for the common good.

We are not so naive to believe that politics will resume tomorrow in Washington D.C. and Congress will be chanting kumbaiya.

But, today was a start.

Obama Promises Hope Over Fear

On the steps of our nation's capitol, built by slaves 200 years ago, Barack Hussein Obama was sworn in Tuesday as the 44th and first black president of the United States of America.

As hundreds of millions watched throughout the world, Obama promised a new era of "hope over fear, unity of purpose over conflict and discord."

The inaugural address was delivered forcibly and eloquently but fell short of phrases that will go down with the ages. But the message was clear, up beat and challenging. It lacked Franklin Roosevelt's "We have nothing to fear but fear itself," and John Kennedy's "Ask not what your country can do for you but what you can do for your country."

The expectations of Obama's speech were so high based on his famous oratorical skills first heard by the nation at the 2004 Democratic convention and later on the campaign trail that even he could barely surmount.

Rather, Obama indirectly chided the Bush administration for much of the mess our nation faces
saying ”the time has come to set aside childish things. Today, I say to you that the challenges we face are real. They are serious and they are many. They will not be met easily or in a short span of time. But know this, America — they will be met.”

It is exactly what Americans and the world wanted to hear.

The goodwill Obama has created in events leading up to today's inauguration is reflected by a 71% approval rating during the transition since the Nov. 4 election. He has talked the talk up to this moment. Now, he must walk the walk as he prepares still another speech -- and probably more important -- for his State of the Union address to Congress where he will set the nation's agenda.

In his speech, Obama signalled he will not be timid in efforts to right the ship of state.

"Our journey ... has not been the path for the faint-hearted — for those who prefer leisure over work, or seek only the pleasures of riches and fame. Rather, it has been the risk-takers, the doers, the makers of things — some celebrated but more often men and women obscure in their labor, who have carried us up the long, rugged path towards prosperity and freedom.

" ... But our time of standing pat, of protecting narrow interests and putting off unpleasant decisions — that time has surely passed. Starting today, we must pick ourselves up, dust ourselves off, and begin again the work of remaking America."

" ... Now, there are some who question the scale of our ambitions — who suggest that our system cannot tolerate too many big plans. Their memories are short. For they have forgotten what this country has already done; what free men and women can achieve when imagination is joined to common purpose, and necessity to courage.

"... What the cynics fail to understand is that the ground has shifted beneath them— that the stale political arguments that have consumed us for so long no longer apply. The question we ask today is not whether our government is too big or too small, but whether it works — whether it helps families find jobs at a decent wage, care they can afford, a retirement that is dignified. Where the answer is yes, we intend to move forward. Where the answer is no, programs will end. And those of us who manage the public's dollars will be held to account — to spend wisely, reform bad habits, and do our business in the light of day — because only then can we restore the vital trust between a people and their government."

The new president also admonished his predecessor on foreign policy.

"We reject as false the choice between our safety and our ideals. Our Founding Fathers, faced with perils we can scarcely imagine, drafted a charter to assure the rule of law and the rights of man, a charter expanded by the blood of generations. Those ideals still light the world, and we will not give them up for expedience's sake. And so to all other peoples and governments who are watching today, from the grandest capitals to the small village where my father was born: know that America is a friend of each nation and every man, woman, and child who seeks a future of peace and dignity, and we are ready to lead once more."

"... Guided by these principles once more, we can meet those new threats that demand even greater effort — even greater cooperation and understanding between nations. We will begin to responsibly leave Iraq to its people, and forge a hard-earned peace in Afghanistan. With old friends and former foes, we will work tirelessly to lessen the nuclear threat, and roll back the specter of a warming planet. We will not apologize for our way of life, nor will we waver in its defense, and for those who seek to advance their aims by inducing terror and slaughtering innocents, we say to you now that our spirit is stronger and cannot be broken; you cannot outlast us, and we will defeat you."

"... To those who cling to power through corruption and deceit and the silencing of dissent, know that you are on the wrong side of history; but that we will extend a hand if you are willing to unclench your fist."

The concurrent theme running through Obama's speech was the basic values and virtues of the American people.

"For as much as government can do and must do, it is ultimately the faith and determination of the American people upon which this nation relies. It is the kindness to take in a stranger when the levees break, the selflessness of workers who would rather cut their hours than see a friend lose their job which sees us through our darkest hours. It is the firefighter's courage to storm a stairway filled with smoke, but also a parent's willingness to nurture a child, that finally decides our fate."

