October 14th, 2008 By JOE GANDELMAN, Editor-In-Chief
Afghanistan’s defense minister today said that 2008 has been the bloodiest year yet for the insurgency in Afghanistan. A British reporter says the country is locked in a spiral of doom. In this Guest Voice post, India-based American freelance reporter Wil Robinson details what the U.S. must do to win. Robinson spent two weeks reporting in Afghanistan last December.
What The U.S. Must Do To Win In Afghanistan
by Wil Robinson
Both presidential candidates agree that the insurgency in Afghanistan needs to be addressed. Yet neither senator has a clue about how to go about it.
The idea of a “surge,” similar to the troop increase in Iraq, seems to be the most popular choice. But despite General Petraeus’s counter-insurgency tactics, a carbon-copy of Iraq pasted onto Afghanistan won’t work.
Winning Afghans’ hearts and minds is the goal, and most would agree it starts with the economy. Understandably, violence in the country prevents many well-intentioned projects from moving forward. Therefore, a strategy to win in Afghanistan must simultaneously subdue levels of violence and visibly demonstrate to the people that the war effort will continue beyond killing terrorists. Afghans need to see that international troops have their eye on reconstruction – a Marshall Plan for Afghanistan - not a strategic drawdown that will leave a hole to be filled by remnants of the Taliban.
Winning will require money and real commitment. Here’s a five-point plan to succeed:
* Stop all air strikes. Immediately and completely.
Not another bomb should be dropped from an airplane in Afghanistan or Pakistan. Not one “smart-bomb” from an unmanned predator drone, not a “two-ton” bunker buster aimed at senior Taliban leaders, not so much as a grenade lobbed at a mud-brick house in a Hindu Kush village. Every civilian that is killed – mistakenly or not – by a U.S. or NATO bomb is a victory for the Taliban and a recruitment tool. Military strategists who are willing to accept collateral damage should take note that seven years of dropping bombs has not worked.
Part of the reason the Taliban gains sympathy and is able to recruit is because of the large base of unemployed young men who only seek to protect their families. There is literally a pool of potential soldiers to pull from; so far, only the Taliban has been taking advantage of this. Increasing the size of the Afghan army to 300,000 would diminish the capacity of the Taliban to increase their numbers, lift hundreds of thousands out of poverty with a paycheck, and provide the kind of troop levels necessary to secure the entire country.
Allowing Afghans to form their own defense force would eliminate the need to send in more international troops. Existing ISAF troops could be used to train the Afghan army at a rapid pace.
October 13th, 2008 By JOE GANDELMAN, Editor-In-Chief
What to do about Iran? Should it be isolated? Should the newAmerican president in January President open up a more extensive dialogue with it? Or should it be a mixture of both isolation and minimal dialogue? And what are the realities and what has happened so far? In this Guest Voice post Iranian freelance writer and blogger Kourosh Ziabari takes a look at the issue.TMV runs Guest Voice posts of various viewpoints. Guest Voice posts do not necessarily reflect the opinion of TMV or its writers.
Did The U.S. Really Isolate Iran?
by Kourosh Ziabari
Iran is moving towards obtaining nuclear technology and that is not favorable for the US and its allies.
In their addresses, notes, lectures, interviews and meetings with the world heads of states, US officials perpetually express the deepest regret and sorrow that Iran is just a few steps away from producing nuclear weapons and becoming a threat to global peace and stability.
Perhaps the tremendous experience of US atomic strike on the Japanese cities of Hiroshima and Nagasaki made the American statesmen and American news media fearful that a same disaster may happen to them and that it’s more rational to prevent an atomic hit rather than coming up with a response. But it seems that they’re really on the wrong path. Iran is not the country to be targeted by the rhetoric of US and affiliated media.
You may have heard the famous story of Pharaoh and Moses.
After his terrible nightmare and hearing the interpretation, Pharaoh ordered his attendants and soldiers to search all the homes around Egypt for new-born infants and put them out of the way. They did and killed all of the new-born boys. But they missed one; the one set adrift on the Nile by his mother to be protected.
Pharaoh was satisfied with his wise idea’s result but didn’t recognize that the rescued baby who was found later on the Nile shore and attracted “Asyia” would someday become the abolisher of his monarchy.
The story of US is totally the same.
They are backing the Middle East’s major depositor of nuclear warheads completely, (according to FAS, Israel currently possesses 170 nuclear warheads) and on the other hand are at odds with Iran. IAEA’s head declared 12 times that there is no sign of deviation in Iran’s nuclear program….
Even so, you can often find ridiculous and strange stories illustrating the American hostility against Iran; a media-backed “war of words.” Some examples:
* The dossier of Hamed Haddadi
The NBA-based “Memphis Grizzlies’” contract with the leading 2008 Olympic basketball rebounder Hamed Haddadi of Iran astonished the observers of “outward” darkening relations between Tehran and Washington. The news was carried by thousands of American websites, newspapers and TV stations.
At the beginning of 2008 Olympics basketball games, when the first murmurs of Hamed Haddadi’s enrollment to the Memphis were whispered, some in the US media claimed that the US government would never allow any trade with the “enemy” and Haddadi should forget the sweet dream of playing in NBA. Although the Iranians always new that gossiping and intrigue are major parts of American media agenda, they almost believed that their favorite player would be kept from joining the NBA.
