October 10, 2008, 7:30 a.m., 12:30 p.m.
Which Do You Want First, the Bad News
or the Bad News?
To help get your mind off of the coming global depression, let's take a look at Afghanistan.
[Photo credit: European Pressphoto Agency; as reproduced in New York Times, October 9, 2008; "Zabiullah Majahid, front, of the Taliban, led his group in the mountains of Helmand Province."]
Once again we are learning that, as I put it to President Lyndon Johnson with regard to Vietnam, "You can't play basketball on a football field."
Once again we are learning why I am only half joking when I say we need "military control of the civilians, rather than a government in which civilians dictate to the military."
Once again we are learning that the bumper sticker's observation -- "whatever is the question, war is not the answer" -- while overly simplistic, is right more often than it is wrong.
There are many differences between Vietnam, and Iraq, and Afghanistan, and Pakistan. But as important as it may be to recognize and respond to those differences, it is equally important not to ignore their similarities.
It is very difficult to "play war" when:
o You are only the latest in a long line of outside invader/occupiers (most of whom have been no more successful than you are about to be)
o The "enemy" is not a "country" in the sense we normally think of it, but an area where borders are both porous and disputed and central governments may be corrupt, weak (or engaged in civil war)
o You don't understand the country -- its people, tribal loyalties, history, culture, geography, and most importantly, language
o There are no "front lines" or battlefields (in the WWII sense) -- territory gained at considerable cost can easily and quickly be lost
o The "enemy" refuses to wear easily identifiable uniforms, dresses and looks like your "allies" in the fight, and can easily fade into the local population
o The loyalty of your supporters is thin, and shifts with who's paying them and their (understandable) urgent sense of personal survival
o The resulting "collateral damage" (innocent civilian deaths and injuries) are counterproductive in "winning hearts and minds" and actually contribute to the increased recruitment of terrorists
o Genuine local economic and infrastructure needs -- roads, bridges, hospitals, schools, water and electricity -- go unattended, and are made worse, by military action and the resulting shift to a drug-based economy
These are but my instincts and observations. But they have often turned out to have been later echoed by military officers and others who really do have some credentials, experience, and on-the-scene observations.
That is now happening once again.
No, I am not singing "we ain't goin' to study war no more," or saying that there is no role for conventional military action, that we should become a neutral isolationist nation, or that we should eliminate the Defense Department's budget (although there is some evidence we could improve our national security by cutting it by about one-third, and certainly by replacing the Bush Doctrine with the Powell Doctrine. For an explanation of the Powell Doctrine see, Nicholas Johnson, "War in Iraq: The Military Objections," February 27, 2003.).
What I am saying, in passing, is that the McCain Campaign (and some in the media) are doing no one a favor by using the language of WWII to describe the challenges we confront in the Middle East -- "war," "surge," "victory," "winning," and "the white flag of surrender." "Send in the Marines," "these colors don't run," "let's kick some butt," and "nuke 'em" are the very dangerous and costly (in terms of lives, burden on taxpayers, and loss of international reputation) rhetorical chants of elected officials and candidates who are either (a) not very well informed, or (b) devoid of the ethical and moral restraints that might challenge their belief that "there is nothing worth losing an election for."
But what I am mostly saying is not "listen to me" but "listen to our military." Not "follow them blindly," just listen and reflect.
Senator McCain says he wants a "surge" in Afghanistan. He believes the one in Iraq "worked" -- even though it did not bring about (a) the political solutions it was designed to make possible, or even (b) a permanent reduction in insurgency and civilian deaths. The Washington Post reports that he has said, "the same strategy that [Sen. Barack Obama] condemned in Iraq, that's going to have to be employed in Afghanistan."
By contrast, the Post reports, General David D. McKiernan, who led the Iraq invasion and has for four months headed the NATO coalition in Afghanistan, has
stated emphatically that no Iraq-style 'surge' of forces will end the conflict there. . . . "The word I don't use for Afghanistan is 'surge,'" . . ..
"Afghanistan is not Iraq," . . .. [It is] "a far more complex environment than I ever found in Iraq." The country's mountainous terrain, rural population, poverty, illiteracy, 400 major tribal networks and history of civil war all make for unique challenges, he said.
McKiernan [says] what is required is a "sustained commitment" to a counterinsurgency effort that could last many years and would ultimately require a political, not military, solution. . . .
Another facet of the Iraq strategy that McKiernan doubts can be duplicated in Afghanistan is the U.S. military's programs to recruit tribes to oppose insurgents. . . .
Tribal engagement in Afghanistan is also vital, McKiernan said, but . . . "I don't want the military to be engaging the tribes," he said. Given Afghanistan's complicated system of rival tribes and ethnic groups and the recent history of civil war, allying with the wrong tribe risks rekindling internecine conflict, he said. "It wouldn't take much to go back to a civil war." . . .
[T]he violence is more intense than he had anticipated . . .. The U.S. military death toll has risen to . . . a new annual high since the war began in 2001.
Attacks into Afghanistan from Pakistan have escalated, . . .. An influx of foreign fighters across the border is bolstering the Taliban insurgency and has shown a "significant increase from what we saw this time last year," he said, pointing to intelligence that picked up fighters speaking Uzbek, Chechen, Arabic and other languages.
"We are in a very tough fight," he said. "The idea that it might get worse before it gets better is certainly a possibility."
Ann Scott Tyson, "Commander in Afghanistan Wants More Troops," Washington Post, October 2, 2008, p. A19; and see Eric Schmitt, "Joint Chiefs Chairman Is Gloomy on Afghanistan," New York Times, October 9, 2008 ("With security and economic conditions in Afghanistan already in dire straits, the chairman of the Joint Chiefs of Staff said Thursday that the situation there would probably only worsen next year. 'The trends across the board are not going in the right direction,' the chairman, Adm. Mike Mullen, told reporters. 'I would anticipate next year would be a tougher year.'”).
And McKiernan was saying it two months ago
"There is no magic number of soldiers that are needed on the ground to win this campaign," McKiernan said. "What we need is security of the people. We need governance. We need reconstruction and development." . . . McKiernan said, "There is a clear linkage between 'narco' trafficking and financing of the insurgency."
Barbara Starr, "'Surge' May Not be Enough in Afghanistan," Commander Says," CNN, August 8, 2008, 1:35 p.m. ET.
British Commander Agrees: "Taleban will never be defeated;" it's "neither feasible nor supportable"
The departing commander of British forces in Afghanistan . . . Brigadier Mark Carleton-Smith, the commander of 16 Air Assault Brigade, whose troops have suffered severe casualties after six months of tough fighting . . . says he believes the Taleban will never be defeated.
He told The Times that in his opinion, a military victory over the Taleban was “neither feasible nor supportable”. . . .
The brigadier’s grim prognosis follows a leaked cable by François Fitou, the deputy French Ambassador in Kabul, claiming that Sir Sherard Cowper-Coles, the British Ambassador, had told him the strategy for Afghanistan was “doomed to failure” [and that] “the security situation is getting worse, so is corruption and the Government has lost all trust.” He said . . . “we should tell them [the U.S.] that we want to be part of a winning strategy, not a losing one. The American strategy is doomed to fail.” . . .
Brigadier Carleton-Smith . . . indicated that the only way forward was to find a political solution that would include the Taleban. . . . Efforts are being focused on the so-called “tier-two” and “tier-three” Taleban, who are perceived to be less ideologically intransigent.
The brigadier said that in the areas where the Government had no control, the Afghan population was “vulnerable to a shifting coalition of Taleban, mad mullahs and marauding militias.” . . .
He said that there had been a government vacuum for 30 years, . . ..
Tom Coghlan in Kabul and Michael Evans, "We can't defeat Taleban, says Brigadier Mark Carleton-Smith," The [London] Times, October 6, 2008.
U.S. Army Literally Re-Writes the Book: Mission "Development, Reconstruction and Humanitarian"
The U.S. Army on Monday released a new field manual that for the first time gives nation-building the same top priority as major combat operations in conflicts involving fragile states.
The Stability Operations Field Manual, derived from the Army's experiences in Iraq and Afghanistan, provides commanders and other Army personnel with a guide for supporting broader U.S. government efforts to deliver development, reconstruction and humanitarian aid in war-torn nations.
Army officials described the document as a roadmap from conflict to peace. . . .
The manual mirrors a U.S. defense strategy released in July that says military operations should play a supporting role for "soft power" initiatives to undermine militancy by promoting economic, political and social development in vulnerable corners of the world.
"The greatest threats to our national security will not come from emerging ambitious states but from nations unable or unwilling to meet the basic needs and aspirations of their people," the new Army manual states. . . .
"Army issues new manual for nation-building," Reuters, October 6, 2008, 4:44 p.m. ET
Nor are these kinds of judgments limited to the military generals.
British ambassador in Kabul: "The presence -- especially the military presence -- of the coalition is part of the problem, not the solution."
The British ambassador in Kabul thinks the war in Afghanistan is as good as lost and that current US military and economic strategy there is destined to fail . . ..
Sir Sherard Cowper-Coles, the UK diplomat involved, is also alleged to have said that the only practical long-term solution was for the West to support "an acceptable dictator" to unite the fractured country.
The diplomatic bombshell . . . came on the same day that the senior American military commander in Afghanistan called on NATO to provide more troops . . . in a counterinsurgency battle he said could get worse before it gets better.
The general's downbeat assessment also coincides with a fresh report by UN Secretary-General Ban Ki-moon, who expressed dismay that attacks on aid workers have risen in 2008 despite the presence of more allied troops than at any time since the US-led invasion in 2001. . . .
