November 04, 2009

The rise of grudge voting in America

This gets confusing. I'm pretty sure Frank Rich of the New York Times, among others, confidently predicted the death of the Republican Party as recently as three days ago. Rich, in writing a GOP obituary on Sunday, noted confidently,

It’s also why [failure to take into account the changing demographics of the American population] the G.O.P. has been in a nosedive since the inauguration, whatever Obama’s ups and downs. In the latest Wall Street Journal-NBC News poll, only 17 percent of Americans identify themselves as Republicans (as opposed to 30 percent for the Democrats, and 44 for independents).

Then on Tuesday the Republican candidate wins the governor's seat in Virginia by a 60-40 margin, a state which Obama carried a year ago. In New Jersey, a reliably Democratic stronghold, a Republican defeats the incumbent Democrat John Corzine.

It's odd that Rich doesn't see the answer to the riddle in his own quoted stats. It may be that nearly twice as many people identify themselves as Democrats than Republicans; but the two parties together are only slightly larger than the Americans who want nothing to do with either party. If the Democrats can only claim 30% of the electorate, aren't they also in a "nosedive?" I guess Rich's training as a theater critic did not include a course in statistics.

I saw Jesse "The Body" Ventura on TV a couple of days ago, the former rasslin' governor of Minnesota (a state which must have been in a puckish, demoralized state of its own). He suggested that members of Congress should stop wearing business suits and instead copy the style of NASCAR drivers, silvery jackets emblazoned with patches and decals of their corporate sponsors. That way we would know who they were legislating for. There would be Chris Dodd and Chuck Schumer all decked out in logo-splashed thermal suits emblazoned with "Goldman Sachs" and "Citigroup," with maybe a corporate motto thrown in: "Too Big to Fail." Senator Max Baucus in a gold satin jacket featuring "Blue Cross" and "Aetna" -"Our Profits Sky When You Die."

That's a very funny idea, Jesse. I wouldn't mind a system where the Congressional "drivers" were directly compensated for their endorsements, either. Let's keep it all above board. But slightly more seriously, let's face it: except for a tiny sliver of Americans actually directly involved in either Democratic or Republican politics (as part of the machinery, in other words), most Americans regard themselves as simply captives of a completely dysfunctional two-party system, and this includes, no doubt, significant fractions of those nominally "affiliated" with the two parties as registered members. The Democrats and Republicans pull votes because they're the only game in town. No serious third (or fourth or fifth) party is on the horizon to challenge their hegemony, and the Mainstream Media, which controls what is in the consciousness of its American subjects, is too invested in these fascinating two-party "horse races" to allow the choices to expand to include, I don't know, candidates and positions that have something to do with the reality of life for actual Americans.

So now you'll see lots and lots of stories from the usual pundits about how these two off-year elections are a "litmus test" for the Obama Administration, how he's let his "progressive base" (huh? who dey?) down, about the failure to enact "comprehensive health care reform with a robust public option," about the continued waste of two useless wars, on and on, signal "danger" for the Democrats in 2010, and the rest of it. Sure, go ahead and write that stuff. That's also part of the two-party paradigm: the analysis of everything in terms of the two parties.

I think it's simpler than that. The great majority of Americans hate everyone in office. They get tired of them, they resent them. They're sick of their lies and corruption. Yet they're trapped, without real choices, condemned to this pointless plebiscite on the rise and fall of whatever party is "in power" and is currently lining their pockets and letting America go to hell.
My hope is that the Republican Party becomes more "mainstream," less infested with wackos like Sarah Palin and Rush Limbaugh, or radically dangerous subversives like George W. Bush and Dick Cheney, because they're going to get their turn again. American voters derive their one pleasure in voting from throwing out of office the people they've gotten sick of, and currently there are more Democrats to hate than Republicans. So the GOP will be back, we will remember how awful they are too, and then we'll throw them out get the picture.

I still think those logo jackets are a swell idea.

November 03, 2009

I come to praise Obama, not to mess with him

Okay, it's become fashionable to knock the O-Man. Bill Maher is doing it, "liberal" talk radio guys are doing it, Arianna Huffington, you name it. All the fun, in other words, has gone out of the game.

I was an early critic. Partly this is because I pay attention to civil liberties cases and the Bill of Rights, a result of my legal background. Barack has been a train wreck on such matters. He absolutely will not put any distance between himself and Bush on controversies ranging from illegal NSA wiretapping to use of the "state secrets" option of terminating litigation which might reveal embarrassing and/or illegal activity such as rendition and complicity in torture. Something I heard Ed Schultz say on the radio the other day brought to mind a minor suspicion of mine. Ed was opining that the reason Obama is so intent on "bipartisanship" for his health care reform bill is that he just wants to make certain that Olympia Snowe, Susan Collins or someone with an R next to their name is standing in the circle of grinning solons at the signing ceremony. In the same vein, I have thought that the reason Obama absolutely, positively will not allow anything out into the open about Bush's torture regime (forcing all litigants and journalists and legal groups to use FOIA requests [always highly contested by the O Administration] to get anything) is because when all the "living Presidents" gather in the Oval Office for one of those heartwarming moments of camaraderie, Obama does not want a damper on the good times; you know, like a felony indictment of George W. Bush prosecuted by Eric Holder.

