A Soggy Nation

I'm in DC again for the 5th or 6th time. This trip, I was optimistic about being able to catch a glimpse of the cherry blossoms around the mall, which is probably the only touristy thing that I've wanted to do but been unable to enjoy in my previous trips here. It's a little harder than it sounds because there is a two week window of fragrant white, pink, and purple blossoms framing white marble monuments, and the exact time changes every year.

This year I'm about a week too late. Though some trees are still blooming, and they are magnificent, this week so far has been much more soggy than blossomy. Being from the desert, I'm not sure we appreciate real rain like they have out here. It's like God throwing little watery javelins at you. Fortunately I was ensconced within my POS rental PT Cruiser, which, despite many flaws, did prove capable of keeping out the rain.

Driving around the soggy capitol, I made a few observations:

• It seems like everyone runs here. At every intersection, along with a bunch of people in suits, is at least one or two people jogging in place like they're auditioning for Jazzercise.
• It also seems like everyone has a dog, too, and some people try to run with them. This includes this very small Asian gentleman and his 3 month old black lab pup. At first, all I saw was a man's head jerking violently every few steps behind the row of parked cars. Then I saw the dog on the leash. Good luck dude, that dog is going to weigh more than you in about 3 months and then he'll be walking you.
  
• Few things are more miserable looking than a group of wet tourists. Unlike me, they paid their own money to traipse around the national mall in the rain. They are also probably more than a little miffed by having to wear a 2 dollar gift-shop poncho. Can we say "not flattering?" At least it keeps them fresh, like meat under cellophane.

Politics Shmolitics...

I hate talking about politics sometimes because that topic seems, too often, to immediately descend into vitriol and tired party lines. If there's anything that's wrong with politics today, it is our intolerance for differing opinions. Punditry has so largely displaced discourse that the moderate voices no longer have place. Ideas are not judged on merit, but mocked or lauded by party leanings. This is why I begrudgingly write about politics at all, because I can handle the partisanship.

It is this hesitance that motivates me, because I realize that if I am weary of the political process, there must be countless other thoughtful voices that are also stifled. If we collectively remain silent, then the quiet moderate majority will constantly be held hostage by the political pendulum. With this in mind, I have some thoughts on current economic situation we face in the US.

So, sure, deficit spending didn't cause our current problems, or de-regulation of the financial markets, or the Fed keeping interest rates too low to avoid inflation, or sub-prime lending destroyed by the housing bubble, or an ill-timed and expensive conflict in Iraq, or a ballooning national debt, but surely it's some combination of all of them... which was in turn caused by some combination of Presidential administrations, Congresses, and greedy/stupid people.

While preventing any one of those problems might have mitigated our current situation, that doesn't change the fact that we're here now. Everyone is looking for the straw that broke the economy's back to assess blame, but there isn't one. I happen to think that GWB's admin has perhaps a majority of straws, but Congress and previous admins have their share, too. In the end, we have to assess each problem individually and find the best solution.

The big news right now, is, of course, President Obama's new 3.6 trillion dollar budget for 2009-2010. Yes, it is huge, and yes, numbers of that size frighten me. But then again, I'm not so sure it is as egregious as we might think.

The thing to remember about debt is that it is not bad in itself. While it is generally to be avoided, there are times when taking on debt allow us to invest in things that pay long term dividends. Home ownership and college education are two classic examples. I think national debt should be viewed in the same way. When we agree to take on debt, we have to consider where we are investing those dollars. Is out debt going to pay out long term dividends that exceed the long term costs?

So, what's the purpose of this new debt we're taking on? From what I understand, it appears to be more focused on infrastructure, energy, and health care. To me, these seem like no-lose investments. Frequently, this country has gone into debt primarily for the national defense. Unfortunately, this is less of an investment than it is an expense. Certainly we reap the benefits of a strong national defense, but the expended money seems to have little long term effect on the economy. The one notable exception to this, I think, is the success of the GI bill in growing post WWII America. That massive investment in American education largely created the modern middle class.