Cowper-Coles [is quoted as saying]: "The current situation is bad. The security situation is getting worse. So is corruption and the government has lost all trust. . . .
"[T]he insurrection, while incapable of winning a military victory, nevertheless has the capacity to make life increasingly difficult, including in the capital.
"The presence -- especially the military presence -- of the coalition is part of the problem, not the solution. The foreign forces are ensuring the survival of a regime which would collapse without them. In doing so, they are slowing down and complicating an eventual exit from the crisis." . . .
Cowper-Coles, 53, was also quoted as saying that while Britain had no alternative to supporting the United States, the Americans should be told to change strategy.
Reinforcing the military presence against the Taliban insurrection would be counter-productive, he said, and allied governments should start preparing public opinion to accept that the only realistic solution for Afghanistan was to be ruled by "an acceptable dictator."
Ian Bruce, "War in Afghanistan Lost, Says UK Diplomat in Leaked Report," The [Glasgow, Scotland] Herald, October 2, 2008; and see Charles Bremner in Paris and Michael Evans, "British Envoy Says Mission in Afghanistan is Doomed, According to Leaked Memo," The [London] Times, October 2, 2008.
National Intelligence Estimate: Afghanistan in "Downward Spiral" Due to "Lack of Leadership" from Bush Administration
A draft report by American intelligence agencies concludes that Afghanistan is in a "downward spiral" and casts serious doubt on the ability of the Afghan government to stem the rise in the Taliban's influence there, according to American officials familiar with the document.
The classified report finds that the breakdown in central authority in Afghanistan has been accelerated by rampant corruption within the government of President Hamid Karzai and by an increase in violence from militants who have launched increasingly sophisticated attacks from havens in Pakistan. . . .
Its conclusions represent a harsh verdict on decision-making in the Bush administration, which in the months after the Sept. 11, 2001, attacks on the United States made Afghanistan the central focus of a global campaign against terrorism.
Beyond the cross-border attacks launched by militants in neighboring Pakistan, the intelligence report asserts that many of Afghanistan's most vexing problems are of the country's own making, the officials said. . . .
[I]t also laid out in stark terms what it described as the destabilizing impact of the booming heroin trade, which by some estimates accounts for 50 percent of Afghanistan's economy. . . .
Inside the government, reports issued by the Central Intelligence Agency for more than two years have chronicled the worsening violence and rampant corruption inside Afghanistan, and some in the agency say they believe that it has taken the White House too long to respond to the warnings . . . .a "lack of leadership" both at the White House and in European capitals where commitments to rebuild Afghanistan after 2001 have never been met. . . .
The assessment on Afghanistan is the first since the Taliban regained strength there beginning in 2006 and launched an offensive that has allowed them to seize large swaths of territory. . . .
Senior American commanders have recently been blunt in their assessment of the security trends in the country. "In large parts of Afghanistan, we don't see progress," General David McKiernan, the top American officer in Afghanistan, told reporters last week. "We're into a very tough counterinsurgency fight and will be for some time."
It is not just American officials who offer a grim prognosis. A French diplomatic cable leaked to a French newspaper last week quoted the British ambassador to Afghanistan as forecasting that the NATO-led mission there would fail.
"The current situation is bad, the security situation is getting worse, so is corruption, and the government has lost all trust," the British envoy, Sherard Cowper-Coles, was quoted as telling the French deputy ambassador to Kabul, who wrote the cable.
Mark Mazzetti and Eric Schmitt, "U.S. Report Warns of Crisis in Afghanistan," International Herald Tribune, October 9, 2008.
America's interests and role in the world involve a lot more than the overwhelming application of military force. The military itself knows this. Why don't the politicians?
It's time we learned from our wisest military leaders -- and then took up our own responsibilities to let our elected and other officials know how we feel.
What has been attributed to Ghandi is still true: "When the people will lead, their leaders will follow."
Let's lead.
# # #
October 6, 2008, 7:45 a.m., 11:30 a.m. (addition of relevant links)
Conflicts About Conflicts of Interest
While the world evaluates our $1.3 trillion transfer of wealth from the middle class to the wealthy -- (along with the law's built-in earmarks for rum and wooden arrow heads) by depressing the value of global stock exchanges by about 5% (and trillions of dollars), we learn there are over 750,000 Americans who lost their jobs so far this year, 80% of Americans think they will be adversely affected economically, the British and American generals are telling us there cannot be a military "victory" in Afghanistan, voters watched the vice presidential candidates' debate like NASCAR fans watching for a crash that never happens
-- meanwhile, Marc Mills remains in the news with the petition for his reinstatement and two Iowa City lawyers duking it out over Stolar's charges of Mills' "conflict of interest."
Brian Morelli, "Faculty Circulating Petition to Reinstate Mills," Iowa City Press-Citizen, September 30, 2008, 4:23 p.m.
David Roston, "Pinpointing Mills' conflict of interest," Iowa City Press-Citizen, September 27, 2008
Mark Schantz, "Refuting Mills' 'conflict of interest,'" Iowa City Press-Citizen, October 4, 2008.
David Roston is the former chairman of the Chicago Bar Association Committee on Professional Responsibility. Mark Schantz was the University of Iowa's general counsel from 1992 to 2005.
David Roston wrote, "His [Marc Mills] responsibility was to protect the legal interests of the AD [Athletic Director/Department] and the university by assuring compliance with law and insulating it from liability. If Mills had made that responsibility clear to the student-athlete and her family, they would have known right off the bat that he was not going to protect their interests in this matter and that they should not rely on his help."
Mark Schantz responds, "Roston indicates that an attorney for the university should, when speaking with persons such as the student athlete's father, advise them that he is the university's attorney, not theirs. Mills did so, a fact about which there appears to be no dispute. Insofar as Roston implies otherwise, he is mistaken."
Roston charges, "Mills' failure to advise the Iowa state Board of Regents of the letter from the student-athlete's mother is analogous to the general counsel of a corporation failing to advise its board of directors of facts concerning an issue which it has decided to investigate. . . . The regents were his client, and it appears that he failed to provide them with important information because he thought that he had an obligation to the student-athlete and her family."
Schantz responds,
"[I]n the eyes of Iowa law, the Board of Regents exists separate and apart from the universities it governs. Chapter 13 of the Iowa Code makes completely clear that the attorney general of Iowa is the regents' lawyer. The board, therefore, is not the "client" of the university general counsel.
In the 13 years I served as university counsel, I recall no occasion when the board considered me to be its lawyer. . . .
Once it is understood that the regents were not Mills' client, the matter of whether and by whom the regents should have been advised concerning the critical letters from the student-athlete's mother takes on quite different coloration.
The Iowa Code is quite clear that the regents govern the institution by and through the president of each university. As a practical matter, the president directs regents communication downward to university officers and communication from university officers upward to the regents. I would not have made any official communications to the Board of Regents without the president's knowledge and approval. Nor, I am sure, did Marc Mills.
Roston also charges, "His [Mills'] responsibility was to protect the legal interests of the . . . university by assuring compliance with law and insulating it from liability."
Schantz responds,
Roston's final error, which also is reflected in the Stolar Report, is his misconception that the sole function of university counsel is to "insulate (the University) from liability."
University policies, however, reflect a variety of university interests, often described in rather general language, and university lawyers regularly are involved in trying to reconcile or balance the different interests reflected in those policies.
The university wishes, for example, to encourage victims of sexual assault to report such events and . . . also wishes to ensure that students accused of sexual assault are provided a fair hearing . . .. Balancing those competing interests is part of a lawyer's job, and it is not primarily about preventing liability. The fact that a large entity frequently pursues different interests does not mean its lawyer has a "conflict."
I cannot know, and won't speculate, why David Roston would have written what he did. From my own perspective, Mark Schantz clearly has the more persuasive analysis.
But this is more than just a "he-said-he-said."
As Schantz concludes, "Accusing an Iowa lawyer of 'conflict of interest' is to accuse one of violations of the Iowa Rules of Professional Responsibility. Such allegations are defamatory and actionable if false, as I believe I have shown they are, with respect to Marc Mills."
Links to Related Documents
Marc Mills
Stolar Partnership, "Special Counsel's Report [The Stolar Report], State of Iowa Board of Regents, University of Iowa Internal Investigation," September 18, 2008 (a pdf file):
"[T]he General Counsel's involvement as liaison for an alleged victim of sexual assault is improper, given the perceived (if not apparent) conflict of interest with the General Counsel acting in such a capacity." p. 12.
"Marcus Mills’ involvement in micromanaging the University’s response to the
incident presented a serious conflict of interest." p. 60.
"The role of the University’s General Counsel is to represent the University and its
Executive Officers, Administrators, Faculty and Staff, all in their official capacities. As legal counsel for the University, there is a substantial appearance of a conflict of interest if such counsel is dealing with an unrepresented complainant." pp. 60-61.
"The Office of the General Counsel should never have assumed a supervisory role
in the investigation of the incident. To do so was an inherent conflict of interest." p. 72.
_______________
Marc Mills, "Response of the General Counsel to The Stolar Report," September 23, 2008, see generally pp. 2-3, "Conflict of Interest":
"The Report does not cite the applicable rule [Iowa Court Rule 32], much less identify any specific provisions violated by Mr. Mills.
"[A] conflict of interest does not arise merely from communication between a lawyer and an unrepresented party, even a potentially adverse party. Indeed, the conflict of interest provisions of Rule 32 do not apply in such situations."
"Lawyers in these situations are guided by Rule 32:4.3, 'Dealing with Unrepresented Person.' ("In dealing on behalf of a client with a person who is not represented by counsel, a lawyer shall not state or imply that the lawyer is disinterested. . . .").
