For a number of years, the best way to reach Osama bin Laden was to call 00-873-682505331. That was the number of the satellite phone the terrorist kingpin lugged about in Afghanistan’s mountains. Snoops at the National Security Agency’s headquarters in Maryland knew that when Osama dialed 011-967-1-200-578, he was checking in on his global operations center, located in a private home in Yemen. By 2000, the NSA was eavesdropping on calls between that house and a young man who had recently moved out. Agents knew the man’s name and suspected him to be an international terrorist. The fact that his calls were coming from inside the United States escaped their notice.
For years, tales about the 9/11 hijackers we should have caught have been circulating, said Bob Kerrey in The Washington Post. But by adding new details, veteran journalist James Bamford “goes where the 9/11 Commission did not fully go.” Twenty-six years after Bamford’s landmark first book about the NSA, The Puzzle Palace, the author’s “disturbing” new portrait of the agency makes a convincing case that America’s intelligence failures leading up to 9/11 had nothing to do with technological or legal constraints. After 9/11, we watch as the NSA switches instantly from being overly cautious to being overzealous, eventually launching its infamous domestic wiretapping program. “In impressive detail,” Bamford also reveals how private contractors, including some with foreign-based owners, have done “the sensitive work” of sorting the data on Americans that the NSA collected.
Bamford wasn’t always a thorn in the NSA’s side, said Scott Shane in The New York Times. In 2001, he published Body of Secrets, a book about the agency that was feted at its Maryland campus. Shadow Factory is thus, in part, “a reporter’s mea culpa for his temporary seduction” by the spies he covers. His anger can be distracting, though, said Gabriel Schoenfeld in The Wall Street Journal. “Despite the wealth of information it provides,” Bamford’s account is distorted by the author’s clear “loathing of the Bush administration.” It’s one thing to question why the U.S. invaded Iraq. It’s another to complain, as Bamford does, that our overstretched Army is now packing its ranks with “criminals, dropouts, and the unemployable.”
Friday, October 31, 2008
The mixed blessing of lower oil prices
It’s the recession’s silver lining, said Gargi Chakrabarty in the Denver Rocky Mountain News. Gasoline prices have tumbled nearly $1 from last July’s all-time high of $4.11 a gallon; prices likely will slip below $3 a gallon in the coming weeks “and stay there for the rest of the year.” The sharp drop is a symptom of the slowing economic activity around the world. Demand for gasoline is falling almost 10 percent a week in the U.S., and even faster in other countries, including China, the developing world’s energy hog. The slowdown is showing up in prices for crude oil, which settled at $74.25 in New York trading this week, a nearly 50 percent drop from the July high of $147. The OPEC countries say they’ll reduce output to shore up prices, but that strategy might fail if the recession is a deep one. “If the U.S., Europe, and Japan go into a major recession,” says oil analyst Mark Pervan, “there’s no reason we can’t see $35, $40 a barrel.”
U.S. consumers, though, can take only so much consolation from the price drop, said the Associated Press. That’s because falling home and stock values have been so traumatic, any positive impact of lower gas prices has been blunted. “I’m more concerned about the financial condition of my 401(k),” said Ben Brockwell of the Oil Price Information Service, expressing a common sentiment. Such worries will likely keep a lid on demand, even as prices fall further.
That’s bad news for Hugo Chavez, Mahmoud Ahmadinejad, and Vladimir Putin, said Simon Romero in The New York Times. While oil prices were rising, “the leaders of Venezuela, Iran, and Russia muscled their way onto the world stage, using checkbook diplomacy and, on occasion, intimidation.” Now, though, “economists in Venezuela are expressing alarm over the government’s ability to pay its bills,” Iran is contemplating an 19 percent cut in its national budget, and Russia is rethinking plans to modernize its crumbling energy infrastructure. “The producers are experiencing a reverse oil shock,” says energy consultant Daniel Yergin.
So are backers of alternative energy, said Steven Mufson in The Washington Post. The drop in prices “threatens a wide variety of game-changing plans to find alternatives to oil or ways to drastically reduce U.S. consumption.” General Motors is now having trouble raising funds to develop its Chevy Volt plug-in hybrid, and Tesla Motors has postponed the introduction of its electric sedan. Tight money is also hurting start-ups’ efforts to develop biofuels from algae, wood chips, and wild grasses. Because any payoffs from such ventures are well down the road, private financing is all but impossible to find. That leaves only government subsidies, which could be scarce without high oil prices to mobilize taxpayers and concentrate policymakers’ attention. Every silver lining, it seems, comes with its own cloud.
U.S. consumers, though, can take only so much consolation from the price drop, said the Associated Press. That’s because falling home and stock values have been so traumatic, any positive impact of lower gas prices has been blunted. “I’m more concerned about the financial condition of my 401(k),” said Ben Brockwell of the Oil Price Information Service, expressing a common sentiment. Such worries will likely keep a lid on demand, even as prices fall further.
That’s bad news for Hugo Chavez, Mahmoud Ahmadinejad, and Vladimir Putin, said Simon Romero in The New York Times. While oil prices were rising, “the leaders of Venezuela, Iran, and Russia muscled their way onto the world stage, using checkbook diplomacy and, on occasion, intimidation.” Now, though, “economists in Venezuela are expressing alarm over the government’s ability to pay its bills,” Iran is contemplating an 19 percent cut in its national budget, and Russia is rethinking plans to modernize its crumbling energy infrastructure. “The producers are experiencing a reverse oil shock,” says energy consultant Daniel Yergin.
So are backers of alternative energy, said Steven Mufson in The Washington Post. The drop in prices “threatens a wide variety of game-changing plans to find alternatives to oil or ways to drastically reduce U.S. consumption.” General Motors is now having trouble raising funds to develop its Chevy Volt plug-in hybrid, and Tesla Motors has postponed the introduction of its electric sedan. Tight money is also hurting start-ups’ efforts to develop biofuels from algae, wood chips, and wild grasses. Because any payoffs from such ventures are well down the road, private financing is all but impossible to find. That leaves only government subsidies, which could be scarce without high oil prices to mobilize taxpayers and concentrate policymakers’ attention. Every silver lining, it seems, comes with its own cloud.
