Issue XXI: Who Killed the Economy?

By now you’ve heard that a bipartisan group of Congressmen killed George Bush’s $700 billion bailout for Wall Street.  A left-right alliance thumbed their noses at the leadership of both parties and let the stock market tank 777 points today.  Since my last post, the last investment banks went out of business or transformed into regular banks.  Today Wachovia, the nation’s second biggest bank, got bought out by Citigroup while Washington Mutual went under last week, the biggest bank failure in American history.

But who killed the economy?
Rome wasn’t built in a day, but it sure burnt down in one.  The tinderbox that is the American financial system took a long time to be prepare like the Aggie Bonfire.  Who chopped down the trees, set the pyre, and lit the flame are all different, but they’re all guilty in their own way.  Here’s a partial lineup.

Suspects

• Senator Enron aka “The Professor” aka Phil Gramm, the former Senate banking chairman (R-TX).  A corrupt Aggie fathead of the Texas school this ex-Democrat now is the chief economic adviser to a certain president candidate named John McCain.  When he isn’t calling the American people a “bunch of whiners,” he pushed outrageous bankruptcy legislation at the behest of his credit card and banking donors.  His wife Wendy deregulated energy trading, retired, and then took a job on the Enron board of directors.  Ol’ Phil also wrote the law than repealed the Glass-Steagall Act, a law from the Great Depression intended to prevent the concentration of economic power.  The deregulation he pushed directly lead to mammoth corporations involved in insurance, stock brokerage, retail banking, and investment banking which was forbidden after the Depression while easing the ability to speculate without oversight.  It’s alright though, he cashed out chips to become vice-president at Union Bank of Switzerland (UBS AG).

• The Citigroup Boys aka “The Bagman” aka former Treasury Secretary Rob Rubin.  Rubinomics brought deregulatory free market fundamentalism into the halls of a Democratic White House.  Bill Clinton and the neoliberal DLC Democrats swallowed whole, signing off on legislation from Congress while permitting the massive mergers that formed the monsterous Citigroup Inc. with its fingers in every financial pie under the sky.  No business was too dirt for Citigroup: it paid $125 million in fines for predatory lending and bought Banamex (a former government-owned bank in Mexico) to become the banker of choice for narcotraffickers.  Rubin cashed out to work for Citigroup, the house that Clinton Democrats made.

• Bonnie and Clyde aka Freddie Mac and Fannie Mae.  Fannie and Freddie are two huge government-sponsored enterprises that are not officially part of the federal government but are understood to have a public service role.  They work by buying mortages from banks to inject more cash into banks so that they can lend more to homeowners (see this Explainer for more).  Of course, rather than actually lower the cost of homeowner lending for the average American, Freddie and Fannie used their government backing to make even more money for their stockholders and a bipartisan cast of hacks appointed to the company.  The entire world, including many Asian central banks, is invested heavily in Freddie and Fannie, and their asses had to be saved in the recent nationalization of the companies if the whole world’s economy wasn’t going to topple over with them.

Links
David Sirota – “Top 5 Reasons to Vote Against Wall Street’s $700 Billion Bailout”
James Galbraith (UT Professor and Obama adviser) – “The Predator State” and “A Bailout we don’t need”
The Economist – “End of Illusions“

REGISTER TO VOTE!

It’s getting to be that time again. On Friday the presidential debates will begin. Rather than sit on the sidelines, how about we push that youth vote we keep hearing about through the roof? The registration deadline in Texas is October 6th. BUY SOME STAMPS and mail these in.

Early Voting (Texas) – October 20 to October 31, 2008 – anywhere in the county you are registered in. Fewer locations than election day, but you can vote on weekends. I usually early vote.

Election day (nationally) – November 4th – only at your local precinct (click here for Texas)

Recommended Sites for registration:

• www.votexas.org for Texas
• Rock the Vote for Nationwide Registration
• Galveston County Voter Registration (free postage)
• Am I Registered? (Texas)

Out of towners

For those of us displaced by the hurricane or otherwise out of town on November 4th, we have a few options.

1) You can early vote if you are in your home county at anytime (Oct. 20 – Oct. 31)

2) Change your registration to your new home for the next month before registration ends (Oct. 6th) and vote or early vote there

3) Apply for a mail in ballot to be mailed to your temporary address. Use this form and mail this form in to your county clerk. Since Galveston County has competitive state Senate seats up for grabs this year, you may want to do that (i.e. have a vote in something that may be close). For Galveston, mail it to this address:

GALVESTON COUNTY

County Clerk

Mary Ann Daigle

P.O. Box 17253, Galveston 77552-7253

(409) 766-2210

FAX: (409) 765-3160

The hurricane will probably affect all the elections on the Gulf Coast, especially Galveston County. See the following links for more news about the hurricane and the races affected. Mail in votes from Galvestonians could decide the Senate elections.

