Real Change
I’ve been critical of our new President over three matters: the Afghanistan strategy, his reliance of Bob Rubin’s economic team and the choice of Tom Daschle. So much for the right wing belief that progressives would all turn into Pod People when Obama assumed the Presidency. But last night President Obama was on TV being interviewed and did something George Bush never did in 8 years.
“I’ve got to own up to my mistake, which is that ultimately it’s important for this administration to send a message that there aren’t two sets of rules,” Mr. Obama said in an interview with NBC News. “You know, one for prominent people and one for ordinary folks who have to pay their taxes.”
Obama didn’t have to take the blame for this. After all, Daschle never told him he might have a tax problem. But the sign of a great executive is one who lives “the buck stops here” in real life. This is real change.
So where do we go from here?
- Announce limits on executive pay for companies getting government bailouts. This is another important break from the Bush CEO-friendly policy.
- Get the Recovery Act finished by President’s Day. For those people saying there are not enough projects that are “shovel ready”, it doesn’t have to be all infrastructure. Mass transit all over the country is cutting back service for lack of funding at the very moment that the ridership is climbing. Rush Limbaugh is ginning up a lot of vocal opposition to the Recovery Act. If you haven’t already called your Senators and Congressman, do so.
- Continue to recalibrate the Afghanistan policy. As George Friedman points out this morning, the Taliban’s destruction of the bridge over the Kyber Pass two days ago, cut off the only supply route into Afghanistan for our troops. His prescription is right in line with mine–”Fighting terrorists requires identifying and destroying small, dispersed targets. We would need far fewer forces for such a mission than the number that are now deployed.”
President Obama is under no illusions about the looming problems. The media is of course only interested in the cat and mouse game of Washington partisan politics. Their signal-to-noise ratio is screwed up. Progressives need to ignore the noise and demonstrate our support for the real changes needed. Just like in the long campaign of the last two years we have to show patience and make progress one step at a time. The Recovery Act is only a first step. Do what you can to help get that passed.
Next steps:
1. By close of business today (Wed Feb 4, 2009), the entire transition team should be removed from their postings in the new administration – all of them. In addition to those leaving to pursue other professional interests, all who uttered “stay the course”, “this can be managed”, and “it happens from time to time, but we’ll work through it”. They obviously weren’t courtesy copied on the campaign memos dealing with “change”, “responsibility” and “ethics”.
2. By close of business today, Rahm Emanuel’s replacement (he’s leaving, see #1) will place a printed copy of the campaign’s web site (everything – all white papers, speeches etc.) on his and the President’s night stand. Both will review it before retiring each evening, and do fifteen minutes of Q&A each morning until they both “get it”.
General comments:
1. Mr. President, two weeks into office and you’ve already spent an “I screwed up” mulligan. What’s so damning is that it was completely unnecessary. What was lost on those you entrusted to vet your inner circle? The American people got it, why didn’t they?
2. Perhaps the answers lie not in their ignorance or obstinacy, but in you. With all due respect, did you believe in your campaign? Or was it simply a cleverly designed appeal to the electorate? Could it be that those tasked with ferreting out the “best and the brightest” didn’t believe a new ethos was also elected on Nov 4, 2008?
3. With respect to the old political culture voted out on Nov 4, there are no more “I screwed up” moments, there can’t be, your election elevated the country’s expectations well beyond what was accepted prior to Nov 4. Stop trying to do what the other guys did – only better. We expect more.
4. Please never lose sight of the fact that on Nov 4, 2008 the country chose “honesty, transparency and accountability”. Everything your administration touches should reflect those qualities. They are the standards by which you will be measured, and ultimately determine your success and legacy. Universal health care, renewable energy, rebuilding our infrastructure etc. are all laudable goals, but none are more important than believing in our government, understanding our government and holding those responsible for governance accountable. Nothing.
Next steps:
1. By close of business today (Wed Feb 4, 2009), the entire transition team should be removed from their postings in the new administration – all of them. In addition to those leaving to pursue other professional interests, all who uttered “stay the course”, “this can be managed”, and “it happens from time to time, but we’ll work through it”. They obviously weren’t courtesy copied on the campaign memos dealing with “change”, “responsibility” and “ethics”.
2. By close of business today, Rahm Emanuel’s replacement (he’s leaving, see #1) will place a printed copy of the campaign’s web site (everything – all white papers, speeches etc.) on his and the President’s night stand. Both will review it before retiring each evening, and do fifteen minutes of Q&A each morning until they both “get it”.
General comments:
1. Mr. President, two weeks into office and you’ve already spent an “I screwed up” mulligan. What’s so damning is that it was completely unnecessary. What was lost on those you entrusted to vet your inner circle? The American people got it, why didn’t they?
2. Perhaps the answers lie not in their ignorance or obstinacy, but in you. With all due respect, did you believe in your campaign? Or was it simply a cleverly designed appeal to the electorate? Could it be that those tasked with ferreting out the “best and the brightest” didn’t believe a new ethos was also elected on Nov 4, 2008?
3. With respect to the old political culture voted out on Nov 4, there are no more “I screwed up” moments, there can’t be, your election elevated the country’s expectations well beyond what was accepted prior to Nov 4. Stop trying to do what the other guys did – only better. We expect more.
4. Please never lose sight of the fact that on Nov 4, 2008 the country chose “honesty, transparency and accountability”. Everything your administration touches should reflect those qualities. They are the standards by which you will be measured, and ultimately determine your success and legacy. Universal health care, renewable energy, rebuilding our infrastructure etc. are all laudable goals, but none are more important than believing in our government, understanding our government and holding those responsible for governance accountable. Nothing.
I want to see Obama write “I Will Not Do Anything That Isn’t Thoughtful and Transparent and Honest and Accountable Because the American People Deserve More” 500 times on the blackboard.
And no pudding for dessert!
I want to see Obama write “I Will Not Do Anything That Isn’t Thoughtful and Transparent and Honest and Accountable Because the American People Deserve More” 500 times on the blackboard.
And no pudding for dessert!
I want to see a nation-wide popular goundswell for a People’s Choice Secretary of HHS. The Beltway’s Choice has self-destructed with his insider ethical cluelessness. Now the quiet, hopeful crowds who came out for Obama in droves and cried at his victory speech (are you reading this Oprah!?) and inauguration need to get off their asses and burn up the White House switchboard and ask for a People’s Choice Cabinet member.
I’m open to anyone, but we have to agree on a candidate. I think Howard Dean is the logical first choice. Demand that he show up in Washington for a proper interview with Obama and key Senate leaders at a minimum and a real reason for not appointing him if they don’t think it’ll work. We’re not a lynch mob, but we won’t be trifled with.
I’ve contacted WhiteHouse.gov and Max Baucus’ Senate office. Have you?
I want to see a nation-wide popular goundswell for a People’s Choice Secretary of HHS. The Beltway’s Choice has self-destructed with his insider ethical cluelessness. Now the quiet, hopeful crowds who came out for Obama in droves and cried at his victory speech (are you reading this Oprah!?) and inauguration need to get off their asses and burn up the White House switchboard and ask for a People’s Choice Cabinet member.
I’m open to anyone, but we have to agree on a candidate. I think Howard Dean is the logical first choice. Demand that he show up in Washington for a proper interview with Obama and key Senate leaders at a minimum and a real reason for not appointing him if they don’t think it’ll work. We’re not a lynch mob, but we won’t be trifled with.
I’ve contacted WhiteHouse.gov and Max Baucus’ Senate office. Have you?
Roman- You are really acting like a troll.
Roman- You are really acting like a troll.
@seth: I agree. Dean should advance at this point. It’s time he and Emmanuel buried the hatchet.
The values of the game, or what does winning mean, are more important than its rules. Means matter but if you have to sacrifice a greater good for a shorter gain, it’s better to lose the round and make it up.
Obama did the right thing. Move on.
I agree with items 1 and 2. I’m concerned about the logistics of 3. I’m not sure one can target effectively without enough ground forces to maintain the presence without putting them in more danger. Still, we absolutely must have a definition for winning, the goals of being there, or there is no way to know if we are playing the right game.