"The facts indicate that Mr. Mills acted wholly and appropriately within the bounds of Rule 32:4.3 in his dealings with the father. At no time did Mr. Mills suggest or otherwise give the impression that he was disinterested. . . . The father never indicated to Mr. Mills that he misunderstood Mr. Mills' role and Mr. Mills never gave legal advice to the father. [Thus, he] did not violate either the letter or the spirit of the applicable ethical rule."
Links to Prior Blog Entries
The most extensive collection of material: Nicholas Johnson, "University of Iowa Sexual Assault Controversy -- 2007-08," July 19-present
"Sex and Finance," September 30, 2008.
"Cleaning Up After the Party," September 26, 27, 2008 (includes link to Mills' response to Stolar Report)
"Which Would be Worse?" September 25, 2008
"Scapegoat Bites Back," September 24, 2008
"Got Questions?" September 23, 2008
"Rational Responses to Stolar and Global Finance" (includes "The Case for Mills and Jones"), September 20, 2008
"Extra: Stolar Report," September 18, 19, 2008 (includes liink to Stolar Report)
Global Finance
"Better Alternatives to Congress' Bailout Plan," October 2, 2008.
"Sex and Finance," September 30, 2008.
"Alternatives to 'The Plan,'" September 28, 2008.
"Global Finance: The Great Fountain Pen Robbery," September 21, 2008.
"How Much Do You Owe the Chinese?" September 6, 8, 2008.
# # #
October 2, 2008, 7:00, 11:45 a.m.
Senate Bill: Wrong Plan, Favoring Wrong People, at the Wrong Time
Look, I understand that I don't have a Ph.D. in economics or an MBA in finance. But I can smell a hog confinement when the breeze blows in from south of Iowa City, and what is floating in the hot air coming from Washington smells very similar.
I really don't like to say "I told you so." But I predicted almost step by step what was going to happen with our war in Iraq, and it has. And I don't like what I see coming down the road over the next few years as a result of what Washington thinks is a "solution" to our financial woes either.
Nonetheless, I realize that most rational readers of this blog would like to have a little more reassurance on something of this magnitude than just my gut instinct and intuition. So this morning I'm going to wheel in the support of 200 economists and another nation's much more sensible solution to an almost identical challenge.
Do we need to "do something"? Absolutely. I just don't think we ought to be doing "something" that is going to make the situation worse rather than better, and is inherently unfair in terms of whom it benefits (the excessive-risk-taking greedy bankers who created and profited from the problem, along with the excessive-campaign-contribution-taking elected officials who, in exchange, deliberately failed to regulate it) and whom it burdens (the unemployed, working poor, homeowners, and present and future generations of taxpayers).
Don't you have just a little deja vu with the rhetoric from the White House? Doesn't it sound a little like the "mushroom cloud" we were going to be witnessing if we didn't invade Iraq?
[S]ane people were rightfully a little suspicious of the plan to upright the finances of the U.S. by a $700 billion handout funded by taxpayers.
The House was rightly skeptical too, failing to pass the proposal Monday.
But George Bush skipped talking about sacrifice and buckling down in his speech promoting the bailout to the nation. He preferred to persuade us mere peons using fear, as he has in the past. The phrases he chose were dire, scary even: “a long and painful recession” and “our entire economy is in danger.”
"More banks could fail, including some in your community,” he warned. “The stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet. Foreclosures would rise dramatically.
“And if you own a business or a farm, you would find it harder and more expensive to get credit. More businesses would close their doors, and millions of Americans could lose their jobs.”
OK, we get it. The markets are falling apart, and with such a high percentage of people with some funds in the stock market, some sort of action will be taken.
But how long will it take before an accounting of the long term cost of fixing this financial mess will occur?
I’m awaiting the politician who admits that some will be shortchanged in the public arena as billions are leveraged to stave off the crisis. . . .
The money will come from somewhere. We just want to have a more honest accounting of the situation, of who will actually suffer, who will profit by the plan, and whether it will really fix the problems of the U.S.
Mary Sanchez, "We're Ready to Sacrifice, But Not be Suckers," Kansas City Star, October 2, 2008 (in this morning's Gazette as "Americans Ready to Sacrifice, But Not to be Suckers," p. A4).
Even Nicholas Kristof, a solid backer of the Paulson approach, acknowledges,
"[C]ritics of the bailout have reason to be furious. It is profoundly unfair that working-class American families lose their homes, their jobs, their savings, while plutocrats who caused the problem get rescued. . . .
Congressional critics of the bailout . . . should come back in January . . . with a series of tough measures to improve governance and inject more fairness in the economy: . . . remove tax subsidies on executive pay and allow courts to restructure mortgages as they do other kinds of debt. . . .
Among the strongest critics of inflated executive pay have been Warren Buffett and the late management guru, Peter Drucker, who argued that C.E.O. salaries should peak at no more than 20 or 25 times those of the average worker. (Last year, C.E.O.’s got an average of 344 times the wages of the typical worker.) . . .
C.E.O.’s hijack shareholder wealth in ways that are unconscionable. . . . [I]f [Nabors Industries] Eugene Isenberg . . . were to drop dead one of these days, his estate would be entitled to a “severance payment” of at least $263 million — more than the firm’s first-quarter net earnings.
Nicholas D. Kristof, "Save the Fat Cats," New York Times, October 1, 2008
Last night the Senate passed -- over the opposition of a full fourth of the body (25 senators) -- a "sweetened" version of the Paulson/House bill. FDIC insurance on depositors' accounts in banks would be raised from $100,000 to $250,000, and even more tax cuts are promised, among other things.
Think about it. More for the wealthy. How many of the 600,000 workers laid off this year will be helped by tax cuts? How many of your neighbors keep so much more than $100,000 in their checking account (and are so lazy or ignorant they haven't opened additional accounts elsewhere) that they really need the reassurance that it's guaranteed up to $250,000? Are House Republicans who voted for common sense (and their outraged constituents) really able to be bought with such tarnished coin?
And with the dollar continuing to drop, please explain to me how adding even more debt (from unfunded additional tax cuts) to our current national debt of $10 trillion, unfunded future obligations of $55 trillion, Iraq future costs of $2 trillion, and Paulson's added debts of $1.3 trillion, is going to make things better for future taxpayers.
There is even more reason to vote against the Senate's plan than there was to vote against the House proposal.
So where is my support from the nation's economists? Here it is. Some 200 of them, from some of the most prestigious public and private universities in the nation. I'll provide the link if you'd like to look for your own school, but my truncated listing of all the signers -- those whose last names begin with "A" or "B" -- will give you an indication of who's on board.
And what do they think of the Paulson proposal? Not much:
To the Speaker of the House of Representatives and the President pro tempore of the Senate:
As economists, we want to express to Congress our great concern for the plan proposed by Treasury Secretary Paulson to deal with the financial crisis. We are well aware of the difficulty of the current financial situation and we agree with the need for bold action to ensure that the financial system continues to function. We see three fatal pitfalls in the currently proposed plan:
1) Its fairness. The plan is a subsidy to investors at taxpayers’ expense. Investors who took risks to earn profits must also bear the losses. Not every business failure carries systemic risk. The government can ensure a well-functioning financial industry, able to make new loans to creditworthy borrowers, without bailing out particular investors and institutions whose choices proved unwise.
2) Its ambiguity. Neither the mission of the new agency nor its oversight are clear. If taxpayers are to buy illiquid and opaque assets from troubled sellers, the terms, occasions, and methods of such purchases must be crystal clear ahead of time and carefully monitored afterwords.
3) Its long-term effects. If the plan is enacted, its effects will be with us for a generation. For all their recent troubles, America's dynamic and innovative private capital markets have brought the nation unparalleled prosperity. Fundamentally weakening those markets in order to calm short-run disruptions is desperately short-sighted.
For these reasons we ask Congress not to rush, to hold appropriate hearings, and to carefully consider the right course of action, and to wisely determine the future of the financial industry and the U.S. economy for years to come.
The online letter notes, "This letter was sent to Congress on Wed Sept 24 2008 regarding the Treasury plan as outlined on that date. It does not reflect all signatories views on subsequent plans or modifications of the bill."
Here is a link to the letter, where you will find the names and institutions of the signers as "updated at 9/27/2008 6:00PM CT."
Meanwhile, as promised, here's a sampling of the names and institutions -- those whose last names begin with "A" or "B":
Acemoglu Daron (Massachussets Institute of Technology)
Ackerberg Daniel (UCLA)
Adler Michael (Columbia University)
Admati Anat R. (Stanford University)
Ales Laurence (Carnegie Mellon University)
Alexis Marcus (Northwestern University)
Alvarez Fernando (University of Chicago)
Andersen Torben (Northwestern University)
Baliga Sandeep (Northwestern University)
Banerjee Abhijit V. (Massachussets Institute of Technology)
Barankay Iwan (University of Pennsylvania)
Barry Brian (University of Chicago)
Bartkus James R. (Xavier University of Louisiana)
Becker Charles M. (Duke University)
Becker Robert A. (Indiana University)
Beim David (Columbia University)
Berk Jonathan (Stanford University)
Bisin Alberto (New York University)
Bittlingmayer George (University of Kansas)
Blank Emily (Howard University)
Boldrin Michele (Washington University)
Bollinger, Christopher R. (University of Kentucky)
Bossi, Luca (University of Miami)
Brooks Taggert J. (University of Wisconsin)
Brynjolfsson Erik (Massachusetts Institute of Technology)
Buera Francisco J.(UCLA) . . .
