Rogue Columnist

The biggest regulatory overhaul since...?

You'll hear a lot of sound bytes today about the Bush administration's proposal to deal with the latest Wall Street scandals as "the most sweeping regulations since the Great Depression" or some such drivel. Don't be fooled. This second major wave of venal crime in Mr. Bush's presidency will be dealt with no more effectively as the first, perhaps less so.

All you need to know was in this Sunday preview in the New York Times:

Although the proposal would impose the first regulation of hedge funds and private equity funds, that oversight would have a light touch, enabling the government to do little beyond collecting information — except in times of crisis.

The regulatory umbrella created in the 1930s would grow wider, with power concentrated in fewer agencies. But that authority would be limited, doing virtually nothing to regulate the many new financial products whose unwise use has been a culprit in the current financial crisis.

Another interesting take this morning from Mother Jones:

There remains an enormous deregulatory elephant in the room that no one is addressing, but rather everyone accepts as an irrevocable presence—Glass-Steagall repeal. In the face of current debate about whether more oversight will fix our nation's housing problems or the banking credit crunch of its own making, there is a steadfast refusal to consider that change can mean relying on past measures that have proven effective.

The banking system simply must be regulated at source. Thanks to Glass-Steagall repeal in late 1999, so-called commercial banks today are merely composites of investment and commercial banks that can manufacture loans on one side of their balance sheet and trade them on the other.

In other words, the way is clear for more CEO malfeasance, more looting of America's wealth, more crony capitalism, another bubble. Sadly, the gutted business staffs of America's dumbed-down newspapers -- which have also eliminated most of their independent coverage of Washington -- will miss all this.

The current mess is only a preview of the damage that will be done by a combination of a largely unregulated shadow capital market, weak oversight and crippling American debt and other economic vulnerabilities (poor education, falling capacity to produce things of real value, a conservative entitlement society, etc.).

Biggest irony: The Fed is being given new responsibility to identify crises before they happen. Yet the housing bubble was created largely by Alan Greenspan's Fed.

'America's toughest sheriff's' cowardly war against illegal immigrants

In my David Mapstone Mysteries series, the Maricopa County Sheriff is a Mexican-American tough guy -- bull-headed, manipulative, egotistical, fascinating. Nobody ever accused him of violating prisoners' rights, however, and he brings an ambivalent realist's view to illegal immigration. In real life, we get Joe Arpaio, who casts himself, thanks to a gullible media and public, as "America's toughest sheriff."

Many real police officers have nothing but contempt for Arpaio -- they call him the "badged ego" for his endless publicity stunts. They talk about how the media leave largely unexamined the troubled record of Arpaio's department (an honorable exception is the weekly New Times and my friend, journalist John Dougherty). But nobody wants to listen to reality in Arizona, particularly when the Arpaio fantasy so appeals to the simplistic minds of the many Anglos who want the Salt River Valley to be Des Moines with hot weather.

The latest spectacle involves Arpaio sending deputies and "posse" members into the city of Phoenix to arrest illegal immigrants. Phoenix PD wasn't happy about it, and Mayor Phil Gordon belatedly condemned it, albeit before a safely sympathetic Hispanic audience. An Arizona Republic poll -- an unscientific, self-selecting Web thang -- shows most support the sheriff.

Whatever faith-and-prejudice-based ether Arizona's Web lurkers live in, the reality is far different. Arpaio plays to the mob while doing nothing to address this complex issue of, in Joe Wambaugh's words, lines and shadows.

Making serious economic reform, part I

The candidates are giving speeches on the economy, ranging from Obama's correct diagnosis that corporate political power has driven much destructive policy to Clinton's programmatic wonkishness to McCain saying speculators should receive no federal bailout. Unfortunately, he means individuals who face foreclosure, not the big financial institutions that caused the housing and mortgage collapse.

The nation faces more economic challenges than at any time since the Great Depression. But overall America is so wealthy that the stresses and dangers are concealed; their most severe consequences may not be felt for decades. Nobody has all the answers, but I will lay down some markers to watch. These are based on history, the test of time and the reality of today's economy. I wonder if the candidates will address them (we already know McCain's answer)?

Fresh evidence of a profound slowdown in Arizona

Arizona's cheer-leaders have their heads down, hoping to mute news of the severity of the recession there, hoping, hoping to get the sprawl machine rolling again. Unfortunately, evidence continues to emerge -- if any more were needed -- that the Arizona model is a failure. That is, unless one uses very limited metrics: population growth, houses built (ooops, until lately), golf courses, and a class of rich people living in an income gap reminiscent of the Third World.

