The Pandemic

Since the pandemic issues are changing rapidly, I don't want to write much about it.  But, I wanted to provide a link to a fabulous outline of the issues, essentially what we know what we don't know.  Click here for the link.

Here is Seattle, we now have, as of this morning, three confirmed cases.  The elementary school where one child has been diagnosed is now closed.  

Google is providing maps of the flu.  And Vice President Biden recommends not taking planes or trains (as in public transportation, boy that will rile the mass transit folks in this city!).

And last, here is some video discussing the pandemic provided by my colleagues with the Society of Environmental Journalists.  Sorry about the ads you have to watch...

While it is all confusing and made even more so by a media that thrives on crisis (has CNN picked it's pandemic music, yet?), my suggestion is similar to President Obama's.  Be prudent, do your research, and wash your hands.

The policy discussions will continue to fall out, everything from tracing food sources, corporate or mass feed lot raised meats and poultry, to, of course, trans-boundary issues of human migration.  But at this point those discussions are for later.  

As we find more sites and information that will be helpful, we will post it.

Honey! I Shrunk the Economy!

The economy continues to shrink.  It's the 100th day of the Obama Administration, a benchmark which is convenient for the media but seems arbitrary and useless for the rest of us, but on this day, President Obama has to worry whether he has implemented enough steps to arrest the economic contractions.

Ironically, today is the shareholder's meeting for Bank of America.  Ken Lewis, the head of Bank of America, has been in his office for over 7 years.  And during those 7 years he has been part of a real estate boom and bust that has rocked and roiled the global economy.  Chances are, despite some shareholder activists, Lewis will remain the head of the company, the Dead Bank Walking, while complaining his salary and bonus is not high enough.

More important, however, is that President Obama has expressed optimism that the economic stimulus packages will create 2 to 3 million jobs.  That's great, except we are now at an unemployment rate far greater than 2 or 3 million.  

We have a long long way to go before we have figured out how to have a sustainable economy, not subject to the "wizards" of the financial industry's ideas to spread risk on lending practices or whatever other scheme they come up with that will cause our economic stability to crash down around us.  The first step is, during the next 100 days, for Congress to insert ear plugs and stop listening to the financial industry lobbyists.  Then pass legislation that mandates regulation of this industry so that they are not risking our money on Ponzi-like schemes where they and only they come out richer.

The first 100 days have been good, hopefully the next 100 get better.  

In the meantime, anyone know where the economy went?

Holy Cow Arlen Spector!

Well.  What a news day.  Between the swine flu epidemic and real estate prices continuing to fall (I keep thinking about my realtor friend who sincerely believed values would not fall in Seattle because "there is no place left to build" and I wonder what he thinks now) I thought we had enough news for one "cycle," but along comes US Senator Arlen Spector from Pennsylvania, formerly a Republican, now a Democrat.  Holy cow!

As I was driving around noon, I heard the Senate Minority Leader, Mitch McConnell, somberly intone that Spector's "treason" is cause of great concern for all Americans because it inches the Democrats closer to becoming filibuster proof in the US Senate.  "The majority party will get everything they want, there are no checks, no balances," he said.  I had to laugh thinking that was never his concern when the Republicans had a filibuster proof majority in the US Senate and a huge majority in the House.  But life on Capital Hill ebbs and flows.  Someday the Republicans will be in the majority, again.

But in the meantime, perhaps Senator McConnell and his party should do a bit of self-reflection rather than a large dose of verbal non-sense.  Senator Spector leapt ship because of the rather large leaks in the Republican Party boat.  Their failures to suggest positive solutions to the depression (oops, here I go again) and to, in fact, any other domestic issues, much less their cranky hypocritical pronouncements on life choices, have finally made them seem out of touch with most Americans.  Heck, even gays are getting married in Iowa today.  And attitudes over wedge issues are changing rapidly.

I am a big proponent of diversity.  I really believe a healthy democracy consists of vibrant give and take between different views and values.  I am, frankly, saddened that the Republican Party can not seem to find it's way.  Losing one of it's best and most articulate Senators will not help this hapless party find a course that is closer to what Americans need and want right now.  So, while I seem to echo Senator McConnell in concerns about democracy, it isn't for the same reasons.  My concern is not about gaining power or preventing the use of power. It's about ensuring a robust democracy.

Senator Spector is by no means a "liberal."  I would suggest he will remain true to his past record and vote accordingly.  But his switch certainly is an indication that there are more serious problems for the Republican Party than we imagine.  But it is my hope that Senator Spector does remain true to his moderate leanings, encouraging other members of his new party to examine the critical issues of the day from all sides.

Holy cow!

Salaries and Bonuses? What?

Yesterday, the New York Times reported that banks and other financial institutions are returning to salary and bonus levels found in 2007.  Apparently, these institutions feel they are out of the financial mess they created!