Consistent with the concerns of these economists are those of Senator Russell Feingold:
“I will oppose the Wall Street bailout plan because though well intentioned, and certainly much improved over the administration’s original proposal, it remains deeply flawed. It fails to offset the cost of the plan, leaving taxpayers to bear the burden of serious lapses of judgment by private financial institutions, their regulators, and the enablers in Washington who paved the way for this catastrophe by removing the safeguards that had protected consumers and the economy since the great depression. The bailout legislation also fails to reform the flawed regulatory structure that permitted this crisis to arise in the first place. And it doesn’t do enough to address the root cause of the credit market collapse, namely the housing crisis. Taxpayers deserve a plan that puts their concerns ahead of those who got us into this mess.”
"Statement of U.S. Senator Russ Feingold On Opposing the Bailout," October 1, 2008.
For the objections of other senators in the coalition of opposition see, David M. Herszenhorn, "A Curious Coalition Opposed Bailout Bill," New York Times, October 2, 2008 ("Their concerns spanned a panorama of issues: frustration over the lack of long-term regulatory changes in the legislation; alarm that $700 billion in taxpayer money would be at risk; anger that the Treasury secretary would not be subject to more stringent oversight; skepticism that executives of firms that seek help would face limits on their pay; and dismay that such an important bill was being rushed through Congress. And, perhaps most pointedly, they expressed skepticism that the bailout proposal would be able to restore liquidity to the credit markets, prevent the collapse of additional banks and safeguard the economy from a long recession.").
There are those who say (to me, and to other critics of what Congress is doing), "Now look, I understand you're angry, that you don't like this plan. But we have to do something. You can't just oppose the only plan we have. If you don't like it so much, tell me what you think would be a better plan."
OK. And I'm about to tell you what would be a better plan.
But not before I observe that I don't really think that's my responsibility. I'm with the secretaries with more than one boss who post the sign on the wall, "Your failure to plan does not constitute my emergency." It's like the profligate friend who wants to borrow money "because otherwise the electricity is going to be cut off." And you're thinking, (a) why didn't you think about that when you engaged in that last excessively expensive bit of discretionary spending (or trip to the casino), and (b) why didn't you let me know this was coming more than the day before the shut-off is going to occur?
Those who will bear the burden of this Wall Street bailout did not create the problem. It's not their responsibility to come up with a solution.
But because they (and I) will continue to be berated by the perpetrators unless we solve it for them, here's an idea.
I.
It's not a theoretical, ivory tower approach. Not only did it work for another country -- it was actually the approach taken by Paulson with Fannie Mae, Freddie Mac and AIG! So please tell me: Why has he now suddenly abandoned this approach?
It's not as if no other country has ever dealt with a similar financial crisis, or that there is no other approach than that of Secretary Henry Paulson. The $700 billion we're talking about represents some 5% of our GDP. In 1992 Sweden put 4% of its GDP into its banks. (They had run into trouble for much the same reason as ours: "Financial deregulation in the 1980s fed a frenzy of real estate lending by Sweden’s banks, which did not worry enough about whether the value of their collateral might evaporate in tougher times," as the Times' Carter Dougherty reports, but they didn't use taxpayers' money to buy up "toxic debt." Dougherty continues:
Sweden took a different course than the one now being proposed by the United States Treasury. And Swedish officials say there are lessons from their own nightmare that Washington may be missing.
Sweden did not just bail out its financial institutions by having the government take over the bad debts. It extracted pounds of flesh from bank shareholders before writing checks. Banks had to write down losses and issue warrants to the government.
That strategy held banks responsible and turned the government into an owner. When distressed assets were sold, the profits flowed to taxpayers, and the government was able to recoup more money later by selling its shares in the companies as well. . . .
[T]he final cost to Sweden ended up being less than 2 percent of its G.D.P. Some officials say they believe it was closer to zero, depending on how certain rates of return are calculated. . . .
A few American commentators have proposed that the United States government extract equity from banks as a price for their rescue. But it does not seem to be under serious consideration yet in the Bush administration or Congress.
The reason is not quite clear. The government has already swapped its sovereign guarantee for equity in Fannie Mae and Freddie Mac, the mortgage finance institutions, and the American International Group, the global insurance giant.
Putting taxpayers on the hook without anything in return could be a mistake, said Urban Backstrom, a senior Swedish finance ministry official at the time. “The public will not support a plan if you leave the former shareholders with anything,” he said. . . .
Sweden formed a new agency to supervise institutions that needed recapitalization, and another that sold off the assets, mainly real estate, that the banks held as collateral.
Sweden told its banks to write down their losses promptly before coming to the state for recapitalization. . . .
Then came the imperative to bleed shareholders first. . . . Peter Wallenberg, at the time chairman of SEB, Sweden’s largest bank . . ., the scion of the country’s most famous family and steward of large chunks of its economy, heard that there would be no sacred cows.
The Wallenbergs turned around and arranged a recapitalization on their own, obviating the need for a bailout. SEB turned a profit the following year, 1993. . . .
[T]he agency had mostly fulfilled its hard-nosed mandate to drain share capital before injecting cash. When markets stabilized, the Swedish state then reaped the benefits by taking the banks public again.
Carter Dougherty, "Stopping a Financial Crisis, the Swedish Way," New York Times, September 22, 2008.
II.
Are you really going to try to convince me that there are no American "Wallenbergs" out there who might come up with similar solutions if they knew their share of the $700 billion would be accompanied by a loss of ownership? There is a "market" out there as well as taxpayer money. J.P. Morgan bought the failing Bear Stearns. "In the midst of the subprime crisis, Buffett said during a media interview in June that he sees investment opportunities in the subprime market." He just put $3 billion into General Electric. Bank of America bought Merrill Lynch when it was near bankruptcy. Wells Fargo just bought Wachovia. There have been others.
Maybe the market, alone, is not enough to pull us out of this. But shouldn't that option at least be exhausted before loading an additional $700 billion (or more) debt on our great grandchildren?
III.
Ireland has just come up with its own innovative approach (though not unprecedented, less satisfactory, and far more controversial), characterized by The Daily Telegraph as "the most dramatic and comprehensive bank bailout in Europe since the Scandinavian rescues of the early 1990s." The Irish Times, from which this quote comes, has published a summary of the response of many of the world's great newspapers to its government's essentially bank loan guarantee plan. "World View," Irish Times, October 2, 2008. For the Financial Times' take on what's going on in Ireland this week (as well as the British government's response) see Andrew Hill, "Guarantees Go Only So Far," Financial Times, October 2, 2008.
IV.
And Michael Moore (yes, that Michael Moore) has some solid suggestions among the ten in Michael Moore, "How to Fix the Wall Street Mess," October 1, 2008.
V.
Now I'm not about to join those "I'm still angry," PUMA, former-and-for-always Senator Hillary Clinton supporters and "go Republican" on you. But I've always been more interested in ideas than ideology, proposals than partisanship, and when I find a Republican with a better one I'm not afraid to say so.
Though I must say it gives me some sadness to have to say, this close to election day, that I think Dr. Mariannette Miller-Meeks, the Republican opponent of my Democratic Congressional Representative, Dave Loebsack, has the better position on the Wall Street bailout. See, on her Web site, "Congress Must Set Aside Politics, Address Root Causes of Financial Crisis," September 30, 2008.
Not only do I not support everything she says, I have to candidly acknowledge I don't even understand everything she says. But I understand and agree with most of it, and offer it in the context of this blog entry as, at a minimum, one more response to those who argue that no one is permitted to dislike the Paulson approach unless they can come up with some other alternative. Well, here is yet one more alternative.
"We need to quickly stabilize the financial system with the least cost to the taxpayers. . . .
She said Congress should remove language from Community Reinvestment Act that encouraged excessive risk-taking by Fannie Mae and Freddie Mac and authorized the development of bundled mortgage debt obligations creating this morass and passing the risk onto others. Miller-Meeks advocates temporarily suspending mark-to-market accounting so that banks can stabilize their accounts instead of writing down good loans that will be repaid in full.
"Home owners who are dutifully paying their mortgages on their primary home and have been honest in their application, should be protected with new mortgage product or stabilization of the housing prices. We should penalize those responsible for the losses and keep current executives in place without golden parachutes. Unfortunately, those who benefited most are already gone from those institutions," she said. . . .
Miller-Meeks said the federal government does have an appropriate role in the crisis, including purchasing some institutions and securities at fair market value and selling them at fair market value to the benefit of taxpayers. She believes all proceeds from the eventual sale of such assets should pay down the national debt or provide a tax dividend to taxpayers. . . .
"Steve King is absolutely right when he says doing 'something' is not enough; we have to do the right thing. That means we need to approve a plan so that Wall Street won't expect a bailout every time they make the wrong decisions," she said. "To paraphrase Martin Luther King, Jr., we can't afford socialism for the rich and raw capitalism for the rest of us. Unfortunately, David Loebsack doesn't seem to understand that or the real-world challenges facing the people he's supposed to represent."
Miller-Meeks favors allowing the Federal Deposit Insurance Corporation to ease capital requirement for banks so they can ride out the current credit crunch. She also believes the Securities and Exchange Commission should modify fair value accounting so assets aren't considered worthless during a market panic and instead can be valued on the basis of their true economic value. She also favors development of a plan to let private investors fund the bailout through guaranteed recovery bonds or to set up insurance programs to ensure Wall Street bankrolls its own recovery. . . .
So there you have it. There are better ways to deal with our financial problems, at a minimum there are alternative ways that should be fully explored before rushing down the dangerous path Congress has chosen, ways that consider the plight of the unemployed and homeowners, ways that promise a little greater likelihood of a return to taxpayers, ways that don't reward those who created the problem, and ways that don't perpetuate their inclination to make short-term greedy profit by putting long-term probable risk onto taxpayers.