Turkey: Exposing a shadowy cabal of nationalists
The indictment “reads like a Dan Brown novel,” said Nicholas Birch in the London Independent. Turkey this week put 86 of its most prominent citizens on trial for allegedly belonging to a secret cabal of ultranationalists—known as Ergenekon—that has been undermining the country’s democracy for decades. Accused of trying to overthrow the government of Prime Minister Recep Tayyip Erdogan, the defendants are a motley group of retired generals, famous professors and journalists, and even “mafiosi.” Some of them, notably the secularist generals, are thought to oppose Erdogan because of his Islamist leanings. Others, the right-wing academics, are believed to abhor his attempts to bring Turkey into the European Union. Turkish observers are divided on the merits of the case. Supporters of the government are convinced that the group is “behind every act of terrorism in the past half-century.” The secular opposition, though, says that the government has concocted a fanciful conspiracy theory as an excuse “to neutralize its enemies.”
The truth probably lies somewhere in the middle, said Yusuf Kanli in Istanbul’s Turkish Daily News. Few Turks would dispute the existence of “the deep state,” a secret group that has long worked to undermine our democracy by creating instability and encouraging military coups. Yet whether all the Ergenekon defendants are really part of the conspiracy is highly doubtful—it looks like prosecutors simply indicted “whoever was a leading opponent” of the government and then tossed in a few underworld figures for “color.” The pro-government media has already helped convict the accused in the court of public opinion, by “reporting at length on alleged confessions by the defendants.” The judges, therefore, face a difficult task. Coming up with a verdict “devoid of political influence” will be a key test for Turkish justice—and Turkish democracy.
But will Ergenekon even let the judges do their crucial job? asked Mumtazer Turkone in Istanbul’s Today’s Zaman. The shadowy organization “is like a giant octopus” that has tentacles deep within the state. Many people believe that those Ergenekon members who have managed to escape prosecution “are trying to create chaos and a climate of fear in order to prevent the organization from being uncovered further and to disrupt the trial.” As long as the trial goes on, and it could be many months, Turks will see every terrorist attack and every political statement as a blow either for or against the cabal. “The prosecutor’s indictment has opened Pandora’s box.” We can only hope that putting Ergenekon on trial means that “a new era has begun in Turkey, in which unlawfulness has no place.”
The truth probably lies somewhere in the middle, said Yusuf Kanli in Istanbul’s Turkish Daily News. Few Turks would dispute the existence of “the deep state,” a secret group that has long worked to undermine our democracy by creating instability and encouraging military coups. Yet whether all the Ergenekon defendants are really part of the conspiracy is highly doubtful—it looks like prosecutors simply indicted “whoever was a leading opponent” of the government and then tossed in a few underworld figures for “color.” The pro-government media has already helped convict the accused in the court of public opinion, by “reporting at length on alleged confessions by the defendants.” The judges, therefore, face a difficult task. Coming up with a verdict “devoid of political influence” will be a key test for Turkish justice—and Turkish democracy.
But will Ergenekon even let the judges do their crucial job? asked Mumtazer Turkone in Istanbul’s Today’s Zaman. The shadowy organization “is like a giant octopus” that has tentacles deep within the state. Many people believe that those Ergenekon members who have managed to escape prosecution “are trying to create chaos and a climate of fear in order to prevent the organization from being uncovered further and to disrupt the trial.” As long as the trial goes on, and it could be many months, Turks will see every terrorist attack and every political statement as a blow either for or against the cabal. “The prosecutor’s indictment has opened Pandora’s box.” We can only hope that putting Ergenekon on trial means that “a new era has begun in Turkey, in which unlawfulness has no place.”
How they see us: Racism and the presidential campaign
Will American racism cost Barack Obama the election? asked Alexander Downer, former foreign minister of Australia, in Australia’s Advertiser. Polls consistently put the Democrat several points ahead of his Republican rival, John McCain—but the very slimness of his lead is shocking. Both parties share the blame for the global financial crisis, but given that it “happened on the Republicans’ watch,” the Democratic candidate “should win in a landslide.” The fact that McCain still has a chance can be explained by only one factor: race. The truth is, race remains a hugely divisive factor in American politics. We outsiders may not realize it—since we’re used to seeing Colin Powell or Condoleezza Rice as the face of America—but polls show that many white Americans view blacks with suspicion, even distrust. “Sen. Obama is doing less well than you would expect not because of his policies, or because of the failure of his character, but because of the color of his skin. That’s very sad.”
But it’s not surprising, said Achille Mbembe in South Africa’s Cape Times. The Republican Party has been practicing “win-at-any-cost” politics for decades. Fighting a close battle with a black candidate, it naturally chose to “descend into the dark territories of race-baiting and xenophobia.” But the tactic may be spinning out of control. McCain’s running mate, Gov. Sarah Palin, has been encouraging crowds to see Obama as somehow un-American, possibly even as a terrorist. “Rousing the uglier impulses of America is a symptom of an ideology in an advanced state of decay.”
I have met four Republicans in my life, said Jacob Dlamini in South Africa’s Business Day, and all have been “the very definition of narrow-mindedness and mean-spiritedness.” One of them openly admitted he was a racist, another had a “visceral hatred of gay people,” and the other two believed that the solution to the Middle East’s problems was to “nuke the Arabs.” I know that four people, out of millions, don’t add up to a significant sample. Perhaps there are “many decent Republicans” out there. But I wonder “how many of them feel at home” in the party today.