Being blunt about this, this news is like hearing people on welfare get to set their own monthly payments.  While some of these financial institutions may be beginning to do well, they are certainly making profits only because of federal assistance whether it is Troubled Asset Relief Program money, the zero percent interest they are paying for borrowing money from the Federal Reserve or the reluctance by Congress to pass legislation which will restrict the usurious interest rates and lending practices established by banks.  Our financial institutions are the 21st Century version of welfare queens.

Apparently tomorrow there are going to be protests at Bank of America branches through out the country, asking for Ken Lewis's resignation.  We need more than that.  Congress has got to step up and enact legislation that regulates this industry and stand strong against their numerous lobbyists trying to quash the cram down revisions to the Bankruptcy laws.  Enough is enough.  

And what, just what are these salaries going for?

On Torture

I've been reluctant to wade into this discussion.  I am appalled at the acts of cruelty we can inflict as humans upon each other, among other things (don't get me started on animal cruelty).  This cuts all ways.  Hijacking planes and crashing them into the World Trade Towers, the Pentagon, and attempting to crash one into presumably the White House is as much an act of cruelty and torture as waterboarding.  The intent and effect are the same: create fear and exercise power.

That said, I am pleased to see this issue so intensely debated in the public sphere right now.  But I am of two minds, or I should say, many minds.

I was not a policy maker in the post-September 11th moments.  When a nation looked to leadership on explaining how we could be attacked in such a brazen and clearly well thought out way by a loose organization based in the remote mountains of Afghanistan.  There is no way I could know the decision making process that went through American national security agencies on how to find the people, still alive, responsible for the attacks, much less find the "cells" who may be plotting even more strikes against a clearly vulnerable nation.  But the emotions in those security agencies must have ranged from anger, grief, fear, and more anger.

Torture is a reflection of inhumanity but it is also caused by anger.  Anger is, unfortunately, a human emotion we have all felt and expressed, over time, in ways we have regretted.  And the policy makers, from lawyers who wrote memos condoning the use of torture to the officials who asked the lawyers to produce those memos, were angry.  

Anger does not justify a crime.  

But it seems to me there are so many people, so many policy-makers, from Republicans to Democrats, who knew about these methods, knew they were being used, and whether overtly or covertly, condoned the actions.  To prosecute may mean taking down the whole policy-maker infrastructure of Washington, DC.  Housecleaning like that may be a good thing, but is it necessary?  And what are the long term consequences of prosecuting ex post facto methods done in good faith to protect American citizens?  Does that open the door for future Administrations to prosecute former Administrative officials for acts they deem illegal?  Is that what we want?  It seems if that happens we are not that different than nations we condemn in Africa, Asia, South America...

On the other hand, it seems to me that understanding the motivations, the reasoning behind the authorization of these methods would be helpful.  South Africa had enormous success with Truth and Reconciliation Commissions.  But the key is reconciliation.  Once the information is out, we need to forgive, to understand, to reconcile.  We were all angry after September 11, 2001.

President Obama and Senate Majority Leader Harry Reid are against this sort of commission.  Probably because they are aware almost every one in Washington, DC would be implicated.  But, if we truly reconcile, perhaps it will make those same folks even better leaders and us, better citizens.

Remember AIG?

Great short piece on AIG in yesterday's New York Times.  Essentially, in the negotiations over who was going to run AIG and how it was going to be managed, AIG beat the federal government.  We have loaned AIG billions and billions of dollars with no control over spending, much less management of this insurance behemoth.  

I think about my father, giving me an allowance.  Every week he would go over how I was going to spend the money, line by line, down to the candy I snuck from a local dime store.  But here, we lend money without any clue how to retain control.

And really the issue isn't the bonuses or the past, it's about the future.  It's whether this company can manage it's way out of a paper bag from here on in.  In a larger context is whether our government is being consistent in the micro-managing of the Chrysler and GM and yet hands off of the very culprits who were in the epicenter of this financial tornado.  While we can heap blame over the futurists at GM, Chrysler, and Ford not seeing an end to cheap oil and building smaller, more fuel efficient cars (and hello, who bought those cars?), 99.9% of the blame for this depression lies at the wing-tipped feet of the financial industry.  Yet they still seem amazingly in control of their daily work world and continue to lobby Congress and the Administration for lax regulation on them and tough bankruptcy laws on the very victims of their follies.  

What is up with that?

Every Day is Earth Day

There is a bumper sticker that the Society of American Foresters sells to it's members: Every Day Is Earth Day for a Forester.  It's slightly defensive, but makes a critical point.  Every day should be Earth Day for each of us.

We are caught in an interesting time for environmental policy and politics.  We have a President and Congress who seem motivated to "do something" on top of the list environmental issues like, well, er, global climate change.  Global warming, as it is called in the popular media, is the darling of politicians.  Primarily because "doing something" can appeal to so many constituencies.  There can be jobs created doing "green technologies," or "green building."  Legislation can be passed requiring regulations to be promulgated, hence creating more governmental jobs monitoring emissions.  And we can still keep our lifestyle as long as we are consuming "green."