@seth: I agree. Dean should advance at this point. It’s time he and Emmanuel buried the hatchet.
The values of the game, or what does winning mean, are more important than its rules. Means matter but if you have to sacrifice a greater good for a shorter gain, it’s better to lose the round and make it up.
Obama did the right thing. Move on.
I agree with items 1 and 2. I’m concerned about the logistics of 3. I’m not sure one can target effectively without enough ground forces to maintain the presence without putting them in more danger. Still, we absolutely must have a definition for winning, the goals of being there, or there is no way to know if we are playing the right game.
Oh who f–king cares, Roman. He screwed up, he owned up, we all move on. Oh, wait. Bush never owned up.
It’s a personnel decision, not a harbinger of doom. Besides, we have those in abundance in other places. Case in point from AP:
“Sen. Barbara Mikulski led the successful effort to allow many car buyers to claim an income tax deduction for sales taxes paid on new autos and interest payments on car loans.”
This when we can’t fund transit. NO! NO!!! Idiots.
And in the “this would be funny if it weren’t infuriating department,” US automakers are now using taxpayer dollars to sue taxpayers so they can ignore fuel efficiency standards:
http://tinyurl.com/cun3yv
If you want to do your bit to encourage transit (the only sustainable way to move people) instead of Ford F350s: http://tinyurl.com/d6jx3r
Oh who f–king cares, Roman. He screwed up, he owned up, we all move on. Oh, wait. Bush never owned up.
It’s a personnel decision, not a harbinger of doom. Besides, we have those in abundance in other places. Case in point from AP:
“Sen. Barbara Mikulski led the successful effort to allow many car buyers to claim an income tax deduction for sales taxes paid on new autos and interest payments on car loans.”
This when we can’t fund transit. NO! NO!!! Idiots.
And in the “this would be funny if it weren’t infuriating department,” US automakers are now using taxpayer dollars to sue taxpayers so they can ignore fuel efficiency standards:
http://tinyurl.com/cun3yv
If you want to do your bit to encourage transit (the only sustainable way to move people) instead of Ford F350s: http://tinyurl.com/d6jx3r
JohnO:
“Oh who f–king cares, Roman. He screwed up, he owned up, we all move on. Oh wait. Bush never owned up.”
“Oh who f-king cares?” If no one cared, the President wouldn’t have “…summoned a conga line of Anderson, Katie, Brian, Chris and Charlie to the Oval Office to do penance, over and over.” (M. Dowd, NYT, 2/4/09).
“He owned up?” Owned up to what exactly? As if it were a magnanimous gesture. He had no choice! Daschle was the THIRD nominee with tax issues?!?
“We all move on?” So tell me again why Geitner is the new Sec. of the Treasury?
“Oh wait. Bush never owned up?” Huh? The President’s measure of success is whether or not Bush did or didn’t do something?
IMHO, there was a fundamental disconnect between the ethos of the campaign and that of the transition team.
The question not asked last evening is whether that disconnect is present in the new administration as well?
JohnO:
“Oh who f–king cares, Roman. He screwed up, he owned up, we all move on. Oh wait. Bush never owned up.”
“Oh who f-king cares?” If no one cared, the President wouldn’t have “…summoned a conga line of Anderson, Katie, Brian, Chris and Charlie to the Oval Office to do penance, over and over.” (M. Dowd, NYT, 2/4/09).
“He owned up?” Owned up to what exactly? As if it were a magnanimous gesture. He had no choice! Daschle was the THIRD nominee with tax issues?!?
“We all move on?” So tell me again why Geitner is the new Sec. of the Treasury?
“Oh wait. Bush never owned up?” Huh? The President’s measure of success is whether or not Bush did or didn’t do something?
IMHO, there was a fundamental disconnect between the ethos of the campaign and that of the transition team.
The question not asked last evening is whether that disconnect is present in the new administration as well?
Jon:
“Roman- You are really acting like a troll.”
I apologize if my comments offended you, that certainly wasn’t my intent.
Jon:
“Roman- You are really acting like a troll.”
I apologize if my comments offended you, that certainly wasn’t my intent.
It’s the year of the kinder, gentler Rush Limbaugh: The concerned citizen, who, he will have us know, has no regard whatsoever for any partisan politics, and simply wants what is best for the nation as a whole, sighing sadly and expressing wistful regret (a whole 15 days into the administration) that Mr. Obama could not have lived up to his grand and noble promises to make America a better place while never, ever doing even the teensiest thing wrong or expressing any form of displeasure beyond an occasional raising of the left eyebrow a sixteenth of an inch.
We could try electing a robot, except then it would probably go all HAL on our asses.
Which would actually be kinda cool.
It’s the year of the kinder, gentler Rush Limbaugh: The concerned citizen, who, he will have us know, has no regard whatsoever for any partisan politics, and simply wants what is best for the nation as a whole, sighing sadly and expressing wistful regret (a whole 15 days into the administration) that Mr. Obama could not have lived up to his grand and noble promises to make America a better place while never, ever doing even the teensiest thing wrong or expressing any form of displeasure beyond an occasional raising of the left eyebrow a sixteenth of an inch.
We could try electing a robot, except then it would probably go all HAL on our asses.
Which would actually be kinda cool.
In the not-quite-quid-pro-quo of politics, Obama owed Daschle. Others wanted the job and they were pushed out. Then it turns out that the Senator wasn’t clean as a hound’s tooth. Ever had someone fail to send you a 1099? Daschle did the right thing.
Consider McCain’s team at the point they were told Palin’s daughter was preggers. They let it go forward.
Somehow on balance, I’m just not that dismayed by these failed appointments. There are others who can do the job as well (again, get Dean back in the process) and no real fouls committed.
We’ve got to decide if we want to get on with the goals or if we want to pick over every opportunity to bad mouth the other team. I say we be more tolerant and less eager to make winning a matter of the other guy losing. It really is a matter of which game is most important: the politics of party wankery or of getting out nation out of the hole.
The Obama team set the bar very high and if they don’t expect they will be measured by it, that is painfully naive and perhaps professionally witless. If the Republicans don’t expect people to bring up Bush for all of the ouchies that are causing even more pain today than two years ago, that is painfully obtuse.
The whining is noise. Jobs are signal. Mortgages are signal. Laws to fix the gaping holes of financial governance are signal.
One bit of unasked for advice from the class of middle managers: three loyal people with a can do-will d0 attitude are worth more than the smartest expert with a bad attitude toward the job. It is sometimes about the hours at the desk not the lightning swift reflexes.
Again, watch Hillary.
In the not-quite-quid-pro-quo of politics, Obama owed Daschle. Others wanted the job and they were pushed out. Then it turns out that the Senator wasn’t clean as a hound’s tooth. Ever had someone fail to send you a 1099? Daschle did the right thing.
Consider McCain’s team at the point they were told Palin’s daughter was preggers. They let it go forward.
Somehow on balance, I’m just not that dismayed by these failed appointments. There are others who can do the job as well (again, get Dean back in the process) and no real fouls committed.
We’ve got to decide if we want to get on with the goals or if we want to pick over every opportunity to bad mouth the other team. I say we be more tolerant and less eager to make winning a matter of the other guy losing. It really is a matter of which game is most important: the politics of party wankery or of getting out nation out of the hole.
The Obama team set the bar very high and if they don’t expect they will be measured by it, that is painfully naive and perhaps professionally witless. If the Republicans don’t expect people to bring up Bush for all of the ouchies that are causing even more pain today than two years ago, that is painfully obtuse.
The whining is noise. Jobs are signal. Mortgages are signal. Laws to fix the gaping holes of financial governance are signal.
One bit of unasked for advice from the class of middle managers: three loyal people with a can do-will d0 attitude are worth more than the smartest expert with a bad attitude toward the job. It is sometimes about the hours at the desk not the lightning swift reflexes.
Again, watch Hillary.
Roman, at least you “got it.”