Let’s hope it’s not many, said Kap Kirwok in Kenya’s East African Standard. True, some of the anti-Obama bumper stickers are downright “scary.” A typical one reads, “Warning: I am a bitter Christian and I am clinging to my gun.” That’s ostensibly a reference to a comment Obama made about people in small towns, but it carries threatening overtones. Still, we should not be disheartened. Obama has a huge and devoted network of supporters, most of them white, and they are working tirelessly to get him elected. He is like “a duck on a lake: On the face of it, it looks all calm and serene, effortlessly gliding along, but below the water surface, its legs are paddling madly.” All we can say is, “Go, Obama, go!”
But it’s not surprising, said Achille Mbembe in South Africa’s Cape Times. The Republican Party has been practicing “win-at-any-cost” politics for decades. Fighting a close battle with a black candidate, it naturally chose to “descend into the dark territories of race-baiting and xenophobia.” But the tactic may be spinning out of control. McCain’s running mate, Gov. Sarah Palin, has been encouraging crowds to see Obama as somehow un-American, possibly even as a terrorist. “Rousing the uglier impulses of America is a symptom of an ideology in an advanced state of decay.”
I have met four Republicans in my life, said Jacob Dlamini in South Africa’s Business Day, and all have been “the very definition of narrow-mindedness and mean-spiritedness.” One of them openly admitted he was a racist, another had a “visceral hatred of gay people,” and the other two believed that the solution to the Middle East’s problems was to “nuke the Arabs.” I know that four people, out of millions, don’t add up to a significant sample. Perhaps there are “many decent Republicans” out there. But I wonder “how many of them feel at home” in the party today.
Let’s hope it’s not many, said Kap Kirwok in Kenya’s East African Standard. True, some of the anti-Obama bumper stickers are downright “scary.” A typical one reads, “Warning: I am a bitter Christian and I am clinging to my gun.” That’s ostensibly a reference to a comment Obama made about people in small towns, but it carries threatening overtones. Still, we should not be disheartened. Obama has a huge and devoted network of supporters, most of them white, and they are working tirelessly to get him elected. He is like “a duck on a lake: On the face of it, it looks all calm and serene, effortlessly gliding along, but below the water surface, its legs are paddling madly.” All we can say is, “Go, Obama, go!”
What goes up must come down
For more than 400 years, financial ‘bubbles’ and panics have shaken empires and altered history. It’s happening again with the housing bubble. Why don’t we ever learn?
What is a financial bubble?
Bubbles are a market phenomenon in which something’s value is inflated far beyond its intrinsic worth. They are probably as old as commerce itself, though the first outbreak of market delirium identified as a bubble was the Dutch Tulip Bubble of 1636–37. A few decades later, the British government tottered after hundreds of thousands of Brits went broke investing in a South American real estate boom. In the 1800s, countless Americans lost their shirts speculating on railroad stocks. The 20th century brought the most destructive bubble of all—the credit-fueled stock speculation of the Roaring ’20s that ended in the Great Depression. More recently, the U.S. has been rocked by the Internet bubble of the late 1990s and this decade’s housing bubble, which ushered in today’s worldwide financial crisis. In fact, bursting bubbles led to nearly all 11 recessions the U.S. has suffered since the end of World War II.
Do all these bubbles have anything in common?
They’re all outbreaks of what historian Charles Mackay called “the madness of crowds.” (See below.) Take the tulip bubble. In the early 1600s, a mysterious virus infected many of the Netherlands’ tulip bulbs, which suddenly started producing brightly colored flowers with unusual streaks and whorls. A craze for the flowers developed, and during the winter of 1636, many Dutch started trading promises—futures contracts, essentially—to buy or deliver tulip bulbs the following spring. Prices rose furiously. One eager buyer traded his house for a single bulb; another swapped 12 acres of land. The outlandish prices brought in even more traders seeking easy riches, and initially, prices rose as new buyers surged into the market. But promises to deliver bulbs outnumbered the actual supply, and as spring approached, many people who had contracted to deliver bulbs couldn’t fulfill their obligations. Contracts to buy the bulbs were suddenly worthless, and the market crashed.
People really thought tulips could make them rich?
It sounds silly. But that’s the nature of bubbles—frenzied speculators part with common sense in their “irrational exuberance’’ for the next big thing. In the mid-1800s, new U.S. railroad companies were working to link markets that had never before been connected, thus revolutionizing commerce. Millions of Americans borrowed money to buy shares in railroad companies, and stock prices soared. But the steep costs of building the railroads proved too much for many companies, and several collapsed, ruining investors who planned to repay their loans out of their stock profits. The Internet bubble of our own time was remarkably similar.
In what way?
Investors were so excited about the potential, they lost sight of reality—hope triumphed over reason. Take the notorious case of Webvan, a company that delivered grocery orders placed over the Internet. On the day Webvan went public in 1999, its stock market value soared from $375 million to $8.5 billion—one of the best opening days of any stock in history. Webvan could never deliver enough groceries to justify that value, and the company went bankrupt in 2001. But it wasn’t just faith in the Internet that led speculators to bid up Webvan’s price. They also had faith that other people believed even more fervently in the Internet’s potential. In short, people who paid a foolish price for Webvan and hundreds of other Internet firms figured they could always find a greater fool to pay an even higher price. And many did, compounding their folly by buying their shares with borrowed money. Eventually, of course, the bubble burst.
What does borrowed money have to do with it?
Without borrowed money, there likely would be no bubbles. That’s because bubbles first inflate when credit is easy to obtain, and pop when credit tightens. During the stock bubble of 1929, for instance, many investors bought shares with borrowed funds. When prices started to fall in October 1929, investors rushed for the exits, hoping to sell their shares while they were still worth more than their loans. But because everyone was selling at once, stock prices plummeted, leaving many investors with debts they couldn’t repay. Many U.S. banks were among those investors. Hearing about the banks’ losses, depositors rushed to withdraw their funds, starting a bank run that caused thousands of banks to collapse.
Is something similar happening today?