• Houston Chronicle – “Hurricane may alter political landscape“
• Texas Observer – “Fighting Chances” (see district 10 and 17)

Welcome to the Situation

“The fundamentals of our economy are strong.”

– John McCain

“The market self-regulates” and “get the government off our backs” and “deregulate everything” have been the dominant refrain in economic thinking my entire life.  A chorus of smug business school boys, University of Chicago professors, and self-righteous hacks profiting off of the short selling of the American Dream claimed they knew better than the rest of us about the real economy.  While most Americans worked for the same wages (inflation-adjusted) or less than they did in the 1970s, worked more hours than any First World nation, took less vacation than Japan, and paid more for crappier healthcare than the rest of the industrialized world, free-market fundamentalists and their sorry preachers in the media kept on jabbering about the American way of life and the boom that will never die.

Nothing fails like failure, and this death came almost overnight.

In the last two weeks, the federal government has nationalized Fannie Mae/Freddie Mac ($5 trillion in assets), American International Group ($1 trillion) while bailing out Bear Stearns with a speed that would make Indira Gandhi wince.  Lehman Brothers is broke and only two out of five investment banks still exist.  “The last 10 days have been the most remarkable period of government intervention into the financial system since the Great Depression,” write two University of Chicago economists.

In the coming weeks, I’ll point fingers and name names on who did this.  Wake up America…. our asses is broke.

Links
Freakonomics blog – FAQ on the crisis
Letters at 3AM – “Welcome to the Situation“

Issue XX: Mister Ten Percent and the Improbable Return of Pakistani Democracy

Perhaps having read my advice in Issue XI, Pakistani General-President Musharraf became President Musharraf and then just Mister Musharraf, finally resigning from power after almost a decade in power.

Musharraf’s downfall began after he fired the Supreme Court for ruling against his position as both president and leader of the armed forces of Pakistan. Amazingly, the bar association of Pakistan went on strike for days on end in protest against his violations of the Pakistani Constitution (take note American lawyers). Rather than give up, he declared a state of emergency and canceled multiparty elections for Parliament and had the outgoing Parliament (illegally) re-elect him president before his party, PML-Q, could lose the upcoming elections. America’s favorite “moderate” and “democratic” dictator in South Asia didn’t look too much of either.

America’s great gambit to keep a pal in power was to return the exiled Benazir Bhutto to Pakistan. With the most famous last name in Pakistani politics and a monopoly over the Pakistan Peoples Party, she could “manage” a democratic resurgence in Pakistan. She couldn’t, however, prevent her assassination by mysterious means (terrorist attack? military conspiracy?), but by then, we all knew elections were going to happen. And that the PPP would win easily.

And, as I predicted before, real elections in Pakistan wiped out the Islamic fundamentalist parties. In the February 18th election, fundamentalist parties were wiped out in the Northwest Frontier Provinces and Musharraf’s puppet PML-Q was slaughtered as well. The PPP became the biggest party in Parliament while the man Musharraf overthrew in 1999, Nawaz Sharif, made a triumphant return with his PML-N’s second place showing. Now the two mortal enemies, PPP and PML-N, united against Musharraf by pushing for his impeachment. Seeing the writing on the wall, Musharraf resigned leaving the office of the president empty.

A new president has to fix the unfixable nation, a borderline failed state on the border of a failed state. There is incredible corruption, a budget that almost entirely goes towards the military and repaying debt, no separation of powers, a military that acts like a branch of government, a laid off Supreme Court, the world food crisis, Islamic fundamentalism and terrorism on the rise, a secret service that answers to no one, a presidency too powerful for a parliamentary democracy, and an absolutely ungovernable border with Afghanistan where bin Laden is almost undoubtedly hiding.

So who replaced Mister Musharraf today as president? The most corrupt man in Pakistan or Mister Ten Percent.

Pakistan’s Electoral College (Parliament plus the state legislatures) elected Mister Bhutto – Asif Ali Zardari – the new president of Pakistan. With the Pakistan Peoples Party in control of most states, his election was a foregone conclusion. The laughable reverence Western feminists have towards Benazir Bhutto cracks when they hear that most Pakistani refer to her as “that corrupt bitch.” Zardari used to demand that 10% of every government contract go towards him in bribes. He even served 11 years in jail without being convicted for his thefts and may have murdered his own brother-in-law.

What will he do about returning the fired judges? Nothing, because he has his own legal issues and doesn’t want his amnesty overturned by the courts.

Will he weaken the presidency? Not now when he is king and Mush is gone.

Will he be able to control the military? Washington has been betting against it, meeting General Kayani 5 times separately since October and not the civilian Prime Minister.

Will he finally control the out of control Pakistani Secret Service, the ISI, who bombed the Indian embassy in Afghanistan? Depends on whether the military lets him but so far not.

After being leaderless for many months now, Pakistan is firmly in the control of one man again. And this may be the end of the Improbable Return of Pakistani Democracy.