The route the Senate -- and perhaps on Friday (October 3rd) the House -- are taking (particularly given their role in criminally removing regulation from the industry) is not necessary and is certainly not the only, inevitable, approach; it's just the despicable approach.
# # #
October 1, 2008, 9:30 a.m., 1:00 p.m. (addition of report on Mike Hogan's accomplishments at UConn)
Mike Hogan is Alive and Very, Very Well
Mike Hogan is back in the news, and "in the hearts of his countrymen (and women)," at the same time a petition is being passed from UI faculty member to faculty member urging the reinstatement of former General Counsel Marc Mills. Brian Morelli, "UI professor petitioning to reinstate Mills," Iowa City Press-Citizen, October 1, 2008, p. A1; Amanda McClure and Kelli Shaffner, "Petition to reinstate Mills garners support from UI community" [in this morning's hard copy edition as "Mills Firing Irks Many"], The Daily Iowan, October 1, 2008, p. A1.
Mills, the University's former general counsel, was unceremoniously and peremptorily fired for . . . for . . . what exactly was he fired for? That's part of the problem. No one of us can look back on all of our actions and say there is absolutely nothing during our lifetimes that we might have done differently. But, at a minimum, it's hard to read his lengthy response to the Stolar Report's charges, and his explanation of his role (or absence of role) during the UI's handling of an alleged sexual assault last October 14 and find anything he did (alone or taken together) that would warrant such precipitous action. (And there has, of course, been no effort to show a pattern of mis-, mal- or nonfeasance over the past 20 years of his distinguished service to the University -- nor could there be). See generally, Nicholas Johnson, "University of Iowa Sexual Assault Controversy -- 2007-08," July 19-present.
It's caused many to look at other personnel decisions that don't seem to have made any more sense than this one. See, e.g., this morning's Russell Scott Valentino, "Advice to new VPs: Watch your backs, people," Iowa City Press-Citizen, October 1, 2008, p. A17.
But the story that caught my attention was Lauren Sieben, "Regent: No 2nd Thoughts," The Daily Iowan, September 26, 2008.
Former UI Provost Michael Hogan, who was denied the UI presidency in 2006, this week turned down a $100,000 bonus for exemplary service as the president of the University of Connecticut. . . .
Hogan declined the $100,000 bonus because of the state and school's struggling economic situation, and he asked that the money be given to the university's graduate program, the Associated Press reports.
Hogan served as UI provost from 2004 to 2007. He was a finalist in the UI presidential search in the fall of 2006, before the regents rejected all four finalists.
The regents called for a second presidential search in 2007, which cost the university roughly $200,000 and yielded then-Purdue Provost Sally Mason.
During the first search, Regent Robert Downer [noted] . . . that Hogan had been an "exemplary provost."
"I felt that he would have been an excellent president," Downer said. . . .
Members of the UI Faculty Senate and UI Student Government also were shocked and disappointed at the regents' decision to disband the search in 2006. The two groups passed "no-confidence" votes in November that year, a symbolic gesture of outrage.
Former Regent Amir Arbisser said Hogan received "very serious" consideration in the presidential search because of his prominence in the UI community, but [it was] . . . a "politically unpleasant" time.
"I think that it's a matter of sometimes throwing out the baby with the bath water," Arbisser said. "I think that people were looking for a completely new crew of candidates, not that [the] candidates we had looked at weren't excellent. . . ."
I didn't choose to post a comment regarding Mike Hogan to this story at the time (only a comment about the Daily Iowan's closing out the opportunity to put comments on two stories that day involving President Mason). What follows are excerpts from a random sampling from those Daily Iowan readers who did. The more severe criticisms of President Sally Mason have been deleted because (a) it is to everyone's interest that CEOs succeed, whether the president of our country or our university, (b) I don't think firing anybody is the answer to any problems the UI may have, and (c) this blog entry isn't about President Mason anyway, it is about (University of Connecticut) President Hogan.
Outrageous
posted 9/26/08 @ 10:00 AM CST
Didnt the regents say that the candidates were unqualified when they rejected a candidate that is vastly superior to our new president? Mason can't get a raise and Hogan turns down a bonus because of the economy. Dear Regents: you made a HUGE mistake. Your extreme negligence on this issue goes beyond any business judgment ruling that we would apply and the people of Iowa should get to recoup the losses you have inflicted from you personally.
Chris
posted 9/27/08 @ 5:41 PM CST
Why don't they just ditch Mason? . . .
Let's weigh the "evidence" on Mason:
[lengthy criticism of Mason follows, and then the comment concludes . . .]
And, the very sad reality -- we could have had Mike Hogan. He wanted the job and was imminently qualified and adored. Instead, he's at University of Connecticut, where he has just contributed his bonus BACK to the University. I guess the regents just could not tolerate a leader who has more intelligence, integrity, ability to lead, support, and intelligence than them.
At a minimum, they should see if Mike Hogan would come back as president, if they'd fire Mason, as would be appropriate in this situation. . . .
Similar, anonymous, comments were added to my blog entry, "Cleaning Up After the Party," September 26, 27, 2008.
Anonymous said...
I have several concerns: . . .
Instead of stepping up and taking responsibility, Mills and Jones are thrown under a bus. You can say that Jones may have had past problems, but where's the evidence that either he or Mills is responsible for the mishandling of this event?
Strike 3!
The bottom line is that the Regents have to justify hiring her over Mike Hogan. That's right -- Our first choice, who went off to better and brighter alternatives in Connecticut -- where, BTW, he just DONATED his $100k bonus back to the university.
Meanwhile, Mason, in a shadow of under-performance, receives an increment to her performance bonus.
How sad. Let's see about bringing back Hogan!
9/27/2008 06:11:00 PM
Anonymous said...
The regents didn't want Hogan because he could think for himself, just like Skorton did. The regents wanted someone too dumb to think for themselves, someone who had to be told how to think. That is, by her own account, why Mason fired Mills and Jones-- they weren't telling her what to think when she needed them to!
Looks like the regents got just what they wanted with this hire. How lucky for all of us.
9/27/2008 08:44:00 PM
Anonymous said...
I think you are right, anonymous-at-8:44PM. . . .
It's a little ironic that Amir Arbisser has come out in support of Mike Hogan at this point (according to the Daily Iowan). He voted against him as a presidential appointment. Yet, I have to respect his integrity for stepping up and admitting a mistake was made. . . .
--Signed, a once-proud faculty member
9/28/2008 07:55:00 AM
When Mike Hogan was here as our Provost you could probably have counted me as a "fan" -- though I was not a member of the Facebook "Hogan's Heroes" group. But I never worked with him on anything; in fact, I don't think I ever talked to him in his office about anything; and he made no decisions (of which I am aware) that affected me positively or negatively. So I claim no special knowledge.
Moreover, university administrators, like administrators of most institutions, are like judges. Most of the time their decisions mean that someone wins and someone loses. Those who "win" give no credit to the decider because, after all, they deserved to win, they were right and the other person wrong, and the decider only did what they ought to have done. Those who "lose" go away convinced the decider is either incompetent, corrupt or biased against them.
So I assume Hogan must have created his own detractors at our University; but my rough assessment is that, if so, they were far outnumbered by his fans -- including a good many regents.
Missing him, I decided to check out how he's been doing at Storrs, Connecticut. (Hopefully, it's unnecessary to add that I've had no contact with him, or anyone at his university, with regard to this blog entry, and I can only hope that if he ever sees it he won't be upset.)
Here's an editorial from the (University of Connecticut) The Daily Campus a couple weeks ago that provides a summary (Photo credit: Wikipedia; the dog in the picture is "Jonathan," the school mascot): Editorial, "Hogan's campus presence more than just a photo op," The Daily Campus, September 17, 2008:
Toward the end of former UConn President Philip Austin's tenure, a survey was taken asking students, faculty members and administrators what they would like to see in a future university president. The result of this survey was not surprising to most -- nearly unanimously, those connected with UConn were looking for a president who was a more visible member of the community.
To those who asked for a president they could connect with, someone who would be an active member of UConn's growing community, Michael Hogan has been the answer to their prayers.
In the year since President Hogan came to UConn, he has managed to make himself an integral part of the university on a multitude of levels. . . . He is an honorary member of a variety of fraternities and sororities on campus. His face graces the cover of the UConn dining handbook, replete with beekeeper hat to highlight UConn's efforts to use locally produced honey. It was Hogan who greeted parents on move-in day and Hogan who took the bus with students to football games. During sporting events, the president can typically be found in the student section and on Relay for Life he took laps around the track with student volunteers. . . .
He regularly eats meals in dining halls and is often approached by average students just to say hello. . . .
Students can often be seen waving at Hogan as he walks around campus, or shouting out his name at he passes by.
"Mike has made a very conscious effort to really get to know a lot of students. . . . I really run into him more informally around campus than I probably do formally, which says a lot," said USG President Ryan McHardy.
After years of being governed by a president who was rarely heard from directly and even more rarely seen around campus, UConn wanted a president who was a real person, someone they could connect with and who would be part of the community. In the year since President Hogan arrived in Storrs, that is exactly what we've received.
Not surprisingly, when it came time a couple of days ago for the paper to issue "Hogan's Report Card" they awarded him an "A" for "approachability." Editorial, "Hogan's Report Card: One Year in Review," The Daily Campus, September 26, 2008 ("'Mike,' as Hogan allows students to call him, is definitely a far cry from past presidents who liked to stay in their offices. Hogan walks around campus regularly, . . . seems to enjoy students' coming up and introducing themselves and generally makes time for small talk . . . and makes a discernible effort to reach us on our level.").