But talk has been and continues to be all we seem to do.  Frankly, technological "solutions" often contribute to the problem rather than the solution.  So-called green buildings actually require destruction of a current structure, contributing to the waste stream.  How about green restoration?  And encouraging people to consume as long as it's green?  How about not consuming.  Those reusable bags from China probably do far more damage to the environment than driving to the grocery store!

Here in the Pacific Northwest we have been talking about salmon restoration for decades, and still the numbers decline because of lack of political will and constituency demand.  We tinker at the edges while advocating the use of hydroelectric power, generated by massive dams along the Columbia River, one of the major spawning waterways for salmon.  Google, claiming they are the premier environmental company ("do no evil") recently located a massive server farm, using huge amounts of electricity, near The Dalles, in Oregon, which is directly across from a massive power generating dam.  Google gets cheap power, salmon die.  Go figure.

The same thing is true for the Chesapeake Bay and Puget Sound, the two premier estuaries in the continent.  Both have been major environmental concerns for decades, yet we continue to overdevelop the adjacent lands (with built green homes, no less) pouring massive amounts of toxic run-off into the waters.  The two estuaries, once filled with lively fisheries and amazingly fresh water, are ecological nightmares.  But we sure love to talk about it.

We have a long long way to go before we can say that every day is Earth Day.  The current economic depression (there, I said it) trumps environmental concerns for most Americans.  The good news is that perhaps as we scratch our heads and examine how we spent our way into this mess, we realize that spending our way out of it might not work.  And that, alone, will go along way for Earth!

As an aside, I want to direct you to the Frontline piece done by Heddrick Smith on the Chesapeake and Puget Sound.  You can find the link to the video by clicking on the title to this post.

Credit Card Racket: What's in Your Wallet?

Several years ago I contacted one of my credit cards.  After navigating the automated voice tree, I found out that to make a phone payment, I would be assessed a fee!  I hung up and wrote a check, grumbling that as a small business owner myself, I would never think of charging clients a fee to pay me!

Then, of course, like millions of Americans, I have received a letter from my credit card company (one of the recipients of TARP money, by the way) telling me my interest rate is going up.  No reason other than they are suffering from the economy.  So apparently they need to make even more money on the spread of the no-interest loans from my taxpaying dollars.  I just got stung twice.

So it is great to read that President Obama is convening a sit down with the heads of the major credit card companies on Thursday to talk them out of their most egregious acts like charging to make a payment, unilaterally raising rates, charging interest on fees, giving virtually no time between billing and due dates...the list goes on.

But there are even worse issues.  Our country, our culture, has become so addicted to credit cards that we capitulate to a corrupt system.  Companies like Equifax and other credit rating monopolies tell us that unless we have credit and use it, our credit ratings decline.  If we have closed accounts our credit ratings go down.  It's disgusting symbiotic relationship.  If you want to live without credit, you seemingly do not exist to the very companies that can decide the interest rates you get on home loans.  The most responsible among us are punished.  Does that make sense?

Or how about small businesses, unable to get business loans from a lender are forced into using high interest credit cards from the same lender who turned them down for a more reasonable loan? Who makes the money?

It's great that Obama is going to cajole the credit card executives.  We'll see the photo-op, and the executives in their gorgeous suits standing in front of the White House proclaiming they will work with the Administration.  And minutes later, out of the camera's eye, they will be meeting with their K Street lobbyists figuring out how to kabash the proposed legislation on Capital Hill which would begin requiring the companies to behave in slightly less disgusting manner.  

But like a monopoly, or like a Mafia mob, the tentacles of the credit card companies (which are mostly owned by the "too big to fail banks) are intertwined into our culture, our "way of life," and into all of the policy makers pockets.  Unravelling their power will be long, difficult, but rewarding work.  

Time not paying credit card bills?  Priceless!

Shell Games with Bank Numbers

Finally, the stock market used it's x-ray vision and saw through profit statements from a bank!  It took a few days, but the analysts realized bally-hooing banks might not be such a good idea since there really hasn't been any change in banking assets except deposits of enormous amounts of taxpayer bail-out money.

Indeed the announcement of Bank of America's numbers sent the stock market on a tail spin.  Maybe investors are beginning to wonder who the heck they can believe?

In the meantime, confidence that boomers can retire and live comfortably is at an all time low level.  In other words, we're more than slightly worried that all those nifty investments we were sold are not going to help us live like we thought when we turn 65.  

All of this is beginning to remind me of the lessons we try to teach children.  About decision making for long term gain rather than short term joy.  It seems to me that so many of the CEOs only thought about short term joy.  Money lining their pockets, not the long term health and welfare of their companies, much less their customers.  

It's beginning to feel a bit like a sophisticated robbery scheme, isn't it?

Economic Heroes: Elizabeth Waren

An expert in bankruptcy law who is on the faculty of Harvard Law School, Elizabeth Warren is challenging the Obama Administration to do all it can to ensure our economy no longer goes through the boom and bust cycles we have seen for the past thirty years.  

