Categories
Election 2008 McCain Politics

Old Men Are Dangerous

[digg-reddit-me]

Old men are dangerous: It doesn’t matter to them what is going to happen to the world.

So says the 88-year old Captain Shotover in George Bernard Shaw’s play Heartbreak House. Of course, this sentiment could just as easily apply to those who believe we are in the End Times. John McCain, with his questionable temperament, just exacerbates this danger. Add to this McCain’s flair for drama, the personality cult that McCain has built around himself, and his tendency to demonize his opponents.

“It doesn’t matter to them what is going to happen to the world.”

Think of Iran; deregulation; “killing” the United Nations; health care; massive tax cuts offset only by cutting pork; and of course, war and empire.

A man who lived his youth “looking for hardship, danger, horror, and death that [he] might feel the life in [him] more intensely” now seeks, in market his old age, by invoking the virtues of his being disinterested, of being “above politics,” of “putting country first.” This is McCain story – of an irresponsible youth – who is now wise with old age. Yet, as he wrote, “Often my haste is a mistake, but I live with the consequences without complaint.” Poetic – and an apt description of how McCain’s wisdom is limited by his personality. (While Obama’s wisdom is reinforced by his patience and focus.)

Old men have their uses – but today’s crises – financial meltdowns, terrorism, war, climate change – call for a young man who will have to live in the world he has wrought, after his power has ebbed. Just as in 1960 the nuclear standoff of the Cold War needed a new generation to take responsibility, to come into power, to wrest away from their elders the burden and privilege of leadership – so today, we must. We will live in the nation, the world created by the actions of the next president. It is important that the next president realize he must live with the consequences of his actions.

Below the jump is the context of this quote in Shaw’s play which is actually very interesting as well. The second line – a question by a young woman – describes exactly the tact McCain has taken to marketing his old age. Captain Shotover’s response reveals some other similarities with McCain – although I cannot imagine McCain being as honest or reflective.

Categories
Reflections

Quote of the Day

A man is wise with the wisdom of his time only, and ignorant with its ignorant. Observe how the greatest minds yield in some degree to the superstitions of their age.

Henry David Thoreau in his diaries on January 31, 1853.
[Image of Walden Pond used courtesy of Storm Crypt licensed under Creative Commons.]

Categories
Election 2008 McCain Obama Politics

A Sarah-gogue

[digg-reddit-me]Found on page 41 of today’s New York Daily News page along with a syndicated column by the arch-conservative Charles Krauthammer which, while attacking Obama’s character through all sorts of sleazy techniques, cannot deny that “Obama is a man of first-class intellect and first-class temperament.” (Remember – Krauthammer is the guy who approvingly claims McCain wants to “kill the United Nations.”)

Categories
Economics Election 2008 Humor Videos

11 Things I Learned While Trying to Figure Out the Financial Crisis

[digg-reddit-me]Like a lot of people, I’ve been struggling to understand this financial crisis over the past few weeks. I don’t pretend to be an economic expert – I’ve always been more interested in foreign policy, politics and history – but the issue of this crisis is obviously so important, it seems that it is everyone’s responsibility to find out what went on, what caused this.

I also feel that this is an issue which is confusing our politics, our partisan impulses. Both the right and the left have many reasons to hate the bailout – yet the pragmatists on both sides agree that something must be done. Everyone is angry. Very few predicted this. I only came across a few who prominently warned about a crisis such as this – subscribers to the Austrian school of economics such as Ron Paul; liberal capitalists such as Warren Buffet and George Soros; and economists like Nassim Nicholas Taleb.

This crisis has succeeded in confusing ideological categories – which is probably part of the reason it has spwarned so many interesting and non-ideological takes, as people struggle to understand these momentous events in terms they are familiar with. (Here’s one ingenious example.) On the whole, Republican politicians instinctively trusted the market and although some attempted to reign in Fannie Mae and Freddie Mac, they saw no imminent threat to the financial system. A few Democrats saw the need for more oversight to prevent excessive risk-taking that might endanger the financial system; many more Democrats (especially as the party in Washington is dominated by neo-liberals), didn’t see the profit in warning of an unknowable future catastrophe. Those financial firms whose main purpose was to minimize risk and maximize profit accomplished this by reducing the risk of any individual transaction while placing greater and greater stress on the system – trading many small risks for a giant catastrophic risk. But theyse firms didn’t know this because the entire system was opaque and oversight was minimal. As long as things were going well, there was no reason to figure out what was going on.