The federal Bureau of Economic Analysis tracks data on per-capita income. This is the measure economists say best tells how people are actually doing. Arizona, with more than 6 million people, is the 16th most populous state in the nation. Yet its per-capita income ranks 39th, and is only 87 percent of the national average. That average includes places such as Mississippi. By comparison, Washington state ranks 14th in population and 15th in income. Colorado ranks only 22nd in population but 10th in income. Thus the argument that population growth and size are the determinants of economic success is another of those sunstroke lies.

The cheer-leaders often claim Arizona's income is growing fast as a percentage. This is a statistical artifice partly based on rapid population growth and it never lifts actual per-capita income even to the national average at the end of the year. But in the latest BEA numbers, Arizona ranked last among the states in income growth rate from 2006 to 2007. This is a sign of a profound slowdown. I'll be interested to see how this is reported/buried in the Arizona Republic, or referenced by GOP political operative Robert Robb, who has written the same columns over and over, using per-capita income growth to defend the status quo.

But no worries, cheer-leaders. Arizona won't and can't change. You're "safe." Too bad the world keeps changing around it, and not to its advantage.

'Support the troops.' What does that mean?

One of the most fascinating changes in my lifetime has been the militarization of America. It's not just the rise of the national security state with the Cold War, extended vastly by the so-called war on terror. It's not just the Military-Industrial Complex that President Eisenhower warned against, where profits drive policy, often to disastrous ends. It's not even the necessary burdens of being a superpower, or, if we're not careful, an imperial power.

It's the whole "support the troops" religion that has grown up. In fact, Americans were historically suspicious of a large standing army. Support the troops? Newly commissioned, young U.S. Grant was heckled and ridiculed when he came home from West Point. It made him forever shy away from gaudy uniforms. World War II was fought by citizen-soldiers who wanted to get the job done and come home. Architects of the post-war world sought collective security with diplomacy and strength. Americans had been oppressed by a king with hired troops. They knew from ancient history that permanently militarized republics eventually became centralized tyrannies.

Do we even think about these things as we "support the troops"?

Shareholder Nation...suckers

From today's Wall Street Journal, news that should chill everybody who thought they could depend on rising stock prices to fund their retirements through 401k)s, which they were forced to take instead of pensions:

The stock market is trading right where it was nine years ago. Stocks, long touted as the best investment for the long term, have been one of the worst investments over the nine-year period, trounced even by lowly Treasury bonds.

Is it already over for Obama, II?

From today's New York Times, a story that adds ammo to my skepticism that Obama can win. The headline: "Obama's Test: Can a Liberal be a Unifier." Imagine a similar question about McCain: Can a conservative be a unifier? The historical record says no, but set that aside for a moment. The supposedly liberal media continue not only to give McCain a free ride, but to buy into the destructive narrative about "liberals" and "conservatives."

The Times writes:

To achieve the change the country wants, he (Obama) says, “we need a leader who can finally move beyond the divisive politics of Washington and bring Democrats, independents and Republicans together to get things done.”

But this promise leads, inevitably, to a question: Can such a majority be built and led by Mr. Obama, whose voting record was, by one ranking, the most liberal in the Senate last year?

Also, and more immediately, if Mr. Obama wins the Democratic nomination, how will his promise of a new and less polarized type of politics fare against the Republican attacks that since the 1980s have portrayed Democrats as far out of step with the country’s values?

So are we to believe that breaking the military in endless wars of choice, installing a theocracy of 'family values' intolerance, ignoring global warming, wrecking the constitutional separation of powers and whittling away the middle class in favor of a corporate elite are "in step with the country's values"? God help us if they are.

 

The time bomb ticking in American portfolios

Once again people with 401(k)s are getting hammered by the stock market. The Dow may be up one day, down the next and up yet another day, but it's been a bad year for most people's portfolios. As Congress talks about long overdue regulation of Wall Street, you can bet that the artifice of 401(k)s won't be on the table.

That's too bad, because America is headed for a wave of impoverished baby boomers. It may not be a big one, because many will inherit the wealth of their parents. But each succeeding generation will be a little poorer. There may be more wealthy, too, but the majority will see declining living standards. It's all so Gilded Age. And few have thought through the consequences.

McCain's free ride continues while 'terminator' rampages

Frank Rich gets it exactly right in today's New York Times, when he identifies the "Republican Resurrection" that has resulted from Hillary's Terminator-like actions in the campaign. He's especially good on the media's"benevolence" toward John McCain.

This was strikingly apparent last week, when Mr. McCain’s calamitous behavior was relegated to sideshow status by many, if not most, news media. At a time of serious peril for America, the G.O.P.’s presumptive presidential nominee revealed himself to be alarmingly out of touch on both of the most pressing issues roiling the country.