Currently, Warren is the chair of a Congressional Oversight Panel monitoring how the Toxic Asset Relief Plan (oops, did I mean Troubled Asset Relief Program?) is implemented.  This position has given her a soapbox to talk about what needs to happen for long range economic stability.  The kind we saw post World War II for at least 50 years.  As witnessed by yesterday's news, our economy can not continue to ride this roller-coaster that we have been on since the savings and loan crisis in the mid-1980s.  

The second largest shopping mall developer files for bankruptcy.  Foreclosure rates are rapidly increasing.  New housing starts drop to their lowest levels, ever.  Our economy is chronically sick.

So, Warren advocates a new path.  Greater regulation and monitoring of our financial systems.  Safety nets.  Leveling out the booms and busts so all Americans can find a niche to succeed.  She is spot-on and hopefully legislators and the current federal and state administrations are listening to her.  This unassuming and brilliant woman.  Here is another article relating Warren's cautious but insightful analysis of the financial institution crisis where she essentially says what we are doing mimics what Japan tried to do in the 1990s, and that decade in Japan is called: lost.

An economic hero.  Or, as Jon Stewart said, "she gives chicken soup for the economy."

Foreclosures: What Is Your Bank Doing?

The two articles made my stomach turn.  First, banner headline in yesterday's Wall Street Journal that banks are ramping up foreclosures.  According to the article, now that the lenders "understand" what the Obama Administration's requirements for assisting defaulting homeowners, the lenders apparently, in a matter of a few weeks, have managed to survey their portfolios, determine who is qualified to re-negotiate their loans and who shall be foreclosed and evicted.  

Meanwhile, the changes to the bankruptcy code which would permit federal bankruptcy judges to modify home loans, the cram-down provisions, remain bogged down in the US Senate.  Banking industry lobbyists apparently can control 100 US Senators far better than that unruly US House of Representatives who did pass the modifications to the bankruptcy laws.

As appalling as the realization that lenders who are essentially being bailed-out unconditionally, turn around and pull the plug on thousands of homeowners, is what is happening to elder borrowers.  Folks who have lived in their homes for dozens of years, had significant equity, could pay their taxes on the miniscule incomes they had, but were swayed by mortgage brokers who trolled the public records looking for just these kinds of people.  They were told by these mortgage brokers that they could take the equity, live a better life, perhaps use the money to pay the loan...many of them didn't make enough money to pay the first mortgage payment.  Meanwhile the mortgage brokers walk off laughing with thousands of dollars in commissions and fees.  And of course, these elders, our mothers, fathers, grandparents, are in foreclosure or out of their beloved homes.

While there have been several very public criminal investigations of mortgage brokers committing fraud, the victims have been lending institutions.  Not people.  Not elders seduced in classic huckster style, to borrow way more than they could afford, eventually losing their homes.  So while we as a society are so busy saving banks, we have done a horrible job helping our neighbors.  We are not protecting their homes, we are not prosecuting the fraudulent lenders and brokers who preyed on people (not banks).  We are not standing up to the US Senate telling them to do everything they can do to help homeowners.  Pass the cram down provisions now!

Meanwhile, stop into your bank.  Ask to speak with the branch manager.  Tell him or her that you are upset your bank, your money, is being used to foreclose on your neighbors.  Tell them you don't want that to happen.  That you want your bank to work with every single homeowner until that homeowner calls it quits.  Tell them you want the bank to look at the mortgage brokers who brought them the loans, to send cases to prosecutors where the loan was clearly predatory and the victim is hurting.  Tell them you are embarrassed and ashamed of their behavior.  Talk to them, all their ads claim they listen.

Since I posted this this morning, I read this great piece on the status of the cram-down provisions in the US Senate.  If you live in one of the states with the Democratic Senators opposing the re-institution of the cram-down provisions, or even if you don't, call the folks on the list in the article. Call them every day.  It's important not only for the folks trying to work with the banks, but for your own neighborhood, community, and conscience.

Again, the Economy

Yesterday, President Obama gave what was billed as a major economic speech.  He said, in my opinion, all the right things.  But the problems remain horrific.  While Wells-Fargo reported "record earnings," it is highly probable that those earnings were based on the accounting changes recently made so that the so-called toxic assets are not valued at fair market value.  And the unemployment rates continue to rise, causing hardship unknown to many in recent history.

Truly, this country must change in fundamental ways.  

Hopefully, policy makers are listening to what the President said.  And that they are asking what they can do, now, to continue making the changes necessary to guard against this financial shenanigans from happening again.

But on the ground, I don't think change is really happening.  Lenders are jacking up interest rates making enormous profits on the spreads.  They continue to foreclose, to  to negotiate mortgages that will ultimately fail, and to lobby against provisions in the bankruptcy code which will actually help homeowners and debtors in trouble.  Meanwhile, Wall Street complains that they have become the victim!