Back to current times, I would prefer that my tax dollars not be used for stimulus spending, but my point is that IF there is going to be stimulus spending, I want that spending to be in areas that will have tangible results after the money is gone: a new road, or new rails, or more scientists, or better pre-emptive health care to reduce costs later, etc.

If we look back to the last huge stimulus package, the New Deal, I will agree that a lot of FDR programs did not help the situation in the immediate term (poor monetary policy and counter productive price controls are two that come to mind) but the effects of the other programs can still be seen all around us: rural communities gained electricity or irrigation systems and I was educated in buildings that were constructed by the WPA some 75 years ago. Sure, it's not ideal, but if there's going to be spending, I think it should be spent in a similar way.

Mostly, I'm tired of the knee-jerk reaction to everything President Obama does, whether its pirates, budgets, or bailouts. Such vitriolic responses do little but make the conservatives seem increasingly out of touch. Though they may not be the party in power right now, the conservatives can still have a powerful voice in shaping how President Obama's agenda is implemented, and I hope they don't throw away that chance.

No Room for Moderation?

Finally. It's over. The election is finally over. I am sick and tired of polls and talking about politics. Now maybe I can get some work done at the office without some coworker lamenting the end of civilization if so-and so wins. And, finally finally, we can finally start talking about the most important event of fall: college football.

The thing that I hate about politics is that it is so polarizing. Instead of healthy debates and pragmatism on the issues, every position is either totally right or totally wrong. Can't we see that this is an extremely hostile environment for anyone that wants involve themselves in the political process?

To see what I mean, consider the fundamental social need of human beings to belong. Unconsciously, many of us will tone down our personal beliefs if they don't quite match up with the predominant views of the group we wish to join. We do this as a survival mechanism; no one wants to be an outcast. If you don't believe me, just think about the times when you've been found yourself surrounded by people with significantly different viewpoints than you. What was your reaction? Did you express your true views and risk being an outcast, or did you soften your stance to try and fit in?

This desire to "fit in" isn't necessarily a bad thing, because it helps us to empathize with others and understand their position. If, however, we limit ourselves to cliques that share our own points of view, our views will inevitably become more extreme, as each group member suppresses their individuality and prove their membership through a voracious defense of the group's position.

The best example of this, I think, is the worthless vitriol spewed by both liberal and conservative pundits. As de facto leaders of their respective groups, their views are always the most extreme because they constantly have to solidify their position as group leader. As a result, we see the loudmouths of each party become louder and more obnoxious as time goes on.

Given enough time, our desire to fit it can result in an unwillingness to consider alternate views, making conservatives more conservative and liberals more liberal. We have to break this cycle and realize that just because you understand how one group arrives at a particular position doesn't mean that you'll end up agreeing with them. Similarly, it needs to be okay to change their mind on an issue without being labeled as weak.

Interestingly enough, I would have voted for McCain in 2000. He seemed like a moderate voice in increasingly partisan times. Unfortunately, his primary loss to Bush took all the moderate out of him. This time around, he played the party games to secure the nomination, but then tried desperately to define himself as a maverick without alienating the party base. Who knows how things might have turned out if he had been brave enough to run as a true moderate.

What I really want to see in American politics is the candidate who is brave enough to be a true moderate, to think on his or her feet, and acknowledge all points of view. Ultimately, I'm ready for pragmatism instead of platforms.

Laissez-"fair"?

Anyone else feel like they've been sucker punched in the groin by Adam Smith's "invisible hand" lately? The fall of Fannie and Freddie this weekend was the last straw. I was righteously indignant when my taxes were spent on artery clogging government pork, but I'm unconsolably incensed when they are spent to rescue profit mongering shareholders, home flippers, and people with irresponsibly large mortgages.

The thing that irritates me most of all is that I have to admit to myself that the government MUST step in. They have no choice. We can't let the two mortgage giants twist in the wind as they rightfully should, because there are lots and lots of honest, hard-working people who want that part of the American dream that is home ownership, and they need Mac and Mae to help them with their loans.