“Fighting terrorists requires identifying and destroying small, dispersed targets.” Oh?
For starters, IMvhO of course, the word “terrorist” has been used so many times in so many contexts and with so many assumed definitions and connotations that for this simple Chicago transplant, it has no meaning, or way too much truth-obscuring meaning, any more. This sentence appears to assume that the villages and/or houses and/or caves where some of the people whose culture has them playing Wild West for the last millenium, are “terrorists,” to be targeted by our giant radio-controlled model airplanes armed with high-tech bottle rockets and those “surgical” attacks by Special Ops troops in the pseudo-daylight of a green-eyed night vision device, at least the ones in the in that scene in “Patriot Games.”
The freaking noun “Taliban” is a snare and a delusion too. “It” doesn’t have the cohesion or actual identity of a football team or even the Third Baptist Church, it’s a congeries of warlords-cum-mullahs, seeking the main chance for themselves, dealing drugs in that fragmented market and struggling to “rationalize” it the way the Mafia did with similar sins here. It appears in that land of shifting loyalties you can buy a “Taliban” leader’s fealty to the American Cause for a handful of Viagra pills from your corner CIA pharmacy. This set has a convenient “common enemy” to stir up support, and the usual male-on-top “conservative religious” cover, enforced by righteous death squads, to give a “moral” gloss to what the various factions, and there are plenty of them, are about and up to.
There’s been talk here about junk speech leading to stupid behaviors that become apotheosized as “policy.” Where ground truths are miles apart from what the all-wise planners and their doctrines “know” to be true, once they lock into a set of symbols that are convenient to their own personal interests.
From what I can glean from reading and webbing and TV, the various bits of “Taliban” are just more of the same in Afghanistan, that area-that-is-not-a country-but-we-insist-on-giving-”it”-a-name, maybe with the frequency of violence and the level of dys-civility ramped up by all the billions and the troop-targets “we” add to the mix.
But the people who bring you the MIC have sucked even smart folks into believing in the existence of a world-wide web of “terrorists.” Which, like the Commies in the last go-round, are whoever “we” say they are, so “we” can get behind whatever geopolitical jerk-meatery is the Grand Strategy of the Bienium.
So if “we” are going to waste maybe trillions on finding a place to put young people who can’t find constructive work at home, or who get off on the stuff you get to do to somebody who is officially identified as “the enemy,” I guess it would be too much to ask that we maybe be a little precise in defining not only “the mission,” but just who the “terrorists” are and what their uniforms look like and how we can pick them out of a crowd. So we can be sure “we” don’t just make a whole shitload of other people who, having lost some of their family “soft targets” to “unfortunate collateral damage,” decide that Jihadicide-by-belt or placing roadside bombs and booby traps is a great way to take revenge. Or are drawn to helping some of the few real nihilist misanthrope terrorists stir the pot to produce the chaotic insanity that those particular kinds of cancer cells thrive in. Giving the folks who rule us by fear some more anecdotes and episodes to keep us all looking under the bed and taking off our shoes and being electronically strip-searched by a gadget developed by a “defense contractor,” so some Epsilon-minus TSA employee can sneak those “X-Ray Glasses” pictures of big boobed ladies onto YouTube.
We don’t need another LBJ trading dead Americans and a boatload of the future’s wealth to get the Chicken Hawks on board for some weak-tea version of a “just society,” or in this case a vastly corrupt “bailout.”
Roman, at least you “got it.”
“Fighting terrorists requires identifying and destroying small, dispersed targets.” Oh?
For starters, IMvhO of course, the word “terrorist” has been used so many times in so many contexts and with so many assumed definitions and connotations that for this simple Chicago transplant, it has no meaning, or way too much truth-obscuring meaning, any more. This sentence appears to assume that the villages and/or houses and/or caves where some of the people whose culture has them playing Wild West for the last millenium, are “terrorists,” to be targeted by our giant radio-controlled model airplanes armed with high-tech bottle rockets and those “surgical” attacks by Special Ops troops in the pseudo-daylight of a green-eyed night vision device, at least the ones in the in that scene in “Patriot Games.”
The freaking noun “Taliban” is a snare and a delusion too. “It” doesn’t have the cohesion or actual identity of a football team or even the Third Baptist Church, it’s a congeries of warlords-cum-mullahs, seeking the main chance for themselves, dealing drugs in that fragmented market and struggling to “rationalize” it the way the Mafia did with similar sins here. It appears in that land of shifting loyalties you can buy a “Taliban” leader’s fealty to the American Cause for a handful of Viagra pills from your corner CIA pharmacy. This set has a convenient “common enemy” to stir up support, and the usual male-on-top “conservative religious” cover, enforced by righteous death squads, to give a “moral” gloss to what the various factions, and there are plenty of them, are about and up to.
There’s been talk here about junk speech leading to stupid behaviors that become apotheosized as “policy.” Where ground truths are miles apart from what the all-wise planners and their doctrines “know” to be true, once they lock into a set of symbols that are convenient to their own personal interests.
From what I can glean from reading and webbing and TV, the various bits of “Taliban” are just more of the same in Afghanistan, that area-that-is-not-a country-but-we-insist-on-giving-”it”-a-name, maybe with the frequency of violence and the level of dys-civility ramped up by all the billions and the troop-targets “we” add to the mix.
But the people who bring you the MIC have sucked even smart folks into believing in the existence of a world-wide web of “terrorists.” Which, like the Commies in the last go-round, are whoever “we” say they are, so “we” can get behind whatever geopolitical jerk-meatery is the Grand Strategy of the Bienium.
So if “we” are going to waste maybe trillions on finding a place to put young people who can’t find constructive work at home, or who get off on the stuff you get to do to somebody who is officially identified as “the enemy,” I guess it would be too much to ask that we maybe be a little precise in defining not only “the mission,” but just who the “terrorists” are and what their uniforms look like and how we can pick them out of a crowd. So we can be sure “we” don’t just make a whole shitload of other people who, having lost some of their family “soft targets” to “unfortunate collateral damage,” decide that Jihadicide-by-belt or placing roadside bombs and booby traps is a great way to take revenge. Or are drawn to helping some of the few real nihilist misanthrope terrorists stir the pot to produce the chaotic insanity that those particular kinds of cancer cells thrive in. Giving the folks who rule us by fear some more anecdotes and episodes to keep us all looking under the bed and taking off our shoes and being electronically strip-searched by a gadget developed by a “defense contractor,” so some Epsilon-minus TSA employee can sneak those “X-Ray Glasses” pictures of big boobed ladies onto YouTube.
We don’t need another LBJ trading dead Americans and a boatload of the future’s wealth to get the Chicken Hawks on board for some weak-tea version of a “just society,” or in this case a vastly corrupt “bailout.”
JTM-In the long run, you are totally right about Afghanistan. But politics is the art of the possible. I doubt very much that in two weeks President Obama could announce we were going to quit the Mid East entirely. I’m looking for incremental cover from a conservative like George Friedman who runs Stratfor, to draw down troops instead of sending more kids to die in Afghanistan.
JTM-In the long run, you are totally right about Afghanistan. But politics is the art of the possible. I doubt very much that in two weeks President Obama could announce we were going to quit the Mid East entirely. I’m looking for incremental cover from a conservative like George Friedman who runs Stratfor, to draw down troops instead of sending more kids to die in Afghanistan.
Is there a reason why the upright new President couldn’t do just that? His tribe is doing a lot of other unexpected, outside-the-box stuff. He should have done that with Daschle, maybe? To flag a real break with business as usual?
Mr. Taplin — any idea about what the increments might look like?
Or are there secret places where people plan such things, so “the enemy” won’t get wind that “we” plan to try to save our culture by stopping the bombing and maybe, MAYBE well-meant, interference in and and corruption of theirs? Not that what people in other cultures are dragged down into by their own social cancers and limbic systems is terribly healthy either.
