Thursday, October 9, 2008

The cost of freedom

I'll take Manhattan
It is Yom Kippur and in Manhattan the impact is quite apparent. I's Upper West Side is one of the the few places outside Israel where the Jewish population exists in such numbers that it is at near-parity with the rest of the population. My daughter goes to an Episcopal school that is 40% Jewish. We are of neither faith. This is New York. Every sort of person is everywhere. It remains the American melting pot, thankfully where some things melt slowly. The diversity is the source of Manhattan's true vitality.

So on such a day it naturally makes one somewhat reflective.

Reflections and their cause
This process of being reflective was moved along today when I went to a scheduled TV appearance at the NASDAQ and encountered a young man (black) with a sandwich board slung over what was left of his arms. The each arm terminated just about at its elbow. In truth I did not stop to read his sign. Having just had knee surgery I am walking with a cane and I limped past him feigning an obsession with my own problems - as did most who passed him that day. But the more I thought back on him, the more something bothered me. I gave money to a beggar on the train on the way home but I did not give any to the nearly armless guy at Times Square whose very presence made me feel uneasy... It brought it all home to me:

What is the cost our freedom? How do we treat those who bear the bulk of our burden? Do we choose leaders who make the right choices for us? My musings on these subjects gave me little solace... Here are some of them.

War: what is it good for? ...and who thinks so?
As we consider our next president it is important to remember that the cost thrust upon us by the duplicitous agenda of George W. Bush - and this is no anti-Republican rant. It's just trying to come to terms with the past and learn from it. Go back and spin it as you will. But that invasion was not justified on the terms as presented. Some still defend it on other grounds - but revisionism does not sit well with me. Here's a thought: Isn't it chilling to think that we killed more than Saddam would have if we had 'left him alone?' The costs of this war were far worse than were postulated. Laurence Lindsey, an economist at the Treasury at the time spoke out and said that much higher costs were likely; He was let go for his forecast and analysis because it was unpopular at least with in the administration. But he was right.

Learning from our own mistakes as well the mistakes of others -or
BOY are we ever smart now!
We should not be fooled into thinking that we get anything objective out of this administration. It's analysis and spin is all self-serving and is never reflective. The analysis itself may not even be deep. As we consider who to vote for remember that John McCain is not George W. Bush. Nor should we hasten to elect Barack Obama because he tries to tar McCain with an association with Bush. The truth is that military men are often the least likely to want to go to war. They know the Hell that war is. No wonder Bush and Cheney loved it; Rice promoted it and they misled Colin Powell, the lone military man who was then Secretary of State. Powell was later drummed out of the Administration or simply left because of his own broken heart.

Foreign policy matters more than ever B4
Upshot? Foreign policy matters. Everyone loves Barack. He is young and vital and reminds some of JFK. But the Russians slipped missiles into Cuba under JFK's watch after the failed Bay of Pigs invasion. JFK had to find a way to face them down. That 'strong public stand' that we remember as one of America's strongest most decisive moments, cost us our missiles in Turkey and came about because of a young president's mistakes. Now once again the Russians want to help Cuba this time to put 'an international launching station for spacecraft' (wink wink) into Cuba. I wonder what McCain and Obama think of that one?

Financial crisis, the Pinocchio factor and contemporaneous revisionism
As to our current financial crisis I see all this happening again but in slow motion. Paulson promotes some blank check plan (One he probably got from some bank lobbyists) that is the economic equivalent of the Gulf of Tonkin resolution ( He fought hard for it even getting Fed Chairman Bernanke to push for the Muppet-like plan (no strings on me!) to be adopted. Bernanke argued passionately for the independence and the lack of strings or accountability and recourse that Paulson plumped for! I was shocked! In the event it was with heavy changes and lots of strings and oversight that the bill finally passed. Paulson's ex-post spin is that he never expected to get by with no oversight and that he did not think it was a good idea to try to thrust all the details on Congress. He calls that presumptuous. Huh? Is this the same guy who I saw testify in favor of something even more presumptuous: $700blillion with NO outside control or oversight or recourse? And he is not even an ELECTED official! So what was Bernanke in this - his complicit stooge? Did Bernanke know that he was being Lamb Chop to Paulson's Sherry Lewis? No wonder they took turns talking!

Paulson: the Great White Disappointment
It's time to stop worrying about hurting 'friend's' feelings or 'making enemies' or even impeding our own careers. Paulson has been a disaster. While he may 'get it' better than did John Snow, he does not 'have it'. He is no astronaut. Tom Wolfe will never write about him as one with all-the right stuff. He can't even get all the stuff right.

All the right stuff? Huh? Stuff what? The Manchurian Candidate?
Paulson was ushered into the treasury amid such hoopla but has been a bust. First, he was supposed to be an expert on the Chinese. He had gone to China so many times supposedly he knew where all the graffiti was written on the Great Wall and presumably what it meant. He knew so many key Chinese officials. He knew how to deal with 'them.' In the end he was the best 'hire' China had in the US Treasury. His 'acumen' amounted to using his 'credibility' to get us to understand why 'we' had to be patient in dealing with China. Thanks Hank.

Paulson as Financial Genius - Or Wall Street Insider?
As the financial crisis broke out he proposed a Super SIV to collect the 'bad assets. The plan was a flop. The Fed took the lead in most of the market actions. When things got tough it was the FSA in the UK that banned short selling. The SEC followed their lead. Next it was the British that proposed capital infusions into banks. And now after pushing the $700bln bailout out with Fed-inspired reverse auctions as the centerpiece, it looks like capital infusions for banks may become plan 'A' instead of the foot-note remedy that appeared in the boiler plate of 'what we will try to do' that finally passed as the bail out plan. In short, treasury's idea of leadership has been pure follower-ship. Or it's make it up as you go along.

Walk-Over-Ya story: Not a fairy tale What you know or who you know?
Paulson brought his former Goldman colleagues into all this. Steele came to treasury and the new trader to head the mortgage/CDO/whatever auction process is a former Goldman trader. Now Bob Steele is the head of Wachovia and Wachovia is the subject of a bitter Citibank-Well Fargo battle over assets. Citi was going to get Wachovia real cheap as the FDIC was prepared to make what now looks like a sweetheart deal so sweet Citi may have contracted diabetes from it. Then, suddenly, Wells Fargo emerged with a bid to buy the whole firm and put the tax payers on the hook for nothing! This was far superior to the Citi plan for Wachovia and for the American Taxpayer (remember him/her?).

Are we learning yet?
All this SHOULD really make you wonder about the reverse auctions that never have been conducted before as a 'solution' to the removal of 'bad' assets from bank balance sheets (i.e. see dictionary under word "problem" as in 'the solution is the problem' or it soon will be). But the plot thickens. Now after a more thorough asset inspection, Wachovia appears to have more junk on its books than 'they' thought. A certain calm has been cast over the haggling process for Wachovia. Is it stalemate or just Yom Kippur?

Who will get reflective next?

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