" .... What is required of us now is a new era of responsibility — a recognition, on the part of every American, that we have duties to ourselves, our nation, and the world, duties that we do not grudgingly accept but rather seize gladly, firm in the knowledge that there is nothing so satisfying to the spirit, so defining of our character, than giving our all to a difficult task."

The task of governing now begins.

Seldom in our history has so much hope been placed on the shoulders of a single man.

Monday, January 12, 2009

Wall Street Blamed For High Gasoline Prices

It defied the logic of supply and demand when gasoline prices soared above $4 a gallon last year. It turns out oil speculators were the culprits. There is no other way to explain it, according to an investigative report by CBS News "60 Minutes."

The most frightening aspect of the report is that former Enron computer program geeks manipulated the price increases causing the oil commodities bubble to finally implode.

The following is a transcript of the "60 Minutes" segment:
  • About the only economic break most Americans have gotten in the last six months has been the drastic drop in the price of oil, which has fallen even more precipitously than it rose. In a year's time, a commodity that was theoretically priced according to supply and demand doubled from $69 a barrel to nearly $150, and then, in a period of just three months, crashed along with the stock market. So what happened?
  • It's a complicated question, and there are lots of theories. But as correspondent Steve Kroft reports, many people believe it was a speculative bubble, not unlike the one that caused the housing crisis, and that it had more to do with traders and speculators on Wall Street than with oil company executives or sheiks in Saudi Arabia.
  • To understand what happened to the price of oil, you first have to understand the way it's traded. For years it has been bought and sold on something called the commodities futures market. At the New York Mercantile Exchange, it's traded alongside cotton and coffee, copper and steel by brokers who buy and sell contracts to deliver those goods at a certain price at some date in the future. It was created so that farmers could gauge what their unharvested crops would be worth months in advance, so that factories could lock in the best price for raw materials, and airlines could manage their fuel costs.
  • But more than a year ago those markets started to behave erratically. And when oil doubled to more than $147 a barrel, no one was more suspicious than Dan Gilligan. As the president of the Petroleum Marketers Association, he represents more than 8,000 retail and wholesale suppliers, everyone from home heating oil companies to gas station owners.
  • When 60 Minutes talked to him last summer, his members were getting blamed for gouging the public, even though their costs had also gone through the roof. He told Kroft the problem was in the commodities markets, which had been invaded by a new breed of investor. "Approximately 60 to 70 percent of the oil contracts in the futures markets are now held by speculative entities. Not by companies that need oil, not by the airlines, not by the oil companies. But by investors that are looking to make money from their speculative positions," Gilligan explained.
  • Gilligan said these investors don't actually take delivery of the oil. "All they do is buy the paper, and hope that they can sell it for more than they paid for it. Before they have to take delivery." "They're trying to make money on the market for oil?" Kroft asked. "Absolutely," Gilligan replied. "On the volatility that exists in the market. They make it going up and down."
  • He says his members in the home heating oil business, like Sean Cota of Bellows Falls, Vt., were the first to notice the effects a few years ago when prices seemed to disconnect from the basic fundamentals of supply and demand. Cota says there was plenty of product at the supply terminals, but the prices kept going up and up. "We've had three price changes during the day where we pick up products, actually don't know what we paid for it and we'll go out and we'll sell that to the retail customer guessing at what the price was," Cota remembered. "The volatility is being driven by the huge amounts of money and the huge amounts of leverage that is going in to these markets."
  • About the same time, hedge fund manager Michael Masters reached the same conclusion. Masters' expertise is in tracking the flow of investments into and out of financial markets and he noticed huge amounts of money leaving stocks for commodities and oil futures, most of it going into index funds, betting the price of oil was going to go up. Asked who was buying this "paper oil," Masters told Kroft, "The California pension fund. Harvard Endowment. Lots of large institutional investors. And, by the way, other investors, hedge funds, Wall Street trading desks were following right behind them, putting money - sovereign wealth funds were putting money in the futures markets as well. So you had all these investors putting money in the futures markets. And that was driving the price up."
  • In a five year period, Masters said the amount of money institutional investors, hedge funds, and the big Wall Street banks had placed in the commodities markets went from $13 billion to $300 billion. Last year, 27 barrels of crude were being traded every day on the New York Mercantile Exchange for every one barrel of oil that was actually being consumed in the United States.
  • "We talked to the largest physical trader of crude oil. And they told us that compared to the size of the investment inflows - and remember, this is the largest physical crude oil trader in the United States - they said that we are basically a flea on an elephant, that that's how big these flows were," Masters remembered.
  • Yet when Congress began holding hearings last summer and asked Wall Street banker Lawrence Eagles of J.P. Morgan what role excessive speculation played in rising oil prices, the answer was little to none. "We believe that high energy prices are fundamentally a result of supply and demand," he said in his testimony.
  • As it turns out, not even J.P. Morgan's chief global investment officer agreed with him. The same that day Eagles testified, an e-mail went out to clients saying "an enormous amount of speculation" ran up the price" and "140 dollars in July was ridiculous." If anyone had any doubts, they were dispelled a few days after that hearing when the price of oil jumped $25 in a single day.
  • That day was Sept. 22. Michael Greenberger, a former director of trading for the U.S. Commodity Futures Trading Commission, the federal agency that oversees oil futures, says there were no supply disruptions that could have justified such a big increase. "Did China and India suddenly have gigantic needs for new oil products in a single day? No. Everybody agrees supply-demand could not drive the price up $25, which was a record increase in the price of oil. The price of oil went from somewhere in the 60s to $147 in less than a year. And we were being told, on that run-up, 'It's supply-demand, supply-demand, supply-demand,'" Greenberger said.
