Flawless is coming soon...

Sunday, November 21, 2010

Predators Along Life's Highway - Part 1

What do Bernie Madoff and the sub-prime lenders have in common? They both perpetrated the largest securities fraud in their respective industries in U.S. history: Madoff swindled more investment capital than any fiduciary ever, and the mortgage companies nearly brought down the entire global economy with the sub-prime lending scheme. Though the two frauds were similar, the government’s response was vastly different: Madoff was sentenced to prison with a scheduled release date of November 14, 2139. If you’re keeping track of the math, that’s 130 years of a 150 year sentence. However, instead of prosecuting those in the banking industry who brought the world’s economy to a screeching halt as it teetered over the precipice of oblivion, the banking system received a massive injection of Federal funds. This bailout, the Troubled Asset Relief Program (TARP), was established under President George W. Bush, and was given in lieu of any jail terms.

TARP obligated the tax payers to purchase or insure $700 billion of “troubled assets,” mostly related to the sub-prime lending fraud. So in other words, unlike in the Madoff case, the perpetrators of the mortgage fraud got bailed out, while many of the homeowners who took advantage of these sub-prime loans were left drowning in a sea of debt. The term “underwater” directly relates to homeowners whose houses are now worth less than the amount that is owed on them.

While housing prices were rising precipitously during the early 2000s, homeowners came to expect 10-20 percent annual gains on the value of their homes. And as home values continued their steep appreciation, with no signs of a correction, the lending institutions used this fool’s gold to entice borrowers whose credit worthiness would have never qualified them for a mortgage under any reasonable lending guidelines. Although many pundits have blamed the homeowner for borrowing money they could not afford to repay, I would argue that the fault doesn’t lie with the homeowner, but the lending institutions.

It is no stretch to compare the recipients of these sub-prime loans with a 15 year old girl who is being pursued romantically by a 40-something year old man, who has all the trappings of wealth – expensive cars, large home, vacation villa, custom threads, international travel, an investment portfolio, and rubbing shoulders with world famous celebrities. Not many girls can resist being captured by one of the traps that have been set. In most states, if this man snares the 15 year-old girl and engages in sexual relations with her, it is considered rape; notwithstanding if the relationship was consensual or not, because society has determined that a 15 year old girl is not expected to be emotionally mature enough to resist such an allure.

Home ownership is the American dream; however, it was unattainable for many until that 40-something year old man came by flashing his no-interest, no paperwork mortgages during a time when home values were on a steady increase. Although we now see the consequences of what happened to those who received sub-prime loans, every bad risk borrower didn’t end up underwater. Some were astute enough and others were lucky enough to buy a home at the beginning of the real estate boom; sell it a few years later and realized a couple hundred thousand dollars windfall, and then they put that money down on a more reasonable home purchase. God Bless them; however, not everyone was so fortunate.

Who is to blame for the mess? I hear back-alley pundits throwing around words like, “stupid,” “dumb,” “foolish,” and “ridiculous,” referring to borrowers for purchasing homes that they could not afford. Sure, in a perfect financial world, where the lending guidelines are being strictly adhered to, most of those sub-prime loans would not have been made, and the economy would not have collapsed as a result of “predatory” lending practices. However, with the prospect of home ownership during an era of unprecedented rise in home values, was that 15 year old girl mature enough to remain in that low-rent, crime ridden apartment complex when that 40-something year old man was literally giving mortgages away?

In hindsight, we now see that this young girl was swept off her feet by her gluttonous pursuer; yet, instead of rescuing her from her assailant, the U.S. government defended the attacker and insulated him from his own destruction…to the tune of $700 billion. This, we were told by the Secretary of the Treasury at the time, Henry Paulson, was necessary to prevent a global economic collapse.