At that time, the NBA’s board of directors announced several times that bargaining with the enemy was not at all viable, and Hamed Haddadi would not be allowed to be the first Iranian player ever joining NBA.
Most sports fans believed the big lie in throes of the “word war,” but a few days later the NBA’s board of directors announced that the legal limitations for Hamed Haddadi joining the NBA would be removed. And then, a few weeks later, Haddadi signed an undisclosed deal with the Grizzlies as simple as that. Again, everybody forget the outcries and screams of American media who had claimed that Hamed Haddadi would be rejected forever and must “return home”.
October 13th, 2008 By JOE GANDELMAN, Editor-In-Chief
Free speech should protect both sides in political debate. In this Guest Voice post, journalism professor and author Walter Brasch looks at a case that hasn’t received much publicity — and has an end result that would probably make the Founding Fathers smile. Brasch is an award-winning syndicated newspaper columnist and radio commentator, and president of the Pennsylvania Press Club. Guest Voice posts reflect differing viewpoints and do not necessarily represent the opinion of TMV or its writers.
Conservative Group Is Right: Free Speech Is Not a Political Issue
by Walter Brasch
The Sunbird Conservatives, a student group, put out some pro-McCain literature at a recruiting table at Fresno Pacific University a week ago.
Seemed innocent enough. The conservatives weren’t harassing anyone, nor were they blocking any sidewalks.
But, administrators at this Christian-based college didn’t like it. A dean told the students to either remove the McCain literature or to agree to what he said was university policy to present both sides. The dean correctly noted that the First Amendment applies only to government intrusion. A private university, unlike a public university, may curtail any free speech it wants.
The students still argued “free speech rights.” Enter the provost, head of all academic affairs at the university. She reaffirmed the dean’s demands. One of the members shouted: “free speech” at her. They challenged her, arguing that for a political organization to present both views would defy common sense. The provost’s response, according to the conservative Leadership Institute, was “Shut-up! I’m the provost. That is disrespectful.”
The students were warned if they didn’t comply with the administrators’ demands, they would be restricted in future activities on campus.
The Founding Fathers wanted all views to be heard. Channeling the revolutionary political philosophy of poet John Milton and judge Lord Blackstone, they believed that mankind is rational, and if all the facts were available, mankind would find the truth. That became the basis of the First Amendment.
Now, the twist is that the Fresno Pacific administrators were wrong. Their own university actually believes that all views should be allowed, as long as there is the opportunity for opposing views. It does not require one organization to put out all views.
But, the Fresno Pacific administrators are also right. A private university can do what it wants to do. It can encourage or restrict free speech. Except in California. Read the rest of this entry »
With reports of yet moe tactical shifts and polls — and Wall Street — continuing to bring bad news, the growing conventional wisdom is that Republican presidential candidate Sen. John McCain is headed to defeat. In this Guest Voice interview, columnist Bill Steigerwald interviews writer-columnist Pat Buchanan, who makes the case that McCain can still win. TMV runs Guest Voice post of differing viewpoints. Guest Voice posts do not necessarily reflect the opinion of TMV or its writers.
John McCain Can Still Win
by Bill Steigerwald
Catching up with author and syndicated columnist Pat Buchanan during this election season is almost impossible. Up at 5 a.m. weekdays and still up many nights at midnight, commuting multiple times to Washington and sometimes to New York City, he’s always on the move — and yet he’s a near-permanent presence on MSNBC, where he has become the house conservative in a den of liberals.
I caught up with Washington’s consistently jovial pundit by telephone from his Northern Virginia home on Thursday, Oct. 9.
Q: Do you think it’s over for John McCain because of this economic meltdown that seems to know no floor?
A: I just sent out a column that said I don’t think it’s over. McCain and (Sarah) Palin were winning this election for two weeks after the Republican convention. Since then we’ve had the worst market crash worldwide since 1929-1930 and we’ve had it in a telescoped four-week period. That has taken McCain from 2 points, or 3 points or 4 points up to around 8 or 10 behind in some polls, 11 in one tracking poll and an average of 6.
Is it over? No. I think McCain can still do it. But what he has to do is find a way to make Barack Obama no longer credible as an individual who can be president of the United States in a time of war and economic catastrophe. He has got to impeach his ideas, his record, his agenda and his judgment.
Q: Do you think these polls are accurately gauging support for Obama or do you think there is a “Bradley Effect” hidden in there?
A: I do believe that if the race turned out to be 48-48 with 4 undecided on Election Day, McCain would win. Look: People voting on the issue of race have already made up their minds. African Americans, I saw one poll, are 94-1 behind him. Of white Americans, there’s a minority who are going to vote for him because he’s African American and a small number who are going to vote against him for that reason.
Now is there a hidden factor in there? I don’t know. I don’t know the reason why, but Obama does not do well when he is closing. Hillary Clinton, as you know, beat him by 10 or 9 percent in Pennsylvania and about the same amount in Ohio and then by 41 in West Virginia and 35 in Kentucky. I think part of that is the Scots-Irish and those folks out there who don’t cotton to Obama not simply because of reasons of race, but class. He really is not one of them. I think Colin Powell would do far better, for example.