They also gave him a "B+" for fundraising, having "exceeded his goal of raising $55 million in new gifts . . . the second best performance in the university's history," and an "A-" for the "environment," among others (one A, one A-, two B+, and one B- -- contested by a student reader as far too low and unrealistic for his "political advocacy").
Mike Hogan's delightful blog -- which is called the "Pres Release" -- provides one reason for his environmental grade in a September 29 entry: "UConn has improved its rating from a year ago and is now listed as a “Campus Sustainability Leader” in the 2008-09 Green Report Card, which was released last week by the Sustainable Endowments Institute. . . . Only eight state public universities in the nation were rated higher than UConn and 12 others received the same overall rating, including several of our 'aspirational' peers: Cal-Berkeley, UVA, Wisconsin-Madison and Michigan."
He also blogs about his "Report Card":
I got my report card from the Daily Campus today. A solid A-/B+, depending on your grading scale. But of course this is before the upward adjustment for the usual grade inflation, which would probably convert the grade to an A+. So I’m very happy with the results. Besides, since I already have a good job I don’t have to worry about getting into a top-notch law school.
Looking at the Daily Campus, I got to thinking about my report cards in grade school when we would get marks like ‘Good,’ ‘Satisfactory,’ and ‘Unsatisfactory’ for our personal behavior. I was once in a class where the teacher asked us to make out our own report cards and explain the grades we gave ourselves. So I did that here, based on the cards I used to get. Here are the results:
I had to give myself an S- for General Deportment in my second twelve weeks because of getting too exuberant at a Women’s Basketball game in Gampel. But as you can see, I think I’m improving. I didn’t give myself any E’s (Excellent) since I can always do better. Besides, these are not adjusted for grade inflation!
The blog contains 17 entries for September alone, with lots of photos. In one he's pictured with the "UConn Marching Band’s clarinet section." He says, they "sent me this photo taken on the field after the Hofstra game. As I look at the picture, I’m not sure if that’s really me or if it’s another version of ‘Stand-Up Mike,’ that two-dimensional figure you might have seen around campus and last residing in Kevin Fahey’s office."
There is apparently something called "The Rock" on campus that appears to be literally an enormous rock that one is permitted to paint with birthday and other greetings.
There are his campaigns: "trayless dining" as a water conservation measure, the use of locally developed honey ("Honey Harvest" photos; "Dining Services harvested its first batch of honey from the hives they set up last spring . . ."), and the picnic he put on to promote graduate and professional education.
Some are his comments about UConn's academic achievements -- some EE and computer engineering students who've figured out how to send computer data as sound waves through water, or a faculty member with a sense of humor about her recently well-funded research on tape worms.
Some, like those of any blogger, describe his day: "This past weekend I took some time out from my usual work schedule to take in some UConn athletic events – it was a perfect weekend to be outside. I went to four games (football, softball, field hockey, men’s soccer) and we were 4-0 in those games."
And, of course, at a time when we're paying our football coach in the millions, putting an extra $30,000 into our UI president's "incentive package" (now $80,000), Wall Street executives are being permitted to keep their jobs and multi-million-dollar bonuses (rather than forcing their firms to go through bankruptcy, thereby requiring the executives to pay back the bonuses to the trustee in bankruptcy for creditors) as a "solution" to a problem these executives created for themselves and the global economy -- what a bright and shining moment it is to see someone, whose accomplishments have warranted a $100,000 bonus, turn that bonus back to his University because of the economic hard times.
You want class? That's class.
Class plus . . . impressive fundraising, serious academic accomplishment by faculty and students, mutual respect, a learning environment, coupled with a sense of fun and good humor with all. School just doesn't get much better than that.
All in all I'd say our Mike Hogan is doing all right on the east coast for an Iowa boy ("Born and raised in Waterloo, Iowa, Hogan earned his B.A. degree at the University of Northern Iowa, where he majored in English with minors in history and classics; his M.A. and Ph.D. degrees were conferred by The University of Iowa.").
I still miss him.
# # #
September 30, 2008, 8:30 a.m., 5:00 p.m.
Sexual Assault Aftermath, Global Collapse, Links and More
Sexual Assault Aftermath
5:00 p.m. Breaking News: Brian Morelli, "Faculty Circulating Petition to Reinstate Mills," Iowa City Press-Citizen, September 30, 2008, 4:23 p.m.
First, here are links to some recent and related entries:
The most extensive collection of material: Nicholas Johnson, "University of Iowa Sexual Assault Controversy -- 2007-08," July 19-present
"Cleaning Up After the Party," September 26, 27, 2008 (includes link to Mills' response to Stolar Report)
"Which Would be Worse?" September 25, 2008
"Scapegoat Bites Back," September 24, 2008
"Got Questions?" September 23, 2008
"Rational Responses to Stolar and Global Finance" (includes "The Case for Mills and Jones"), September 20, 2008
"Extra: Stolar Report," September 18, 19, 2008 (includes liink to Stolar Report)
To which the Press-Citizen has added a couple of additional stories this morning:
Brian Morelli, "Campus reaction to recent events varies," Iowa City Press-Citizen, September 30, 2008, p. A1, which reports, as the headline suggests, that some are supportive of the Regents/Mason firings, some very disturbed, and the remainder make up the ever-present apathetic ("UI history professor Katherine Tachau said having read comments from well-regarded people in the UI community such as former UI President Sandy Boyd, former law school dean Bill Hines and former UI General Counsel Mark Schantz, who don't often comment publicly, 'I take that as a sign that there are serious governance problems now because of what is seen as an overly hasty decision with insufficient due process.'").
Lee Hermiston, "Ex-education lawyer criticizes UI firings," Iowa City Press-Citizen, September 30, 2008, p. A1 ("Sheldon Steinbach, a Washington, D.C., attorney, [who] served for 37 years as the general counsel for the American Council on Education . . . said he questions the report done by the Stolar Partnership . . .. 'Having read this sort of B-minus report over a second time, I fail to see what in that report ... warrants their termination, if anything," Steinbach said, adding that their firings 'border on the extraordinary.'").
And The Daily Iowan reports the UI's proposed all-employee sexual harassment training program is also opening to mixed reviews: Matt De La Peña, "Harassment training receives mixed response," The Daily Iowan, September 29, 2008, p. A1 -- and check out the comments while you're there.
Meanwhile, The Gazette reports: Diane Heldt, "UI investigates anti-gay graffiti," Gazette Online, Updated September 29. 2008 7:40 p.m.
"Global Collapse"?
First, a couple links to prior entries:
"How Much Do You Owe the Chinese?" September 6, 8, 2008
"Global Finance: The Great Fountain Pen Robbery," September 21, 2008.
"Alternatives to 'The Plan,'" September 28, 2008.
Well, "The Plan" got voted down yesterday. Jonathan Weisman, "House Rejects Financial Rescue, Sending Stocks Plummeting," Washington Post, September 30, 2008, p. A1.
The sky has yet to fall. The Dow's drop was predictable -- but much of it occurred before the vote. The Japanese market was down around 4%, but that was about the world's worst. Europe's markets regained most of their decline. Russia's problems had to do with the price of oil, not U.S. mortgages and bankers' greed.
Two-thirds of the House Republicans voted against it -- a plan created, strongly supported, and widely publicized by their own Party's President and Secretary of the Treasury.
Forty percent of the House Democrats voted against it -- because (among other things) provisions they felt essential had been stripped out of it in order to get more Republican support.
I think both groups of nay voters were right to reject it -- albeit for their different reasons.
That's not the same thing as saying we should do "nothing." It's only saying Congress shouldn't be doing what they are being urged to do, with the speed at which they are being urged to do it.
The Republicans say we have not yet begun to consider a whole range of marketplace options that could reduce or eliminate the need to socialize the financial sector and require taxpayers pick up the predictable losses from irresponsible, excessive private greed.
As I laid out in "Alternative to 'The Plan,'" linked above, we need to focus more on the needs of depositors (let's first fully fund FDIC), the unemployed (unemployment compensation, training programs, and a CCC-like program ready to roll), and homeowners (permitting those declaring bankruptcy to keep their one home, or at least have their mortgage readjusted to represent the home's actual value), and less on the CEOs.
Bankruptcy is not my field, so I can't personally say what follows is true. But a bankruptcy lawyer recently pointed out to me that when a firm declares bankruptcy, if the CEO and other executives have paid themselves bonuses based on fraudulently inflated accounting statements, those bonuses have to be repaid to the trustee in bankruptcy for distribution to creditors. Thus, when Henry Paulson the magnificent magician one evening turned Goldman Sachs and Morgan Stanley from investment banks into conventional banks, thereby enabling them to avoid bankruptcy, he may have also enabled their CEOs to keep millions of dollars in self-awarded bonuses they would have otherwise had to surrender.
"Doing something" is not always the best response to a crisis -- when, as in this case, the details of that "something" are unknown, there is no confidence the "something" will make things better, it will have known adverse effects, will transfer enormous and Constitution-challenging power to one unelected person, and will redistribute an unprecedented amount of debt from the wealthy to the middle class and poor.
We took a long time to think through and respond to the savings and loan bailout. This challenge deserves no less.
# # #
September 29, 2008, 9:45 a.m.
"Censorship" and Anonymous Electronic Speech
The Daily Iowan has, without explanation, removed comments, and shut down the ability of readers to add more, to a couple of stories about the UI's President Sally Mason. Until the paper explains what happened and why it is premature to assume it was either a "computer error" or an outrageous bit of state censorship.