Now, here we are today.

I don’t pretend to understand the cause or the cure of this crisis. But here are 10 things I’ve learned, 10 things worth sharing, in my attempts to figure out what’s going on:

  1. The “real” Great Depression of 1873: “[T]he current economic woes look a lot like what my 96-year-old grandmother still calls ‘the real Great Depression.’ She pinched pennies in the 1930s, but she says that times were not nearly so bad as the depression her grandparents went through. That crash came in 1873 and lasted more than four years. It looks much more like our current crisis.” This depression also featured mortgage issues, a housing bubble, an emerging economy undercutting global prices (America instead of China), amd a lack of transparency leading banks to refrain from lending. From Scott Reynolds Nelson in the Chronicle of Higher Education.
  2. The Martingale. Wall Street fell for a 400 year old sucker bet, the martingale. You always win in this betting game – as long as you can cover your losses. But once your losses are too great, this “double-or-nothing” game leads to catastrophe. The formula to understand this is simplified as:

    (0.99) x ($100) + (0.01) x (catastrophic outcome) = 0

    In other words, playing for $100, there is a 99% chance that you will make at least $100 dollars playing this game. But there is a 1% chance of a catastrophic outcome. If you never stop betting, the catastrophic outcome is inevitable.

  3. April 28, 2004. Stephen Labaton of the New York Times examines the SEC decision to relax regulations and create an exemption for the biggest investment banks (those with assets over $5 billion) that would allow them increase their leverage ratio, and borrow as much as 33 times their assets as Bear Stearns did. This made the big investment banks especially susceptible to any downturns, as if their overall investments declined by even 3%, they would lose all their assets.
  4. Goldman Sachs always wins. David Weidner of MarketWatch explains how Goldman Sachs looks to come out of this crisis stronger – and why their political connections had nothing to do with it. (Really. It’s just a coincidence that their main competitors have been ruined, the institution they relied on most was bailed out, and the Treasury Secretary is a former CEO.)
  5. Financial Interdependence. Which means that if one bank trips, the entire financial system falls down. Why? Because the key innovations of the past thirty years in the financial markets have been geared towards reducing risk. Often this was accomplished by spreading risk among many actors. An investor would borrow money to invest in some security; to hedge in case the investment went south, an investor would buy insurance; to hedge against the insurance company not being able to pay, they would purchase a credit default swap. Mark Buchanan described in a New York Times editorial how some economists had begun to create models of markets which projected the actions of many agents acting independently. As the economists allowed greater interdependence in these models: “The instability doesn’t grow in the market gradually, but arrives suddenly. Beyond a certain threshold the virtual market abruptly loses its stability in a ‘phase transition’ akin to the way ice abruptly melts into liquid water. Beyond this point, collective financial meltdown becomes effectively certain. This is the kind of possibility that equilibrium thinking cannot even entertain.”
  6. The American System. The American economic system is not and has never been pure capitalism. As Robert J. Schiller wrote:

    No, our economy is not a shining example of pure unfettered market forces. It never has been. In his farewell address back in 1796, 20 years after the publication of Adam Smith’s “The Wealth of Nations,” George Washington defined the new republic’s own distinctive national economic sensibility: “Our commercial policy should hold an equal and impartial hand; neither seeking nor granting exclusive favors or preferences; consulting the natural course of things; diffusing and diversifying by gentle means the streams of commerce, but forcing nothing.” From the outset, Washington envisioned some government involvement in the commercial system, even as he recognized that commerce should belong to the people.