I’m sorry, that’s probably troll-like too. It’s just that as a Viet vet with some awareness of things historical and behavioral, I am still saddled with this sick, painful notion that humans can actually do better. Maybe only in smaller groups that fit with the scale of the traditional Tribe. Again, my favorite definition of “cynic” is “disappointed romantic.”
I would never suggest that the CinC order the boys (and girls, and older folks too, now) to jump the C-7s and 141s and wing their ways home in two weeks. At the very least, there will be long rear-guard actions to extract without too much “attrition.” I hate the picture of “attritted” people in aluminum boxes with flags draped over them, or lying in shallow, hastily dug ditches with white shrouds pinked with blood, with wailing relatives “who think life is cheap” standing around disconsolate on their way to lockup in the part of grieveing called “anger.” (Maybe that’s why Strangelove and Rummy were so careful to keep “journalists” from letting the folks at home add a bit of reality to the imagery of the fanged, bearded camel-jockey bomb-belted “terrorists?”)
And of course I doubt he can undo all the (hate the hackneyed phrase) tentacles that warp us alongside the oil wells and platforms and tankers. Likely ever. Unless the Hope and Change include successful creation of a home-based alternative energy industry. And of course your personal bete noir, and mine, the MIC (again, a shorthand for a very large and complex set of self-sustaining, predatory and almost hereditary evils) can be redirected piecemeal or wholesale into more productive endeavors. I am not hopeful that all those engineers and project managers and colonels who have spent their lives inventing really neat acronyms with billion-dollar wealth transfers attached, and the investors in their operations, and the executives of the companies with their symbiotic relations with various members of Congress and lobbyists and generals, are about to allow any redirection.
Which is one of the reasons I tend to the notion that humanity has a death wish. “The art of the possible,” which is uncomfortably close to “business as usual” in my simple mind, is killing us.
Is there a reason why the upright new President couldn’t do just that? His tribe is doing a lot of other unexpected, outside-the-box stuff. He should have done that with Daschle, maybe? To flag a real break with business as usual?
Mr. Taplin — any idea about what the increments might look like?
Or are there secret places where people plan such things, so “the enemy” won’t get wind that “we” plan to try to save our culture by stopping the bombing and maybe, MAYBE well-meant, interference in and and corruption of theirs? Not that what people in other cultures are dragged down into by their own social cancers and limbic systems is terribly healthy either.
I’m sorry, that’s probably troll-like too. It’s just that as a Viet vet with some awareness of things historical and behavioral, I am still saddled with this sick, painful notion that humans can actually do better. Maybe only in smaller groups that fit with the scale of the traditional Tribe. Again, my favorite definition of “cynic” is “disappointed romantic.”
I would never suggest that the CinC order the boys (and girls, and older folks too, now) to jump the C-7s and 141s and wing their ways home in two weeks. At the very least, there will be long rear-guard actions to extract without too much “attrition.” I hate the picture of “attritted” people in aluminum boxes with flags draped over them, or lying in shallow, hastily dug ditches with white shrouds pinked with blood, with wailing relatives “who think life is cheap” standing around disconsolate on their way to lockup in the part of grieveing called “anger.” (Maybe that’s why Strangelove and Rummy were so careful to keep “journalists” from letting the folks at home add a bit of reality to the imagery of the fanged, bearded camel-jockey bomb-belted “terrorists?”)
And of course I doubt he can undo all the (hate the hackneyed phrase) tentacles that warp us alongside the oil wells and platforms and tankers. Likely ever. Unless the Hope and Change include successful creation of a home-based alternative energy industry. And of course your personal bete noir, and mine, the MIC (again, a shorthand for a very large and complex set of self-sustaining, predatory and almost hereditary evils) can be redirected piecemeal or wholesale into more productive endeavors. I am not hopeful that all those engineers and project managers and colonels who have spent their lives inventing really neat acronyms with billion-dollar wealth transfers attached, and the investors in their operations, and the executives of the companies with their symbiotic relations with various members of Congress and lobbyists and generals, are about to allow any redirection.
Which is one of the reasons I tend to the notion that humanity has a death wish. “The art of the possible,” which is uncomfortably close to “business as usual” in my simple mind, is killing us.
As one of the ex-head honchos of NSC quipped, it’s difficult to find terrorists, but they are easy to kill once you find them.
WRT Obama, I’m glad he stepped up and took some blame, but he’s got a god-damn mandate and he needs to work it hard. Sure invite the Repigs to play ball, but when they don’t/won’t wack them hard.
As one of the ex-head honchos of NSC quipped, it’s difficult to find terrorists, but they are easy to kill once you find them.
WRT Obama, I’m glad he stepped up and took some blame, but he’s got a god-damn mandate and he needs to work it hard. Sure invite the Repigs to play ball, but when they don’t/won’t wack them hard.
As one of the ex-head honchos of NSC quipped, it’s difficult to find terrorists, but they are easy to kill once you find them.
WRT Obama, I’m glad he stepped up and took some blame, but he’s got a god-damn mandate and he needs to work it hard. Sure invite the Repigs to play ball, but when they don’t/won’t wack them hard.
The past week, the news that Merrill Lynch had hurried to pay out billions of dollars in bonuses before the end of the year, provoked a torrent of tirades and rage across America. Now, progressive blogs are in another uproar over the perceived lack of leadership from President Barack Obama in the fight for a stimulus program. Many defenders of President Obama demand to know what he might do different. And many seem not to feel, or do not yet understand, that the financial and banking system needs a complete reformation. Well, here’s my suggestion, in the form of a speech the President can give explaining a few crucial, truly transformative measures to the nation. My fellow Americans,We have reached a historic and dangerous juncture, where the operations and interests of our financial and banking system no longer serve the greater interests of our nation. What we once thought was the great blessing of financial innovation, we now see has led us down a false path to national ruin, individual misery, and increased indebtedness for all.Banks are supposed to act as intermediaries between people who have saved and wish to invest, and those who need credit. They are expected to evaluate if a borrower is a good credit risk, and are supposed to be the mechanism by which money and credit is allocated and used in our economy. But we have found to our dismay that financial innovation has actually distorted and even destroyed the incentives for banks to play the role they should. Banks have been seeking the highest returns, but have failed to properly assess and manage the associated risk.As a result, the financial and banking system has been failing to perform the task of allocating money to the entrepreneurs and businesses that use it best. Manufacturing and research and development have been slowly but systematically starved for funding over a period of many years, and the result is that with few exceptions, such as aerospace, all types of U.S. industry have lost their lead as world leaders in innovation, productivity, and efficiency. A January 2008 study of worldwide technological competitiveness by the Georgia Institute of Technology showed that China will soon pass the United States in the critical ability to develop basic science and technology, and turn those developments into marketable products and services.In short, the banking and financial system was not creating value for the economy, but was destroying it. We are now seeing just how much value has been destroyed.In a free market economy, one of the most essential functions of the government is the full and fair enforcement of contracts. But it has long been a principle of our legal system that a contract based in whole or in part on fraud or coercion is not a valid contract, and that the government should not enforce it. Indeed, the enforcement of fraudulent contracts can cause much more damage than the original fraudulent contracts, because it destroys the trust and reputation of an entire national economy.Accordingly, I have ordered that all trading and activity in credit default swaps be frozen immediately. These financial instruments are the broken link in the chain of complex financial instruments that now threaten our economy. Credit default swaps are like insurance, but were carefully designed to avoid regulation as insurance. There were no mandated actuarial tables and no mandated reserves. There were no standards imposed for who could write and sell credit default swaps, and no standards for the calculation of risk and premiums. Many credit default swaps were sold with the explicit condition that they could never be sold on an open traded market, such as the Chicago Board of Trade or the New York Stock Exchange. This prevented regulators from examining these contracts and imposing minimal standards. This also meant that these contracts were illiquid, with no ready market in which they could be traded, and without a market mechanism in which prices could be set and settled in an open way.In short, credit default swaps are illiquid and designed specifically to avoid regulation, and are based on improper mathematical principles and assumptions of risk. In other words, credit default swaps are fraudulent, and therefore the government has no obligation to enforce the contracts. [See Ian Walsh Cutting the Gordian Knot of Bad Contracts to Save the Economy See also, The Big Banks vs. America: A Roundtable with David Kotok and Josh Rosner.]A review of the records of the previous administration and of the Federal Reserve indicates that much of the nearly $3 trillion already disbursed in the TARP and the various Federal Reserve programs to prop up the financial system were used to pay off the terms of credit default swaps written and sold by the AIG unit in London. We are currently in discussions with the appropriate authorities in Britain regarding the status and location of these funds. In case these discussions do not proceed satisfactorily, we are also examining and preparing what steps can be taken to prevent and seize all capital transfers to selected institutions in Britain. I have directed the Director of National Intelligence and the National Security Agency to cooperate fully in this effort.We are also working on measures to prevent and seize all capital transfers to offshore financial centers, and to begin dismantling them. Some observers have called these offshore financial centers "secrecy jurisdictions," which have been purposefully established and structured to allow companies and individuals to escape observation, regulation and taxation by national authorities around the world. We have already seen that an inability to observe and regulate financial excesses will lead to general economic distress, so it makes no sense to allow these offshore financial centers to continue offering low or zero taxes, secrecy, and lax regulation. We also know that these offshore financial centers were often used to fraudulently obtain higher credit ratings for a number of financial operations, by isolating ownership of the financial vehicles from their true owners and controllers.As an October 2008 article by the Tax Justice Network noted,