To state the obvious; “This was very serious.” It was infinitely more serious than Madoff’s ponzi scheme; and I am certainly not mitigating the gravity of his crimes. However, if we are to believe Paulson’s justification for a tax payer bailout of the banking system, then where are the Federal prosecutors who should be investigating the illicit, and possibly illegal, sub-prime lending practices? Oh, that’s right! They were busy chasing Wesley Snipes.

to be continued…

Wednesday, November 17, 2010

Slaying a Herd of Sacred Cows

Here we go again! The chairmen of the presidential, bipartisan deficit commission recently offered President Obama a slew of sacred cows to be sacrificed on the altar of fiscal responsibility. What makes this abomination of desolation so hypocritical is that former Clinton White House Chief of Staff, Erskine Bowles, and former senator, Alan Simpson (R-Wyo), have hatched a plan to send tax payers to the rescue…again, to save the country from the consequences of nearly 25 years of Conservative rule since 1980. And by the way, I am soliciting suggests for a new label to replace “Conservative.” It has become increasingly difficult to define conservatism. One of the bedrock principles of conservatism has been fiscal restraint; however, this pragmatic approach was killed long ago by President Ronald Reagan.

Reagan, the consummate performer, convinced his goose-stepping followers that trickle-down would benefit the entire country. But what trickle down did was place the nation on a spending binge that nearly caused a global, economic meltdown. To be sure, Reagan’s fiscal policies did not cause the mortgage crisis, the gas crisis, the near insolvency of the U.S, automobile industry, and the banking crisis, but it was the trigger that set the entire nation on a pork-feast at the trough of hyper-deficit spending. If we consider what happened to America economically during the eight years of the Reagan Revolution, it amazes me that anyone who calls themselves a Conservative (there I go with that word again) can still pay homage to his legacy.

When Reagan succeeded President Jimmy Carter in 1981, the public debt was $998 billion, or just south of $1 trillion; however, when Reagan passed the baton to George H.W. Bush, the debt had exploded to nearly $3 trillion. This is a staggering demonstration of financial mismanagement. To place this level of reckless disregard in its proper perspective, one must consider that in eight years, Reagan tripled what it took the country 204 years to accrue in deficit spending. This is astonishing! Yet, former President Ronald Reagan is still revered in nearly mythological proportions. In fact, I understand that there is a move by Conservatives (there I go with that word again) to nominate him for a posthumous Nobel Prize.

There are three certainties in life: Death, taxes, and the requirement that every GOP leader genuflect before the portrait of Ronald Reagan that hangs in the headquarters of the Republican National Committee. Why? Because Reagan was the first president to demonstrate that you can overspend beyond your wildest imagination if you could convince the country that an enemy was looming: Reagan, of course, had the former Soviet Union; H.W. Bush had Saddam; and Dubya had bin Laden. Now watch very carefully, because the hands are indeed quicker than the eyes – During the 20-year reign of the Republican presidents since 1980, the United States has spent nearly $8 trillion on defense…you still watching?

  • · Russia disintegrated without firing one single bullet in self defense;
  • · Saddam was held up in a hole the size of my walk-in closet; and
  • · The last I heard, Osama bin Laden was last seen walking through the streets of Anacostia.

Did you see that?

This entire performance took place; not because of the trillions that were spent, but in spite of the trillions it cost the American tax payers. According to one analysis of global defense spending, the U.S. spends more money on defense than the rest of the world combined. The United States spends nearly 57 percent of all military expenditures world-wide. The runner up to this dubious honor and the bronze medal winner go to China and Russia respectively with a combined military spending of $115 billion, or 10 percent of total global military expenditures. America’s closest NATO ally, France, spends about $45 billion per year, or four percent of the total global military expenditures.

Simple mathematics shows me that NATO is getting a free ride at the expense of the tax payers in this country. So let me make sure I have this right: The presidential deficit commission is recommending the elimination of the sacred mortgage deduction; increasing the age of retirement under Social Security; eliminating “all the expensive and popular deductions,” which almost certainly means cafeteria plans, charitable contributions and childcare deductions; programs to assist the poor would be drastically cut back; and an increase in the amount of income subject to Social Security taxes. To be fair, the Commission is also recommending a $100 billion cut in defense spending, but if we assume that the Military Industrial Complex will just roll over and play dead while the surgeon cuts, this would simply reduce America’s percentage of global defense spending from 57 percent to 48 percent.