  • A recent report out of MIT, analyzing world oil production and consumption, also concluded that the basic fundamentals of supply and demand could not have been responsible for last year's run-up in oil prices. And Michael Masters says the U.S. Department of Energy's own statistics show that if the markets had been working properly, the price of oil should have been going down, not up. "From quarter four of '07 until the second quarter of '08 the EIA, the Energy Information Administration, said that supply went up, worldwide supply went up. And worldwide demand went down. So you have supply going up and demand going down, which generally means the price is going down," Masters told Kroft. "And this was the period of the spike," Kroft noted. "This was the period of the spike," Masters agreed. "So you had the largest price increase in history during a time when actual demand was going down and actual supply was going up during the same period. However, the only thing that makes sense that lifted the price was investor demand."
  • Masters believes the investor demand for commodities, and oil futures in particular, was created on Wall Street by hedge funds and the big Wall Street investment banks like Morgan Stanley, Goldman Sachs, Barclays, and J.P. Morgan, who made billions investing hundreds of billions of dollars of their clients’ money. "The investment banks facilitated it," Masters said. "You know, they found folks to write papers espousing the benefits of investing in commodities. And then they promoted commodities as a, quote/unquote, 'asset class.' Like, you could invest in commodities just like you could in stocks or bonds or anything else, like they were suitable for long-term investment."
  • Dan Gilligan of the Petroleum Marketers Association agreed. "Are you saying that companies like Goldman Sachs and Morgan Stanley and Barclays have as much to do with the price of oil going up as Exxon? Or…Shell?" Kroft asked. "Yes," Gilligan said. "I tease people sometimes that, you know, people say, 'Well, who's the largest oil company in America?' And they'll always say, 'Well, Exxon Mobil or Chevron, or BP.' But I'll say, 'No. Morgan Stanley.'"
  • Morgan Stanley isn't an oil company in the traditional sense of the word - it doesn't own or control oil wells or refineries, or gas stations. But according to documents filed with the Securities and Exchange Commission, Morgan Stanley is a significant player in the wholesale market through various entities controlled by the corporation. It not only buys and sells the physical product through subsidiaries and companies that it controls, Morgan Stanley has the capacity to store and hold 20 million barrels. For example, some storage tanks in New Haven, Conn. hold Morgan Stanley heating oil bound for homes in New England, where it controls nearly 15 percent of the market.
  • The Wall Street bank Goldman Sachs also has huge stakes in companies that own a refinery in Coffeyville, Kan., and control 43,000 miles of pipeline and more than 150 storage terminals. And analysts at both investment banks contributed to the oil frenzy that drove prices to record highs: Goldman's top oil analyst predicted last March that the price of a barrel was going to $200; Morgan Stanley predicted $150 a barrel. Both companies declined 60 Minutes' requests for an interview, but maintain that their oil businesses are completely separate from their trading activities, and that neither influence the independent opinions of their analysts.
  • There is no evidence that either company has done anything illegal. Asked if there is price manipulation going on, Dan Gilligan told Kroft, "I can't say. And the reason I can't say it, is because nobody knows. Our federal regulators don't have access to the data. They don't know who holds what positions."
  • "Why don't they know?" Kroft asked. "Because federal law doesn't give them the jurisdiction to find out," Gilligan said. It's impossible to tell exactly who was buying and selling all those oil contracts because most of the trading is now conducted in secret, with no public scrutiny or government oversight.
  • Over time, the big Wall Street banks were allowed to buy and sell as many oil contracts as they wanted for their clients, circumventing regulations intended to limit speculation. And in 2000, Congress effectively deregulated the futures market, granting exemptions for complicated derivative investments called oil swaps, as well as electronic trading on private exchanges.
  • "Who was responsible for deregulating the oil future market?" Kroft asked Michael Greenberger. "You'd have to say Enron," he replied. "This was something they desperately wanted, and they got." Greenberger, who wanted more regulation while he was at the Commodity Futures Trading Commission, not less, says it all happened when Enron was the seventh largest corporation in the United States. "This was when Enron was riding high. And what Enron wanted, Enron got." Asked why they wanted a deregulated market in oil futures, Greenberger said, "Because they wanted to establish their own little energy futures exchange through computerized trading. They knew that if they could get this trading engine established without the controls that had been placed on speculators, they would have the ability to drive the price of energy products in any way they wanted to take it." "When Enron failed, we learned that Enron, and its conspirators who used their trading engine, were able to drive the price of electricity up, some say, by as much as 300 percent on the West Coast," he added.
  • "Is the same thing going on right now in the oil business?" Kroft asked. "Every Enron trader, who knew how to do these manipulations, became the most valuable employee on Wall Street," Greenberger said. But some of them may now be looking for work. The oil bubble began to deflate early last fall when Congress threatened new regulations and federal agencies announced they were beginning major investigations.
  • It finally popped with the bankruptcy of Lehman Brothers and the near collapse of AIG, who were both heavily invested in the oil markets. With hedge funds and investment houses facing margin calls, the speculators headed for the exits. "From July 15th until the end of November, roughly $70 billion came out of commodities futures from these index funds," Masters explained. "In fact, gasoline demand went down by roughly five percent over that same period of time. Yet the price of crude oil dropped more than $100 a barrel. It dropped 75 percent." Asked how he explains that, Masters said, "By looking at investors, that's the only way you can explain it."

