Greenspan... My Bad

During his run for the presidency in 2000, John McCain was drilled by a reporter about what he would do as president if something happened to then Federal Reserve Chairman Alan Greenspan.

McCain, a self-described don't-know-much-about-the-economy, grinned and said.... "Well, I'd put sunglasses on him and prop him up like that guy in Weekend at Bernies."

Well "Bernie," who retired in 2006, was back on the Hill this Thursday where he told a Congressional committee that the economic crisis had shaken his very understanding of how markets work, and agreed that certain financial derivatives should be regulated... this from the anointed financial Maestro who heretofore vigorously resisted the "r" word.... "Greenspan Says He Was Wrong on Regulation." the Washington Post headline blares.

Greenspan's admission stuck at the very core of "trickle-down" Reaganomics as he lamented.... "I made a mistake, in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms."

Bernie thought unfettered, unregulated investment bankers and Wall Street would stifle their greed. Would let the obscene profits in their sticky palms trickle down to the middle class. Excuse me.... hah, hoo, hoo, hah, hah, hah.....!

Greed is the fairy-dust of Reaganomics. Greenspan's apparent successes in managing the economy from 1987 to 2006 were in fact illusory.... they came at the cost of building the biggest credit bubble in world history.... and the bubble has now burst.

Bernie actually saw it coming. Greenspan warned in his 2007 memoir that Washington was now "harboring a dysfunctional government.... Governance has become dangerously dysfunctional."

Now we're living with the shambles the Decider has wrought with his dysfunctional government.... a dysfunctional, deregulated, deficit-mushrooming disaster.

A stubborn McCain is now no longer interested in putting sunglasses on Bernie and propping him up since Thursday the genuinely perplexed Greenspan was hard-pressed to explain how formerly fundamental truths about how markets work could have proved so wrong.

McCain doesn't want to hear it. He's taking back the sunglasses and deserting Bernie.... he wants to ignore the demise of Bernie-Reaganomics and party on with Bush's economic agenda of tax-break-for-corporations and trickle-down lots-a-luck for the middle class.

November 4. Vote. It matters!

History: McKeating to Meltdown

By contrast, the Keating Five scandal was small potatoes. A financial institution bailout costing over $3 billion in 1989.

Compared with the bailout of hundreds of billions for the current financial meltdown, it seems small potatoes. But, there are other comparisons that chill.

The Keating Five scandal.... five Senators entangled in the failure of big- time campaign contributor Charles Keating's Lincoln Savings and Loan. The five were accused of intervening with banking regulators to protect Keating.

Then-economist Alan Greenspan wrote a letter on Keating's behalf extolling the management of Lincoln Savings as "seasoned and expert" with a "record of outstanding success."

Sen. John McCain, now seeking the presidency of the United States, was one of the five.

Alan Greenspan went on to become chairman of the Federal Reserve.

In today's New York Times Frank Rich puts a fine point on this history in Truthiness Stages a Comeback.

Rich reminds us that McCain.... "has been chairman of the Senate Commerce Committee, where he claims to have overseen “every part of our economy.” He didn't, thank heavens, but he does have a long and relevant economic record that begins with the Keating Five scandal of 1989 and extends to this campaign, where his fiscal policies bear the fingerprints of Phil Gramm and Carly Fiorina. It’s not the résumé that a presidential candidate wants to advertise as America faces its worst financial crisis since the Great Depression. That’s why the main thrust of the McCain campaign has been to cover up his history of economic malpractice.

McCain has largely pulled it off so far, under the guidance of Steve Schmidt, a Karl Rove protégé. A Rovian political strategy by definition means all slime, all the time. But the more crucial Rove game plan is to envelop the entire presidential race in a thick fog of truthiness. All campaigns, Obama’s included, engage in false attacks. But McCain, Sarah Palin and their surrogates keep repeating the same lies over and over not just to smear their opponents and not just to mask their own record. Their larger aim is to construct a bogus alternative reality so relentless it can overwhelm any haphazard journalistic stabs at puncturing it.

These smear tactics are nothing new.... George Bush smeared McCain in the 2000 GOP presidential primaries, and Swiftboated John Kerry in the 2004 presidential election..... but, it was the former Republican Speaker of the House Newt Gingrich who codified such tactics in a 1996 GOPAC memo entitled Language: A Key Mechanism of Control.