But as the old saying goes, “Talk is cheap.” Therefore, in addition to my criticism of the plundering of the American treasury, I offer this recommendation: Let’s go back to where the Conservatives (oops, there I go again) ran off the track during the Reagan administration, and reduce military spending to those 1981 levels. This would erase nearly $400 billion in spending overnight, but here is the good part: The $317 billion defense budget during Reagan’s first year is still three times more spending than China and Russia combined, but what it does additionally is require NATO to shoulder more of the burden for living in a relatively safe world.

Although I do not subscribe to Marxism; I must say that Marx’s case on the misunderstood power of the working class is profound. Now that I’ve made my point, here is the overriding issue: Will you sit back and permit your congressional leaders to take the crumbs that Reagan gave you in trickle down, or will you make your political leaders accountable for the decisions that they make? Perhaps demanding that this nation’s vaunted, overpriced military capture bin Laden would be a great first step. With this nation’s almost surreal intelligence apparatus, unless bin Laden is communicating with carrier pigeon, surely we should have captured him by now…if that was a national priority. However, what seems to be most important to our leaders today is to push back the gains, benefits and amenities afforded to the working class over the last 75 years and not the capture of Osama bin Laden.

And unless a chorus of opposition is heard, over the next few years, the citizenry will be scratching their collective heads, wondering how their politicians did it to them again. Well, here is the memo in case you missed it: It is called forgetting the past.

Tuesday, November 16, 2010

An Act of National Suicide - Part 3

Call me cynical, but when Tea Party backed candidate for governor of New York, Carl Paladino, advocates housing the poor in prisons, I must wonder if the right wing splinter group has plans to manufacture new ovens and gas couplings. If so, based on the mid-term election results, many in our nation would not believe it until they smelled the burning flesh. Although Andrew Cuomo soundly defeated his radical opponent, I do not sleep easily knowing that more than a dozen House seats, three Senate seats and the Governor’s mansion in South Carolina are now occupied by men and women of varying extreme, right-wing views.

Trent Franks, the U.S Representative for Arizona’s 2nd congressional district stated in a 2010 interview that, “Far more of the African American community is being devastated by the policies of today than were being devastated by the policies of slavery." In this interview, he stated that abortions in the black community are having a greater adverse impact than slavery. Whoa! Franks must have been absent when his American Politics 101 class was assigned to write the following phrase 100 times: “I promise to never, ever compare anything to slavery, the Holocaust, or rape.” While he laments the state of the black community, I find his hypocrisy loathsome if he wishes to condemn abortion by contrasting its adverse impact on the black community to slavery. What about its affect on the white community? or the Hispanic community? One would think, considering Franks’ lamentation of the “devastation” that abortion has had in the black community, that he would express a similar anguish for his own ethnic group; especially since it accounts for the majority of abortions in the country.

Congressman Steve King, representing Iowa’s 5th Congressional District, dishonored the election of the first African American to win the U.S. Presidency by saying, “The al-Qaeda, and the radical Islamists and their supporters, will be dancing in the streets in greater numbers that they did on September 11th,” referring to Obama’s victory. Oops! He must have also missed his American Politics 101 class on the day the professor cautioned white politicians against besmirching President Obama’s historic, presidential victory. And then to suggest that al-Qaeda took more pleasure in his victory than it did in annihilating nearly 3,000 American citizens is. . . I’m struggling for a word(s) here, but “insane” is the most print-friendly expression that I can offer.

Despite the ridiculous positions that these and other Tea Party members subscribe to, my favorite for pure absurdity, with a massive dose of hypocrisy goes to Tea Party backed, Alaska Senate candidate, Joe Miller. Miller has advanced the outrageous notion that government aid, like unemployment compensation, is unconstitutional; however, after leaving his employment at the end of 2002, his wife, Kathleen Miller, received unemployment payments. By the way, Miller has yet to concede his race against incumbent, Lisa Murkowski, because write-in and absentee ballots are still being counted.