As Bear Sterns collapsed and the nation faced its worst economic collapse in decades, McCain's staff released an "anodyne" statement containing nothing. He promises more of the same hands-off, "business-friendly" government that helped cause the disaster.

In Iraq, Mr. McCain did not repeat his April 2007 mistake of touring a “safe” market while protected by a small army. (CNN tried to revisit that market last week, but the idea was vetoed as too risky by the network’s security advisers.) Instead he made a bigger mistake. As if to emulate Dick Cheney, who arrived in Baghdad a day behind him, he embraced the vice president’s habit of manufacturing false links in the war on terror: Mr. McCain told reporters that Iran is training Al Qaeda operatives and sending them into Iraq.

His Sancho Panza, Joe Lieberman, whispered in his ear that a correction was in order. But this wasn’t a one-time slip, like Gerald Ford’s debate gaffe about Poland in 1976. Mr. McCain has said this repeatedly. Troubling as it is that he conflates Shiite Iran with Sunni terrorists, it’s even more bizarre that he doesn’t acknowledge the identity of Iran’s actual ally in Iraq — the American-sponsored Shiite government led by Nuri al-Maliki. Only two weeks before the Iraqi prime minister welcomed Mr. McCain to Baghdad, he played host to a bubbly state visit by Mahmoud Ahmadinejad.

Bottom line: McCain keeps getting a free ride, while the Clintons keep showing why Bill's presidency was a mixed bag, helping prepare the way to the present calamity.

Passportgate: Only the tip of the iceberg

Revelations that State Department "contract employees" were looking at the passport files of Sen. Barack Obama raise so many questions.

Contract employees? Who benefits? What is the company and its ties to the Republican party? We know from the Iraq war and Hurricane Katrina that billions have been poured into politically connected private firms, many through no-bid contracts, all lacking proper oversight. And the deeper issue is why so much that should be done by impartial government employees is being farmed out for profit.

I'm not comforted that Clinton and McCain were also snooped on. Obama is the candidate who must be taken out. He's the one being painted as too foreign, too Hussein, too comforting to terrorists. In reality, he's the candidate who is most threatening to the community of interests that rule now. Maybe all three were really victims. But maybe the other two files are mere cover.

UPDATES: The contractor has been identified. Secretary Rice promises this will be investigated by the department's inspector general. Unfortunately the job is unfilled following the scandal over Blackwater's murderous ways and the infamous Baghdad embassy mess.

Is it already over for Obama?

For everyone who was stirred and moved by Barack Obama's inspiring and intelligent speech this week -- one of the finest of my lifetime  -- I have bad news. He will not be the next president. He may not even be the Democratic nominee. I pray and hope that I'm wrong. But the evidence is not good.

Why? Maybe it will be because, as Matt Bai pointed out in the New York Times Magazine, Obama only wins urban areas with concentrated black voters and states with few blacks -- not enough for an electoral majority. He loses in the critical places with real (segregated) diversity, such as Ohio:

What this suggests, perhaps, is that living in close proximity to other races — sharing industries and schools and sports arenas — actually makes Americans less sanguine about racial harmony rather than more so. The growing counties an hour’s drive from Cleveland and St. Louis are filled with white voters whose parents fled the industrial cities of their youth before a wave of African-Americans and for whom social friction and economic competition, especially in an age of declining opportunity, are as much a part of daily life as traffic and mortgage payments.

Maybe it will be because Hillary Clinton has shown she will destroy the party rather than lose the nomination. Maybe it will be because Obama is such a threat to the community of interests that wants things to stay as they are (no need for conspiracy theories).

Five years that changed America, whether we know it or not

After five years of war in Iraq, we know a few things. None of them gives us much comfort for the future.

We know that, contrary to President Bush after 9/11 (used as a false pretense for waging war in Iraq), that everything did not change. That was certainly true on the home front. For the first time in American history, taxes were cut as the nation went to war. Most Americans were asked to make no sacrifices at all -- indeed, we were told to "consume" more (imagine that admonition from FDR). Americans continued the unthinking choices that helped lead to the mess in the Middle East, chiefly driving ever longer distances in automobiles. Televised and electronic distractions continued and even increased. Many Americans still believe Saddam Hussein was behind the 9/11 attack. The media unthinkingly report on "al Queda" in Iraq, although it is a separate group of insurgents that emerged as a result of the invasion. Most Americans, it seems, have "moved on."