Gingrich advised GOP campaigners to memorize as many of his suggested words as possible and use them. He suggested they talk about themselves with optimistic positive governing words such as... change, commitment, moral, family, vision... and use words to define Democrats such as.... abuse of power, betray, cheat, corrupt, greed, hypocrisy, traitors, welfare.... even, gasp, liberal.

And the point.... control. Over our country, over our lives.

And control the GOP did. Congress from 1994 to 2004 and the White House for the last eight years. Now they want to point the finger at everyone else for the dismal state of our economy, although there is plenty of blame to go around and the Democrats skirts aren't all clean.

The combination of Rove's bogus alternative to reality and the application of Gingrich's advice to use words as tactics has been politically successful for the GOP, and lethal for the country as the populace was manipulated and misled.

As Rich explains: "When a McCain spokesman told Politico a week ago that 'we’re not too concerned about what the media filter tries to say' about the campaign’s incessant fictions, he was channeling a famous Bush dictum of 2003: 'Somehow you just got to go over the heads of the filter.' In Bush’s case, the lies lobbed over the heads of the press were to sell the war in Iraq. That propaganda blitz, devised by a secret White House Iraq Group that included Rove, was a triumph. In mere months, Americans came to believe that Saddam Hussein had aided the 9/11 attacks and even that Iraqis were among the hijackers. A largely cowed press failed to set the record straight...

"If you doubt that the big lies are sticking, look at the latest Washington Post/ABC News poll. Half of voters now believe in the daily McCain refrain that Obama will raise their taxes. In fact, Obama proposes raising taxes only on the 1.9 percent of households that make more than $250,000 a year and cutting them for nearly everyone else."

This same media filter is being used in the current financial crisis. Why isn't the press talking about McCain's Keating past? Rich notes that the "indisputable historical antecedent for our current crisis is the Lincoln Savings and Loan scandal of the go-go 1980s. When Charles Keating’s bank went belly up because of risky, unregulated investments, it wiped out its depositors’ savings and cost taxpayers more than $3 billion. More than 1,000 other S.&L. institutions capsized nationwide.

"It was ugly for the McCains. He had received more than $100,000 in Keating campaign contributions, and both McCains had repeatedly hopped on Keating’s corporate jet. Cindy McCain and her beer-magnate father had invested nearly $360,000 in a Keating shopping center a year before her husband joined four senators in inappropriate meetings with regulators charged with S.&L. oversight.

"After Congressional hearings, McCain was reprimanded for 'poor judgment.' .... Yet he, like many deregulators in his party, was guilty of bankrupt policy-making before disaster struck. He was among the sponsors of a House resolution calling for the delay of regulations intended to deter risky investments just like those that brought down Lincoln and its ilk."

McCain as a "maverick" is just another manipulative use of a word as a tactic.

In truth, as Rich reminds us.... "The corporate jets, lobbyists and sleazes that gravitated around McCain in the Keating era have also reappeared in new incarnations. The Nation’s Web site recently unearthed a photo of the resolutely anticelebrity McCain being greeted by the con man Raffaello Follieri and his then girlfriend, the Hollywood actress Anne Hathaway, as McCain celebrated his 70th birthday on Follieri’s rented yacht in Montenegro in August 2006. It’s the perfect bookend to the old pictures of McCain in a funny hat partying with Keating in the Bahamas."

Eric Hovde explains today in Calling Out the Culprits Who Caused the Crisis (WaPo) ...."In the run-up to the millennium, the Federal Reserve, led by then-Chairman Alan Greenspan, began to pump money into the capital markets to deal with any financial problems that might arise from a Y2K meltdown."

The meltdown didn't happen, but the "monetary stimulus, coupled with the aforementioned hype, created an unfortunate bubble in Internet, technology and telecommunications stocks."

Large Wall Street investment banks recognized the potential profit in promoting the technology boom and from mid-1999 to mid-2000 they took about 500 companies public, raising about 77 billion for the IPOs, for which they received a 6 percent underwriting fee.

In this rush for profits, the investment banks also invested in these companies before the IPO when the stock was valued at a fraction of the post IPO, and threw out their underwriting guidelines in place since the Great Depression.

Then.... the technology bubble burst and as Hovde explains, "America's corporate landscape was littered with bankruptcies and mass layoffs, and investor losses have been estimated at more than $1 trillion."