In many ways, yes. The housing bubble first started to inflate when interest rates fell to 1 percent after the 2000 dot-com crash. Banks happily granted mortgages to almost anyone who could fill out an application. Millions of borrowers bought houses they really could not afford, figuring they could sell at a profit if they got in a pinch. It wasn’t such a far-fetched idea—in much of the U.S., housing prices had risen steadily since the late 1970s. But prices eventually hit a peak and started to fall, and the inevitable stampede for the exits began. As in 1929, says finance professor Lawrence Kryzanowski, people thought “the good times were going to go on forever. And then very quickly, they stopped.” History provides one consolation, however: Just as every boom inevitably comes to an end, so does every recession.
The madness of crowds
Many economists believe that people tend to make rational financial decisions. But the recurrence of bubbles suggests that greed, emotion, and peer pressure can overwhelm rationality. When we see friends and neighbors making big bucks trading dot-com stocks or flipping McMansions, we want in on the action. For a while, as everyone joins the party, rising prices become a self-fulfilling prophecy. But then comes a seemingly minor event that reverses the psychological polarity, turning endless optimism into bottomless panic. (In the case of the housing bubble, it was one big bank’s announcement in March 2007 that it was experiencing higher-than-expected losses on its mortgage holdings.) The same herd mentality that drove people to crowd into the market now drives them to flee the market en masse. Falling prices then become the self-fulfilling prophecy, and the panic feeds on itself, sweeping aside caution, common sense, and historical memory. Super-investor Warren Buffett has seen it happen over and over again through the years. “What we learn from history,” he likes to say, “is that people don’t learn from history.”
What is a financial bubble?
Bubbles are a market phenomenon in which something’s value is inflated far beyond its intrinsic worth. They are probably as old as commerce itself, though the first outbreak of market delirium identified as a bubble was the Dutch Tulip Bubble of 1636–37. A few decades later, the British government tottered after hundreds of thousands of Brits went broke investing in a South American real estate boom. In the 1800s, countless Americans lost their shirts speculating on railroad stocks. The 20th century brought the most destructive bubble of all—the credit-fueled stock speculation of the Roaring ’20s that ended in the Great Depression. More recently, the U.S. has been rocked by the Internet bubble of the late 1990s and this decade’s housing bubble, which ushered in today’s worldwide financial crisis. In fact, bursting bubbles led to nearly all 11 recessions the U.S. has suffered since the end of World War II.
Do all these bubbles have anything in common?
They’re all outbreaks of what historian Charles Mackay called “the madness of crowds.” (See below.) Take the tulip bubble. In the early 1600s, a mysterious virus infected many of the Netherlands’ tulip bulbs, which suddenly started producing brightly colored flowers with unusual streaks and whorls. A craze for the flowers developed, and during the winter of 1636, many Dutch started trading promises—futures contracts, essentially—to buy or deliver tulip bulbs the following spring. Prices rose furiously. One eager buyer traded his house for a single bulb; another swapped 12 acres of land. The outlandish prices brought in even more traders seeking easy riches, and initially, prices rose as new buyers surged into the market. But promises to deliver bulbs outnumbered the actual supply, and as spring approached, many people who had contracted to deliver bulbs couldn’t fulfill their obligations. Contracts to buy the bulbs were suddenly worthless, and the market crashed.
People really thought tulips could make them rich?
It sounds silly. But that’s the nature of bubbles—frenzied speculators part with common sense in their “irrational exuberance’’ for the next big thing. In the mid-1800s, new U.S. railroad companies were working to link markets that had never before been connected, thus revolutionizing commerce. Millions of Americans borrowed money to buy shares in railroad companies, and stock prices soared. But the steep costs of building the railroads proved too much for many companies, and several collapsed, ruining investors who planned to repay their loans out of their stock profits. The Internet bubble of our own time was remarkably similar.
In what way?
Investors were so excited about the potential, they lost sight of reality—hope triumphed over reason. Take the notorious case of Webvan, a company that delivered grocery orders placed over the Internet. On the day Webvan went public in 1999, its stock market value soared from $375 million to $8.5 billion—one of the best opening days of any stock in history. Webvan could never deliver enough groceries to justify that value, and the company went bankrupt in 2001. But it wasn’t just faith in the Internet that led speculators to bid up Webvan’s price. They also had faith that other people believed even more fervently in the Internet’s potential. In short, people who paid a foolish price for Webvan and hundreds of other Internet firms figured they could always find a greater fool to pay an even higher price. And many did, compounding their folly by buying their shares with borrowed money. Eventually, of course, the bubble burst.
What does borrowed money have to do with it?
Without borrowed money, there likely would be no bubbles. That’s because bubbles first inflate when credit is easy to obtain, and pop when credit tightens. During the stock bubble of 1929, for instance, many investors bought shares with borrowed funds. When prices started to fall in October 1929, investors rushed for the exits, hoping to sell their shares while they were still worth more than their loans. But because everyone was selling at once, stock prices plummeted, leaving many investors with debts they couldn’t repay. Many U.S. banks were among those investors. Hearing about the banks’ losses, depositors rushed to withdraw their funds, starting a bank run that caused thousands of banks to collapse.
Is something similar happening today?
In many ways, yes. The housing bubble first started to inflate when interest rates fell to 1 percent after the 2000 dot-com crash. Banks happily granted mortgages to almost anyone who could fill out an application. Millions of borrowers bought houses they really could not afford, figuring they could sell at a profit if they got in a pinch. It wasn’t such a far-fetched idea—in much of the U.S., housing prices had risen steadily since the late 1970s. But prices eventually hit a peak and started to fall, and the inevitable stampede for the exits began. As in 1929, says finance professor Lawrence Kryzanowski, people thought “the good times were going to go on forever. And then very quickly, they stopped.” History provides one consolation, however: Just as every boom inevitably comes to an end, so does every recession.
