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DEBATE AND OTHER DEBACLES September 29, 2008

Posted by wmmbb in US Politics.
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The puzzle is how to describe the American Republics, if indeed, it remains a republic. The banana republics were located in Central America in which the external control of the one cash crop would give effective control over the country.

American financial institutions seem to overloaded with over-leveraged debts. The purpose of the Emergency Economic Stabilisation Act of 2008, now before Congress, but not yet approved, seems to be bailout the banks but not the mortgage holders. The notion is, to my best understanding, that if not done credit lending will stop and the financial system will seize up (or something like that). So much for the ability of markets to clear problems, other than the all time favourite of reducing wages.

Of course Congress had no problems in providing the budgetary allocation to the military and the war of terror as Chalmers Johnson describes at  Truthdig.

According to ABC Online, this is a financial safeguard that will keep on giving:

The deal gives US Treasury Secretary Henry Paulson an immediate $US250 billion to buy bad loans from financial companies, with the rest to be doled out in stages.

At the request of the President, this can be boosted by another $US100 billion.

It is a big departure from the Bush administration’s original request for unchecked authority to bailout companies reeling from the record number of home foreclosures.

The legislation specifies the bailout must be carried out in a way that protect home values and taxpayer savings, preserve home ownership and maximises returns.

The rescue deal will apply up until December next year, although it could be extended at the Government’s request for another year.

So how will the bailout be financed? Is it just an example of funny money, advocated by people such as Social Credit Parties?

ABC Online quotes Professor Peter Morici of the University of Maryland suggesting that the bill does not address the underlying, long term issues that give rise to the crisis:

“The package will avert the immediate crisis, the banks were unwilling to lend to each other and credit markets seized up last week,” he said.

“However the longer term problems; the shortage of credit in the United States, the incomprehensible, excessive compensation in New York that gives rise to high risk taking, that’s not likely to be changed by the provisions of this deal.

“As a consequence the Federal Government that’s been giving hundreds of billions of dollars in aid, to the banks and getting little in return, will continue to give hundreds of billions of dollars in aid to the banks and getting little in return.”

Congress did approve, according to AntiWar.com radio, a $612 Billion dollar package for the military and the war of terror. No problems. Where is the money coming from? That is not even a question.

Meanwhile back in the real world of political punditry and unreal electoral politics, E J Dionne at The Washington Post writes that because McCain did not wipe the floor with Obama, as apparently he did with his Republican opponents, he lost by default. E J Dionne accurately observes:

McCain is supposed to own the foreign policy issue — and he should have owned Friday’s debate. During their respective primary battles, McCain was a better debater than Obama, who could be hesitant, wordy and thrown off his stride.

But the Obama who showed up at Ole Miss was sharper and more concise than the man who frequently lost debates against his Democratic foes. He was also resolutely calm in standing his ground against McCain, whose condescension became a major talking point after the debate. If Al Gore suffered from his sighs during the 2000 debates, McCain will be remembered for his supercilious repetition of seven variations on “Senator Obama doesn’t understand.”

This gave special power to Obama’s peroration about McCain’s “wrong” judgments on going to war in Iraq. McCain’s dismissal of Obama brought back memories of how advocates of the war arrogantly dismissed those who insisted (rightly, as it turned out) that the conflict would be far more difficult and costly than its architects suggested.
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McCain’s derisive approach may help explain why the instant polls gave Obama an edge in a debate that many pundits rated a tie — and why women seemed especially inclined toward Obama. CNN’s survey found that 59 percent of women rated Obama as having done better, with just 31 percent saying that of McCain.

An Obama adviser who was watching a “dial group” — in which viewers turn a device to express their feelings about a debate’s every moment — said that whenever McCain lectured or attacked Obama, the Republican’s ratings would drop, and the fall was especially steep among women.

Of course, McCain was going to step and save America from the financial crisis, and then it emerged he did not understand the issues. So the call to cancel the debate was “recused”. The next debate starring Sarah Palin will be the game breaker. I am pretty confident that if Sarah gets to read the teleprompter, and does all her little non-verbal communication moves, she will win hands down, and dispense with the notion she is a one-trick pony.