Q: You have roots of sorts out this way. Your mom was from the Mon Valley, right?
A: They’re all gone now. But my mom and uncles and grandparents were from Charleroi, Pa. I’ve got German-American cousins in Southeastern Ohio. They’re all German-Americans and I did very well. I was endorsed by the union at the steel plant over in Weirton. So those are sort of our folks. Barack Obama is too exotic. He’s too Harvard. He’s too Hyde Park, University of Chicago — riding around on his bike with his little hat on. And then you get a picture of Sarah leaning back on a Harley-Davidson (laughs).
Republican presidential candidate Sen John McCain is getting a lot of criticism from many pundits in many news organizations and on many sites (such as this one) for raising the “Ayers” issue. In this Guest Voice column, Michael Reagan, the popular talk show host and son of former President of Ronald Reagan, argues that the issue does matter. Guest Voice posts do not necessarily reflect the opinion of TMV or its writers.
Why Ayers Matters
by Michael Reagan
To listen to the Obama spin-masters you’d think that the McCain campaign’s questioning of their candidate’s association with unrepentant terrorist bomber Bill Ayers is a smear tactic falsely elevating a casual relationship between the two men into one where they worked together in promoting Ayers’ far-left goals.
Their reaction to the continuing revelations that disprove that claim is one of sheer panic — and they have a good reason to be scared witless that any in-depth probe of what went on between the two comrades will reveal Obama’s true colors — all of them dark red!
If the truth becomes better known — and it will if the Ayers issue is doggedly pursued — it will be clear that Obama was not only deeply immersed the fetid swamp of Chicago’s far-left political scene, but was from the very beginning of his career carefully groomed by the city’s socialist left to follow the path he’s on now in his quest for the presidency of the United States.
Giving credence to the charge that Obama was “groomed by an older generation of radical leftists for insertion into the American political process, trading on good looks, brains, educational pedigree, and the desire of the vast majority of the voting public to right the historical racial wrongs of the [past]” as the American Thinkers’ Thomas Lifson has written:
• Obama belonged to the socialist New Party, described by Lifson as “a radical left organization, established in 1992, to amalgamate far-left groups and push the United States into socialism by forcing the Democratic Party to the left.” A March 22, 1998 article by John Nichols in These Times revealed, “After six years, the party has built what is arguably the most sophisticated left-leaning political operation the country has seen since the decline of the Farmer-Labor, Progressive and Non-Partisan League groupings of the early part of the century.”
• Obama has been allied with ACORN and their Project Vote, the radical leftist group now charged with massive vote fraud aimed at electing Barack Obama president of the United States. Obama has long been directly involved with ACORN. An article by Toni Foulkes of ACORN, “Case Study: Chicago-The Barack Obama Campaign,” which appeared in Social Policy magazine in 2004, Foulkes revealed ACORN noticed Obama when he was organizing on the far south side of the city with the Developing Communities Project. Wrote Foulks: “He was a very good organizer. When he returned from law school, we asked him to help us with a lawsuit to challenge the state of Illinois’ refusal to abide by the National Voting Rights Act … Obama took the case, known as ACORN vs. Edgar … and we won. Obama then went on to run a voter registration project with Project VOTE in 1992 that made it possible for Carol Moseley Braun to win the Senate that year. Project VOTE delivered 50,000 newly registered voters in that campaign (ACORN delivered about 5000 of them). Since then, we have invited Obama to our leadership training sessions to run the session on power every year, and, as a result, many of our newly developing leaders got to know him before he ever ran for office.”
• Obama and Bill Ayers were close associates for years, going back as far as 1995 if not earlier. According to CNN: “A review of board minutes and records by CNN show Obama crossed paths repeatedly with Ayers at board meetings of the Annenberg Challenge Project. The Annenberg Foundation gave the project a $50 million grant to match local private funds to improve schools… Obama was asked to serve as the board chairman in 1995… For seven years, Ayers and Obama — among many others — worked on funding for education projects, including some projects advocated by Ayers … The board, for example, gave hundreds of thousands of dollars to Bill Ayers’ small schools project… The funding, according to records… CNN reviewed, came directly from the Annenberg foundation which Obama chaired. While working on the Annenberg project, Obama and Ayers also served together on a second charitable foundation, the Woods Fund.”
No wonder the Obama campaign wants the Ayers connection to be off-limits.
October 5th, 2008 By JOE GANDELMAN, Editor-In-Chief
Campaign 2008 is heating up and getting more negative than ever. In this Guest Voice post, Hunter Hatfield, who often comments on this site under the name Pacatrue, looks at some of the negatives being used in the email and now formal campaign against Democratic nominee Sen. Barack Obama.
Less is More and the Ayers’ Association
by Hunter Hatfield
Just a few days ago, I was forwarded an email that claimed to have definitive proof that Barack Obama was a socialist. It contained a single quote, in which, supposedly, Obama says government must redistribute income more equitably. The implication was intended to be that Obama’s guiding philosophy is to take our money and give it to others until his notion of equality was satisfied.