[See Amanda McClure, "No Raise for Mason," The Daily Iowan, September 26, 2008, and Amanda McClure, "Mason Apologizes to Regents," The Daily Iowan, September 26, 2008, and the six comments complaining about those deletions posted between September 26 11:34 a.m. and September 28 7:41 a.m. to Lauren Sieben, "Regent: No 2nd Thoughts," The Daily Iowan, September 26, 2008.]
But that's not the only bit of blogging news.
Some of the best literary as well as policy writing on the Press-Citizen's editorial pages occurs when the paper's own editorial page editor, Jeff Charis-Carlson, writes and publishes a piece that is entirely his own.
But it's a significant commentary about the role of blogs and other forms of electronic speech these days that someone who has such exclusive access to his own editorial page in a newspaper also chooses to communicate by way of a blog.
It's especially appropriate that he would do so in this case.
He's blogging about blogging.
Specifically, he's addressing some of today's hot issues surrounding the propriety of mainstream media permitting on their online Web sites anonymous comments from readers about stories in the paper's hard-copy edition. These comments can sometimes include those that are little more than name calling and mean-spirited allegations with little or no factual basis, coming from those able to hide their lack of decency and manners behind their anonymity.
Charis-Carlson sides with the practice of anonymous speech utilized by three of our nation's founding fathers, Alexander Hamilton, James Madison, and John Jay. Jeff Charis-Carlson, "Anonymous Online Comments: Good, Bad or Just Ugly?", September 24, 2008, 4:24 p.m. He begins:
I was asked to take part in an Iowa City Public Library panel discussion on Online News and Message Boards. I had prepared five-minutes worth of introductory remarks, but the organizers launched right into questions. So, I thought I'd share these remarks with the people who could appreciate them most -- anyone reading and commenting on www.press-citizen.com:
"Introduction for the Intellectual Freedom Festival: Online News and Message Boards."
Last week, I attended the annual convention of the National Conference of Editorial Writers — this year in Little Rock, Ark.
As you can imagine, our focus was primarily on trying to justify our own profession at a time when anyone with an Internet connection can set himself or herself up as a purveyor of opinion.
Not only did we discuss the issues arising from our own anonymity — writing the nameless consensus opinions of our editorial boards — but we had many discussions on the degree to which allowing anonymous online responses to news and opinion articles either:
a) Represents a revolution in citizen journalism (which is good),
b) Provides a crass way to drive up online traffic statistics at the expense of reasoned, vetted, well-edited news and opinion (which is bad), or
c) Does a lot of both (which is just ugly).
The three witnesses called by Charis-Carlson are, as you'll recall the authors of the famous and influential "Federalist Papers," writings encouraging the ratification of the Constitution while impressing the authors' interpretations of it upon the public and judges who followed. They chose to write anonymously, using the name, "Publius." (Originally published as newspaper articles, October 1787-August 1788, they were ultimately published in book form as The Federalist (J. and A. McLean, 1788).)
The courts have tended to look favorably upon anonymous speech as well -- and to some extent for the same reasons Charis-Carlson identifies: "at times, cyber-anonymity is the only way to allow contrary opinions to be raised without retaliation against those who dare speak out against majority opinion. At times it is the means by which a voice crying in the wilderness can find an audience." (See, e.g., "Anonymous pamphlets, leaflets, brochures and even books have played an important role in the progress of mankind. Persecuted groups and sects from time to time throughout history have been able to criticize oppressive practices and laws either anonymously or not at all." Talley v. California, 362 U.S. 60 (1960).)
I guess, while I would not differ with the basic doctrine approving anonymous speech (with such a distinguished historical foundation), I do think it is not compromised by modifying it in the specific context of readers' comments on a newspaper-owned Web site.
As it was put in Justice Jackson's separate opinion in Kovacs v. Cooper, 336 U.S. 77, 97 (1949): "The moving picture screen, the radio, the newspaper, the handbill, the sound truck and the street corner orator have differing natures, values, abuses and dangers. Each, in my view, is a law unto itself."
The Court has made clear that the only people who have meaningful First Amendment rights in our monopoly-media-dominated society are those who own them. And those are only rights as against government action. Editors and journalists can be fired by owners; they certainly don't have any First Amendment rights as against the owners. Even though a paper has a local monopoly, and has posted rates for the sale of advertising, it can refuse to publish an ad just because it doesn't like the content. It can attack someone in its pages and refuse to sell or give them the space to reply. (See, e.g., Miami Herald v. Tornillo, 418 U.S. 241 (1974), overturning as unconstitutional a Florida statute providing for precisely that right.) Clearly, the public doesn't have any First Amendment right as against the owners. (All are actions that would in most contexts be violations of the First Amendment if done by governments -- a consideration that may impact on the propriety of The Daily Iowan's recent actions.)
As the Court argued in upholding the Fairness Doctrine (now repealed) in Red Lion v. FCC, 395 U.S. 367 (1969), the Congress/FCC could have decided to require broadcast licensees to share frequencies (that is, one licensee might broadcast Sunday through Wednesday, another Thursday through Saturday -- both in the same town and on the same frequency). Therefore the much lesser Fairness Doctrine requirement was clearly permissible (i.e., the sole licensee had to (a) deal with local controversial issues of his/her choice, and (b) present a range of views, also of their choice, in doing so).
Similarly, if a privately owned newspaper can refuse to carry any letters to the editor, and refuse to permit any comments from readers about its stories on its Web page, it would seem to me perfectly permissible for it to allow only the comments of those willing to identify themselves.
Most papers will go to some considerable lengths before publishing a letter to the editor to confirm that the letter submitted to the paper has been written and sent by the person indicated as the author. Of course, once published the author's name is known. And at least two of the standards the paper will use in deciding which letters to publish, presumably, are (1) the extent to which the letter makes a worthwhile substantive contribution to the community dialog, and (2) the civility of the language employed.
By what rationale does a paper apply such relatively rigid, responsible, professional standards to the letters to the editor in its hard copy edition, and virtually none to what amount to the "e-letters to the editor" in its online edition?
If (1) there is, in fact, a problem of outrageously offensive comments about stories being placed on newspapers' Web pages (what Charis-Carlson calls "grossly inappropriate commentary"), and if (2) there is reason to believe that requiring those placing comments to identify themselves might reduce or eliminate the problem, why would it be so wrong to require those commenting to identify themselves by their actual names?
On the other hand -- like President Truman's request for "a one-handed economist," would you really want me to be a one-handed blogger? -- the printing press has been around a lot longer than the World Wide Web. (China had movable porcelain type in 1040; Korea the first metal movable type in 1230. Johannes Gutenberg was a Johannes-come-lately, waiting around in Mainz until 1439.) The Congress and the courts have taken a somewhat lenient free market approach to the Internet's wild west excesses during its baby years. Section 230 of the Communications Decency Act of 1996 gives those who provide an opportunity for online comments from others something of a base on balls when it comes to what would otherwise be the provider's liability for third-party content.
Many papers and other services have at least some mechanism for readers to flag comments of others they believe to be over the top. As Charis-Carlson notes, "in the past year we’ve [the Press-Citizen] had to kick off dozens of participants for grossly inappropriate commentary."
But that sort of thing can raise other problems -- as anyone can quickly discover when their e-mail provider gets put on an industry-wide "do not receive" list, friends no longer get their emails, and there is little to nothing they can do about it. (It's kind of similar to the "Red Channels" list of tainted actors and writers during the "anti-communist" years of Senator Joseph McCarthy.)
Privately-owned papers are not restrained by the First Amendment. They can, legally, be selective about which readers' ideas will be permitted on their Web sites, and which will be removed. When the government opens up what is called a "public forum" it cannot make such content-based distinctions between who can, and cannot, use the facility. But even though not legally required to do so, the underlying principles suggest a similar standard would also make sense for privately owned newspapers. If you're going to open up your Web site to reader comments, a community dialog, doesn't it make more sense to permit all of them?
That's the way this blog of mine has been operated. The only comments I've ever removed are those that are clearly advertising for goods or services (primarily from gambling casinos; comments appended to blog entries dealing with gambling). As long as I get my say in the blog, I think readers are entitled to their say in the comments -- though I would tend to be more tolerant of comments criticizing me than comments bordering on defamation, or invasions of privacy, regarding others, were those situations to arise.
It helps, in trying to understand both the First Amendment and the utility of considering its underlying foundations' applicability to private media as well, to lay any proposal involving speech alongside the First Amendment's purposes to see how it fares.
1. "Marketplace of ideas." It is believed that "truth" is more likely to emerge from a public dialog in which all persons and ideas can be presented and weighed.
2. "Self-governing." If a self-governing people are to have a prayer at making democracy work they must at least have access to the maximum possible range of information and opinion on public matters (whether they take advantage of that access is, of course, another matter).
3. "Checking value." The press is sometimes called "the Fourth Estate" because it is both recognized in our Bill of Rights as an important component of government and one that is totally outside of government. As every school child knows, the legislative, executive and judicial branches provide a check on each other. But the media can serve as an additional "check" as well, not only on abuses by government, but abuses by other powerful institutions as well (this week think "Wall Street").
4. "Safety valve." There is a theory/assertion that by permitting the frustrated and angry an opportunity to speak we can reduce somewhat their alternative response: violent actions of one kind or another perpetrated against the community and the elements within it they perceive to be the cause of their misery.
5. "Self-actualization." Humans belong to, as a general semanticist has observed, "the only species able to talk itself into difficulties that would otherwise not exist." We are bested by the other species -- especially squirrels -- in many ways (speed and athletic prowess; sight and hearing; survival skills; the bats' radar; etc.). Our superiority is in our ability to create and use language. Speaking and writing -- and the analytical thought that, hopefully, precedes it -- contribute to our growth as individuals, our self-actualization, with regard to the only quality that sets us apart.