President Obama does not believe in transparency any more than did Dick Cheney, although for different reasons. Cheney hid everything so he could stir up trouble; Prez O hides things so everyone can get along. He's in the wrong job for that attitude, but the job remains his. So...what to think?

Well, my legal career has been mostly about helping the underdog, and now Barack is getting a little too much heat, in my opinion. So I rise, sort of, to his defense. We're starting to forget that he did in fact inherit an economic catastrophe, and two unnecessary wars, from the inept, bungling W. Further, Barack really had no time to learn on the job. The country was falling apart when he took the oath, and then the problems accelerated with massive job losses and unprecedented levels of foreclosure and equity losses. Couple these circumstances with the fact that there was nothing in Obama's background which really prepared him for such crisis management, and you begin to understand why he basically froze up and clung to as many advisors and Bush appointees, particularly in the defense and financial fields, as he did. Thus, Gates at defense, Bernanke (a Republican) at the Fed, Geithner (from the New York Fed and a Greenspan acolyte) at Treasury, McChrystal for Afghanistan, Petraeus at CentCom, and holdovers from the Clinton Bubble Era such as Larry Summers. He also added a bunch of Goldman Sachs alumni for key positions in the financial nomenklatura.

A lot of these people were in on the ground floor of the economic catastrophe in the first place; yet, to Barack's mind, at least they knew about the extremely complicated, arcane nature of modern finance - derivatives, securitization, interest rate policy, capitalization of the banks - and they might be able to pull us back from the brink of utter disaster. And this suspicion of his has proved correct, so far. Everyone wanted Obama to be a "populist" from the get-go based on his promises of "Change," but think about it: a radical approach of allowing moral hazard to destroy every large financial institution in the country might be the way to go (empircally), but if he started his Administration on that tack and things went absolutely in the shitter, then the game was up right on Day One.

FDR might have taken such an approach, risks be damned, but his background was as Governor of New York State, which at the time was the most populous and powerful state in the Union. He was used to making big decisions. Barack, on the other hand, was the junior Senator from Illinois who barely spent two years on active duty before hitting the campaign trail for good. What was there in his past that remotely prepared him for Chief Managing Officer of the country? I can appreciate that he had the benefit of many briefings by experts during the campaign, but realistically he did not really know what he was doing last January 21, 2009, when he began making (or allowing others to make) all these momentous decisions.

But no doubt he'll get better. How much better, I don't know, and I doubt that anyone else does either. Everything depends on his qualities as a person. His critics from the liberal side always append the observation that Barack is "brilliant." Here's Bill Maher, just as one example: how

It's still too early to lose hope in a guy as smart and talented as Barack Obama. But I would counsel him to remember: If you're going undercover to infiltrate how Washington works, so you become one of them for a while, to gain their confidence, well, it can be just like all those movies where a cop goes deep, deep, DEEP undercover with drug people and -- f***, he's a drug addict, too! ...Logic tells me that really smart guys like Obama and Rahm Emanuel know better what they're doing than I do.

How do we really know that he's "really smart?" We don't, actually. He may in fact be, but that's a different matter. There's no question he ran a disciplined, highly effective campaign, and his managers were among the first to understand that the electronic media had become essential to success (unlike the Luddite McCain campaign). Barack displayed enormous talent in giving speeches, but so did Jimmy Stewart in "Mr. Smith Goes to Washington." Still, there's an element of reverse racism in all this confident adulation of Obama's intellect; white critics routinely called Bush a moron, but this remains such a race-conscious country that Obama's intellectual capacities cannot be the basis of criticism among his liberal detractors. So they've settled on this "timidity" and "conflict-adverse" meme as the basis of their comments.

As I say, I just don't know. When he speaks off the cuff, it sounds okay - not blindingly brilliant, by any means, but compared to Bush, of course, he sounds like Winston Churchill. He doesn't make up new words not found in any dictionary and he can get from one end of a sentence to the other without making ten or eleven grammatical and syntactical errors. Hey, we'll take it.

He's going to be the President for at least three more years, so I'm hoping he gets better with the passage of time. Naturally, since I'm a patriot. Most of the time, I fear, he will be struggling with an economy mired in a semi-Depression, but better Obama at the controls than Bush (or McCain). He inherited a country in serious decline. At least he understands the need for Change; he just needs to implement it.