How did we get in this mess? I think it goes back to Adam Smith. Like many American industries of the late 80s and 90s, the banking industry experienced a fair amount of deregulation. Then, in the mid 90s, the economy picked up steam, and everyone was doing well. It seemed like deregulation was the way to go. Soon, the number of investment firms ballooned and everyone was getting into stocks and securities. It seemed like easy money. The problem was that companies were now beholden to very fickle shareholders who primarily wanted a higher stock price regardless of what it meant to the company. Executives were replaced, CEO salaries skyrocketed, and the temptation to satiate shareholders was so great that many companies start to post paper profits.

This all ended when the dot com bubble burst and Enron et al collapsed. At this point, the government had to step in like it had in the past. Sure, the market was free with deregulation, but too many people were too greedy. The markets and the companies that traded on them simply HAD to be more closely monitored. After all, a lot of honest hardworking people were hurt when their pensions and 401k burst along with the dot com bubble. In the end, it was the regular folk that were most hurt. The venture capitalists/investor types were only shaken up. And since there would be no more lucrative IPOs and acquisitions, they needed a new place to make their money. Unfortunately, they settled on the mortgage market.

Soon, the mortgage market heated up along with the real estate market. Interest rates were low, and everybody was getting into real estate. People starting flipping homes. Home ownership became a short term investment vehicle rather than a means to a permanent domicile. Investors loved it. Banks loved it too because they could sign people up for terrible variable rate mortgages which they could then sell to investors, who actually expected to see that 10 or 12% interest after the two years were up on the ARM. With deregulation, banks could be more aggresive in marketing mortgages to consumers, relaxing lending requirements, and could become very creative in how they bundled up the mortgages to sell to investors. Suddenly, "second mortgages" somehow became "home equity loans" and people could afford the cabin/boat/RV that they always wanted. It seemed like everyone was winning.

It was inevitable, though, that prices would fall. The market was saturated by real estate gurus, flippers, and investors clamoring for share price -- which had all speculatively inflated the market. Meanwhile, interest rates had been too low for too long. This had weakening the dollar, making US investments look bad in general, and causing general instability in the markets. When those investing in mortgages started to realize that there really is no such thing as a free lunch, they jumped ship, just like the home flippers and the family earning 100k a year and living in a half million dollar home on the bench.

The companies did their best the massage the numbers, hoping to hold out until the market rebounded. Mortgages were fundamentally sound, risk-free investments, right? Well, it turns out the Freddie and Fannie were counting some mortgages as capital assets, as if it was an absolutely sure thing that they would be repaid at the full interest rate. Well, who in their right mind is going to pay a 12% interest on a mortgage that is now upside-down? No one, that's who. The people buying the mortgages should have known it, too, as should the people trying to profit off of the hot market. Why people were willing to take such risks with something as important as a family's home, or millions of homes across America, I will never know.

So, are you mad yet? I hope so. Our tax dollars are going to be used to keep these companies afloat. In our efforts to be more laissez-faire, we end up being tens times less so, and exactly because we have to protect ourselves from all the capitalist asshats that assured us that a more market freedom would be better for us all.

Sometimes, I hate being right.

Eight years is a long time; about 1/10 of an American life span, and I'll bet you already know where this post is going. As I look at this year's Presidential race, I've spent a lot of time thinking about past races; specifically the ones in which I've voted. With the benefit of hindsight, it's enlightening to look back at what I thought then and compare it with how things have gone.

So, the 2000 election reminds me a great deal of the 2008 election. The outgoing President was unpopular, there were economic rumblings on the horizon, and I wasn't wowed by either candidate. In fact, I was downright worried by both of them. One seemed stiff, and out of touch, the other a bumbling country boy. In the end, I marginally favored the stuffy guy, despite serious reservations. In the end, it didn't really matter who I liked anyway, because my state was only going to go one way.