The madness of crowds
Many economists believe that people tend to make rational financial decisions. But the recurrence of bubbles suggests that greed, emotion, and peer pressure can overwhelm rationality. When we see friends and neighbors making big bucks trading dot-com stocks or flipping McMansions, we want in on the action. For a while, as everyone joins the party, rising prices become a self-fulfilling prophecy. But then comes a seemingly minor event that reverses the psychological polarity, turning endless optimism into bottomless panic. (In the case of the housing bubble, it was one big bank’s announcement in March 2007 that it was experiencing higher-than-expected losses on its mortgage holdings.) The same herd mentality that drove people to crowd into the market now drives them to flee the market en masse. Falling prices then become the self-fulfilling prophecy, and the panic feeds on itself, sweeping aside caution, common sense, and historical memory. Super-investor Warren Buffett has seen it happen over and over again through the years. “What we learn from history,” he likes to say, “is that people don’t learn from history.”
Crisis moves from Wall Street to Main Street
What happened
President Bush said this week he was open to taking additional steps to stimulate the flagging economy, amid new indications that the U.S. is sliding into a deep recession. A slew of downbeat earnings reports and a steep jump in unemployment claims convinced policymakers and investors alike that the financial crisis had extended beyond Wall Street and was battering the “real economy.” The Bush administration reversed itself and voiced support for a new economic stimulus package, as did Federal Reserve Chairman Ben Bernanke. Congressional Democrats quickly got to work producing a $300 billion package with new infrastructure spending, unemployment benefits, and Medicaid assistance to states. Congress plans to hold a special session after the election to take up the legislation.
Following a stock market rally that reflected widespread relief that the credit crisis was easing, stock indexes plunged as corporations reported dramatically lower sales and earnings. Construction equipment giant Caterpillar called the economic contraction “the worst we’ve seen in years.” Internet portal Yahoo! announced it would lay off 1,500 workers, and thousands of other layoffs were announced by Merck, PepsiCo, and other companies. “This is an equal-opportunity recession,” said Cathy Paige of temporary-staffing supplier Manpower. “Everyone is feeling it.”
What the editorials said
The Fed chairman knows which way the wind is blowing, said The Wall Street Journal. With a Barack Obama presidency looking increasingly likely, “Bernanke all but submitted his job application” to Obama by endorsing the interventionist, Democratic approach to fiscal “stimulus.” A “tougher” Fed chairman would refrain from “meddling in campaign tax-and-spending debates” right before an election, but Bernanke has opted for self-interest over principle.
Washington’s inclination to intervene is admirable, said USA Today, but the public would be better served if policymakers let the recession play out. It may sound “harsh,” but “recessions are as necessary to prosperity as are recoveries.” Growth can resume only after the economy is purged of its excesses. There’s room for limited steps to ease the downturn’s impact on the most at-risk Americans, but expensive new programs that add to the soaring deficit “could do more harm than good.”
What the columnists said
Welcome to “the Great Incomprehensible Recession of 2008,” said Steven Weisman in The New Republic. “The only thing easy to understand” about the mess we’re in is that panic is everywhere, from the stock exchange to the halls of Congress. Nearly everything else is comprehensible only to “a priesthood of experts.” As Washington moves beyond short-term fixes to consider long-term reforms, the first priority “must be to make the entire global financial system more transparent, comprehensible, and accountable.”
Too bad that’s not the Democrats’ main concern, said James Capretta in National Review Online. The stimulus measures that the Democrat-led Congress will take up in November represent the first step backward toward “the failed liberal policies of the 1960s.” Those policies, with their “large expansions of federal entitlements and explicit efforts to redistribute income,” will foster dependence on government and stifle initiative and innovation.
Washington has its priorities, I have mine, said Warren Buffett in The New York Times. And that’s to “buy a slice of America’s future at a marked-down price.” One rule has guided all my investment decisions: “Be fearful when others are greedy, and be greedy when others are fearful.” Right now, fear is coursing through the markets, knocking down the prices of some of the world’s soundest companies to levels not seen in decades. Those companies “will be setting new profit records five, 10, and 20 years from now.” I’m positioning myself now to share in those profits, and so should you.
What next?
President Bush said this week that he’ll host an economic summit, beginning on Nov. 15, at which leaders of the world’s biggest economies will consider coordinated efforts to combat the global slowdown. The announcement cheered European leaders, “who’ve already forced the U.S. hand on key design elements of the financial rescue effort that’s currently underway around the world,” said John D. McKinnon in The Wall Street Journal. European leaders are “hoping that a politically weakened Bush administration will be more likely to accept their ideas at the summit.”
President Bush said this week he was open to taking additional steps to stimulate the flagging economy, amid new indications that the U.S. is sliding into a deep recession. A slew of downbeat earnings reports and a steep jump in unemployment claims convinced policymakers and investors alike that the financial crisis had extended beyond Wall Street and was battering the “real economy.” The Bush administration reversed itself and voiced support for a new economic stimulus package, as did Federal Reserve Chairman Ben Bernanke. Congressional Democrats quickly got to work producing a $300 billion package with new infrastructure spending, unemployment benefits, and Medicaid assistance to states. Congress plans to hold a special session after the election to take up the legislation.
Following a stock market rally that reflected widespread relief that the credit crisis was easing, stock indexes plunged as corporations reported dramatically lower sales and earnings. Construction equipment giant Caterpillar called the economic contraction “the worst we’ve seen in years.” Internet portal Yahoo! announced it would lay off 1,500 workers, and thousands of other layoffs were announced by Merck, PepsiCo, and other companies. “This is an equal-opportunity recession,” said Cathy Paige of temporary-staffing supplier Manpower. “Everyone is feeling it.”
What the editorials said
The Fed chairman knows which way the wind is blowing, said The Wall Street Journal. With a Barack Obama presidency looking increasingly likely, “Bernanke all but submitted his job application” to Obama by endorsing the interventionist, Democratic approach to fiscal “stimulus.” A “tougher” Fed chairman would refrain from “meddling in campaign tax-and-spending debates” right before an election, but Bernanke has opted for self-interest over principle.