Layoffs continue.  Hallmark announced massive layoffs.  John Deere.  The list of American companies goes on and on.  

We need change.

Nature, Natural, and National Parks

Over the weekend, the North Cascades National Park announced that unless Congress legislatively directs the National Park staff otherwise, the Park is not only going to prevent volunteers from stocking high alpine lakes within the National Park boundaries with trout triploids, it will also eradicate the current fish within those lakes.  The North Cascade National Park's reasoning is those fish are not native to the high alpine lakes.  In fact, in their opinion, no fish are native.

The Park staff are supported in this by the North Cascades Conservation Council, a wilderness advocacy group, who believes the "lakes should be restored to their natural state."

Here is my question: what is natural?  The North Cascades have been hiked, climbed, ridden over and through by humans for centuries.  Native Americans hunted deer and bear, gathered berries, cut the timber and more than likely fished the rivers.  English, French, and American fur trappers scoured the area, gold miners panned, and boosters sought to make money off the Swiss Alps-like beauty.  More than likely there is very little land that has not witnessed some sort of human activity.  We have altered the landscape and the place has altered us.

To add to this issue, the fish stocking has been taking place for over 40 years, long before conservation advocates stood over a table drawing lines on a map defining the North Cascades National Park.  In other words, the fish stocking preceded the creation of the Park.  Lines on a map, after all, are arbitrary.  Ironically, just outside the boundaries, the United States Forest Service will allow fish stocking in the high alpine lakes within their jurisdiction.

Meanwhile, the National Park Service complains that visitors have dwindled in the parks.  National Park folks tend to believe it's because children do not want to go outside anymore.  However, note that numbers for fishing and hunting are down.  I think there is another reason that people make other choices.

Reaching the main entrance of any National Park these days you are delivered a set of "rules," along with admonishments about fishing, hunting, walking dogs, campfires...you get the drift.  We no longer have parks, we have museums.  As a result, people don't go because the recreation seems so constricted.  

Several years ago I wanted to fish a section of the fabled Yellowstone River within the Yellowstone National Park boundary.  I practice catch and release fly fishing.  Think Brad Pitt and A River Runs Through It.  When I pulled into a parking area, rigged up, I was told by another visitor that there was a sign: No Fishing.  I asked a ranger, way up the road, and he said: "we don't allow fishing because some people don't think it's scenic."  I kid you not.

We are in a sad place when we decide what is natural and where it "belongs."  To  not be able to look at trout in a lake, planted or not, as wild, means we have truly separated ourselves from nature.  That we continue to have some 19th century ideal of natural as something other than the Douglas fir outside my window, the Crow that just flew off the rooftop, or the Flicker attempting to find it's mate trilling down the street.  Natural, apparently, can only be in some humanly designated pristine sport, which incidentally, isn't really pristine.  

It's as if we have to have an either/or.  Pristine/cultured, virgin/...well you know.  And nature isn't really that way.  Nature and what is natural is all around us.  And we should be encouraging people to get outside, hike 12 miles, burn some calories, and catch a natural fish in a gorgeous lake.  It doesn't get much better.

Changing our Culture

Recently I have not agreed with New York Times columnist Frank Rich.  It's not that I haven't accepted his premise or even understood his ultimate purpose, but he has been, I think, a cheerleader for the current Administration when he severely chastised pundits during the Bush Administration for doing the same thing.  When you have a major opinion column in the major newspaper (or maybe the last newspaper standing) in America, you have some obligation to be a critical thinker.

It caught me by surprise when I agreed with his recent column about the culture of greed in America.  The conclusion of his piece is the same thing I have been saying: in order to get out economy back into shape, we need, we must, get our culture into shape.  We must stop reveling the symbols of greed.

Recently I had dinner with friends, one of the couple's is expecting their first child.  They have both made significant amounts of money, like many young couples in the Puget Sound region, off of a software located in Redmond, Washington.  They are excited and nervous.  The dinner discussion turned, a little prematurely perhaps, to schools.  It turns out it is a topic they have researched quite extensively, as well as nannies and dulas.  And their belief has essentially come down to finding the best private school for their child, hoping that eventually it will attend Harvard or another Ivy League school, so that the child can essentially repeat their financial success.

I idly wondered what they would do if the kid wanted to be a carpenter?

But I think the thing that scared me the most is not only are we a culture that worships money, but that money continues to purchase elite status in this country.  No doubt the child will have to achieve in school, but already it has a leg up on most children without the financial resources of it's parents who are easily weathering this depression.  Essentially, we continue to create a country of elites and the rest of us.

Yet, we are in a depression.  So who can blame the folks who want to watch CNBC and stock jockeys like Jim Cramer who exhort you to buy low, sell high, and make a lot of money in the stock market.  Who can blame anyone for wanting to be as comfortable as the couple expecting their first child, eagerly investigating the pluses and minuses of private schools and what contributions parents must make to get their child on "the list."