As it turns out, Snopes.com has already debunked this email chain. Obama never said it at all, and the fake quote is a WSJ reporter’s summary of Obama arguing for government-funded health care and education. You can decide for yourself whether or not health care and education equals socialism.
The fact that an attacking email chain is untrue is not particularly noteworthy. Indeed, factcheck.org has an article about how such chains are almost always untrue.
More interesting is the root idea of the email, an idea shared by left, right, and those in between.
Namely, the email wished to ignore lots of data that they could use to understand Obama’s beliefs about government and tried to ferret out the hidden truth with less data. Want to know whether Obama is a socialist? Don’t read his issue proposals, listen to his speeches, or look at his voting record. Instead, ignore all of that complicated data with specific ideas and look for some single, special piece of evidence that reveals the Truth.
Using less data instead of more of course makes no sense unless you think all of the other data is unreliable, and, moreover, that you can find the real truth, not by a rigorous search and analysis, but by simply finding something to confirm what you already believe. If you don’t already think Obama is a socialist, there’s not much to be gotten from the false quote.
A similar process occurred just a few weeks ago (though it seems like a political eternity now) in the rumors that Gov. Palin’s daughter was the real mother of Gov. Palin’s youngest.
October 4th, 2008 By JOE GANDELMAN, Editor-In-Chief
In this Guest Voice post Walter Brasch says this week’s Vice Presidential debate between Democratic Sen. Joe Biden and Republican Gov. Sarah Palin proved one thing: Palin can be prepped. Journalism professor and author Brasch is an award-winning syndicated newspaper columnist and radio commentator, and president of the Pennsylvania Press Club. Guest Voice posts do not necessarily represent the opinion of TMV or its writers.
Sarah Palin Wins Debate by Darn
by Walter Brasch
The vice-presidential debates proved one thing. At the very least, Sarah Palin can be trained.
For several days, she had camped out in one of John McCain’s Arizona houses, where she underwent Debate Boot camp conducted by drill instructors who make Marine DIs appear to be slaggers.
With a few “darns,” “betchas,” and “ya”s, Palin managed to get all her talking points into the debate, even if she constantly changed the question to suit her note cards.
During the 90-minute debate, Palin six times referred to her experience as the mayor of a 6,000 resident village. Seven times, she specifically mentioned Ahmadinejad. Iran’s president, proud she knew the name, proud that she could pronounce it. No one asked if she knew his first name or anything else about him. Shades of George W. Bush in his first term trying to prove he knew something about foreign affairs by enunciating the names of a few world leaders after several gaffes early in the campaign. Read the rest of this entry »
October 3rd, 2008 By JOE GANDELMAN, Editor-In-Chief
The second attempt at a bailout is expected to come to a vote in the House of Representatives today. In this post, written before the Senate passed the newer version, Walter Brasch looks at why the bailout failed. Journalism professor and author Brasch is an award-winning syndicated newspaper columnist and radio commentator, and president of the Pennsylvania Press Club. Guest Voice posts do not necessarily represent the opinion of TMV or its writers.
Stampeded by Fear, Scammed by Lies: Why the Bailout Failed
by Walter Brasch
The Republican leaders of the House of Representatives grabbed a half dozen bags of sincerity, looked directly into every TV camera they could find, and lied.
The House had just defeated, 228-?205, a bipartisan $700 billion bailout bill. But it was the Democrats who were the subject of vicious rhetoric.
Speaker of the House Nancy Pelosi (D-Calif.) “poisoned our conference,” screeched Rep. John Boehner (R-Ohio), the Republican minority leader. He said the House would have voted for the bill “had it not been for the partisan speech the Speaker gave on the floor of the House.” Rep. Roy Blunt (R-Mo.) specifically said that Pelosi’s speech changed the minds of about a dozen Republicans who voted against the bill. Rep. Eric Cantor (R-Va.), waving a copy of Pelosi’s speech, screamed out, “Here is the reason I believe why this vote failed!” The speech, he said, “frankly struck the tone of partisanship that frankly was inappropriate in this discussion.” Douglas Holtz-Eakin, a senior advisor to Sen. John McCain, was equally blunt and equally wrong. The bailout failed, he said, because “Barack Obama and the Democrats put politics ahead of country.”
But it wasn’t the Democrats who brought about the bill’s defeat.
The Democrats voted 140?95 for the bill; the Republicans voted 133?65 against the bill. Sens. Barack Obama and John McCain reluctantly supported the bill. Nevertheless, the viciously partisan Republican leadership, eager to paint anything Democratic as vicious partisanship, couldn’t even get a majority of their own members to agree to the bailout, one that now had added protections for the taxpayer.
What infuriated the Republican leaders was Pelosi’s accurate portrayal of the Bush-Cheney Administration’s economic policies as “built on recklessness, on an anything-goes mentality, with no regulation, no supervision and no disciple in the system.” While driving America into the deepest deficit in its history, the Administration had usurped its own campaign lies that breathlessly panted the fear that the enemies of American consumers are “tax-and-spend liberals,” as if it was one word.