What is chilling about Miller and his Tea Party colleagues is that they churn out these radical viewpoints with straight faces. Perhaps they really do believe them: housing the poor in prisons; abortions having a more harmful affect on blacks than slavery; President Obama’s historic victory igniting more revelry in the al-Qaeda training camps than the sneak attack of September 11th; and Unemployment benefits being unconstitutional.

Is this really who you want running America during its current fiscal, employment, international, and leadership crises?

Former president of the Soviet Union, Mikhail Gorbachev, in his book Perestroika, admitted that the country’s leadership realized as early as the 1970s that it was headed on a collision course with disaster: “Back in the 1970s many people realized that we could not do without drastic changes in thinking and psychology, in the organization, style and methods of work everywherein the Party, the state machinery, and upper echelons.”[1] This concession by President Gorbachev that the Russian leadership was aware that the country was on track for collapse as early as 1970 is very significant. It seems to suggest that the entire U.S. military build-up to contain the so-called “Soviet threat” was marginally needed on one extreme and superfluous on the other.

However, notwithstanding the Soviet Socialist Party’s observation, that there were cracks in its foundation, what is more significant is their response to the hemorrhaging. According to Gorbachev, “Certain personnel changes at all levels were needed. New People took over leadership positions, people who understood the situation and had ideas as to what should be done and how.”[2]

Can you see where this is going?

The reason that the Soviets’ response to their dilemma of the 1970s is so significant is because within four years of Gorbachev’s announced wholesale restructuring, or the duration of a U.S. presidential administration, the Soviet Union disintegrated into 15 separate countries. In other words, Russia committed suicide! Will America be next? Perhaps another country will outrun the United States to the grave, but death, and most likely by a self inflicted wound, is inevitable.

I grew up in a nation that revered names like John Fitzgerald Kennedy, Lyndon Baines Johnson, Martin Luther King, Sam Rayburn, Barry Goldwater, and Walter Cronkite. However, today when I see names like Carl Paladino, Trent Franks, Steve King, Glen Beck, Rush Limbaugh, and Bill O’Reilly establishing the national agenda, I wonder if Thomas Cole’s prophetic, allegorical depiction of national destruction will happen in my lifetime. But what is really scary is that if Sarah Palin is the face of modern politics, then maybe America is only waiting for the pathologist to pronounce its cause of death.

[1] Mikhail Gorbachev, Perestroika, New Thinking for Our Country and the World, (New York: Harper and Row Publishers, 1987), p 14.

[2] Ibid.

Tuesday, November 9, 2010

An Act of National Suicide Part 2

What do the BC period of the Pharaohs, the ancient Grecian Empire, the Roman Empire, the Incas, the Aztecs, and the former Soviet Union have in common? According to British historian Arnold Toynbee’s universal theory of civilization, they all migrated through a life cycle of challenge, response and suicide. Machiavelli, the Italian philosopher, whose name is often used as the adjective Machiavellian, to mean merciless cunning, demonstrated that empires rise, expand and fall because of an overreach by the military. The late Carroll Quigley, history professor from Georgetown University, demonstrated a greater complexity to the life cycle of civilizations by showing a progression from mixture to gestation to expansion to conflict to universal empire to decay to invasion and then destruction.

Each of these models, to varying degrees, show that history follows a certain inescapable rhythm. There may be no better illustration of the life cycle of great powers than the series of five paintings by Thomas Cole – The Course of Empire. If a picture is worth a thousand words, then Cole weaves a fascinating story of judgment that will befall all societies that refuse to resist the imperial urge to expand its borders and the temptation to engage in international commerce.