On the other hand, if we also realize that each person is of value, that we all have amazing gifts to contribute, perhaps the private elite school education isn't as important as the ability to give to our society.

We voted for change last November, but the change really must come within all of us.  It's time.

The Dangers of Accounting Changes, Part 2

A week ago Thursday, I wrote about the dangers of removing the Enron enacted accounting rules called mark-to-market.  How removing those rules would enable banks to puff up their books, even though the value of the assets (loans) had not changed, and in fact, may be declining on a daily basis.

Yesterday I read an interesting article linking the changes in the mark-to-market rules and the Latin American "debt crisis" of the 1980s.  While there were some incorrect statements in the article (the author believed the accounting rules were "regulations" which they are not, they are rules promulgated by a private organization, however that does not mean Congress and the Obama Administration do not pressure the Financial Accounting Standards Board (FASB) into changing it's standards) linking the recent changes to how the Reagan Administration handled the Latin American debt crisis is interesting and enlightening.

Compressing a lot of history, large multi-national banks, primarily led by Citibank, loaned billions and billions of dollars to countries like Chile, Argentina, Brazil.  The mound of debt finally succeeded in crushing the countries' ability to pay and Citibank found itself close to insolvent, holding onto "toxic" assets on its books without cash payments coming in the door.  Sound familiar?

But if Citibank declared those assets worthless, the bank itself would be bankrupt.  Instead, it continued to value the assets at the face amount of the loan plus interest owing, and instead of realistically negotiating with the countries for a reasonable debt repayment, the banks, International Monetary Fund, and the US Government hammered for interest payments, more interest payments, and yes, even more interest payments.  

The result was crushing to Latin America, which took years to get back on it's feet, meanwhile Citibank turned around and used the same business plan here in the United States with homeowners and businesses.  Not to pick on Citibank, but remember, it is the owner of Household Finance, a rather well known predatory lender who has been fined a number of times for violating many different states' consumer protection laws.  

The changes in the mark-to-market rules are an inducement for banks to NOT re-negotiate with homeowners on their loans, rather to hold firm, hammering for more and more payments.  And the results will more than likely be similar to what happened in Latin America, the housing market will take longer to stabilize, people's lives will be hobbled and crushed, and our economy will continue in this tailspin.

But hey, the banks' ledgers will look good to stockholders and isn't that what it is all about?

Civility and Community

A friend wrote me the morning after the women's NCAA Basketball Championships that he watched the whole game despite University of Connecticut's domination over Louisville.  He commented that he was impressed with the coach of Louisville's sportsmanship, how he hugged all the UConn players, smiling and laughing with them in their joy over trouncing his own team.  We are, I think, at a loss of that type of civility and community in this country.

I was struck by an article in the New York Times about a dry and arcane subject: municipal bonds.  Apparently over the past few decades the relatively stable and mundane area of municipal bonds has also become a high volume, big money gambling machine.  Essentially, towns and cities have been convinced by investment counselors to issue bond derivatives which bet on interest rates or the bond market itself remaining stable.  The "gift" to municipalities, is that they pay low interest rates during the first few years.  It makes building a new sewer plant far easier.

Of course, as we have seen with all these complex securities, the markets are far from stable, and when chaos happens, the victims are left picking up the tab while the so-called investment whiz-kids are laughing in their mansions.

There can be thousands of discussions about the innocence or vulnerability of the victims, or in this case how financial managers of municipalities really ought to be sophisticated enough to see through these schemes.  But in reality, our society has become less civil, less oriented toward what is good for the community and more about predator and prey.

The Lords of Wall Street viewed everyone as prey.  I am convinced they walked into their offices everyday trying to figure out how to beguile each of us out of our money, not concerned about whether they were helping us or not.  Of course, the pretense, the come-on, was that they were helping us, just like the Lords of Mortgages wanted us all to believe they were helping us lower our interest rates.  It's as if these folks kept dog-eared copies of Lord of the Flies as their guide to daily living on island Earth with all the rest of us rather than the Golden Rule.  

Perhaps as we culturally begin to develop "green ethics" we also need to cultivate a sense of civility and community.  That we are not prey or predator, but rather a community of people.  That we no longer honor masses of money and gluttony as achievement but rather "what can I do for you today?" becomes a sign of greatness.  While regulation of these industries can "force" civility, it will also only cause the "brains" to figure out ways to get around the laws.  These Lord of the Flies issues really must be addressed culturally, to get at the root of it.   

In the meantime, value someone who is trying to do good.

Urbancentric

The embattled General Motors and Segway announced they are developing an electric, two person, urban vehicle.  Pretty darn cool.  But where do I put my skis, dogs, groceries, parents...

It seems to me that much of this green technology is very urban centric.  Which make sense since living in cities can be considered highly efficient.  But much of this country and in fact the world, does not live in cities.  Much less, there is still a large number of people who do live in cities but like to get out of them every now and then.