October 3rd, 2008 By JOE GANDELMAN, Editor-In-Chief
Filmmaker Will Drinker has a reminder about the importance of this month and about a must-see project he’s working on with his brother:
October Is National Down Syndrome Awareness Month
by Will Drinker
Are you aware of Dan Drinker?
Dan is a 23 year old man with Down syndrome who is not only aware of the current presidential race, he’s participating. Dan endorsed Barack Obama (take that, Sarah Palin), he voted for him in the primary, he even saw the senator speak at Penn State.
I’d like to make you aware of my amazing older brother, who just happens to have Down Syndrome. We are making a documentary together about his life. See him the way I see him at http://dandrinker.com.
September 30th, 2008 By JOE GANDELMAN, Editor-In-Chief
This is the last of three special Guest Voice posts on the present Wall Street economic meltdown by Mikkel Fishman, a TMV reader and frequent writer in our comments section who is also an author and computer scientist. Part I is HERE and Part II is HERE. This final part was written right before the House of Representatives defeated the bailout plan.
The 2008 Economic Crisis: How To Protect Yourself
by Mikkel Fishman
In the prior sections of this series I’ve discussed why I believe our current economic crisis is due to long term and fundamental imbalances as well as the two basic choices that our society can make for addressing the problem. In this concluding part, I will talk about the crisis on a more personal level and suggest steps that you should take to protect your own finances, but first a little segue.
A commenter asked if there was a “middle road” solution that had targeted deflation while preserving credit availability and aimed for minimal disruption to economic growth. In fact there is, and the current plans being discussed by Congress are awful if that is the goal.
This plan correctly identifies that the fundamental problem is that there is too much debt that relies on inflated asset values, and that this is preventing banks from lending. It suggests recapitalizing banks directly instead of trying to buy off the assets. This approach is much more efficient because of leverage in the system.
The bailout bill currently being discussed is talking about buying up to $700 billion in assets, but since banks are leveraged approximately 10x, a direct infusion into banks of $70 billion would have the same effect on lending, assuming that it wasn’t directly eaten up by a continued decrease in assets that already exist. This is why the “middle road” is to isolate bad banks and let them fail, letting the massive amount of debt start to deflate and then recapitalizing – even if it means starting up new banks with a fresh balance sheet.
A new study released by the International Monetary Fund that looks at historical precedents concludes that recapitalization is far superior to direct asset purchases, both from an expected government loss stand point and future economic growth.
It’s no wonder that nearly 200 economists have signed a letter opposing the current [recently defeated] bailout as it’s written.
However, while I tentatively support this sort of action, I am more pessimistic about its long term success unless there is a radical change in societal views. Read the rest of this entry »
September 28th, 2008 By JOE GANDELMAN, Editor-In-Chief
What do the bailout, mega-money in politics sought and used by both parties and GOP Presidential candidate Senator John McCain’s dramatic actions this week have in common? In this Guest Voice post, Rosemary and Walter Brasch explain. Journalism professor and author Walter Brasch is an award-winning syndicated newspaper columnist and radio commentator, and president of the Pennsylvania Press Club. Guest Voice posts do not necessarily represent the opinion of TMV or its writers.
Seizing America by Withholding the Mother’s Milk of Politics
by Rosemary and Walter Brasch
It was Monday evening and the phone rang—again. It was probably the fifth time in two hours. A pleasant voice said she was from the—oh that really doesn’t make any difference. Both presidential candidates have volunteer minions on the phones and Internet day after day, month after month, for what seems like years.
A half-dozen or more e-mails a day from candidates, surrogates, and candidate support groups flood our in-boxes; letters and oversized postcards clog our mail boxes. They all give us information, or ask us to fill out a poll that has no value, and then beg for donations, every plea making it seem as if the fate of western civilization will be determined by our bank withdrawal slips.
In August alone, the campaigns of John McCain and Barack Obama spent about $3 million a day, according to the Federal Elections Commission (FEC). By the end of this presidential campaign, each presidential candidate will have spent more than $500 million; by the end of August alone, more than $380 million has been spent on House races, more than $200 million on Senate races, according to the FEC.
September 24th, 2008 By JOE GANDELMAN, Editor-In-Chief
This is the second of three special Guest Voice posts on the present Wall Street economic meltdown by Mikkel Fishman, a TMV reader and frequent writer in our comments section who is also an author and computer scientist.
The 2008 Economic Crisis: Consequences And Fix (Part I of III)
by Mikkel Fishman
In my previous post, I discussed what I believe is the root cause of this current mess on a very abstract and theoretical level that focused primarily on debt as it related to productivity. This post will focus more on the concrete reason, which is that there is too little money to support so much debt and then talk about the ways to try and fix this and the consequences of each. Sorry it’s really long but I hope it’s interesting.
All modern economies use fractional reserve banking. This means that banks keep only a small portion of their deposits and lend out the rest at a higher interest rate than they borrowed it for. The more dollars they loan out proportional to the amount of capital they keep on the books, the more “leveraged” they are said to be. The average US bank is leveraged 12-15x (this is the maximum allowed by regulatory agencies) which means that their loans are only backed by less than 10% of the money that they are obligated to pay on demand.