An indication of how large a problem these offshore financial centers have become is that the Cayman Islands, with 70,000 residents, are the fifth-largest banking centre in the world, with $1.5 trillion in banking liabilities. The Cayman Islands are also the world’s largest center of hedge fund registrations, with over 10,000 hedge fund registrations. Since 2000, the Cayman Islands have been on the “black list” of Non-Cooperative Countries and Territories of the Financial Action Task Force on Money Laundering.A particularly troubling fact is that over half of these offshore financial centers, like the Cayman Islands, are < a href="http://www.monbiot.com/archives/2008/12/16/pin-striped-pirates/" rel="nofollow"> members of the British commonwealth, and technically fall within the jurisdiction of British authorities. In fact, the International Monetary Fund officially considers the City of London as an offshore financial centers. In our negotiations with British authorities, we are insisting on full and complete disclosure of all bank accounts and all hedge fund registrations in all Commonwealth offshore financial centers, including the City of London.In international law, there is a legal theory which holds that the national debt incurred by a regime for personal purposes or for committing aggression, is, like fraudulent contracts, not enforceable. Such debts are called odious debt, and are considered by this doctrine to be personal debts of the regime, and not debts of the state the regime controls. This concept is analogous to the invalidity of contracts signed under coercion.The same legal principle of odious debt may be extended to the millions of mortgages that were sold on false pretenses, serving only to boost the earnings and bonuses of mortgage brokers and bankers. There is a complete circle of fraud here, beginning with home buyers who were often encouraged to lie about their incomes. The banks and brokers committed fraud, not just by encouraging people to lie, but also by failing to perform the due diligence required to estimate the credit worthiness of a home buyer. The companies that bought these mortgages and bundled them together committed fraud by deliberately under-estimating the risk of cascading defaults, and by failing to inform buyers of these sophisticated instruments of their full complexity and credit risk.Clearly, however, where the greatest tragedy lies is in the suffering and anguish of individual human beings who are forced out of their homes. Almost all these people to some extent placed their trust in the banks and brokers that sold them mortgages to deal fairly and not place them in a situation in which they could not make the payments. This was misplaced trust. But stopping these individual tragedies may be the easiest thing we can do at this point. I am deputizing as Federal Marshalls all county marshals and other local law enforcement officials responsible for carrying out home foreclosures, and ordering them to immediately cease all foreclosure proceedings on residential properties. I am also instructing them to insist that all creditors that have begun foreclosure proceedings on residential properties must produce clear titles and documentation of liens to the property. If the mortgage holder refuses to work with the court and the home owner to keep the home owner in the residence, I am instructing these new Federal Deputies to seize the residence on behalf of the home owner, to protect the homeowner in that residence, and to oppose all further proceedings against that property. (See Amy Goodman’s article on what Rep. Marcy Kaptur has been telling her constituents: Facing foreclosure? Don’t leave. Squat.)Our banking system is comprised of over 8,000 institutions, but the crises we face is actually the result of the policies and actions of only a handful of the largest institutions. I have directed the Secretary of the Treasury, the Comptroller of the Currency, and the Director of the FDIC to work with the Federal Reserve in taking effective control of the large banks and financial institutions the taxpayers already own. These institutions are: Citigroup, Bank of America, JPMorganChase, Wells Fargo, and to a lesser degree, Goldman Sachs, and Morgan Stanley.According to information collected by the Comptroller of the Currency, almost 90 percent of financial derivatives activities are concentrated in just these six institutions. We have yet to determine how much of each institution’s financial derivatives activities are fraudulent, as in the case of credit default swaps discussed above, but we will move quickly to identify, and invalidate those contracts.Effectively immediately, the top officers and boards of directors of these institutions have been relieved of their duties, authority, titles and offices. I have also directed that any amounts greater than $15,000 in their personal savings, checking, and other accounts be frozen, pending the completion of investigations into whether or not the past few years’ of excessive compensation may have involved fraudulent conveyance.We will move as quickly as possible to break up the actual banking operations of these six firms, and hand them off to the over 8,000 banks and savings and loans which did not participate in the derivatives madness. This means that if you were banking at a Chase or a Bank of America branch in your town, your account will soon be under the management of a carefully screened and selected bank or credit union that has been operating in your community for years. And let me assure you that the FDIC stands behind all accounts up to the amount of $250,000.To provide immediate economic relief to tens of millions of Americans, these nationalized banks are being directed to lower the interest rates charged to their credit card customers to no more than prime plus five and one half percent, for an effective annual interest rate at this time of six percent. Further, these nationalized banks are being directed to rapidly scale back the amounts of penalties and fees imposed on their customers. It is estimated that these measures will immediately increase the average household’s income by $25 to $50 a month. And this immediate stimulus will not cost taxpayers a single cent.Finally, I have presented to Congress legislation to impose a securities transaction exchange tax (STET) of one half of one percent on all transactions in our financial markets. An immediate goal is to raise revenues to begin to repair the fiscal damage we have sustained. It is estimated that in the first year, a securities transaction exchange tax will raise nearly $200 billion in new revenues. How can it be unfair for someone buying millions of dollars of stocks, bonds, futures, or derivatives contracts to pay one half of one percent tax, when working people have to pay five percent or more in local and state retail taxes when they buy a loaf of bread or a pair of shoes?But a far more important and far-reaching goal is to restructure the financial markets and force them back into coherence with the real economy. To plan, design, build, and equip an industrial facility or an infrastructure project, requires years of dedicated effort by hundreds or thousands of people. Yet, one single person can destroy all the effort of all those people in mere seconds by electronically transferring capital from one side of the globe to another. Banking and finance are supposed to serve the needs of the real economy. They no longer do. This must and will change. A securities transaction exchange tax will begin to force out the short-term speculation that is so harmful to long-term industrial and infrastructure projects. For someone who intends to buy a stock or bond for the long term, a securities transaction exchange tax of one half of one percent will hardly be noticeable. But for someone looking to profit quickly by buying a security and then selling it the next day or next hour, this STET tax will be a formidable obstacle.Before I close, let me note that I have directed the Federal Bureau of Investigation, and all financial regulators, to consider any individuals or institutions that oppose these measures as economic terrorists, and to investigate and pursue them according to U.S. laws designed to combat terrorism. I have also directed the National Director of Intelligence and the National Security Agency to immediately begin locating and tracking whatever foreign holdings these economic terrorists have.These measures are tough, but they are not unprecedented. They will no doubt create panic in certain financial markets. But we have reached the point where we must decide to either
save the financial markets, or save the nation. In large part, the financial markets have caused the problems we now confront. So I urge you, over these next few days, to ignore the wild fluctuations of the financial markets. There will be great weeping and gnashing of teeth as financial assets lose billions, even trillions of dollars in price. But to continue to attempt to prop up these prices would be a fatal mistake for our country, and for our future. We cannot allow the financial markets to dictate the terms of survival for our nation. Once we have restructured our economy, and begun the physical task of building the economic capacities that our children, and their children, and many future generations will use, then the financial markets will return to sanity and normalcy, and will once again be a reliable indicator of the underlying economic health and vitality of the country.Our goal is to preserve the nation from these economic and financial troubles. We must not falter or flinch when the measures needed to do so harm the narrow interests of a privileged few.