Greenspan's Federal Reserve reacted by increasing the money supply and slashing short-term interest rates to 1 percent... a level not seen for more than 45 years. This stimulus led to an enormous housing boom and new mortgage products that ignored all previous lending guidelines.

Wall Street then packaged these subprime mortgages, again receiving billions in fees, and sold them to investors.

We are now facing the disastrous result as this whole get-rich-quick scheme falls apart as the bills come due.

Hovde explains, "First, the Fed laid the groundwork for both these asset bubbles by lowering interest rates to historic lows. In an attempt to protect his legacy after the Internet-bubble collapse, Greenspan provided unprecedented stimulus to re-inflate the economy and maintain his popularity with Wall Street.... But in doing so, he spawned the largest debt and asset bubble in U.S. history."

Of course, the SEC stood idly by as Wall Street took advantage of the investing public in the Internet and housing bubbles. Treasury secretaries took no action to curb these abuses, and "Wall Street investment banking firms sprinkled some of its massive gains into the pockets of our elected officials," and bought itself protection from any tough government enforcement, Hovde explains.

And, regardless of his current fiery calls for a crackdown on Wall Street, McCain opposed the very regulations that might have helped avert the current catastrophe. In 1999, he supported a law co-authored by his campaign financial guru then-Sen. Phil Gramm "that revoked the New Deal reforms intended to prevent commercial banks, insurance companies and investment banks from mingling their businesses," Rich reminds us.

Now, Gramm is keeping a low profile after he blamed the economic meltdown on our 'nation of whiners' and 'mental recession,' but he remains in the McCain loop.

So there you have it.... greed, corruption and a gulled electorate have brought us to this catastrophic financial crisis.

But history doesn't have to be prologue to the future. We can and must change business as usual.

November!

Dangerous Incompetence

It's not just that the new Super Bug is stalking us that is so scary. The real nightmare on Elm street is that our government is.... er.... masking the problem.... and when finally unmasked offers nothing more than a "boo!"

Take yesterday's headline for instance, "Drug-Resistant Staph Germ's Toll is Higher Than Thought." (WaPo) Why aren't we surprised?

Because, undoubtedly someone you know who has had surgery in the last few years has contracted a serious infection from their stay. The prevalence of new antibiotic resistant infections has been widely reported. That the public is just now being alerted by the Centers for Disease Control and Prevention's (CDC).... undoubtedly because it is now increasingly striking our youth....is astounding.

The new Super Bug, referred to as MRSA, is now called "a significant public health problem," by Scott K. Fridkin of the CDC. He adds that "We should be very worried."

Worried for good reason. It now seems that the CDC is just discovering that MRSA has been killing more people than AIDS. Those especially at risk are blacks (67 people per 100,000) and those older than 65 (128 in 100,000). And, it is now spreading to our schools.

Although it is estimated that MRSA is yearly responsible for 94,000 serious infections and nearly 19,000 deaths, "It's really just the tip of the iceberg," according to an article in the Journal of the American Medical Association.... the statistics include only the most serious infections.

As troubling as the CDC's inability to identify widespread MRSA-type of infections is the gaping hole of unaccountability, by not only the CDC, but the department of Homeland Security to spot deadly contagions.

"Man crisscrossed border with TB" (WashingtonTimes) documents the case of a Mexican national infected with a highly contagious, multi-drug resistant form of tuberculosis (MDR-TB) who crossed the U.S. border 76 times and took multiple domestic flights in the past year!

The Customs and Border Protection (CBP) agency warned Homeland Security on April 16 that this frequent traveler was infected, but it took Homeland Security officials more than six weeks to issue a May 31 alert, and then a further week to tell its own Transportation Security Agency!

Finally, on June 7, Homeland Security officials notified the Transportation Security Administration "that a person infected with MDR-TB may be attempting to use the U.S. transportation system."

And, to add real insult to the whole alarming situation, it turns out that the Mexican government had known for more than five years of the condition of their citizen, Amado Isidro Armendariz Amaya, a businessman from Juarez, which is across the Rio Grande from El Paso, Texas.

Want to know the reaction of Homeland Security in June after they finally got their act together.... their employees were told that they would be fired if the situation went public.

Just where did this Mexican national fly with this deadly form of TB that can be transmitted with a single cough? He flew on Delta Airlines to Atlanta and Salt Lake City, he flew on US Air/AM West to Phoenix during 2006 and January and May of 2007. May of 2007! Weeks after the CBP agency alerted Homeland Security!