This has a very interesting side effect, and that is that banks create “money” out of nothing. This Wikipedia link (http://en.wikipedia.org/wiki/Fractional-reserve_banking#Money_creation) shows how $100 turns into $500 with 20% reserve, but like I mentioned, the actual reserves are closer to 8% or slightly below. This means that the vast bulk of “money” in the world is actually debt to banks.
I put “money” in quotes because for all intents and purposes, credit acts like money in the real world and economic modeling. The vast majority of the time people don’t care whether you pay them in cash or through debt (i.e. a credit card) so the total amount of debt available in the world affects inflation and return rates on investment. Even the Federal Reserve mentions, “Referred to as the fractional reserve system, it permits the banking system to “create” money.”
Debt isn’t money. Debt is debt. The Federal Reserve explanation should say “it permits the banking system to expand the monetary supply through issuance of debt,” but they want to act like it is as good as money. So the key question becomes: when is debt as good as money and when isn’t it?
Of course it’s as good as money when the debt is repaid, and if the debt isn’t repaid then it isn’t as good as money. Upon default, the monetary supply contracts and a corresponding amount of real money must be set aside to help maintain deposit requirements now that the income stream is gone. Banks are always worried about default, so they require collateral in most instances. If someone defaults and the collateral is worth as much as the loan then the bank doesn’t lose, and could even gain if the collateral is worth more.
Hence the trick to make sure that debt is as good as money is to keep asset values rising. Here is where I’m going to tie in back to my previous post. Asset values can rise very sharply in bubbles, but that rise will be backed by unsustainable debt if there isn’t a corresponding increase in productivity or the fruits of that increase aren’t distributed widely. This is precisely what we’ve seen and why asset values are falling sharply. Read the rest of this entry »
Democratic President candidate Sen. Barack Obama’s theme is the importance of change. But does his record show he really advocates change? Humorist Tom Purcell, in this Guest Voice, argues that it does not. Guest Voice posts do not necessarily reflect the opinion of TMV or its writers.
Change We Can Spare
By Tom Purcell
“Boy, I can’t wait for Obama to bring us the change we need.”
“Change? What change?”
“At the Democratic National Convention, he said he’s going to cut wasteful spending in Washington! We certainly need to rein in all the taxpayer dough those birds in Washington keep squandering.”
“To be sure, Washington has been squandering plenty. President Bush’s annual budgets grew from $2 trillion to more than $3 trillion in only six years. But why do you think Obama is the guy to rein in spending?”
“Because he and Joe Biden have a record of getting the job done.”
“I hate to break your bubble, but, according to Citizens Against Government Waste, Obama and Biden are two of the biggest spenders in the Senate. Where spending is concerned, they are classified as ‘hostile and ‘unfriendly,’ respectively, according to CAGW’s rating system.”
“They are?”
“On a scale of zero to 100 percent — with 100 percent representing someone who manages taxpayer money frugally — CAGW gave Obama a 10 percent score for 2007 and a lifetime score of 18 percent.”
“That’s not so good.”
“Biden was given a zero percent score for 2007 and a lifetime score of 22 percent. The rankings make perfect sense. According to the National Journal, Obama and Biden are ranked as the first and third most liberal U.S. senators.”
“What’s so wrong about being liberal?”
“Nothing, except that many liberals believe more government programs are the best way to solve America’s problems. Both Obama and Biden have a record of promoting bigger government and more spending. Neither met an earmark they didn’t like.”
September 23rd, 2008 By JOE GANDELMAN, Editor-In-Chief
This is the first of three special Guest Voice posts on the present Wall Street economic meltdown by Mikkel Fishman, a TMV reader and frequent writer in our comments section who is also an author and computer scientist.
The 2008 Economic Crisis: The Cause (Part I of III)
If there is demand for it this might turn into a longer series that examines particular aspects in more detail, but for this series I would like to take as big of picture as possible because ultimately the way forward has to address some core issues that aren’t commonly discussed even amongst most professional economists.
The people that I’ve read that saw this coming all agree that the root problem is that there is too much debt. It’s that simple.
We can talk about mortgages versus credit cards versus government debt in future posts as each one has its own quirks and consequences, but in a way it doesn’t really matter where the debt comes from, as I’ll explain momentarily. Ever since the invention of credit, societies have dealt with credit binges that undermined their entire foundation and I am not optimistic to think that we can avoid it.
As I’m sure most people are aware, we have a fiat money system. Unlike for most of human history, our money isn’t actually representing anything physical but its value is literally dependent on how much debt we have. As time goes on and the monetary base expands, money becomes worth less and less until eventually it becomes worthless. Indeed, versus the value of gold the dollar has lost about 90% of its value since the creation of the Federal Reserve. The only reason why it potentially makes sense to have a fiat currency is that increases in productivity (through either technological or social development) make it cheaper to produce goods and raises the standard of living for all.
So even though goods cost a lot more now than they used to in absolute terms, relative to the entire monetary base they cost less. This is a key point that needs to be remembered when discussing potential solutions. The economists that back the fiat system say that being able to control the money supply ensures greater increases in productivity than having a hard backed currency, and that can be the topic of a future post.