Strange days, double standards, getting away with murder

Things are so out of whack in today's America. The country's attention was manically fixed on the fall of New York Gov. Eliot Spitzer for hiring high-end call girls. Only Ben Stein among major commentators cut to the heart of the matter when he said  how troubling it is that a few "nosy civil servants" using wiretaps essentially overturned the vote of the people of New York. "Something sinister is happening and it scares me," he said. Indeed.

One can lead the nation to war under false pretenses, bungle the war with lethal consequences for thousands of American soldiers and hundreds of thousands of Iraqi civilians. One can neglect the problems of New Orleans, then lethally bungle the response to Hurricane Katrina, and engage in years of ineptitude of response that is still profitable for politically friendly companies. One can destroy America's reputation abroad and enshrine torture as national policy. One can dangerously erode civil liberties, the separation of powers, do nothing to combat global warming or deal with our severe infrastructure, competitive and social challenges. One can do all this and face no consequences. No consequences. Republican Sen. David Vitter frequented hookers and he still keeps his job. Oh, yeah, apparently the new New York governor confessed past infidelity to get ahead of the one thing that can get an American official in trouble, if he's a Democrat.

Something is out of whack.

The same is true with the Barack Obama pastor "controversy." Where is the mainstream media's similar carpet-bombing coverage of the nutty pastors supporting John McCain, indeed ones he avidly courted? The ones who said America's mission is to eradicate Islam, that the Catholic Church is a "whore," and New Orleans deserved the wrath of God. Read all about it here and here. Read and hear Obama's speech about the controversy here.

Take a clueless electorate, a compromised media and the ability to manipulate the vote and I give you come November...President McCain.

Blond coed hooker Wall Street destroys economy

“How are you supposed to know? Fucking men like you built the hydrogen bomb. Men like you thought it up. You think you're so creative. You don't know what it's like to really create something; to create a life; to feel it growing inside you. All you know how to create is death...and destruction.”

These are the lines Linda Hamilton speaks in Terminator 2. Change a few words and she could be speaking of the current financial disaster. Now it's out of control. Make no mistake: the extraordinary steps by the Federal Reserve in the past few days, including a Sunday night fire sale of Bear Sterns and an interest rate cut, are being taken out of fear.

Class, power and downtown development

Back when I was a college right-winger (and in those days we were few and had no pretty girls), I wrote fierce papers demonstrating the murderous fraud that was Karl Marx. A professor gently cautioned me that even if I disagreed with Marx, he offered another way of "seeing through history." He was right, of course. Marx's ideas led to some of the most bloody deeds in history. But his emphasis on class (and this was not original to him) is indeed useful.

I think about this as I watch downtown revivals and their failures. A city such as Seattle preserved most of its core buildings, many businesses and the downtown evolved organically and with all sorts of people. Phoenix and Charlotte, on the other hand, clear-cut most of their downtowns and started from scratch. If you arrived in Phoenix after 1980, you'd think the downtown was always vacant lots, government buildings and a few towers. Of course, Phoenix had a thriving downtown into the 1960s. Charlotte was similar.

Their results have been vastly different. But the class and power undertones are unmistakable and they have shaped the fate of each downtown and city.

Blond coed hooker admiral stands up against war with Iran

If only Admiral William Fallon had been involved with a $5,500 call girl named Kristen, or maybe had murdered a blond coed...

I don't say this to libel this honorable man, but only to make the point about what it might take to get the attention of the addled, coddled, willfully ignorant American people about the really important things that are happening in the world. These thing will affect them far more than the hookers or coeds, or the "local news" that dominates their corporate-owned newspapers.

What's really behind the Spitzer scandal?

Re: the Luv Guv. When are these male politicians (memo to Bill Clinton) going to realize that the European tradition exists because it has stood the test of time: the sophisticated, discreet middle-aged mistress, who doesn't want to marry him, and won't rat him out as part of a prostitution sting.

Or was it a prostitution sting? It now comes out that Spitzer was not caught up in the bust of a high-end call-girl ring, but rather he was specifically targeted by the Justice Department and the IRS. We know that the Bush administration has used these agencies for political hits on a scale not seen since Nixon, maybe even beyond that. I point to the firings of U.S. attorneys who wouldn't push politically motivated prosecutions, and the vendetta against former Alabama Gov. Don Siegelman. For more, see Scott Horton's invaluable No Comment blog. In addition to Spitzer's enemies on Wall Street, New York Republicans were terrified about losing the state senate to Democrats.