November 01, 2009

I don't even like economists, and now I are one

Zero Hedge afforded a lot of space to a guest post by Contrarian Investor, a post which I found enlightening, brilliant, iconoclastic and spot on. I lavish these encomia on this piece because it agrees with me. The essence of the CI analysis can be stated simply: we're not getting out of this recession by the same means which put us in this recession; that is to say, we're not going to borrow and spend our way out of it. (Double click on the chart to see the right hand side if truncated in your browser.)

The authors of the study deliver this news: American consumers, that durable engine of the world's prosperity, are up on blocks]'. News for the Chinese: we've gone Chinese on your ass. We're saving money now. We're not using credit cards. We're not borrowing. We're done. Get used to it.

Now it's true that we've arrived at this enlightened, spiritual, non-materialistic, gewgaw-detached state through a rather rude path. We're broke. The reason we're not offloading pallets of flat-screen TVs at the loading ramp attached to our 12-car garages is that we ain't got no money anymore. The nurturing, misting spray of trickle-down turns out to have been a thirty-year old Elephant taking a piss on us. Since the days of Ronnie RayGun, we've been engaged in a group orgy of magical thinking - if we just get rid of unions, manufacturing, real jobs, education and the tax base, we can turn everything over to a gang of wealth-conjurers on Wall Street who can shuffle the debts around and make everybody rich without working. Those who want to do something can learn to make lattes or run a tanning salon, but your real wealth will reside, like you, in your house.

Now how could a program like that fail? Maybe this way: we built up household debt beyond the point where our shitty incomes from our crap jobs and zero savings could sustain it. Then a minor tremor and the entire edifice falls down on our heads. That's the slope above to the right and downward: the diminution in household debt as a percentage of GDP. Americans are getting out from under household debt in any way they can: by being foreclosed upon, by defaulting on credit cards, by cutting back expenses, even (gasp) by paying off their debts. And since unemployment is sky high and wages are actually falling, one can imagine that it takes prodigious effort, and considerable change in habits of consumption, to produce the simoleons to actually make such a thing happen. The CI guys think a range of 70% of GDP is "reasonable" as the new baseline, but they admit they're trying not to be alarmist. Regression to the mean of 53% seems more reasonable (if inconceivable just a couple of years ago), and that implies tons and tons of further deleveraging and deflation in asset prices. Stuff like the Dow Jones, the S&P and your house.

The mainstream, cheerleading economists, such as Paul Krugman (or his Doppelganger), think that the end of the recession, ipso facto, will bring back the "surge in spending" the economy so badly needs in order to "recover." In the first place, the recession "ended" because the government borrowed and spent a lot of money on our behalf. This can be demonstrated quantitatively. Since GDP counts the positive entry of government spending but does not subtract the borrowing necessary to fund it (a credit without a debit; that is, Fantasyland), the feds can say the "recession" is over and number-fixated mainstream economists, who have not looked out their windows at the row of "For Sale" signs on every lawn, think it's all good. Once they see a positive GDP number for a quarter, the recession ends for them and they confidently await the consumer spending to come roaring back, restoring everything to the Old Normal.

This, however, is the New Normal, the economy which exists after RayGun zapped us in the balls with his loony-tunes economic theory, which, in turn, was solely a cover story and pretext for reducing top-margin tax rates on the oligarchs who supported that idiot and the "ideas" in his microgram-sized brain. A primary Axiom of Analysis in the Waldenswimmer world is that one must not analogize between factual situations which are factually dissimilar. In 1965, Americans bought clothing which was 95% Made in America; in 2009, Americans buy clothing which is 5% American-made. In 1965, General Motors was the largest corporation in the world; today, it is looking for its latest government hand-out in order to remain on life support. Instead of a workforce which knows how to mount a flywheel on a 409 Pontiac, we're learning how to make a dry as opposed to a wet cappuccino, and leave the complicated stuff to the Japanese and Germans. Thanks, Reagan, you treasonous bastard.

So the American consumer is not going to come roaring back, not today, not tomorrow and not the day after that. The Contrarian Investor compiled the charts; in the other recessions in the post-War period, the consumer led the way, beginning to ramp up spending even before the recession officially ended. In this case, spending continues to decline even as the recession ends. People don't spend what they don't have when they can't borrow it, and the house-as-ATM era is over. If the Deutsche Bank analysis is correct, by 2011 half of all American houses will be underwater in terms of mortgage. So if Reagan and his "theoretical" heirs, such as Bush I & II, are expecting a normal "recovery" this time, it cannot be led by the 95% of Americans who suffered as a result of their cruel, radical capitalism. That 1-3% who made out under Reagonomics are going to have to do it. So get to work, Fat Cats! Get on down to CostCo and Wal-Mart, grab an aircraft carrier-sized shopping cart, and start spending all that money those low tax rates left you with! We're counting on you. It's your patriotic duty, and we know how much patriotism means to you.