However there is a dark side to this monetary system and that is that debt can be easily papered over with more debt. Therefore the key question becomes: is the debt being used effectively and increasing productivity, or is it merely misallocated and not providing anything useful? The best way to try to answer this question is to look at the Debt to GDP ratio. In theory, if debt is completely efficient in turning into productivity then the ratio won’t change, and the less effective it is the higher the ratio will become.
This graph astounded me the first time I saw it:
I knew that we had a lot of debt that wasn’t directly contributing to things, but never imagined that our levels were far beyond what we had right before the Great Depression. Read the rest of this entry »
September 22nd, 2008 By PETE ABEL, Managing Editor
This guest column is from Ned Lips, the second of his submissions we’ve published. See here for the first. As always, “Guest Voice” posts do not necessarily represent the opinions of TMV or its writers.
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President Bush has called for dramatically increased powers for the Executive Branch/Treasury. Before we make that leap, perhaps we should evaluate who is really responsible for the current economic crisis. The answer: The Federal Reserve abetted by the Executive Branch. With relatively limited power, they collectively destroyed our economy. Can we afford to make them more powerful?
A Bit of History
In the 1960s, the now defunct Fannie Mae was re-chartered to buy mortgages from banks, bundle them, register the bundles as securities, get them rated by agencies like Standard and Poor’s, and sell them to investors. These were designed to be long-term investments whose value was based on the underlying loans.
In the 1980s, investment bankers began to hold auctions where mortgage-backed and bond-backed securities could be sold. Auctions were held more or less monthly. Investors began to purchase Auction-Rated Securities (ARS) as short term, high yield and fairly liquid investments.
ARS were rated from investment grade, AAA, to “junk” quality. The latter came with the highest possible return on investment and the highest level of risk. Bundled sub-prime loans were usually rated as junk or nearly junk. ARS were purchased and sold based upon those ratings and had been reliably traded up until the recent crisis.
Is Sarah Palin-mania on the decline due to the Wall Street meltdown that thrust GOP Presidential candidate Sen. John McCain squarely back into the news spotlight?? Humorist Will Durst gives his take on McCain’s retaking center stage in this Guest Voice post.
Old Piranha Pants
by Will Durst
Got a message for Alaska Gov. Sarah Palin. Hey, lady. How ya doing? Me too. It’s going around. Listen, the couch is over there and you might want to lie down and take a Zen moment to get over your bad self. You had a nice run: your moment in the sun, complete with an SNL skit featuring your doppelganger, Tina Fey, but now the honeymoon is over and you should moose up and use this quiet time to devise an actual stance in lieu of a pose.
I’m sorry to be the one to have to say this, but you are SO earlier-this-month. It’s your partner, John McCain, who’s back in the news. And not in what you call your good way.
His iron grip on what is generally regarded as reality slipped like the manual transmission on a Model T Ford with a faulty handbrake parked on a San Francisco hill facing up. He’s reverted to his pre-convention state of fumbling and foundering and flummoxing and falling into a fevered form of flabbergast. And it’s that nasty old economy that’s the piranha in his pants biting his big white furry butt. Again.
Earlier this year he said he didn’t know much about it. And it’s not that hard to believe him. If he could point out three distinct differences between Lehman Brothers and the Jonas Brothers, I’d be as shocked as a giraffe on a glass escalator after too many fermented Blackberries that the Arizona Senator either did or didn’t invent. You might say he takes an arm’s length approach to the economy. You might also say that arm length is extended enough to qualify for frequent flyer miles.
It was drinking the Daily Gallup Kool-Aid that transformed Dr. Unconcerned into Mr. Proactive. Read the rest of this entry »
In this Guest Interview, columnist Bill Steigerwald talks to MSNBC’s Erin Burnett about the current Wall Street meltdown and government bailouts.
Greed Is Not Good: Interview with MSNBC’s Erin Burnett
by Bill Steigerwald
Erin Burnett of CNBC is not just another frequently appearing pretty TV face in the world of big-time business reporting. The anchor of CNBC’s “Street Signs” (2-3 p.m.) and co-anchor of “Squawk on the Street” (9-11 a.m.), Burnett is a former investment banking analyst at Goldman Sachs and a former vice president at Citigroup. She’s also a member of the Council on Foreign Relations and a regular contributor to NBC network news shows and “Morning Joe” on MSNBC.
I talked to Burnett by telephone at 3 p.m. Thursday as stocks were soaring on word that the federal government was going to create a special entity that would handle the huge real estate debt that has brought down major financial institutions and created a crisis on Wall Street:
Q: On a 1-to-10 scale, 10 being a meltdown, where are we right now?
A: It depends on who you ask. For many market players, this is a 9 or 10 event. You continue to see headlines discussing this as the worst crisis since the Great Depression. Some people would even say it’s the worst crisis since 1907, so if you think about it that way, you have to say it’s a 10.