Spitzer's stupidity aside, he made a tempting target, going after the endemic corruption on Wall Street that had cost so many American nest eggs and jobs. He dared to challenge the corporate power that has taken over the American government. So Spitzer paid to get screwed? Wall Street has been screwing America. His fall comes at a convenient time, as the capital-market meltdown is exposing even greater corruption and regulatory lapses, reaching into hedge funds, private equity and the ratings agencies. Also in Spitzer's favor is that, unlike Republicans, he was never a morals crusader, obsessing about what went on in people's sex lives.

But the real Untouchables were called that for a reason. They were above reproach, so no one could put the "touch" on them. The stakes are too high now. No mere illegal booze or even murderous gangsters are involved. Spitzer will be lost to this fight. No wonder they cheered on Wall Street yesterday when the news about the Luv Guv came out.

An America that tortures, and other nightmares

We have more than a recession. The bottom has fallen out.

We debate whether the United States should torture prisoners. We debate it and the “in favor” argument wins. Not once, but again and again, for years now.

At the birth of the Republic, Gen. Washington forbade the mistreatment of British and Hessian prisoners of war. He hoped we would indeed inaugurate “novus ordo seclorum,” a new order of the ages. Because the Founders knew they were establishing a republic of men and not angels, they set this new order on a firm foundation of the law, particularly a Constitution based on separation of powers and, especially, checks and balances against the excesses of the executive. It wasn’t just that the Founders had rebelled against a king; they took their cues from ancient Rome, and knew how an emperor could use constant war as an instrument to destroy peoples’ liberties.

Constant war and torture.

It's a recession. Any questions?

If there's any question left that the nation is in a recession, today's news about a net loss of 63,000 jobs should provide the painful answer. That's the worst showing in five years and marks back-to-back monthly job losses. Foreclosures have hit a record high. The credit crunch is worsening, hurting everything from well-capitalized companies to municipalities. Home equity has fallen to levels not seen since 1945. Oil prices have hit records and will keep rising, whatever small dips come along the way. The Fed is pumping liquidity into the market as fast as it can, but, as Alan Greenspan once said, "You can't push a string."

Meanwhile, big mortgage executives are on Capitol Hill, defending the huge pay packages they gave themselves despite their catastrophic misjudgment in helping bring on the calamity. Oh, and get ready for $200 a barrel oil -- enjoy suburbia.

And what are the presidential candidates talking about? John McCain wants more tax cuts and deregulation. In other words, more of the policies that brought us here. Clinton and Obama now seem in a race to see who can slime the other more, doing the job of the Republicans.

In Arizona, small quivers of an impending quake?

Despite the mandate to "say something positive about the community," sometimes the Arizona Republic can't avoid saying something truthful about the community. Today there's an ominous story about emerging evidence that in-migration "slowed sharply last year."

This matters because "growth" is the overwhelming (legal) economic driver of the state economy. There's tourism, too -- hardly a way to sustain a populous, urbanized region in the 21st century. The few other assets, such as the chip plants, would be big for, say, Tulsa. But for a region Phoenix's size, the technology sector is actually smaller as a proportion of the economy than it was 20 years ago.

That leaves "growth" -- meaning population growth, not growth of venture capital, IPOs, Ph.D.s, patents, per-capita income, foreign direct investment, research grants, college graduates, etc. If this even slows for long, the urban Arizona economy will face a recession the likes it hasn't seen in modern times.

McCain on the economy

Sen. McCain outlined his economic platform recently in Rupert Murdoch's Wall Street Journal. If you're a subscriber, read the article here.

Among the major points:
--He supports the Bush tax cuts and making them permanent.
--Like Bush, he supports private accounts for Social Security.
--He might have "a couple of fireside chats" to bolster a sagging economy, but tax cuts are the best way to ensure a recovery.
--Media industries are among his biggest contributors.
--He's "always" for less regulation, but "is aware of the view" that government oversight is needed.
--He would reduce cost-of-living adjustments to Social Security and raise the retirement age to 68.
--He would cut the corporate tax rate from 35 percent to 25 percent.

I report. You decide.

When we say NAFTA, what do we really mean?

NAFTA figured heavily into the Democratic primary in Ohio, yet most of the news coverage and the debates themselves proved unsatisfying. We were served the canard that NAFTA helps consumers but hurt manufacturing jobs. NPR made it sound as if the trade agreement’s consequences are ancient history. The Democrats were more muted on NAFTA in Texas, where Laredo has boomed as a trade port.

Of course, NAFTA is a proxy for trade liberalization and globalization. China has hurt Ohio manufacturing more than Mexico. So, too, have the domestic automakers, undergirding the state economy, that continue to make boring, homely cars that fewer Americans want to buy.

But the real issue goes deeper even than that, and any fixes will be problematic. That doesn’t mean we shouldn’t make them.