So, eight years later, it is interesting to look back at some of my misgiving about the man who would eventually become President. It's sad to say that I was right about some of them:

• Nepotism and cronyism: coming from an entitled upbringing with the attached good ole' boy mentality, I was concerned that Bush, rather than picking the best person for the job, would select advisers that most agreed with him. A certain amount of this is to be expected with any political office, but I think that a truly savvy politician will also bring in people of differing opinions and skills to create a well rounded administration. When Collin Powell, an internationally respected individual, departed as Secretary of State and Condoleeza Rice, a mediocre NSA chief, was selected as replacement, I realized that Bush was surrounded himself with "yes" men. Bush's failure in this area reached its apex when he nominated the woefully unqualified Harriet Miers to the Supreme Court. I think that the WMD debacle resulted largely from Bush's cronyism, as well as a woefully unprepared FEMA after hurricane Katrina.
  

• Ties to oil: the Bush family is well known for its ties to the oil business. Ties to any industry don't inherently make anyone unsuitable for office, but you have to accept a certain amount of deference to that industry while they're in office. In this case, Bush's oil and related energy policies have recently proved disastrous. The industry is enjoying record profits from record prices, which are contributing to the overall slowing of the economy. A more enlightened policy regarding energy, like updated mpg requirements and tighter environmental controls on electrical production might have actually spurred development in alternative fuels and energy as world oil supplies became inevitably tight.
  

• Foreign policy: as governor of Texas, one's foreign policy experience is limited largely to Mexico. And, to his credit, President Bush has does well, I think, with our neighbor to the south and immigration policy (though Congress wasn't helpful.) Worldwide, though, gaining a reputation as a bully was certainly not desirable. Though I think we must always act in our own self defense without waiting for international consensus, we must do so considerately and conscientiously. The younger Bush could have learned a great deal from his father in this area, who very delicately handled the collapsing Soviet Union and the first withdrawal from Iraq. Back then, Cheney as Sec. Def., provided a compelling analysis of what would happen in Iraq if Saddam was deposed: sectarian violence and political instability that would require an occupying force. I don't understand, why, then, we were so unprepared for what was going to happen. Needless to say that greater international support might have drastically altered the course of the conflict, particularly given the massive civilian casualties that have resulted in Iraq.
  

• Church and State: while I admire President Bush for being a man of faith, I saw his use of the evangelical vote as a double edged sword. I feared that his mixing of religion and politics could have undesirable consequences. This was realized by the failure of many of his faith based initiatives. Though a cause and effect relationship is certainly hard to establish, I find it extremely interesting that teen pregnancy rates have increased (abstinence only sex ed, anyone?) and abortion rates have not fallen. Meanwhile, the Republican party has become significantly more conservative as it has to court the increasingly vocal and fickle evangelical vote.
  

• Fiscal/Economic policy: though Republicans are generally thought to be fiscally conservative, their hawkish natures and continual desire to cut taxes frequently have the opposite effect. Bush seemed to fall right in line in this area. It was amazing to me that facing a recession, he elected to increase spending while cutting taxes and sending the nation to war. This ballooned the deficit, lowered confidence in American industry abroad, and began to slow the economic engine of the country. Couple this with the deflation of the housing market, and I think that the current administration shoulders a great deal of responsbility for our current predicament. It wouldn't suprise me too much if we soon find that laissez faire enforcement of the housing market contributed to our current situation.
  

• Intelligence: simply put, I thought Bush wasn't smart enough to be President. I'm not talking about his minor gaffes that made for comedy routine fodder, since those things happen to everyone, but I do think that being President requires a truly significant intellect. The economy, foreign policy, and budgetary matters are extraordinarily complex. No amount of bravado, charm, or humor can mask a failure to understand the issues. I think Bush's failings fundamentally stem from this, particularly in dealing with the economy and the budget deficit.
  

So, this may sound like a huge round of "I told you so", but that's not my intent at all. Nor am I trying to jump on the Bush bashing bandwagon. Instead, these are the things that genuinely concerned me about the candidate. There's no doubt that a similar list could have been made had Al Gore been president. In the end, your concerns regarding a Presidential candidate will almost certainly manifest themselves when the person is in office. Though the extent of such manifestations are totally unknowable, we can at least look at the curent state of the nation to see which flaws would hurt us the most.