But this green technology development is sorely lacking in it's focus on rural and yes, I know it's not politically correct to talk about, suburban folks.  Where are the substitutes for trucks to haul hay or new technologies in irrigation that reduce water consumption?  

We have a long way to go to reduce our dependence on oil.  In the meantime, homogenizing everyone as if we all live in a compact European town isn't going to solve anything.  And of course, there are all the issues which don't get discussed on whether electricity is any better than oil.  At least in the Pacific Northwest, the salmon are not so sure the dams that generate cheap electricity are such a great idea.

The creativity is good, but really in the end, technology is not going to solve this problem.  We may actually all have to re-think how we live.  Uh-oh, does that mean I have to give up skiing?

Guns and Stress

It's no surprise that we are beginning to see a rise in gun violence in America.  People are stressed.  Homes foreclosed, creditors calling, employers expecting more for less, health insurance non-existent.  One more thing reaches a tipping point whether it is spousal issues, kids, landlord, employer.  And the gun gets pulled out, safety off, trigger pulled.

And since this is America, we will get the usual responses from the advocacy groups.  Gun control advocates will point fingers and say: "see I told you so," while the NRA will emphasize that only people kill people, not guns.  

These shooting sprees are generally not a result of a bank robbery, but systemic stress in our culture that is increasing.  These are not horrific incidents that will be cured by gun control or liberalized gun laws.  Rather, we must find ways of dealing with this increasing stress that leads to such horrible violence and death.

The unfortunate thing is that the policy makers don't seem in any hurry to help the average person.  Today, White House officials acknowledge that they will not be able to accomplish President Obama's ambitious agenda in the first year.  What concerns me is that I am not sure the Administration or Congress is going to do much to help main street (to use their term) in the next few months.  

It's important to continue linking this violence to the current economic disaster.  To keep the pressure on policy makers, whether local, state or federal to understand that people are in a world of hurt.  Remember, 5 million Americans are without employment.  That's 5 million (actually more, since many are unable to find work past unemployment compensation much less those who lost their jobs and don't qualify) people worrying about bills, their children, their partner, and wondering where the ammo is kept.

Academia and Free Speech

Last week, a jury in Denver, awarded controversial and often outrageous Ward Churchill $1 and a hope that he will be reinstated to his tenured faculty position in the Ethnic Studies program at the University of Colorado.  

Several years ago, Churchill gave a speech and authored a short essay on the September 11 attacks, where he called many of the victims, particularly in the World Trade Towers, "little Eichmanns."  Churchill for years had been on the "angry at the US" speaking tour, well under the radar because not that many people, frankly, as angry as Ward Churchill.  But suddenly, his post-September 11 comments were picked up by Fox News, and Bill O'Reilly in particular, and off to races went every one.

The governor of Colorado, Brad Owens, demanded Churchill's head.  And the University, reliant on state funding, called for an inquest into Churchill's research, since the only way to fire a tenured faculty member is to question the validity of his work.

Churchill, who does not have a PhD, has a large body of written material.   Most of it focused on colonization and extermination by Anglo-Europeans of Native Americans.  In some of his writings he made assertions concerning the distribution of small-pox infested blankets by the US Army to Natives, as well as other "historical" theories.

The academic inquest obviously found academic fraud and sought Churchill's firing, which the university trustees complied.  Churchill sued, and other than the $1 damages, won reinstatement.

I don't particularly like Ward Churchill.  Even before his outrageous September 11 comments, his anger got in the way of anything meaningful he could accomplish as an student of Native American issues.  But I also don't like the method the university used to fire him.

The debates around research methodologies and statements, particularly among social science students, is profound, deep, and often polarized.  There are those quantitative people who believe the only good research is that which can become a number.  Among the qualitative folks there are many debates about hypothesis versus ground theory driven research.  Much less, in doing historical based research, finding primary sources is of course, problematic itself.  This is to say, just as important as methodology is who gets to set the bar itself.

Frankly, I am also not a big fan of tenure, believing it does the opposite of what is intended, rather than liberating academics, it frequently makes them old and stale.  Why bother, they have tenure?!  

But in Churchill's case, the obvious causation between outrageous comments and firing led the jury to seek this reinstatement.  Now, it is up to the faculty and students of the University of Colorado to hold Mr. Churchill to some academic and humanity standards.  The system he hates so much has proven him wrong.  There is justice in America.

The Unemployment Rate

We are now at a breathtaking 25 million people who are unemployed since this recession, oh heck, depression started.  25 million.  And that's just those who are reporting.  More than likely there is a greater number of people underemployed or chronically unemployed for a variety of reasons.

The international governments are attempting to do something, and world leaders announced, after all the theatrics (see, the agreements on what the are going to do have been worked out long before Air Force One touched down in London), a global stimulus of 1 trillion dollars.  

The see-saw is, however, convincing highly leveraged employers to employ workers when they are madly scrambling to find cash to service their debts, pay calls on stock used as collateral which is not worth the amount secured, or merely have money to continue their own lavish life styles.  Right now employers are reluctant to hire much less retain people.  