Washington’s inclination to intervene is admirable, said USA Today, but the public would be better served if policymakers let the recession play out. It may sound “harsh,” but “recessions are as necessary to prosperity as are recoveries.” Growth can resume only after the economy is purged of its excesses. There’s room for limited steps to ease the downturn’s impact on the most at-risk Americans, but expensive new programs that add to the soaring deficit “could do more harm than good.”
What the columnists said
Welcome to “the Great Incomprehensible Recession of 2008,” said Steven Weisman in The New Republic. “The only thing easy to understand” about the mess we’re in is that panic is everywhere, from the stock exchange to the halls of Congress. Nearly everything else is comprehensible only to “a priesthood of experts.” As Washington moves beyond short-term fixes to consider long-term reforms, the first priority “must be to make the entire global financial system more transparent, comprehensible, and accountable.”
Too bad that’s not the Democrats’ main concern, said James Capretta in National Review Online. The stimulus measures that the Democrat-led Congress will take up in November represent the first step backward toward “the failed liberal policies of the 1960s.” Those policies, with their “large expansions of federal entitlements and explicit efforts to redistribute income,” will foster dependence on government and stifle initiative and innovation.
Washington has its priorities, I have mine, said Warren Buffett in The New York Times. And that’s to “buy a slice of America’s future at a marked-down price.” One rule has guided all my investment decisions: “Be fearful when others are greedy, and be greedy when others are fearful.” Right now, fear is coursing through the markets, knocking down the prices of some of the world’s soundest companies to levels not seen in decades. Those companies “will be setting new profit records five, 10, and 20 years from now.” I’m positioning myself now to share in those profits, and so should you.
What next?
President Bush said this week that he’ll host an economic summit, beginning on Nov. 15, at which leaders of the world’s biggest economies will consider coordinated efforts to combat the global slowdown. The announcement cheered European leaders, “who’ve already forced the U.S. hand on key design elements of the financial rescue effort that’s currently underway around the world,” said John D. McKinnon in The Wall Street Journal. European leaders are “hoping that a politically weakened Bush administration will be more likely to accept their ideas at the summit.”
Is Obama a ‘socialist’?
So this is what desperation looks like, said John Nichols in The Nation. Having failed to convince a majority of Americans that Barack Obama is either a terrorist, a closet Muslim, or a vapid celebrity orator, John McCain has found one final epithet to hurl at Obama in the waning days of the campaign: “Socialist!” As evidence for this charge—currently featured at McCain-Palin rallies nationwide and around-the-clock on right-wing talk radio—McCain cites an exchange Obama had with an Ohio man now nationally known as Joe the Plumber, who had complained that Obama wants to raise taxes on people making $250,000 a year. “When you spread the wealth around,” Obama fatefully replied, “it’s good for everybody.” That notion is certainly debatable, said Rex Huppke in the Chicago Tribune, but it isn’t socialism. Real socialists believe that all important industries should be nationalized, and that everyone should have roughly the same amount of money. These are not Obama’s positions, and if he were a socialist, why would he have the support of such iconic capitalists as Warren Buffet?
Obama may not fit the academic definition of “socialist,” said Byron York in National Review Online, but ordinary people know one when they see one. Like all leftists, Obama wants to punish success and redistribute income from those who earn it to those who live on government handouts. That idea has always been a tough sell in America, where even plumbers believe they can become rich someday. As a result, Joe the Plumber has become more than just “a zinger in McCain’s stump speech.” Supporters are flocking to his rallies with placards identifying themselves as “Phil the Bricklayer” and “Rose the Teacher,” an army of Americans who work too hard for their money to let Obama and his ilk—whatever you want to call them—“spread” it “around.”
McCain’s argument on this point might be stronger, said The Washington Post in an editorial, if he didn’t himself believe in “spreading the wealth.” The radical notion of the wealthy paying tax at a higher rate than the poor happens to be a feature of our current tax system—and has been for a century. It’s called “progressive taxation.” In all his years in Washington, McCain has never opposed progressive tax rates. In fact, back in 2001, McCain even opposed one of President Bush’s tax cuts, saying that “so many of the benefits go to the most fortunate among us, at the expense of middle-class Americans.” And that was before the financial crisis, said Michael Cooper in The New York Times. The truly surreal aspect of McCain’s attacks on Obama’s “socialism” is that they’re coming from a man who just voted for Bush’s nationalization of the banks and financial system. To put it mildly, McCain’s message “sounds a bit mixed.”
You’re missing the point, said Michael Barone in USNews.com. This isn’t an abstract argument about the tax code. When Barack Obama told Joe the Plumber he wanted to “spread the wealth around,” he revealed an attitude—a liberal elitist’s “contempt for the working man,” whose pockets he feels entitled to pick. That admission might just “turn the election around.” You might be right, said Dan Rodricks in the Baltimore Sun, except that Americans have just lived through a prolonged period of Republican, trickle-down economics in which the wealth “trickled up,” not down. Now, with working people struggling to pay their bills and worrying about losing their jobs in a recession caused by Wall Street fat cats, “socialism” is the least of their fears.
Obama may not fit the academic definition of “socialist,” said Byron York in National Review Online, but ordinary people know one when they see one. Like all leftists, Obama wants to punish success and redistribute income from those who earn it to those who live on government handouts. That idea has always been a tough sell in America, where even plumbers believe they can become rich someday. As a result, Joe the Plumber has become more than just “a zinger in McCain’s stump speech.” Supporters are flocking to his rallies with placards identifying themselves as “Phil the Bricklayer” and “Rose the Teacher,” an army of Americans who work too hard for their money to let Obama and his ilk—whatever you want to call them—“spread” it “around.”
