Getting close and closer to our future

With the Presidential elections almost here the final stretch is showing an almost conceding McCain and a solid-paced Obama. The GOP candidate has practically admitted defeat by reaching out for a last and desperate attempt to hold on to a sympathetic rope. He urges the voters to vote for him by appealing to the voters’ alleged sense of fairness; otherwise we will have a Democrat in the White House and a Democrat majority in Congress.

What he is really saying is that he does not want a candidate that will restore to life, from its ashes, the blueprints of the New Deal. In the eyes and hearts of the true and true conservatives that would be a major defeat.

Barack Obama is not Bill Clinton and his economic advisors are more progressive than Clinton’s were, although not all of them (a battle to be fought later inside the administration). Under his administration we may see a new version of the New Deal whereby its immediate step will be to attempt to restore confidence in the financial sector.

Even if Mr. Obama has the charisma of a celebrity, a solid intellectual and academic background and compares well to Mr. McCain on all accounts, the true confrontation is not really about personalities, although they do matter but to a lesser extent during a crisis, it is about welfare, stability and recovering the faith in the social contract between people and their leaders.

The Democrats have in their hands a unique opportunity to show not only its supporters but everybody else that a balanced and functional public administration can provide a socio, economic and political environment upon which this nation can thrive, not only its financial sector, but most importantly its social fabric.

To be sure, the Democrats will face a cornucopia of problems not just rooted in the recent Bush era but also during the roaring nineties. The national debt will certainly constrain Mr. Obama’s fiscal policy and the dysfunctional credit markets will challenge the administration’s political prowess.

The next four years will not be a walk in the park for the Democrats, but they will have an opportunity to demonstrate that the Neoliberal (conservative) agenda polarizes and excludes while a more balanced and progressive socio-economic model can successfully provide a sustainable framework to support the loftier goals of human development.

— Luis Brunstein

The devil is in the details

The crisis is on everyone’s mind. You got to be abnormal not to think about the effect that it may have on your assets.

However, a small little worm has expectedly crawled upon the nest holding our feeble financial system.

You see, the bigger the bank the bigger the punch. Big money rules in politics.

The New York Times blogger Floyd Norris alerted us that the International Accounting Standard Board has just this week allowed banks to engage in a bit of accounting trickery so as to conceal their real market value of their assets.

During a crisis they can now “legally” find ways to do a little bit, or a lot, of window dressing.

We are not yet out of the gates. In fact the horses are not even ready and the long and bony fingers of lobbying pressure has tended its almost invisible web of deception.

What a pity!

The rules seem to apply to Europe, but that is irrelevant, money goes where profits are higher. You relax the rules there and boom, money floods like a river of blood.

Meanwhile, we are all concerned with the enunciation of Sarah Palin or the theatrics behind McCain’s house of pain.

The change in this rule allows banks to adjust the value of their assets retroactively to July, so that all of the sudden their books will look better.

And isn’t that convenient?

Just when the multinational rescue plan is not working, it then may actually work.

The devil is in the details. This change in the way banks do their accounting is not just a mechanical change. It came about from political pressure of the ever more monopolized and thus powerful financial institutions.

Now, you go right ahead and try to regulate these gigantic monsters.

— Luis Brunstein

Are Arabs Terrorists?

On a recent John McCain’s rally at Lakeville, Minnesota, held on October 10, a woman, who supports the venerable senator from Arizona, expressed her dismay publicly at the alleged heritage of Senator Barack Obama. She seemed preoccupied with the future of our country. As all of us do.

Apparently this well-intentioned political activist had her intellect temporarily kidnapped by the odd belief that Mr. Obama was an “Arab,” and as such he may be dangerous to our future. God forbid an Arab (whatever that may actually mean to the public’s imaginary) reaches the highest position in our government.

Thankfully to our democratic “way of life” Senator McCain sat the record straight for all of us by clarifying that Senator Obama is not an Arab and that he deserves respect, not only because he knows him personally but also because, most notably, he is not an Arab.

The assertion not only vindicates McCain for allowing his loyal and small legions to scream life-threatening profanities at earlier events, including that of his fellow “maverick,” but also leave us with a greater sense of safety, if the “black dude” from Illinois wins the election we will not fall under the reign of a terrorist Muslim and neither you nor any of your sisters will be forced into marrying someone like “that one,” as Senator McCain referred of Mr. Obama during the second Presidential debate.

There are observations, reflections and contemplations that soar above and beyond tax, health and education policy considerations. Statements, insinuations and innuendos of such lewd nature override all other concerns. There are statements and then, there are statements… silence concedes… repeated silence instigates…

Can we trust our overtly deteriorated foreign policy and image to the irresponsible hands of candidates whose main tactic in the face of despair has been to pander to the feelings of the lowest common denominator at their base?

How much should the character and integrity of an individual count when it comes to the race for the White House?

At this point, and so close to election time, we have heard as much as we will ever hear before D-day about economic policy and the situation in the Middle East, histrionics and theatrics notwithstanding.

We have a clear battle between a progressive and a regressive economic and social platform, reactionaries versus liberals, and character and personality profiles should play a significant role in the minds of voters.