    Capitalism is not really the best word to describe this arrangement. (The term was coined in the late 19th century as a way to describe the ideological opposite of communism.) Some decades later, people began to use a better term, “the American system,” in which the government involved itself in the economy primarily to develop what we would now call infrastructure — highways, canals, railroads — but otherwise let economic liberty prevail. I prefer to call this spectacularly successful arrangement “financial democracy” — a largely free system in which the U.S. government’s role is to help citizens achieve their best potential, using all the economic weapons that our financial arsenal can provide.

    Americans may assume that the basics of capitalism have been firmly established here since time immemorial, but historical cataclysms such as the Great Depression strongly suggest otherwise. Simply put, capitalism evolves. And we need to understand its trajectory if we are to bring our economic system into greater accord with the other great source of American strength: the best principles of our democracy.

  7. The Shadow Banking System. Existing alongside the regulated banking system is what is called a shadow financial system – including money market accounts, hedge funds, investment banks, and countless other financial creatures. This system was invented in order to avoid government regulation of various sorts. This crisis has been mainly but certainly not exclusively in this shadow system – and those regulated banks have been the big winners in all of this (aside from Goldman Sachs.) Even the remaining independent investment banks – Goldman Sachs and Morgan Stanley have chosen to be subject to greater regulation. Nouri Roubini speaking at the Council on Foreign Relations explained that the shadow banking system is on the verge of collapse because of their lack of transparency and because they took risks they would not have been able to if they were subject to regulation.
  8. Market Fundamentalism. I am a person suspicious of fundamentalism of any kind – and perhaps that makes me more prone to see reflections of the true believers in Communism during the collapse of the Soviet Union in the true believers in capitalism during the current crisis. The difference of course is that we today are not in a pure capitalist system – which is at least part of what has prevented this crisis from destroying our economic system so far. The government shored up essential institutions and is taking various measures now to restore liquidity to the markets – from the bailout to the Federal Reserve’s unprecedented actions. But what is evident to most observers – that the market failed to regulate itself, that the market mispriced risk, that short term profits were prioritized over long-term value, that the actions of thousands of individual actors acting for their own best interest created a systematic risk – is not clear to market fundamentalists. They insist that it was the fact that the government was involved in the market at all that led to these risks – specifically in the form of Fannie Mae and Freddie Mac. They have a point – in that Fannie Mae and Freddie Mac were only lightly regulated in recent years, and that though they got into the subprime lending market late and were forced out by regulators early, they underwrote a significant amount of these loans during that time, and that these institutions were able to overleverage themselves because of an assumed implicit government guarantee. All of this is to say that Fannie Mae and Freddie Mac were part of the problem. They weren’t the first companies to be hit by the crisis; and other companies came quickly afterward. Perhaps it is because of my limited experience, but I haven’t heard any serious economists on the right or left pushing forward the theory that this was all Fannie and Freddie’s fault – only right-wing partisans trying to throw some political blame the Democrats’ way. What these market fundamentalists want to insist is that though even the remaining investment banks have taken themselves out of the shadow banking system and voluntarily subjected themselves to regulation, what we really need is less government intervention in the market. All this is based on the distinction between economic activities of the government as decided in a democracy by the people, which in market fundamentalism are inherently oppressive, and economic activities of private individuals and corporations, which are free. Which means that a single individual controlling hundreds of billions of dollars is freedom while a government of the people controlling a similar amount is oppressive.
  9. Cognitive errors. Megan McCardle of The Atlantic has compiled a useful list of cognitive errors that seem to have played a role in the crisis – both in creating the conditions that led to it and in compounding it. For example, she discusses the recency effect:

    People tend to overweight recent events in considering the probability of future events. In 2001, I would have rated the risk of another big terrorist attack on the US in the next two years as pretty high. Now I rate it as much lower. Yet the probability of a major terrorist attack is not really very dependent on whether there has been a recent successful one; it’s much more dependent on things like the availability of suicidal terrorists, and their ability to formulate a clever plan. My current assessment is not necessarily any more accurate than my 2001 assessment, but I nonetheless worry much less about terrorism than I did then.