To the extent those "First Amendment values" resonate with you, most if not all would seem to be served by readers' comments on newspapers' Web pages.
As Charis-Carlson concludes, permitting them is: "an act of optimism as well as commercial exploitation, but we’re betting its potential benefits of increasing conversation will outweigh the current hazards of having those conversations end in a flame out."
# # #
September 28, 2008, 7:00 a.m., 2:00 p.m.
2:00 p.m. Extra: Here's a link to, "Draft Proposal on Financial Rescue Legislation," Office of Speaker Nancy Pelosi, September 28, 2008, 12:23 p.m., and a section-by-section summary of the 42 sections of the 106-page proposed bill.
What are we to make of the money changers in the temple, worshipers at the alter of "the free market," overturning their own tables, leaving the temple, and following the anti-Christ through the desert to the land of socialism?
Many of my favorite radio programs come from the BBC World Service.
The most relevant today -- as 100 million American families are each about to add an additional $7000 in debt by this evening to what they already owe for homes, cars, credit cards and student loans -- is this week's "Global Business" with Peter Day. The program pretty consistently offers a weekly look inside that enormous wad of chewing gum we call "business" that results in creative insights not likely to be found elsewhere in the business media.
There was a time when banks provided capital for goods and services -- people who grew things, or manufactured things, or sold things, real things you could hold as well as services to a consumer economy. Peter Day calls them "businesses which employed people and made money for shareholders and suppliers etc, and built prosperity for various owners who maybe did good things with their money." Today, he notes,
Many big banks have diluted their old primary business of lending to enable enterprise, and started investing on their own behalf in . . . foreign exchange, or warrants or options or packages of debts so arranged that the liability falls off the balance sheet and cannot readily be ascertained by outsiders. . . .
[T]these banks seem to have lost a lot of their commercial compass or moral purpose of employment or prosperity.
Their feet are no longer on the ground, in the real world.
They are run by contract employees working for annual bonuses, and profits are the only measuring stick they know.
To understand what such "banks" have created, why they are in trouble, and what needs to be done about them, Peter Day -- along with five seasoned analysts and academics (including Andrew Hilton, Director of the Centre for the Study of Financial Innovation) -- explored possible analogies for understanding and concluded that "financial capitalism" (as Day calls it) is most like the casino business.
It's just that the casino industry has done a much better job of analyzing and managing its risk.
Ownership [in "financial capitalism"] no longer carries the old burden of responsibility. The sole measure of success is the medium term returns. . . .
Businesses are not built any more, but sliced and diced and reassembled in a similar way to the toxic mortgages assembled by the banks during the sub-prime bubble.
Bubbles burst, and (as we are now learning) real people are hurt. Casinos know what the odds are, but these new international investment banks don't, despite their complex risk management algorithms.
Unlike the casinos, they are houses of cards.
Now that Iowans are betting that we can gamble our way to economic prosperity, if our casinos weren't doing such a good job of managing their risk we might someday confront their demand that unless we bail out a few failing casinos our state's economy will collapse.
Clearly, that's what the gamblers in Wall Street -- the most generous source of funding for our elected officials in Washington -- are telling America's taxpayers this morning.
I suffer under no illusion that my suggestions in this little blog will have the slightest impact on what Washington will decide today my great-grandchildren's debt should be. Nor do I represent that I have any credentialed expertise in economics or finance. But that's never held me back before.
1. "From those wonderful folks who brought you the Iraq War."
Jon Stewart's "Daily Show," last Thursday, September 25, opened with a wonderful bit comparing videos of the almost word-for-word similarity between the way President Bush explained the God-awful consequences that would flow from our not going to war in Iraq and our not giving Wall Street $700 billion.
Whatever happened to "fool me once, shame on you; fool me twice, shame on me"?
Whatever calamity it is we're about to confront, it was created on the watch of a former Secretary of the Treasury from Goldman Sachs. It is now the subject of a three-page proposal from a Presidential aide and Secretary of the Treasury, both from Goldman Sachs, that we trust them with $700 billion of our money and give it to them immediately. Shouldn't we at least consider the possibility that there may be a lot more rhetoric than reality to the "sky is falling" predictions from this crowd?
Last weekend we were told unless the problem was solved by this past Monday global financial collapse would follow. It wasn't solved by Monday, and the world's economy and stock markets continued to operate on Tuesday, Wednesday, Thursday and Friday.
Secretary Paulson said if any restraints were put on how much could be earned by the CEOs of the bailed out firms those CEOs might not agree to the plan. Think about that for a moment. How serious can this disaster be -- and how worthy the CEOs we're about to bail out -- if they're willing to go through it rather than lose the opportunity to buy another yacht?
2. Frankly, I have a lot more trust in "the market" than these "free market" ideologues recently turned socialists.
These are the folks who complain that there's a "shortage of workers." Offer pay and benefits that someone can live on and the "shortage" evaporates. "The market" will produce those workers.
"There just aren't any buyers for my house." Well, no, not when houses in your neighborhood are selling for $180,000 to $220,000 and you're asking $375,000. Lower the price and there will be buyers.
Banks have taken our deposits and instead of investing them in the local community as we assumed they were doing, they have gone off on a drunken toot on the global market, gambled them away and lost. Having lost what was our money in the first place, they now want us to cover their gambling losses and give them the money all over again. No; I don't think so.
It's not our fault they violated our trust and lost our money.
Moreover, however little their investments are worth, they are worth something. The market will respond to that worth -- and is, in fact, the most accurate way of measuring it.
Warren Buffett found something at the bottom of this barrel he was willing to pay $5 billion to buy. Bank of America picked up Merrill, Lynch. Didn't Barclay's buy at least some of Lehman Brothers? Why not let the market work?
Not the least of the problems with the $700 billion proposal is the difficulty in assessing what the taxpayers should be paying for these "toxic" assets. If we pay what Warren Buffett or Bank of America would have been willing to pay, why are we doing it with taxpayers' money, and how have the investment banks been benefited by our generosity?
If we end up paying more than market value -- either because Washington is being incredibly generous with our money, or because, without a true market, there's no real way of knowing what they are worth -- aren't we being taken to the cleaners?
The spin the last couple of days from Washington has been, "Not to worry; actually you're going to get most of this money back; in fact, you might even make a big profit."
With all respect, I think this is BS. If there's a possibility of actually making money on this transaction there's somebody out there in the private sector who will figure out a way to come up with the capital to do it. If not, don't tell me this is really a scheme to enrich my great-grandchildren.
3. Trickle up, not down.
There are three groups of people I care about in this mess -- none of which is made up of Wall Street or Main Street bankers.
I am concerned about (a) depositors, (b) workers, and (c) homeowners.
The money should go to them, and can, at a fraction of what we're going to be handling over to America's richest individuals.
(a) Bank depositors are insured, up to $100,000 per account, by the Federal Deposit Insurance Corporation (FDIC). Even if their bank fails, those funds are protected. Credit unions' members have a somewhat similar protection. With multiple accounts, or multiple banks, individuals can have even greater protection.
(b) Some 600,000 workers have already lost their jobs this year. They, and those whose layoffs may follow, are the true innocents in this mess. We should extend and expand unemployment compensation and job training programs. Beyond that, we should put in place, ready to roll out, programs like the Civilian Conservation Corps from the 1930s -- potential construction jobs for the unemployed, working to rebuild our aging infrastructure of roads, bridges, dams, hospitals, schools, floodplains, parks and other public projects. The 1930s jobs programs included writing, theater, and other opportunities for the unemployed beyond construction jobs.
(c) Homeowners who've cut back on their discretionary spending, sacrificed, and continued to make their mortgage payments shouldn't be left to think themselves fools. Those who made unrealistic, stupid commitments to make mortgage payments they had no realistic way of making will suffer a bit -- as will the investment bankers. But those who were taken advantage of, those who could make payments based on the current value of their homes (but not their inflated value) should be permitted by bankruptcy judges to do so.
Those three things would, in my judgment, do more to restore America's economy than whatever Secretary Paulson may end up getting from the taxpayers.
4. "The plan" is not "a solution."
Even the plan's advocates acknowledge they can't promise it will fix everything.
There are other financial problems coming down the line.
There's no free lunch. Not only does this put $700 billion on our great-grandchildren's credit card.
There are implications for the value of the dollar vis-a-vis the Euro and other currencies -- indeed other nations' willingness to continue to treat the dollar as the preferred international currency.
There are implications for China and other nations' willingness to continue to loan us the money to enable us to cut the taxes of our wealthiest, fund our two current wars and the world's most bloated military-industrial establishment, and now this $1.3 trillion-plus bailout of those whose greed drove them to take the short-term profits along with the long-term excessive risks for which we've now been asked to pay.
There are implications for inflation, and for the squeeze this puts on -- indeed the probable cancellation of -- very badly needed social programs of all kinds with potential to add even more to our long-term economic growth.
5. Baby steps.
If we're going to do this anyway, why do it through the Secretary of the Treasury, and why do it this weekend all in one fell swoop?
Why not use a separate agency, as was done the last time we bailed out a segment of the financial community -- the savings and loan industry -- rather than handing it over to one person (who will be leaving Washington in three months anyway)?
Paulson says he can "only" spend $50 billion a month. That being the case, why not require whoever is running this to return to Congress for no more than $100 billion at a time as we work out the procedures and monitor the results?
Just some thoughts about Wall Street's casinos.
# # #
[Photo credit: European Pressphoto Agency; as reproduced in New York Times, October 9, 2008; "Zabiullah Majahid, front, of the Taliban, led his group in the mountains of Helmand Province."]