Saturday, January 10, 2009

Health Care Reform From The Bottom Up

So Private It Lost Me

One of the top priorities of the Obama administration is reforming our health care system by reducing its cost. It should take a long look at the costs imposed on the industry by government regulations. We offer the following example which by itself is minuscule but in total is useless and borderline stupid.

In 2003 I purchased a vision/dental plan from Safeguard, the premium deducted monthly from my checking account. Over the years Safeguard sold the account to Nationwide which in turn sold it to Health Net.

Two months ago I cancelled the policy but Safeguard and Nationwide had no record of my account.

Yesterday, Jan. 7, 2009, I received a letter from Safeguard. It informed me federal law requires them to remind me of my privacy rights.

Go figure.

Wednesday, January 7, 2009

No Drama Obama Is A-OK

Hannity's Picky Picky Litany

Sean Hannity of Fox News huffs and he puffs as he blows his infamous litany of sins committed by the Obama transition team. To hear him, one would think the Democrats are dead on arrival before Barack Obama even is sworn into office Jan. 20. Let's briefly examine these egregious acts in the minds of Hannity, Rush Limbaugh and others of his pedigree.

Take Illinois Gov. Rod Blagojevich -- please. He was accused by the U.S. Attorney of trying to sell Obama's vacant senate seat. Obama nor his team took the bait. Against everyone's objections, Blago appoints former state Atty. Gen. Roland Burris. After the race card was played and push came to shove, the Dems do a 180 and probably will accept Burris as senator. A PR nightmare for Obama and the Dems, but what the hell. Blagojevich gets the last laugh. A PR nightmare. But, no harm. No foul.

Then there's the reincarnation of Camelot, you know, about Caroline Kennedy's bid to replace Hillary Clinton as New York Senator. Her credentials, you know, may be suspect, you know, but she says she follows the policies, you know, of Obama, Clinton and other, you know, good Democrats. Gov. David Patterson is pressured from all sides of the political spectrum. But it is his -- not New York Democratic congressmen nor New York Times columnists nor Hannity nor Limbaugh -- appointment to make.

They say the Al Franken senate vote was in some instances counted twice which gave him the 250-vote margin of victory over the Republican incumbent in Minnesota. Every legal challenge has been ruled in favor of Franken by the state Supreme Court. Franken wins by a perfectly legal hair. Get over it guys.