Lots of questions come to mind.... why couldn't the CBP just take action on April 16 when they discovered the infected frequent traveler? Why isn't Mexico sharing information about their infected nationals? What are the Iraq-obsessed Bush government and the profit-bloated drug companies doing to develop antibiotics for these monstrous diseases?

And.... why aren't Michael Chertoff, Homeland Security and CDC officials being held accountable?.... people should be fired, starting with Chertoff.

As Allen Greenspan noted in his recently published memoir, Washington is "harboring a dysfunctional government.... Governance has become dangerously dysfunctional." Emphasis on "dangerously."

Friends of George.... NOT!

Good thing The Decider has Barney.... perhaps his only friend in D.C. right now.... one who won't publicly bark about their time together.

The way former Federal Reserve Chairman Alan Greenspan did in his recent book "The Age of Turbulence" when he howled at Bush for his lack of fiscal discipline and for presiding over a "dysfunctional government." (WaPo)

The Decider was said to be surprised by Greenspan's criticism. Guess Captain Clueless thought self-described "libertarian Republican" Greenspan would applaud the administration's meteoric spending and black-hole national deficit.

But, just as the White House was defending Bush, spinning that his veto "threats" kept GOP congressional spending from spiraling out of control.... (you mean it could have been worse?)....., the man Bush thanked for being "a friend to Laura and me," also turned to bite the overly generous hand feeding the Mexican poor that Mexico's government dumps over our border.

Former Mexico President Vicente Fox, in his new book "Revolution of Hope," called Bush "stubborn" and "the cockiest guy I have ever met in my life." Fox even mocks Bush's Spanish skills as "grade-school" level. (CNN)

Here, Barney.....

Maybe that is why The Decider has nominated what appears to be an honest man.... retired federal judge, law-and-order conservative Michael Mukasey.... as his new Attorney General (WaPo).

Is Bush finally looking for friends in the right places.... and trying to bring to heel his tattered legacy?

Perhaps. But it's much too late for doggie treats for a Bush-wary nation.

Greenspan Goes Public

The impact on the U.S. economy of Alan Greenspan, who was the Federal Reserve chairman for 18 years and the leading Republican economist for the past three decades, was best summed up by candidate Sen. John McCain (R-AZ) during his bid for the 2000 presidency.

When drilled by a reporter about what he would do if something happened to Greenspan, McCain responded, "Well, I'd put sunglasses on him and prop him up like that guy in Weekend at Bernies."

"Bernie" retired in 2006, however, leaving the economy and President Bush to go it alone. The party's over.

In Greenspan's new memoir, "The Age of Turbulence: Adventures in a New World," reviewed by Bob Woodward of the Washington Post, Greenspan praises president Bill Clinton's mind and tough anti-deficit policies, calling the president's 1993 economic plan "an act of political courage."

Not surprisingly for those of us aghast at the monstrous deficit accumulating under the current administration, The Decider doesn't get such rave reviews. Greenspan is frustrated that Bush didn't veto out-of-control spending by the Republican Congress who, Greenspan writes, "..swapped principle for power. They ended up with neither."

Greenspan strongly chastised both Dennis Hastert (R-IL) and Tom Delay (R-TX) because "House Speaker Hastert and House majority leader Tom Delay seemed readily inclined to loosen the federal purse strings any time it might help add a few more seats to the Republican majority."

Even his friend and former colleague in the Ford administration, VP Cheney, was criticized for coining the GOP mantra.... "Reagan proved deficits don't matter." Greenspan rails that "deficits must matter" because uncontrolled government spending and borrowing can produce high inflation "and economic devastation."

Greenspan writes, "The hard truth was that Reagan had borrowed from Clinton, and Clinton was having to pay it back." During Clinton's second term, Clinton proposed devoting extra money to "save Social Security first. I played no role in finding the answer, but I had to admire the one Clinton and his policymakers came up with."

But, all of Clinton's gains were squandered, Greenspan writes, as the large, anticipated federal budget surpluses "were gone six to nine months after George W. Bush took office."

And, Greenspan curtly notes, "I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil."

Observing the ruins of our economy today, Greenspan writes with some bitterness that Washington is "harboring a dysfunctional government... Governance has become dangerously dysfunctional."

And, of course, that is the trouble with a "Bernie" as chairman of the Federal Reserve. He didn't speak up when it mattered, and instead allowed himself to be used as a prop on the White House's macabre economic stage.