Cole’s allegorical work depicts the same expanse over the course of an empire’s rise and fall: The Savage State shows a rock formation in a near pristine natural state where hunters are gathering their daily sustenance; The Arcadian or Pastoral State depicts a society emerging, where the inhabitants work towards the goal of organizing an empire; The Consummation of Empire is the third painting that shows huge marble palaces dominating a metropolitan landscape filled with merchants and consumers; Destruction precedes the end as a fleet of enemy warriors have overthrown the city’s ability to defend itself; and then comes Desolation where the remains of the once bustling city are no match for nature as she reclaims the landscape and the rock formation from the Savage State can be seen once again in all of its majesty.

Cole’s warning of inevitable decay is serious and should motivate this nation to hold its political leadership to a higher level of accountability, because one irresponsible decision by the President, or one intractable policy by Congress, or one unfavorable election result could lead to decline and then the unavoidable fall. If we fail to hold our political leadership responsible for harmful decisions, then we invite social annihilation. This is why I am so stunned at the election results on November 2nd. Most political analysts predicted the wholesale slaughter of the Democratic Party; however, I am still asking myself, “How could America return the keys of the hen-House back to the Fox?”

When I consider the damage, perhaps irreversible, that was done to America the last time the Conservatives controlled any part of the national government, I shudder to think that the voters have given them another opportunity to peddle their bogus corn cure. The last time the Republicans had plenary control of our government under President Bush, America lost its standing as the world’s only superpower. If we examine the before-Bush America and the after-Bush America, we will see that President Bush was handed a goose that laid golden eggs, while he tied a millstone around President Obama’s neck:

  • · Bush received a balanced budget with a $236 billion surplus from his predecessor Bill Clinton; he delivered an additional $6.5 trillion in debt to President Obama.
  • · Bush inherited a middle class whose income rose by an average of $6,000 from 1993 through 2001; he handed Obama a nation whose median household income dropped by $1,000 during his tenure;
  • · During his eight years in office, health care premiums doubled from about $6,000 to $12,000 per family;
  • · Clinton handed Bush a military that was at a high state of readiness, prepared to fight a two-front war; however, Bush delivered a military to his successor that had such low morale it has been unable to meet its recruitment goals;
  • · Bush inherited a nation where gasoline prices were less than $1.00 per gallon in many places; however, after his ‘secret’ energy commission, gas prices rose to as much $5.00 per gallon and in some parts of the nation, consumers are still paying nearly $3.50 for a gallon of gasoline or diesel fuel;
  • · America was respected as an international leader when Bush took over as President; but during his administration some countries believed that the United States was the biggest threat to world peace;
  • · Bush inherited a country that had a blazing economy; however, he delivered a nation to Obama that must rely on foreign investments of treasury bonds to stave off liquidation;
  • · The housing market was blazing when Bush took the oath of office and the economy was growing at a robust pace; however, he handed Obama a country where 1 in 5 homeowners were underwater with their mortgages;
  • · The Bush administration overthrew the leader of a sovereign nation and had him summarily executed, because he claimed that Saddam had weapons of mass destruction and participated in the attacks of September 11th; however, nearly 5,000 dead troops, more than 32,000 wounded troops, and more than 100,000 dead, “innocent” Iraqi citizens later, the military still has not uncovered any WMD or any linkage between Saddam and September 11th. (Yes, Saddam was a very cruel dictator, but American self interest does not overthrow leaders because they are bad. If that was the standard for military operations, who’s next? Amadinejab? Kim? Medvedev? Or to listen to the propaganda machine coming from the right; Obama?
  • · Ninety-seven percent of all troop deaths in Iraq have come since Bush announced “Mission Accomplished”…and that was May 1, 2003.

I could continue to make my case regarding George Bush’s reckless administration, but that is not important now since the damage has already been inflicted. However, what is imperative and essential to altering the course of this nation’s somnambulist path is for the electorate to understand that the Bush administration took us over the precipice of oblivion.

Do they get it?

An old wise man once told me, “You can be on the right track, but travelling in the wrong direction.” If we don’t wake up and reverse course, Coles Destruction and then Desolation will come sooner rather than later, and stamped on the autopsy’s report will be “Death by suicide.”

to be continued...