The past week, the news that Merrill Lynch had hurried to pay out billions of dollars in bonuses before the end of the year, provoked a torrent of tirades and rage across America. Now, progressive blogs are in another uproar over the perceived lack of leadership from President Barack Obama in the fight for a stimulus program. Many defenders of President Obama demand to know what he might do different. And many seem not to feel, or do not yet understand, that the financial and banking system needs a complete reformation. Well, here’s my suggestion, in the form of a speech the President can give explaining a few crucial, truly transformative measures to the nation. My fellow Americans,We have reached a historic and dangerous juncture, where the operations and interests of our financial and banking system no longer serve the greater interests of our nation. What we once thought was the great blessing of financial innovation, we now see has led us down a false path to national ruin, individual misery, and increased indebtedness for all.Banks are supposed to act as intermediaries between people who have saved and wish to invest, and those who need credit. They are expected to evaluate if a borrower is a good credit risk, and are supposed to be the mechanism by which money and credit is allocated and used in our economy. But we have found to our dismay that financial innovation has actually distorted and even destroyed the incentives for banks to play the role they should. Banks have been seeking the highest returns, but have failed to properly assess and manage the associated risk.As a result, the financial and banking system has been failing to perform the task of allocating money to the entrepreneurs and businesses that use it best. Manufacturing and research and development have been slowly but systematically starved for funding over a period of many years, and the result is that with few exceptions, such as aerospace, all types of U.S. industry have lost their lead as world leaders in innovation, productivity, and efficiency. A January 2008 study of worldwide technological competitiveness by the Georgia Institute of Technology showed that China will soon pass the United States in the critical ability to develop basic science and technology, and turn those developments into marketable products and services.In short, the banking and financial system was not creating value for the economy, but was destroying it. We are now seeing just how much value has been destroyed.In a free market economy, one of the most essential functions of the government is the full and fair enforcement of contracts. But it has long been a principle of our legal system that a contract based in whole or in part on fraud or coercion is not a valid contract, and that the government should not enforce it. Indeed, the enforcement of fraudulent contracts can cause much more damage than the original fraudulent contracts, because it destroys the trust and reputation of an entire national economy.Accordingly, I have ordered that all trading and activity in credit default swaps be frozen immediately. These financial instruments are the broken link in the chain of complex financial instruments that now threaten our economy. Credit default swaps are like insurance, but were carefully designed to avoid regulation as insurance. There were no mandated actuarial tables and no mandated reserves. There were no standards imposed for who could write and sell credit default swaps, and no standards for the calculation of risk and premiums. Many credit default swaps were sold with the explicit condition that they could never be sold on an open traded market, such as the Chicago Board of Trade or the New York Stock Exchange. This prevented regulators from examining these contracts and imposing minimal standards. This also meant that these contracts were illiquid, with no ready market in which they could be traded, and without a market mechanism in which prices could be set and settled in an open way.In short, credit default swaps are illiquid and designed specifically to avoid regulation, and are based on improper mathematical principles and assumptions of risk. In other words, credit default swaps are fraudulent, and therefore the government has no obligation to enforce the contracts. [See Ian Walsh Cutting the Gordian Knot of Bad Contracts to Save the Economy See also, The Big Banks vs. America: A Roundtable with David Kotok and Josh Rosner.]A review of the records of the previous administration and of the Federal Reserve indicates that much of the nearly $3 trillion already disbursed in the TARP and the various Federal Reserve programs to prop up the financial system were used to pay off the terms of credit default swaps written and sold by the AIG unit in London. We are currently in discussions with the appropriate authorities in Britain regarding the status and location of these funds. In case these discussions do not proceed satisfactorily, we are also examining and preparing what steps can be taken to prevent and seize all capital transfers to selected institutions in Britain. I have directed the Director of National Intelligence and the National Security Agency to cooperate fully in this effort.We are also working on measures to prevent and seize all capital transfers to offshore financial centers, and to begin dismantling them. Some observers have called these offshore financial centers "secrecy jurisdictions," which have been purposefully established and structured to allow companies and individuals to escape observation, regulation and taxation by national authorities around the world. We have already seen that an inability to observe and regulate financial excesses will lead to general economic distress, so it makes no sense to allow these offshore financial centers to continue offering low or zero taxes, secrecy, and lax regulation. We also know that these offshore financial centers were often used to fraudulently obtain higher credit ratings for a number of financial operations, by isolating ownership of the financial vehicles from their true owners and controllers.As an October 2008 article by the Tax Justice Network noted,
An indication of how large a problem these offshore financial centers have become is that the Cayman Islands, with 70,000 residents, are the fifth-largest banking centre in the world, with $1.5 trillion in banking liabilities. The Cayman Islands are also the world’s largest center of hedge fund registrations, with over 10,000 hedge fund registrations. Since 2000, the Cayman Islands have been on the “black list” of Non-Cooperative Countries and Territories of the Financial Action Task Force on Money Laundering.A particularly troubling fact is that over half of these offshore financial centers, like the Cayman Islands, are < a href="http://www.monbiot.com/archives/2008/12/16/pin-striped-pirates/" rel="nofollow"> members of the British commonwealth, and technically fall within the jurisdiction of British authorities. In fact, the International Monetary Fund officially considers the City of London as an offshore financial centers. In our negotiations with British authorities, we are insisting on full and complete disclosure of all bank accounts and all hedge fund registrations in all Commonwealth offshore financial centers, including the City of London.In international law, there is a legal theory which holds that the national debt incurred by a regime for personal purposes or for committing aggression, is, like fraudulent contracts, not enforceable. Such debts are called odious debt, and are considered by this doctrine to be personal debts of the regime, and not debts of the state the regime controls. This concept is analogous to the invalidity of contracts signed under coercion.The same legal principle of odious debt may be extended to the millions of mortgages that were sold on false pretenses, serving only to boost the earnings and bonuses of mortgage brokers and bankers. There is a complete circle of fraud here, beginning with home buyers who were often encouraged to lie about their incomes. The banks and brokers committed fraud, not just by encouraging people to lie, but also by failing to perform the due diligence required to estimate the credit worthiness of a home buyer. The companies that bought these mortgages and bundled them together committed fraud by deliberately under-estimating the risk of cascading defaults, and by failing to inform buyers of these sophisticated instruments of their full complexity and credit risk.Clearly, however, where the greatest tragedy lies is in the suffering and anguish of individual human beings who are forced out of their homes. Almost all these people to some extent placed their trust in the banks and brokers that sold them mortgages to deal fairly and not place them in a situation in which they could not make the payments. This was misplaced trust. But stopping these individual tragedies may be the easiest thing we can do at this point. I am deputizing as Federal Marshalls all county marshals and other local law enforcement officials responsible for carrying out home foreclosures, and ordering them to immediately cease all foreclosure proceedings on residential properties. I am also instructing them to insist that all creditors that have begun foreclosure proceedings on residential properties must produce clear titles and documentation of liens to the property. If the mortgage holder refuses to work with the court and the home owner to keep the home owner in the residence, I am instructing these new Federal Deputies to seize the residence on behalf of the home owner, to protect the homeowner in that residence, and to oppose all further proceedings against that property. (See Amy Goodman’s article on what Rep. Marcy Kaptur has been telling her constituents: Facing foreclosure? Don’t leave. Squat.)Our banking system is comprised of over 8,000 institutions, but the crises we face is actually the result of the policies and actions of only a handful of the largest institutions. I have directed the Secretary of the Treasury, the Comptroller of the Currency, and the Director of the FDIC to work with the Federal Reserve in taking effective control of the large banks and financial institutions the taxpayers already own. These institutions are: Citigroup, Bank of America, JPMorganChase, Wells Fargo, and to a lesser degree, Goldman Sachs, and Morgan Stanley.According to information collected by the Comptroller of the Currency, almost 90 percent of financial derivatives activities are concentrated in just these six institutions. We have