While it seems clear that true blues and reds have made up their minds by now, there may be a bunch of undecided folk out there who may be scratching their heads trying to figure out the difference between Obama’s and McCain’s health and tax plan.

These have become secondary issues by now, what counts is character and integrity because we are going to face some tough times ahead of us and we will need a steady stewardship at the helm.

Moreover, as the current crisis shows, the economic and social progress of a country depends, on a significant measure, on the moral fortitude of our leaders. The lady from Minnesota can sleep in peace tonight, our next President is not a terrorist, McCain himself said so.

-- Luis Brunstein

It’s the ideology stupid!

In the midst of what is becoming not only a real headache for “Joe six-pack” and the rest of the world there seems to be a certain degree of confusion between cause and effect. And this is not a trivial but rather a crucial matter.

Every time that our economic system enters one of its predictable crises alleged pundits and, worse yet, professional economists shine out their golden trumpets heralding to the world “it is the economy stupid!”

I am afraid that seldom, if ever, it really is. An economic crisis is a symptom of a deeper and more troublesome problem.

While many economists would love to have their fifteen seconds of fame as saviors of the world few are establishing the causality-effect that renders our crisis nothing more than a symptom of our political ideology.

A blind belief in the market forces supported by years of deregulation and a discourse intent on dissolving whatever is left from the New Deal constructed the legal framework and the social imaginary within which we managed to manufacture the current crisis.

Buttressed by a deep free-market dogma it became acceptable to seriously discuss the merits of privatizing Social Security and anything else that could be treated as a tradable commodity whose assigned market values could be traded in the secondary markets so as to broaden the credit base, while simultaneously enriching the technical complexity of the new investment vehicles and lining up with gold the packets of those who traded them without much understanding or AIG-regard for our future.

In this historical context it is, thus, hardly surprising that we as a society find acceptable to conceive that it is acceptable to trade units of retirement, health care or education as long as they yield some dividend somewhere to some “maverick” willing to take some risk in some market.

Our ideology and ensuing legal structure rewards risk-takers and our popular culture Donald-Trumps them above our mores and moral boundaries. They play in this surreal playpen until they accidentally break some of the toys and that is when we step in to either fix the problem or replace the toys with new banks... toys.

Irresponsible behavior driven by political ideology has dilapidated the political capital of the “mavericks” and their solicitous friends and supporters housed in the lower and the upper Houses, nested among the corridors leading to the legislative floors and friendly courts while avidly discussing for years-on-end financial campaign reform and the role of lobbying at some Hawaiian, all you can eat, family resort and spa.

De-facto deregulation and the resulting lingering California-spa-style moral debauchery are not economic problems; they are the root cause of them.

Serious, complex and sophisticated public policy must address the root problems first so as to begin the long road back to recover the socio-political bridges to nowhere between the working “Joe” and those who are supposed to advocate for their rights in the legislative chambers of our broken democracy.

— Luis Brunstein

And now, what?

After the passage of a pork-laden “economic stabilization” bill last week in Congress, there was a sense, reflected and promoted partly by some members of the media, that “things” would go back to “normal” or to at least “they way we were.”

However, that doggone Dow index is relentless, and the other markets in Europe and the rest of the planet seem equally indifferent to the hard work that went into the massive rescue package. It is not easy to add three hundred pages of “incentives” in only a few short days.
So, many people are now left wondering and muttering… now what?

No, this is not a “gotcha” moment and a lifeline will not do either. Let’s not be foxy about it.
What we may need is some deeper, complex and rather sophisticated understanding. No one can recompose the partly dilapidated structure of the global financial markets in a matter of days. It took us a long time to get here and it will take some time and effort to get out of this particular swamp; promises about the bill notwithstanding.

The negative evolution of the stock indexes around the globe are an indicator that investors, behaving like herd, are running towards safe assets, for now, and that there is a sense that there will be a credit crunch for a while until confidence about the future begins to shine above the dark clouds.

The primary strategy right now should be to design a multilateral plan conducted by the industrialized economies to massively intervene in the credit markets, not by simply infusing cash into the hands of broken institutions but rather by taking possession and control of their assets and managerial decisions. When markets fail apart governments can and should take over to improve their workings. But that is not about to happen anytime soon, although Europe stands a slightly better chance that the United States.

The credit crunch is real. Financial institutions are fearful and producers and consumers are more than cautious. And with elections right around the corner most investors will tie their assets to safety rather than risky credit. That always happens around election time anyhow, except that now the effect will exacerbate the fever.

The “stabilization” bill has granted too much power to the same kind of people who manufactured this crisis. The United States government has announced that it will hire many of the same people from Wall Street because they are better equipped to carry on the bill’s mandate. That is a good way to keep them out of welfare.

That also seems oddly ironic. Hiring the same sort of characters responsible for the crisis so as to write a different kind of novel?

It is little wonder that people are scared.

All and all, short-run policies should be geared to recover the faith on the financial sector, we need strong state intervention. Simultaneously we need to rebuild the structure of the financial sector and develop a pork-freer regulatory machine with credible, viable and enforceable mechanism upon which the medium and long run future would evolve.

The mission should be clear, without an adequate level of confidence we cannot possible walk out of the swamp… and that is the now and the what.

— Luis F. Brunstein