McCain’s argument on this point might be stronger, said The Washington Post in an editorial, if he didn’t himself believe in “spreading the wealth.” The radical notion of the wealthy paying tax at a higher rate than the poor happens to be a feature of our current tax system—and has been for a century. It’s called “progressive taxation.” In all his years in Washington, McCain has never opposed progressive tax rates. In fact, back in 2001, McCain even opposed one of President Bush’s tax cuts, saying that “so many of the benefits go to the most fortunate among us, at the expense of middle-class Americans.” And that was before the financial crisis, said Michael Cooper in The New York Times. The truly surreal aspect of McCain’s attacks on Obama’s “socialism” is that they’re coming from a man who just voted for Bush’s nationalization of the banks and financial system. To put it mildly, McCain’s message “sounds a bit mixed.”
You’re missing the point, said Michael Barone in USNews.com. This isn’t an abstract argument about the tax code. When Barack Obama told Joe the Plumber he wanted to “spread the wealth around,” he revealed an attitude—a liberal elitist’s “contempt for the working man,” whose pockets he feels entitled to pick. That admission might just “turn the election around.” You might be right, said Dan Rodricks in the Baltimore Sun, except that Americans have just lived through a prolonged period of Republican, trickle-down economics in which the wealth “trickled up,” not down. Now, with working people struggling to pay their bills and worrying about losing their jobs in a recession caused by Wall Street fat cats, “socialism” is the least of their fears.
Obama with a commanding lead
Barack Obama headed toward the finish line of his two-year-long campaign for the presidency with a growing lead over John McCain in national polls and a commanding advantage in funds. Obama’s lead this week averaged more than seven points, with some polls reporting a double-digit spread. Support for McCain running mate Sarah Palin continued to erode, with 55 percent of respondents to the Wall Street Journal/NBC News poll calling her unqualified. Obama raised a staggering $153 million in September. Flush with cash, Obama flooded swing states with campaign workers and TV ads, and took the fight to McCain in “red” states, including North Carolina and Virginia, where polls showed Obama leading.
Obama was further buoyed by the endorsement of former Secretary of State Colin Powell, who called Obama “a transformational figure,” and said he was very troubled by McCain’s selection of Palin and by his campaign’s insinuation that Obama was connected to terrorists. Portraying himself as an underdog, McCain sought to rally working-class voters to his side by portraying Obama as an untested and untrustworthy “socialist” who “believes in redistributing wealth, not in policies that grow our economy and create jobs and opportunities for all Americans.’’
What the editorials said
“We have known Obama since he entered politics a dozen years ago,” said the Chicago Tribune. “We have tremendous confidence in his intellectual rigor, his moral compass, and his ability to make sound, thoughtful, careful decisions.” This is the first time in the Tribune’s 161 years that we have endorsed a Democrat for president. But Obama is “ready,” and at this perilous moment in history, we need a man who seeks “consensus,” not partisan “savagery.”
As a POW and a veteran member of Congress, John McCain “has demonstrated the grit, energy, and determination that the present challenges demand,” said The Columbus Dispatch. With Congress becoming even more heavily Democratic, we need a president who is committed to cutting the swollen federal budget and reducing the runaway national debt. Having sacrificed so deeply himself, McCain has “unmatched moral authority” to “call on Americans to make sacrifices.’’
What the columnists said
Imagine a Republican who broke a promise to take public financing and “instead dealt the post-Watergate campaign financing system a blow from which it will never recover,” said Rich Lowry in National Review Online. Then the Republican raises $600 million and “out-advertises his opponent” by 4–1. Everyone would call it “obscene.” Yet when Obama does it, “everyone stands back in admiration.”
Republicans are experiencing “a disoriented fit of pique,” said Thomas F. Schaller in the Baltimore Sun. In its “disgusting robo-calls and television ads,” the McCain campaign is insisting that Obama is a dangerous man with terrorist friends and a mysterious past. On the stump, Palin is differentiating between “real America”—where people are patriotic and hardworking—and everywhere else. Guess what millions of “real” Americans are doing while all this sleaze pours forth? “Writing checks to Obama.”
A McCain comeback is not impossible, said Steve Kornacki in The New York Observer, but the electoral map makes it extremely unlikely. Polls show him trailing by nearly 10 points in Iowa, Virginia, Colorado, and New Mexico, all of which President Bush won in 2004. To win, McCain has to take at least three of these states, and keep Obama from winning a single “red” state where the Democrat is now running either ahead or slightly behind, including Florida, North Carolina, Ohio, and Missouri. Barring a major game-changer, McCain’s chances are dim.
What next?
First-time voters support Obama by a whopping 73–26 percent. Yet they are notoriously unreliable and, without them, Obama’s lead shrivels to a mere three points, according to the ABC News/Washington Post poll. But Obama hopes to buttress youthful enthusiasm by maintaining a constant presence on television while fielding an enormous get-out-the-vote operation. “McCain,” said Evan Tracey, who monitors campaign spending on television ads, “is in a shouting match with a man with a megaphone.”
Obama was further buoyed by the endorsement of former Secretary of State Colin Powell, who called Obama “a transformational figure,” and said he was very troubled by McCain’s selection of Palin and by his campaign’s insinuation that Obama was connected to terrorists. Portraying himself as an underdog, McCain sought to rally working-class voters to his side by portraying Obama as an untested and untrustworthy “socialist” who “believes in redistributing wealth, not in policies that grow our economy and create jobs and opportunities for all Americans.’’
What the editorials said
“We have known Obama since he entered politics a dozen years ago,” said the Chicago Tribune. “We have tremendous confidence in his intellectual rigor, his moral compass, and his ability to make sound, thoughtful, careful decisions.” This is the first time in the Tribune’s 161 years that we have endorsed a Democrat for president. But Obama is “ready,” and at this perilous moment in history, we need a man who seeks “consensus,” not partisan “savagery.”
As a POW and a veteran member of Congress, John McCain “has demonstrated the grit, energy, and determination that the present challenges demand,” said The Columbus Dispatch. With Congress becoming even more heavily Democratic, we need a president who is committed to cutting the swollen federal budget and reducing the runaway national debt. Having sacrificed so deeply himself, McCain has “unmatched moral authority” to “call on Americans to make sacrifices.’’