yet to determine how much of each institution’s financial derivatives activities are fraudulent, as in the case of credit default swaps discussed above, but we will move quickly to identify, and invalidate those contracts.Effectively immediately, the top officers and boards of directors of these institutions have been relieved of their duties, authority, titles and offices. I have also directed that any amounts greater than $15,000 in their personal savings, checking, and other accounts be frozen, pending the completion of investigations into whether or not the past few years’ of excessive compensation may have involved fraudulent conveyance.We will move as quickly as possible to break up the actual banking operations of these six firms, and hand them off to the over 8,000 banks and savings and loans which did not participate in the derivatives madness. This means that if you were banking at a Chase or a Bank of America branch in your town, your account will soon be under the management of a carefully screened and selected bank or credit union that has been operating in your community for years. And let me assure you that the FDIC stands behind all accounts up to the amount of $250,000.To provide immediate economic relief to tens of millions of Americans, these nationalized banks are being directed to lower the interest rates charged to their credit card customers to no more than prime plus five and one half percent, for an effective annual interest rate at this time of six percent. Further, these nationalized banks are being directed to rapidly scale back the amounts of penalties and fees imposed on their customers. It is estimated that these measures will immediately increase the average household’s income by $25 to $50 a month. And this immediate stimulus will not cost taxpayers a single cent.Finally, I have presented to Congress legislation to impose a securities transaction exchange tax (STET) of one half of one percent on all transactions in our financial markets. An immediate goal is to raise revenues to begin to repair the fiscal damage we have sustained. It is estimated that in the first year, a securities transaction exchange tax will raise nearly $200 billion in new revenues. How can it be unfair for someone buying millions of dollars of stocks, bonds, futures, or derivatives contracts to pay one half of one percent tax, when working people have to pay five percent or more in local and state retail taxes when they buy a loaf of bread or a pair of shoes?But a far more important and far-reaching goal is to restructure the financial markets and force them back into coherence with the real economy. To plan, design, build, and equip an industrial facility or an infrastructure project, requires years of dedicated effort by hundreds or thousands of people. Yet, one single person can destroy all the effort of all those people in mere seconds by electronically transferring capital from one side of the globe to another. Banking and finance are supposed to serve the needs of the real economy. They no longer do. This must and will change. A securities transaction exchange tax will begin to force out the short-term speculation that is so harmful to long-term industrial and infrastructure projects. For someone who intends to buy a stock or bond for the long term, a securities transaction exchange tax of one half of one percent will hardly be noticeable. But for someone looking to profit quickly by buying a security and then selling it the next day or next hour, this STET tax will be a formidable obstacle.Before I close, let me note that I have directed the Federal Bureau of Investigation, and all financial regulators, to consider any individuals or institutions that oppose these measures as economic terrorists, and to investigate and pursue them according to U.S. laws designed to combat terrorism. I have also directed the National Director of Intelligence and the National Security Agency to immediately begin locating and tracking whatever foreign holdings these economic terrorists have.These measures are tough, but they are not unprecedented. They will no doubt create panic in certain financial markets. But we have reached the point where we must decide to either
save the financial markets, or save the nation. In large part, the financial markets have caused the problems we now confront. So I urge you, over these next few days, to ignore the wild fluctuations of the financial markets. There will be great weeping and gnashing of teeth as financial assets lose billions, even trillions of dollars in price. But to continue to attempt to prop up these prices would be a fatal mistake for our country, and for our future. We cannot allow the financial markets to dictate the terms of survival for our nation. Once we have restructured our economy, and begun the physical task of building the economic capacities that our children, and their children, and many future generations will use, then the financial markets will return to sanity and normalcy, and will once again be a reliable indicator of the underlying economic health and vitality of the country.Our goal is to preserve the nation from these economic and financial troubles. We must not falter or flinch when the measures needed to do so harm the narrow interests of a privileged few.
The past week, the news that Merrill Lynch had hurried to pay out billions of dollars in bonuses before the end of the year, provoked a torrent of tirades and rage across America. Now, progressive blogs are in another uproar over the perceived lack of leadership from President Barack Obama in the fight for a stimulus program. Many defenders of President Obama demand to know what he might do different. And many seem not to feel, or do not yet understand, that the financial and banking system needs a complete reformation. Well, here’s my suggestion, in the form of a speech the President can give explaining a few crucial, truly transformative measures to the nation. My fellow Americans,We have reached a historic and dangerous juncture, where the operations and interests of our financial and banking system no longer serve the greater interests of our nation. What we once thought was the great blessing of financial innovation, we now see has led us down a false path to national ruin, individual misery, and increased indebtedness for all.Banks are supposed to act as intermediaries between people who have saved and wish to invest, and those who need credit. They are expected to evaluate if a borrower is a good credit risk, and are supposed to be the mechanism by which money and credit is allocated and used in our economy. But we have found to our dismay that financial innovation has actually distorted and even destroyed the incentives for banks to play the role they should. Banks have been seeking the highest returns, but have failed to properly assess and manage the associated risk.As a result, the financial and banking system has been failing to perform the task of allocating money to the entrepreneurs and businesses that use it best. Manufacturing and research and development have been slowly but systematically starved for funding over a period of many years, and the result is that with few exceptions, such as aerospace, all types of U.S. industry have lost their lead as world leaders in innovation, productivity, and efficiency. A January 2008 study of worldwide technological competitiveness by the Georgia Institute of Technology showed that China will soon pass the United States in the critical ability to develop basic science and technology, and turn those developments into marketable products and services.In short, the banking and financial system was not creating value for the economy, but was destroying it. We are now seeing just how much value has been destroyed.In a free market economy, one of the most essential functions of the government is the full and fair enforcement of contracts. But it has long been a principle of our legal system that a contract based in whole or in part on fraud or coercion is not a valid contract, and that the government should not enforce it. Indeed, the enforcement of fraudulent contracts can cause much more damage than the original fraudulent contracts, because it destroys the trust and reputation of an entire national economy.Accordingly, I have ordered that all trading and activity in credit default swaps be frozen immediately. These financial instruments are the broken link in the chain of complex financial instruments that now threaten our economy. Credit default swaps are like insurance, but were carefully designed to avoid regulation as insurance. There were no mandated actuarial tables and no mandated reserves. There were no standards imposed for who could write and sell credit default swaps, and no standards for the calculation of risk and premiums. Many credit default swaps were sold with the explicit condition that they could never be sold on an open traded market, such as the Chicago Board of Trade or the New York Stock Exchange. This prevented regulators from examining these contracts and imposing minimal standards. This also meant that these contracts were illiquid, with no ready market in which they could be traded, and without a market mechanism in which prices could be set and settled in an open way.In short, credit default swaps are illiquid and designed specifically to avoid regulation, and are based on improper mathematical principles and assumptions of risk. In other words, credit default swaps are fraudulent, and therefore the government has no obligation to enforce the contracts. [See Ian Walsh Cutting the Gordian Knot of Bad Contracts to Save the Economy See also, The Big Banks vs. America: A Roundtable with David Kotok and Josh Rosner.]A review of the records of the previous administration and of the Federal Reserve indicates that much of the nearly $3 trillion already disbursed in the TARP and the various Federal Reserve programs to prop up the financial system were used to pay off the terms of credit default swaps written and sold by the AIG unit in London. We are currently in discussions with the appropriate authorities in Britain regarding the status and location of these funds. In case these discussions do not proceed satisfactorily, we are also examining and preparing what steps can be taken to prevent and seize all capital transfers to selected institutions in Britain. I have directed the Director of National Intelligence and the National Security Agency to cooperate fully in this effort.We are also working on measures to prevent and seize all capital transfers to offshore financial centers, and to begin dismantling them. Some observers have called these offshore financial centers "secrecy jurisdictions," which have been purposefully established and structured to allow companies and individuals to escape observation, regulation and taxation by national authorities around the world. We have already seen that an inability to observe and regulate financial excesses will lead to general economic distress, so it makes no sense to allow these offshore financial centers to continue offering low or zero taxes, secrecy, and lax regulation. We also know that these offshore financial centers were often used to fraudulently obtain higher credit ratings for a number of financial operations, by isolating ownership of the financial vehicles from their true owners and controllers.As an October 2008 article by the Tax Justice Network noted,