If you look across America, which is something I’ve been spending a lot of time doing with CEOs of regional banks who can speak for one bank or up to 1,000 banks, there is a slow economy. That is a broader fundamental issue. But in terms of whether these banks are operating, able to get money, able to lend money, able to consider bringing in new customers and funding new projects, their answer is, “Yes, they’re able to do all those things.” So on that Main Street level, things have gotten worse, there are some real concerns, but it is most certainly not a 10. I don’t know what it is, but let’s call it a 5 or a 6. Read the rest of this entry »
September 18th, 2008 By PETE ABEL, Managing Editor
This guest column is from Ned Lips. Today, Mr. Lips is a St. Louis-based educator, entrepreneur, and business strategist. Previously, he worked for 12 years as an attorney. He was also one of several party-defiant voters interviewed for our recent feature on the Missouri bellwether. “Guest Voice” posts do not necessarily represent the opinions of TMV or its writers.
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If they use her properly, Sarah Palin will prove to be the perfect selection for the struggling McCain campaign.
Palin appeals to “Jeff Foxworthy voters” who find themselves on the fence in many election cycles.
These voters distrust big business, big oil, politicians, and lobbyists. They tend to be union members; downtrodden blue collar or agricultural workers. They do not own businesses and don’t much like foreigners — especially those who may have taken jobs away from American citizens.
Foxworthy voters were once reliable Democrats, but several issues have overwhelmed their distrust of Republicans. They are predominantly pro-life. They love their guns. In their country, a Christian God should rule supreme. This group values might over talk; war over diplomacy. They fight our wars and die in them with honor — and they volunteer to do so. Finally, to this segment of voters, too many Democrats believe it is more important to protect the snail darter than jobs.
Sarah Palin is the best of all worlds. She is a small town woman from a sparsely populated state. Her husband, Todd, is a union member. She rose from nothing and fought the big oil companies — and won. Every Alaskan will receive more than $3,000 this year under her leadership. She loves to hunt and go fast. She might even chew tobacco. Todd is “her guy” and they have five kids. Her daughter is pregnant, just like the daughters of many Foxworthy voters, who sit on the porch drinking beer after work on a hot summer evening.
Palin loves God and country. Her son is going off to fight in Iraq, and not as an attorney like Biden’s son. Palin’s son is in the infantry, like the sons of many Foxworthy voters. She believes America is right and should rule the world, if not directly then indirectly. If you are near the bottom of the totem poll in your world, being a dominant American is at least something. Her constituents will never leave this country, and will probably not venture too far from their home towns. They don’t care what the French think of us — much less the Chinese or Iranians. “Nuke ‘em.”
Finally, these voters do not trust slick, big-city African-Americans who were once community activists. Democrat or not, most Foxworthy voters will not support Barack Obama in November. And, without Palin, they would probably not vote at all.
If the Republicans are smart, Palin will fly off to her birthplace in Idaho and begin a trek across all the Foxworthy states that the Republicans have to win to have a chance. None of the other candidates appeals to this group. McCain certainly does not.
So let McCain and Lieberman handle the Northeast. McCain and Schwarzenegger handle California. McCain and the Bushes handle Texas and Florida. If Palin can win Idaho to Oklahoma, Georgia to Indiana, the Republicans will win in November. Democrats be forewarned.
September 13th, 2008 By JOE GANDELMAN, Editor-In-Chief
This Guest Voice is by New York attorney Kip Zimmerman who read a post by Gloria Steinem that was much like the many other anti–Sarah Palin emails Democrats have been sending out. This is his reaction. Guest Voice posts do not necessarily represent the opinions of TMV or its writers.
Gloria Steinem, The Democrats And Sarah Palin
by Kip Zimmerman
Way to go Gloria! Except, isn’t a bit late for feminism now?
Where were the fems during primary season? Maybe I just didn’t hear them pounding the table with charges of sexism when Dems were letting reverse-racism(haven’t heard that term in awhile) dictate the nomination. I’m sure they didn’t stand idly by while Dems lost not only a clearly more qualified and viable nominee that would have championed women’s rights, but also maybe the best female candidate we’re ever going to see. Nah, they care too much and have been dying for just such a candidate since the ERA. I probably just wasn’t paying attention when they were saying all that stuff like, 6 months ago.
But hey, let’s all keep talking about Sarah Palin!
Aren’t the Republicans loonies for nominating her? And isn’t anyone who would ever even consider voting for them like, a total moron? And they’re not just dumb, but they’re like, kinda evil too. Especially all those really religious people - GOD I hate them! You know, with all those damn church-goers and country-music lovin’, rednecked gun-owners, I think we may be losing the country. I mean, if they should ever team up with people who are in favor of drilling and people without graduate degrees, what are real Americans like you and I ever to do?
This is serious. These weirdos represent the single greatest threat to the future of this country. You may have some legitimate concerns over the economy or the war or even the environment, but look, we all know those are really just the results of the natural business, terror, and um, sunlight & CO2 cycles. Besides, substantive issues don’t even matter that much these days. It’s all about not getting punk’d and keepin’ it real, yo. As long as we keep responding to every thing they throw at us, we’ll be fine. And I don’t mean just respond, but throw the smack down so hard that by the time they wake up, their clothes’ll be even more out of style. That way they and all their sympathizers will know not to mess with us, and we’ll win this election by making everyone else see just how stupid and unevolved they are. Read the rest of this entry »