Leon Panetta is unworthy as CIA director? Give us a break. The guy is a management guru and that exactly is what our intelligence system requires. There are plenty of spooks in that agency to do the work spooks do. The problem here is internal politics at play by the Obama transition team for ruffling the skirt of Sen. Diane Feinstein by not consulting with her in advance. Of course, they did consult with the House's Rep. Ron Widen who is more sympathetic with the Obama team on wiretaps and torture than his Senate intelligence committee counterparts. Simply a game of power politics and probably a preview of what to expect once the fun begins after inauguration.

With New Mexico Gov. Bill Richardson withdrawing his name as Commerce Secretary, the Obama transition team probably screwed up by not vetting him completely. The charismatic Guv could be involved in a pay-for-play scheme now under investigation by the feds and probably not resolved for months. Richardson, a good choice, can easily be replaced and join the administration later if he is cleared of those nasty charges.

Eric Holder, the attorney general nominee, will be toasted by Republicans in his confirmation hearings for his role in President Clinton's pardoning of several creeps. Holder's sin is he did what he was told. Was that as bad as Alberto Gonzales' bidding for the Bush-Cheney team?
Hannity's litany, of course, is much longer. The bottom line is nothing they are bemoaning rates much higher than two on a scale of 10. None mount to a hill of beans.

The Obama administration has more pressing matters at hand. Such things as a trillion dollar deficit, a stimulus plan which may or may not work, Iraq, Iran, Pakistan and that 4,000-year pack of troubles between Israel and Palestine.

Here's MSNBC's First Read account of the situation:

"No drama Washington? It appears that all the preparation we in the media have been doing to cover controversy -- be it Burris, the recount in Minnesota, or Panetta -- is beginning to fizzle somewhat. Senate Majority Leader Harry Reid suggested yesterday that the Illinois secretary of state’s signature is all that’s standing in the way of Burris being seated (“If Mr. Burris takes possession of valid credentials, the Senate will proceed in a manner that is respectful to Mr. Burris”). It looks like Franken will eventually be seated, too, although Minnesota will possibly have to endure weeks of additional legal wrangling. And despite a second day of criticism, it seems that Panetta might be able to survive a confirmation hearing to head the CIA, thanks to liberal support and an Obama apology to Dianne Feinstein. In addition, Jeb Bush made the “no drama” decision yesterday by announcing that he won’t run for Senate in 2010. Perhaps the best drama left, as the New York Times notes today, is Kennedy vs. Cuomo in New York. (Was Cuomo behind all the upstate criticism Caroline received?) Has “No Drama Obama” become the mantra for all of Washington? Then again, with a struggling economy, war in Iraq and Afghanistan, and conflict in the Middle East, that’s probably enough drama to report.

Monday, January 5, 2009

Scoop: A City Without A Murder

A Joint Police, District Attorney and Court Effort
The year 2008 would just as soon be forgotten in many parts of the country but not for National City. This municipality of 60,000 mostly Mexican-American population sandwiched between urban San Diego and the more affluent Chula Vista recorded no homicides the entire year.

It was the first time since 1963 National City went a calendar year without a homicide. Four years ago there were nine. All were gang-related violence.

Assistant Police Chief Manuel Rodriguez said it was a result of a court-ordered gang suppression unit and “a little bit of luck.” Cooperation between police, the District Attorney's office and judges designated gang-free zones within the city.

The crackdown arrested known gang members congregating in twos or more. Second offenses for other such things as wearing gang colors or carrying weapons resulted an automatic 180 days in jail.

"It didn't take long for the National City gangs to move elsewhere if they were to continue their criminal behavior," said a former officer who headed the first suppression unit.

Violent crime remains a serious problem in National City, but it has dropped 18 percent since 2004. The category covers aggravated assault, robbery, rape and homicide.

“If you actually walk our streets, day or night, you can see the difference and feel the improved safety and security,” Police Chief Adolfo Gonzales said. “You'll see women and seniors often exercising in the parks, and children using our parks and libraries.”

Despite the decrease, National City still leads the county with 6.1 violent crimes per 1,000 population, compared with the region's average rate of 3.9, according to a county government report.

Success of the gang suppression unit was not lost on voters who approved a 1 percent sales tax increase in 2006. With money from the tax increase, the council approved the hiring of 18 police officers to boost the department's staff to 92 sworn officers.