  10. The Black Swan. Nassim Nicholas Taleb is my kind of economist. The basis of his philosophy is that, “The world we live in is vastly different from the world we think we live in.” He advocates “tinkering” as our best mean to change the world – and his theory of the markets take into account many of the previous points. While he was running his own hedge fund in the 1990s, he turned his own knowledge of his lack of knowledge – and others’ lack of knowledge – into enormous profits. It came at the expense of losing a little money 364 days of the year – but making enormous profits in that one remaining day. He would bet on market volatility – which he understood financial firms repeatedly underestimated. Taleb’s key insight is that we know very little of the world itself – and will be more often fundamentally wrong than right. The example he uses is the Black Swan as described by David Hume:

    No amount of observations of white swans can allow the inference that all swans are white, but the observation of a single black swan is sufficient to refute that conclusion.

    This fundamental unknowability of the world must inform our actions, and perhaps points to some solutions. We must attempt to resolve this crisis by tinkering with different solutions, and seeing what works, while being mindful that our actions will inevitably have consequences we do not imagine. And remember – at any point – a black swan could come around and reshape our world suddenly – as 9/11 did, as the assassination of the Archduke Ferdinand to start World War I, as did the invention of the personal computer, as has this financial crisis. The solution will not come from our determined application of fixed ideas, but by our openness to the possibility that we may be wrong, even as we are determined to act. We must see the shades of gray and acknowledge that we do not fully understand the world, yet still act – tinker, if you will.

  11. Damn, it feels good to be a banksta!
Categories
Economics

Watch Wal-Mart Grow

I can’t decide whether this map is extraordinary or disturbing. Probably both.

Categories
Election 2008 McCain National Security Politics The Opinionsphere The War on Terrorism

The Wrong Lessons, The Wrong Leader

The New Yorker summarizes why John McCain is precisely the wrong man to lead America in the War on Terror:

Unimaginably painful personal experience taught McCain that war is above all a test of honor: maintain the will to fight on, be prepared to risk everything, and you will prevail. Asked during the first debate to outline “the lessons of Iraq,” McCain said, “I think the lessons of Iraq are very clear: that you cannot have a failed strategy that will then cause you to nearly lose a conflict.” A soldier’s answer––but a statesman must have a broader view of war and peace.

Categories
Election 2008 Obama

Something About Karma

In 1993 1989, a woman newlywed to a Norwegian was stopped at the airport because she did not have enough money to complete her trip to meet her husband. Then a stranger, waiting in line behind her, offered to pay the remaining $103. She offered to pay him back when she met up with her husband and had money. So, he wrote down his name and address for her.

The stranger turns out to be Barack Obama. (Better translation here.)

This story, of course, doesn’t prove anything. It was just a kind act that one could never expect to receive credit for. And somehow, that does make a difference.

Edits in text. October 15, 2008.

Categories
Domestic issues Election 2008 Foreign Policy Humor McCain Obama Politics The Clintons

A Warning to John McCain

[digg-reddit-me]John (may I call you John?):

I guess I was wrong about you planning a strategy of making Obama seem un-American after your last debate with him. ((On the site, I wasn’t specific about the timing – but in private conversations I was pretty sure when this would be launched.)) Apparently you’ve decided to launch this attack now.

Sarah Palin said yesterday that Obama had disqualified himself from being commander-in-chief, and today that Obama was “palling around with terrorists” and was “not a man who sees America as you see America and as I see America.”

It’s hard to see how she can escalate the rhetoric from here. She can call him a traitor. She can call him a terrorist. She can call him a Muslim. She can say he hates America. These are the only ways to truly go further. Make no mistake – this is a scorched-earth strategy. This is a strategy that attempts to define America in a way that excludes many of it’s citizens. If this is not an explicitly racist strategy, it is as close as a mainstream candidate can get – a candidate I might add who does not seem to be personally racist himself.