Thursday, November 4, 2010

An Act of National Suicide

I could smell the singed manuscript of Joseph Goebbels’ propaganda handbook as the Tea Party inspired Conservatives rode a wave of public anger to re-securing the House of Representatives on Tuesday. He, Goebbels, must be dancing on those hot coals right now. Hyperbole aside, this may be the cleverest campaign that any political party has ever waged: The Republicans offered suicide to the electorate and peddled it as a remedy to their ills. In what can only be described as the lambs being led to the slaughter, the American public has returned the same gangsters to power that unleashed the seven deadly plagues from the bottomless pit. If the election of Barack Obama renewed my faith in the electoral process; November 2nd demonstrated that democracy is, at best, an illusion, and at worst, it may be a prelude to this country’s ruin.

The historians of the future will examine twenty-ten America and declare that it was the most gullible society that the world had ever seen. My good friend Mike calls this age the tailgate generation: “Americans are more interested in sipping a beer over a barbeque grill and discussing whether their home sporting team will make the playoffs, than they are in taking time to determine what the elected officials on Capitol Hill are doing to destroy this country.” We have C-Span 1, C-Span 2, and C-Span 3, which gives us uninterrupted coverage of the theft that is taking place in America in broad daylight, yet the American public has entered into another unsavory agreement with the same larcenists who have mortgaged this country to the brink of insolvency.

The cliché, “follow the money,” is as old as the first legal tender, but it rings truer today than ever. The Tea Party is the latest in a long list of con artists who have promised the public that they would reign in the government’s insatiable appetite for spending. Every president since Ronald Reagan has pledged to harness the pork-fest on Capitol Hill. Congress responded in 1985 with the Gramm-Rudman-Hollings Act, which called for automatic cuts in discretionary spending when certain deficit-reduction targets were not met. Notwithstanding Gramm-Rudman-Hollings, Reagan nearly tripled the public debt from a little less than $1 trillion when he entered the White House to $2.8 trillion by the time he left office in 1989.

Reagan’s successor, George H.W. Bush, continued the unrestrained spending and increased the government’s debt by an additional $1.6 trillion dollars to $4.4 trillion by the time he left office in 1993. Bill Clinton also campaigned on the promise to reduce government spending, and despite an increase in the National debt of approximately $1.3 trillion during his eight years in office, his second term saw a significantly reduced rate of deficit spending. And by 2000, he had balanced the budget and during his final year as President, he had a surplus.

Now enters President George W. Bush.

During President Bush’s two terms, the national debt soared from $5.7 trillion to $12 trillion; a number that is mind boggling. If the $6.3 trillion in deficit spending that accrued under Bush were seconds, the clock would tick for more than 200,000 years. These numbers are truly astonishing and cannot be properly grasped by the average human mind.

In summary, Presidents Reagan and both Bushes were involved in a masterpiece of reckless spending. And in order to truly appreciate the financial chaos that Barack Obama inherited from Bush 43, you must also weigh the fact that in addition to the $12 trillion in debt that he was saddled with; the Ill-advised war in Iraq, the financial collapse, the mortgage crisis and the near meltdown of the automobile industry all converged during his (Bush’s) administration and was the starting point for President Obama.

It does not take Albert Einstein to recognize the pattern that has emerged under Republican administrations, Republican controlled Congresses and Republican controlled Houses during the last 30 years – spend recklessly and call it national security: Reagan gave us Star Wars; Bush 41 gave us the first Gulf War; and George W. outperformed his two predecessors with the War on Terror, Tax cuts for the super rich, a furtive energy policy that produced $5 per gallon gasoline, and a bailout of the financial and automobile industries. If these men were CEOs to any of the fortune-50 corporations, they would have been dismissed for dereliction of duties and possibly prosecuted by the shareholders for failing their fiduciary responsibilities.

My spiritual leader once told me, “If the dog bites you once, it is the dog’s fault, but if he bites you twice, it’s yours.” But I guess I should not have expected any less from a voting public that gets its news from a Fox, who, by the way, now owns the keys to the hen-House.