What the columnists said
Imagine a Republican who broke a promise to take public financing and “instead dealt the post-Watergate campaign financing system a blow from which it will never recover,” said Rich Lowry in National Review Online. Then the Republican raises $600 million and “out-advertises his opponent” by 4–1. Everyone would call it “obscene.” Yet when Obama does it, “everyone stands back in admiration.”
Republicans are experiencing “a disoriented fit of pique,” said Thomas F. Schaller in the Baltimore Sun. In its “disgusting robo-calls and television ads,” the McCain campaign is insisting that Obama is a dangerous man with terrorist friends and a mysterious past. On the stump, Palin is differentiating between “real America”—where people are patriotic and hardworking—and everywhere else. Guess what millions of “real” Americans are doing while all this sleaze pours forth? “Writing checks to Obama.”
A McCain comeback is not impossible, said Steve Kornacki in The New York Observer, but the electoral map makes it extremely unlikely. Polls show him trailing by nearly 10 points in Iowa, Virginia, Colorado, and New Mexico, all of which President Bush won in 2004. To win, McCain has to take at least three of these states, and keep Obama from winning a single “red” state where the Democrat is now running either ahead or slightly behind, including Florida, North Carolina, Ohio, and Missouri. Barring a major game-changer, McCain’s chances are dim.
What next?
First-time voters support Obama by a whopping 73–26 percent. Yet they are notoriously unreliable and, without them, Obama’s lead shrivels to a mere three points, according to the ABC News/Washington Post poll. But Obama hopes to buttress youthful enthusiasm by maintaining a constant presence on television while fielding an enormous get-out-the-vote operation. “McCain,” said Evan Tracey, who monitors campaign spending on television ads, “is in a shouting match with a man with a megaphone.”
Monday, October 27, 2008
Conservative soul-searching
Conservatives will have to do some soul-searching after election day, said Peter Wehner, a former deputy assistant to President Bush, in The Washington Post. No matter who wins the White House, Democrats should increase their margins in the House and Senate. But if Republicans use the "wilderness years" ahead to "become champions of an ambitious conservative reform agenda, they will begin the road back to political dominance.
"That's "absurd," said David Sirota in Blog for our Future. The Republicans made this election "an ideological contest between Reagan conservatism and supposed wild-eyed liberalism/socialism," and a Democratic landslide would be "a huge repudiation of conservative ideology." The Right can't just erase what will be a huge progressive mandate by telling voters "nah nah nah can't hear you!"
Some conservatives believe that shoring up the base is the first step toward a comeback, said Sean J. Miller in National Review online. But Canada's conservatives moved to the center after a near-death experience 15 years ago, emphasizing economic issues over social ones. And Prime Minister Stephen Harper's conservatives "are now in the ascendency, having won back-to-back elections," so Republicans might want to look "look north."
Friday, October 17, 2008
Conservatism: Requiem for a revolution
The modern conservative movement is “sputtering” toward irrelevance, said Paul Waldman in The American Prospect. Barring the outbreak of a new war, the No. 1 issue in this election will be our imploding economy. With the government bailing out the free market from its own stupidity, and the public clamoring for oversight and regulation, the November election could produce “a dramatic repudiation of Republicans at all levels.” The Reagan era is over, said Timothy Noah in Slate.com. When Ronald Reagan revitalized conservatism in 1980, he did so with an appealing blend of muscular militarism, family values, and, especially, the message that “government was the common enemy.” But the catastrophic financial collapse has demolished the “fundamentalist belief in untrammeled capitalism.” Even if John McCain and Sarah Palin somehow manage to win this election, it’ll be as populist reformers, not traditional conservatives. Either way, conservatism “sure looks dead.”
Responsibility for that homicide lies squarely with George W. Bush, said The Economist. His “ruthless partisanship and iron commitment to presidential power” served him well enough at first; most Republicans swooned to his “huge tax cuts” and war on terror. But Bush’s “my way or the highway” approach ultimately fractured his own party. Fiscal conservatives were appalled by his reckless spending. Paleocons resented his invasion of Iraq. Nativists opposed him on immigration reform. The “most damning verdict” on Bush’s mismanagement came last week, when conservative House Republicans initially voted to reject his $700 billion financial bailout package. Their defiance signaled how little respect conservatives now have for their once-beloved leader. Far from “forging a lasting Republican majority,” Bush has left his party “in the worst state they have been in for decades.”
And yet, said John Harwood in The New York Times, Republicans may have reason to be optimistic. When a party is cast out, it often uses its time in the wilderness to “refocus its message and agenda” and stage a comeback. That’s what the Democrats who are now poised to take power have been doing since 2000, and what conservatives did after Barry Goldwater’s humiliating defeat in 1964. In January, Democrats may well assume ownership of the country’s numerous, intractable problems. What better time for conservatives to begin work on their “political renewal”?
Responsibility for that homicide lies squarely with George W. Bush, said The Economist. His “ruthless partisanship and iron commitment to presidential power” served him well enough at first; most Republicans swooned to his “huge tax cuts” and war on terror. But Bush’s “my way or the highway” approach ultimately fractured his own party. Fiscal conservatives were appalled by his reckless spending. Paleocons resented his invasion of Iraq. Nativists opposed him on immigration reform. The “most damning verdict” on Bush’s mismanagement came last week, when conservative House Republicans initially voted to reject his $700 billion financial bailout package. Their defiance signaled how little respect conservatives now have for their once-beloved leader. Far from “forging a lasting Republican majority,” Bush has left his party “in the worst state they have been in for decades.”
And yet, said John Harwood in The New York Times, Republicans may have reason to be optimistic. When a party is cast out, it often uses its time in the wilderness to “refocus its message and agenda” and stage a comeback. That’s what the Democrats who are now poised to take power have been doing since 2000, and what conservatives did after Barry Goldwater’s humiliating defeat in 1964. In January, Democrats may well assume ownership of the country’s numerous, intractable problems. What better time for conservatives to begin work on their “political renewal”?
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