If you win with this strategy, the polarization that will accompany your administration will make the polarization of the past fourteen years seem tame. Racial tensions will be exacerbated to a point they have not been since the late 1960s. As this strategy is not designed on a set of policy issues or an agenda, it likely will not benefit the down-ticket candidates much at all, resulting in a expanded Democratic Congress. The feelings in this Congress will likely be as raw as your feelings were after losing to Bush – as you lost to what was previously described to be one of the dirtiest campaigns in history. Remember – you almost became a Democrat in this period – and opposed almost everything Bush proposed (a fact which you’re building on now as you constantly invokes this period to call yourself a maverick). Your contempt for Bush was legendary. And your status as a martyr for the honorable campaign that refused to go negative gave you great credibility. ((Of course, you had gone negative – just not as bad as Bush.)) Now – imagine that voters elect a Congress of the party who expected to win the White House, only to have it denied them because of a national campaign that was explicitly designed to make their standard-bearer out to be a terrorist-sympathizing, un-American, menacing black man. Democrats will not just believe you cheated to win – but that you encouraged and played on the worst aspects of America in order to do so. And they would be right.

If you – a Republican apparently sympathetic to most of Bush’s policies – was driven to oppose Bush, to lead the charge against him even, by bitterness over your defeat – just imagine how much more bitter, how much angrier, Democrats would be if you were to win with a similar strategy. Imagine the deadlock. Imagine reaching out to this Congress.

But the timing of this attack gives me hope. It is both too late and too early. Those who believe smear emails have heard that Obama is a secret Muslim and hates America and all that. And those who listen to right-wing radio have too. But for many Americans, even as they may have been vaguely aware of such charges, have not heard anyone they trust make them – and they know charges like these have been in the background about every Democratic presidential candidate since at least Bill Clinton in 1992.

But now Palin is bringing them up. And these people have a choice to either trust her or not.

To trust her, these people first need to distrust several things:

  1. The media (who must be trying to cover up for Obama);
  2. Obama (who must be hiding his true self);
  3. The millions of Americans who voted in the Democratic primaries (because at best, they were fooled by Obama into thinking he was a red-blooded American like them);
  4. Joe Biden, Al Gore, Bill Clinton, Hillary Clinton, and many of the other Democrats who vouched for Obama (because if Obama really was a friend of terrorists not qualified to be commander-in-chief who is un-American – and these people have personally met him and subsequently vouched for him, they must at least partially agree with him);
  5. Themselves (because many of them thought Obama was authentic and inspired a feeling of pride in America in them – that it could produce someone like Obama).

It is the last step which is hardest. Because unless they have been ardently opposed to Obama from the beginning, they must admit that you were wrong – that they were made fools of – in order to believe Palin is right and that Obama stands opposed to what they believe.

They must also distrust their perception – because most people, seeing Obama debate you, saw that he held his own if he did not win outright. Obama was a steady, strong presence. He was confident. He was effective. He seemed very much a potential commander-in-chief. But Palin is telling them that when they saw this, they were wrong.

If this attack had been launched earlier – before most Americans had gotten to know Obama, I think it would have had a greater chance of succeeding. If it had been launched later, and Obama would not have a month to dispel the attacks, it might have swayed more people who would feel uneasy about electing someone who had been charged with such awful things. ((Would you trust someone accused of being a pedophile to watch your children? No – because it might be true. This same type of fear can easily lead people away from the candidate attacked most – unless he or she has a chance to dispel this and for you to come to trust your own judgment and to see the attacks as politically motivated.)) Which is why the timing gives me hope. It leaves just enough time for some well-justified backlash. And it clearly is a sign that you are growing increasingly desperate – as Obama is building a lead.

The fact that these attacks have not been launched by you until now that Obama is gaining ground will make some people distrust them. But the key point is this:

As Abraham Lincoln said,

You can fool all of the people some of the time, and some of the people all of the time, but you can’t fool all of the people all of the time.