The Obama Administration now believes that the effects of their stimulus are beginning to show.  They point to increases in paychecks from the reduction on income tax withholding.  However, if you don't have a job, this is moot.  And the increases in paychecks are, frankly, miniscule (around $12 a week) compared to the increases in cost of gas, fuel, milk, eggs, cheese, fruit...

Usually when the unemployment rate goes up, Wall Street reacts with a bump.  But as I type this, the market is down.  Wall Street usually feels unemployment is good.  It keeps the cost of labor down, and hence more profits for corporations.  But perhaps this morning, the Lords of Money are thinking that an economy that relies on consumption (remember 70% of the American economy is about buying stuff) can not recover if people don't have an income.  Hello!

25 million.  The number will increase.  It's scary.

We Don't Need No Stinking Regulation!

We just knew this would happen.  I'm not talking about President Obama's concerns over international regulations on financial institutions (although we'll get to that).  I am talking about something that usually makes normal people doze off: accounting rules.  Accounting rules, when it comes to corporations, are controlled by the Financial Accounting Standards Board (FASB).  For years, they had a rule called "mark-to-market" which means that assets on corporate ledger sheets had to be valued at what market, the least best market, would pay.  

Banks have been having fits over this rule recently, because it has meant that the so-called "toxic assets" were valued as, well, toxic.  Rather, banks wanted to value those assets at mark rather than market.  In other words, what they paid for those assets or what they think, in best case scenario, they could get in the market.  The old FASB rules were essentially realistic, but required banks, therefore, to beef up collateral for Federal regulatory requirements.  If an asset is only worth $100 and the federal regulators require $1000 of collateral, there was a $900 deficit that banks had to find in order to stay in business.  

Today, under enormous pressure from financial institutions and policy makers (read: politicians) who want magic dust spread over this economic and financial mess to make it go away, FASB changed the mark-to-market rules, allowing financial institutions to mark the assets with pie-in-the-sky values.  Voila, an insolvent bank suddenly becomes solvent.  It's like saying a debt you know you will never collect on suddenly looks valuable!  Overnight!  It's magic!  

And dangerous.  It's breathing life into dead bank walking.  But, I guess, those banks don't care because they know (speaking of moral hazard) that the taxpayers will continue to bail them out.  Why?  Because they are "too big to fail!"

Meanwhile, President Obama, at the Group of 20 (G-20) meeting in London, refuses to accede to German and French requests that global leaders begin to think of ways to internationalize regulation of financial institutions.  While President Obama certainly has justifiable concerns about sovereignty issues, it seems to be the failure to institute international regulations defies the "globalized" economy.  

These "too big to fail banks," and even AIG, are all international in scope.  Their tentacles reach into almost every country (isn't there a Citibank branch in Tibet doing sub-prime loans for a yurt?).  AIG's division that created the insurance on the mortgage backed securities (still following me, here?) was based in London.  And then there are the issues of the "off-shore" hedge funds and countries amenable to lax banking regulations which drive business away from prying eyes an into these havens, meanwhile, they fail and cause the same problems we have now.  

I think the Germans and French leaders have justifiable concerns which Americans should not dismiss because of our anathema to international regulation.  Surely there must be ways to address these concerns.

On the other hand, we're still not doing such a great job figuring out how to reign in the financial institutions on our own soil, so maybe we still need to focus on that for awhile.

Note:  Since I wrote this piece Thursday morning, the stock market went up to over 8,000 points before settling in just below that mark.  The reason?  Elation over the new mark-to-market rules.  No offense, but when Wall Street goes ga-ga over an accounting rule, you know it smells bad...right?

Health Care

This is Steven Rattner.  He is now the car czar.  In his past life, he was a "corporate raider."  You  know, one of those guys who leveraged other people's money, buying up corporate stock, and then crushed unions to give up wages, health insurance, retirement benefits on the threat of cutting up the company into unrecognizable pieces.  You know, your job or your concessions.

Part of the Obama plan for General Motors and probably Chrysler includes demanding  even more concessions from the United Autoworkers employees and retirees.  Apparently, according to Rattner and other's in the Obama economic brain trust, it's those "legacy costs" of the retirees that is killing GM and Chrysler (funny, I thought it was the crappy cars they made for years).  

I love the term "legacy costs."   It sounds like a Pentagon generated term, sort of like "collateral damage," which means some one, a real live human, got killed while really big bomb exploded.  Here, real people who need health insurance, who more than likely have lots of health issues having worked around paint fumes, doing redundantly repetitive manual labor, will be told to hit the pavement and figure out how to pay just like the rest of us.  This, from an Administration that wants to solve the health care crisis.

What I want to know is are the AIG, Bank of American, Citibank, Wells Fargo, Goldman Sachs executives or matter of fact, any retired Member of Congress who gets amazing health care benefits, being told their "legacy costs" are too much?

You already know the answer.