An indication of how large a problem these offshore financial centers have become is that the Cayman Islands, with 70,000 residents, are the fifth-largest banking centre in the world, with $1.5 trillion in banking liabilities. The Cayman Islands are also the world’s largest center of hedge fund registrations, with over 10,000 hedge fund registrations. Since 2000, the Cayman Islands have been on the “black list” of Non-Cooperative Countries and Territories of the Financial Action Task Force on Money Laundering.A particularly troubling fact is that over half of these offshore financial centers, like the Cayman Islands, are < a href="http://www.monbiot.com/archives/2008/12/16/pin-striped-pirates/" rel="nofollow"> members of the British commonwealth, and technically fall within the jurisdiction of British authorities. In fact, the International Monetary Fund officially considers the City of London as an offshore financial centers. In our negotiations with British authorities, we are insisting on full and complete disclosure of all bank accounts and all hedge fund registrations in all Commonwealth offshore financial centers, including the City of London.In international law, there is a legal theory which holds that the national debt incurred by a regime for personal purposes or for committing aggression, is, like fraudulent contracts, not enforceable. Such debts are called odious debt, and are considered by this doctrine to be personal debts of the regime, and not debts of the state the regime controls. This concept is analogous to the invalidity of contracts signed under coercion.The same legal principle of odious debt may be extended to the millions of mortgages that were sold on false pretenses, serving only to boost the earnings and bonuses of mortgage brokers and bankers. There is a complete circle of fraud here, beginning with home buyers who were often encouraged to lie about their incomes. The banks and brokers committed fraud, not just by encouraging people to lie, but also by failing to perform the due diligence required to estimate the credit worthiness of a home buyer. The companies that bought these mortgages and bundled them together committed fraud by deliberately under-estimating the risk of cascading defaults, and by failing to inform buyers of these sophisticated instruments of their full complexity and credit risk.Clearly, however, where the greatest tragedy lies is in the suffering and anguish of individual human beings who are forced out of their homes. Almost all these people to some extent placed their trust in the banks and brokers that sold them mortgages to deal fairly and not place them in a situation in which they could not make the payments. This was misplaced trust. But stopping these individual tragedies may be the easiest thing we can do at this point. I am deputizing as Federal Marshalls all county marshals and other local law enforcement officials responsible for carrying out home foreclosures, and ordering them to immediately cease all foreclosure proceedings on residential properties. I am also instructing them to insist that all creditors that have begun foreclosure proceedings on residential properties must produce clear titles and documentation of liens to the property. If the mortgage holder refuses to work with the court and the home owner to keep the home owner in the residence, I am instructing these new Federal Deputies to seize the residence on behalf of the home owner, to protect the homeowner in that residence, and to oppose all further proceedings against that property. (See Amy Goodman’s article on what Rep. Marcy Kaptur has been telling her constituents: Facing foreclosure? Don’t leave. Squat.)Our banking system is comprised of over 8,000 institutions, but the crises we face is actually the result of the policies and actions of only a handful of the largest institutions. I have directed the Secretary of the Treasury, the Comptroller of the Currency, and the Director of the FDIC to work with the Federal Reserve in taking effective control of the large banks and financial institutions the taxpayers already own. These institutions are: Citigroup, Bank of America, JPMorganChase, Wells Fargo, and to a lesser degree, Goldman Sachs, and Morgan Stanley.According to information collected by the Comptroller of the Currency, almost 90 percent of financial derivatives activities are concentrated in just these six institutions. We have yet to determine how much of each institution’s financial derivatives activities are fraudulent, as in the case of credit default swaps discussed above, but we will move quickly to identify, and invalidate those contracts.Effectively immediately, the top officers and boards of directors of these institutions have been relieved of their duties, authority, titles and offices. I have also directed that any amounts greater than $15,000 in their personal savings, checking, and other accounts be frozen, pending the completion of investigations into whether or not the past few years’ of excessive compensation may have involved fraudulent conveyance.We will move as quickly as possible to break up the actual banking operations of these six firms, and hand them off to the over 8,000 banks and savings and loans which did not participate in the derivatives madness. This means that if you were banking at a Chase or a Bank of America branch in your town, your account will soon be under the management of a carefully screened and selected bank or credit union that has been operating in your community for years. And let me assure you that the FDIC stands behind all accounts up to the amount of $250,000.To provide immediate economic relief to tens of millions of Americans, these nationalized banks are being directed to lower the interest rates charged to their credit card customers to no more than prime plus five and one half percent, for an effective annual interest rate at this time of six percent. Further, these nationalized banks are being directed to rapidly scale back the amounts of penalties and fees imposed on their customers. It is estimated that these measures will immediately increase the average household’s income by $25 to $50 a month. And this immediate stimulus will not cost taxpayers a single cent.Finally, I have presented to Congress legislation to impose a securities transaction exchange tax (STET) of one half of one percent on all transactions in our financial markets. An immediate goal is to raise revenues to begin to repair the fiscal damage we have sustained. It is estimated that in the first year, a securities transaction exchange tax will raise nearly $200 billion in new revenues. How can it be unfair for someone buying millions of dollars of stocks, bonds, futures, or derivatives contracts to pay one half of one percent tax, when working people have to pay five percent or more in local and state retail taxes when they buy a loaf of bread or a pair of shoes?But a far more important and far-reaching goal is to restructure the financial markets and force them back into coherence with the real economy. To plan, design, build, and equip an industrial facility or an infrastructure project, requires years of dedicated effort by hundreds or thousands of people. Yet, one single person can destroy all the effort of all those people in mere seconds by electronically transferring capital from one side of the globe to another. Banking and finance are supposed to serve the needs of the real economy. They no longer do. This must and will change. A securities transaction exchange tax will begin to force out the short-term speculation that is so harmful to long-term industrial and infrastructure projects. For someone who intends to buy a stock or bond for the long term, a securities transaction exchange tax of one half of one percent will hardly be noticeable. But for someone looking to profit quickly by buying a security and then selling it the next day or next hour, this STET tax will be a formidable obstacle.Before I close, let me note that I have directed the Federal Bureau of Investigation, and all financial regulators, to consider any individuals or institutions that oppose these measures as economic terrorists, and to investigate and pursue them according to U.S. laws designed to combat terrorism. I have also directed the National Director of Intelligence and the National Security Agency to immediately begin locating and tracking whatever foreign holdings these economic terrorists have.These measures are tough, but they are not unprecedented. They will no doubt create panic in certain financial markets. But we have reached the point where we must decide to either
save the financial markets, or save the nation. In large part, the financial markets have caused the problems we now confront. So I urge you, over these next few days, to ignore the wild fluctuations of the financial markets. There will be great weeping and gnashing of teeth as financial assets lose billions, even trillions of dollars in price. But to continue to attempt to prop up these prices would be a fatal mistake for our country, and for our future. We cannot allow the financial markets to dictate the terms of survival for our nation. Once we have restructured our economy, and begun the physical task of building the economic capacities that our children, and their children, and many future generations will use, then the financial markets will return to sanity and normalcy, and will once again be a reliable indicator of the underlying economic health and vitality of the country.Our goal is to preserve the nation from these economic and financial troubles. We must not falter or flinch when the measures needed to do so harm the narrow interests of a privileged few.