Palin and yourself – in trying to exclude people like Obama from your definition of “American” – are working against what all of us have been taught in schools – our textbook understanding, our Saturday morning cartoon understanding, our life-as-it-is-lived understanding of America. It goes against this idea of America as a combination of a melting pot, Horatio Alger, Grandma, apple pie, cowboys, Martin Luther King, Jr., FDR, Lincoln, JFK, TR, Reagan, a city shining on a hill, a place where we judge people by not by the color of their skin but by the content of their character, a tolerant nation, a unique nation, a nation blessed by God, the nation that created jazz, baseball, and the Constitution, that sent men to the moon, that defeated the Nazis and the Communists, that fought a war against slavery, where life, liberty, and the pursuit of happiness are protected, where freedom rings, where tolerance reigns, where what is right with America can cure what is wrong with America – this ideal America we aspire to and sometimes seem to almost reach.

Barack Obama represents a nation that united as one on 9/11. Barack Obama would never have existed in an intolerant America, in a non-diverse America, in an America that would not allow a poor child to succeed on his merits. The America that united, with pride and patriotism, with defiance and neighborly spirit on 9/11 is precisely the America that Barack Obama is part of.

John – you and Sarah Palin can attack this America only at your own risk. And you should be careful, lest you go down in history as a villain, instead of the American hero you once were.

Sincerely,

A former supporter of yours in 2000,

Joe Campbell

P.S. Why not be a good fellow and try to make up for your sins here and donate to a good cause?

Categories
Election 2008 Libertarianism McCain Obama Politics The Opinionsphere

The Vice Presidential Debate

For the most part, I’m agreeing with what I’ve read and heard about this debate. Palin regained her confidence and was able to bluster her way through some tough spots without the long awkward silences that were evident in the Couric interview. Neither candidate made any significant gaffes. Palin got the name wrong of the commander in Afghanistan – and Biden, clearly knew she did, but chose not to correct her. Palin started early in the debate with a warning to the moderator, Gwen Ifill – saying she didn’t care if Ifill thought she hadn’t answered the question, because she was talking to the American people.

All that I think was evident.

There is one thing though that bothered me. Palin very clearly wanted to call into question Barack Obama’s whether Barack Obama was truly American enough. She said – on seperate occasions – that he wanted to “waive wave the white flag of surrender,” that he was planning on socializing health care, and that he voted against funding for the troops. She kept hammering that last point home despite Biden’s two very strong attempts to correct her. But she kept coming back to it:

I have great respect for your family also and the honor that you show our military. Barack Obama though, another story there.

Maybe I’m being too sensitive – but my distinct impression was that Palin was attempting to plant  seeds of doubts about Obama’s Americanism in these voters. What came across in this debate was that Biden respected McCain, but thought he was incredibly wrong and dangerous. Palin respected Biden, but thought Obama was foreign-ish, un-American, and untrustworthy.

I think someone listening and taking logical stock of the debate would have to come down on the side of Biden. Someone who is not discomfited by Obama – to question whether or not he is American enough – wouldn’t be swayed by Palin’s charges. But for those voters who have an innate distrust of Obama – whether for reasons of race or class or whatever else – Palin was deliberately trying to play into those fears.

I hope I’m wrong – but my fear is that this debate is a prelude. If I’m right, after John McCain’s last debate with Obama (and to some under-the-radar extent before), a deliberate campaign will be launched to aggravate questions of race and of foreign-ness and of American-ness. I’d like to think John McCain is a man who wouldn’t stoop to that to win the presidency. I hope that that’s true. But I’m not sure it is – and it seems clear that this is McCain’s only path to victory.

The problem is that when making a charge like Obama wants to waive a white flag of surrender to the terrorists, the accusation itself sullies him. Biden didn’t defend adequately against these charges – but I’m not sure how he should have. I don’t know.

This debate left me much more concerned about how this campaign will end, although no one else seems to have picked up on this, so maybe, hopefully, I’m concerned for no reason.

Categories
Election 2008 Obama Politics

Lies About Obama #1: A Closet [insert far-left group here]

Obama is a closet socialist (or communist, or other extreme leftist.)

Not even close. The timing of these accusations are a bit odd as everyone from the Financial Times to the Wall Street Journal have called this Republican administration’s recent actions a form of socialism just for the rich. Noted “socialists” Warren Buffet, Robert Rubin, Paul Volcker, and Lawrence Summers have all endorsed and have helped create Obama’s economic policies.