In the world of realpolitik, Professor Morici observes, quoting from ABC Online that the Emergency Bill will not provide effective financial safeguards, but it will work politically for the Democrats:

“The first $350 billion is a sure thing, and the second $350 billion will be asked for, and then the Congress would have to veto it [to halt the transfer]… and that is unlikely to happen,” he said.

“The bottom line is the Democrats want to give this money to the banks because most of it’s going to go to the large New York city banks, and those folks are generous supporters of the National Democratic Party, senators and congressmen running for re-election, and Barack Obama.”

Who am I to say that an emergency economic bandaid is non an imperative, but why was not the crisis foreseen at an earlier stage, and why is it not possible to non-politically expedient, rather than non partisan. These questions point to the funding of political parties, including the possibility of access to free air time on the publicly owned air waves, and the institutionalization of the two-party political monopoly that narrows debate to stylistic differences. That is at least a first cut.

ELSEWHERE:

Gary at Public Opinion referes to John Gray’s article in The Guardian declaiming the beginning of the end of the American Empire. Its power, he says, is ebbing away, and after the crisis is over, the creditors who the US depends on to finance it working will simply use their dollars to buy up assets rather than US Treasury bonds.

Chris Floyd naturally turned all my assumptions on their head. The crisis was not unanticipated at all, but cleverly planned by the White House so that the Congressional Democrats would carry the responsiblity.

To quote Hilzoy at Political Animal:

I don’t think our Congress has faced a more important decision than whether or not to pass the bailout lbil in decades, perhaps longer. (Summary here; CBO analysis here.)

(CBO – Congressional Budget Office)

David Wearing discusses the end of capitalism thesis, and concludes at all economies are in fact mixed economies, and the question is which form of mixed economy serves which political interests best. He includes in his essay the relevance to these events of Naomi Klein’s, Shock Doctrine.

Nicola Lamb in The New Zealand Herald summed up the first presidential debate pretty well.

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Comments»

1. Judith Ellis - September 29, 2008

I do not see McCain as the one who thought that he would step in and rescue American from this economic crisis. (At first I thought that it was purely a photo opt.) As with his every tactical political, non policy move, he wanted to appear to be a maverick, breaking with his party to align with the House Republicans and, you guessed it, appear to be against President Bush. He is the real Republican like the House Republicans. (Pray tell, what was President Bush?) What he failed to see was that The House Republicans up until 2 years ago ran the House and agreed with President Bush on his policies and presided over one of the biggest increase of the national debt.

The House Republicans are those with whom McCain tried to align himself to run a mini-revolt so that the American public could see that he was indeed a maverick. (Perhaps he appeared move like a ego-maniac mad man.) His appearance in Washington was more than photo op; it was a tactical political move. This move failed once again, as the American people saw the stunt for what it was and did not go for it. It was said by both Republicans and Democrats that Senator McCain only spoke for a few minutes; it was obvious that he had nothing to say. After all, this was the candidate who said only a few days before the crisis was apparent that the “fundamentals of our economy are sound.”

2. wmmbb - September 30, 2008

Given there is a financial crisis, with real consequences for people with mortgages and business, and with knock-on effects for the global economy, as we have seen in the bank crashes in England and Belgium, Senator McCain’s behavior, demonstrates to me a lack of responsibility, and therefore an unfitness to be president. The same applies to his decision to select Sarah Palin as his running mate. The fact is that Senator McCain has economic advisers who understand these matters.

These bomber pilot tactics might be good political ploys may be give short term advantage. They suggest the kind of president, McCain would be. He seems to be losing support in the swing states, but not in the red states. So it does not seem to me to be smart political strategy.

I suspect that Obama will win, but in the worst circumstances possible. There will be no money in the Federal Budget for social programs, such as health insurance, or measures to abate climate change. The military spending programs are sacrosanct, are they not?

There is still a chance McCain can win – who knows what will happen then? I don’t want to think about it! But far, far, worse, McCain scares Paul Krugman .

3. Judith Ellis - September 30, 2008

Your clarity in your comment here is clear. Thank you, wmmbb.


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