Economics is Politics

The Political Nature of the Economic Crisis
By George Friedman

Are the resources of the United States sufficient to redefine financial markets in such a way as to manage the outcome of this crisis, or has the crisis become so large that even the resources of a $14 trillion economy mobilized by the state can’t do the job?

Classical economists like Adam Smith and David Ricardo referred to their discipline as “political economy.” Smith’s great work, “The Wealth of Nations,” was written by the man who held the chair in moral philosophy at the University of Glasgow. This did not seem odd at the time and is not odd now. Economics is not a freestanding discipline, regardless of how it is regarded today. It is a discipline that can only be understood when linked to politics, since the wealth of a nation rests on both these foundations, and it can best be understood by someone who approaches it from a moral standpoint, since economics makes significant assumptions about both human nature and proper behavior.

The modern penchant to regard economics as a discrete science parallels the belief that economics is a distinct sphere of existence — at its best when it is divorced from political and even moral considerations. Our view has always been that the economy can only be understood and forecast in the context of politics, and that the desire to separate the two derives from a moral teaching that Smith would not embrace. Smith understood that the word “economy” without the adjective “political” did not describe reality. We need to bear Smith in mind when we try to understand the current crisis.

Societies have two sorts of financial crises. The first sort is so large it overwhelms a society’s ability to overcome it, and the society sinks deeper into dysfunction and poverty. In the second sort, the society has the resources to manage the situation — albeit at a collective price. Societies that can manage the crisis have two broad strategies. The first strategy is to allow the market to solve the problem over time. The second strategy is to have the state organize the resources of society to speed up the resolution. The market solution is more efficient over time, producing better outcomes and disciplining financial decision-making in the long run. But the market solution can create massive collateral damage, such as high unemployment, on the way to the superior resolution. The state-organized resolution creates inequities by not sufficiently punishing poor economic decisions, and creates long-term inefficiencies that are costly. But it has the virtue of being quicker and mitigating collateral damage.

Three Views of the Financial Crisis

There is a first group that argues the current financial crisis already has outstripped available social resources, so that there is no market or state solution. This group asserts that the imbalances created in the financial markets are so vast that the market solution must consist of an extended period of depression. Any attempt by the state to appropriate social resources to solve the financial imbalance not only will be ineffective, it will prolong the crisis even further, although perhaps buying some minor alleviation up front. The thinking goes that the financial crisis has been building for years and the economy can no longer be protected from it, and that therefore an extended period of discipline and austerity — beginning with severe economic dislocations — is inevitable. This is not a majority view, but it is widespread; it opposes government action on the grounds that the government will make a terrible situation worse.

A second group argues that the financial crisis has not outstripped the ability of society — organized by the state — to manage, but that it has outstripped the market’s ability to manage it. The financial markets have been the problem, according to this view, and have created a massive liquidity crisis. The economy — as distinct from the financial markets — is relatively sound, but if the liquidity crisis is left unsolved, it will begin to affect the economy as a whole. Since the financial markets are unable to solve the problem in a time frame that will not dramatically affect the economy, the state must mobilize resources to impose a solution on the financial markets, introducing liquidity as the preface to any further solutions. This group believes, like the first group, that the financial crisis could have profound economic ramifications. But the second group also believes it is possible to contain the consequences. This is the view of th e Bush administration, the congressional leadership, the Federal Reserve Board and most economic leaders.

There is a third group that argues that the state mobilization of resources to save the financial system is in fact an attempt to save financial institutions, including many of those whose imprudence and avarice caused the current crisis. This group divides in two. The first subgroup agrees the current financial crisis could have profound economic consequences, but believes a solution exists that would bring liquidity to the financial markets without rescuing the culpable. The second subgroup argues that the threat to the economic system is overblown, and that the financial crisis will correct itself without major state intervention but with some limited implementation of new regulations.

The first group thus views the situation as beyond salvation, and certainly rejects any political solution as incapable of addressing the issues from the standpoint of magnitude or competence. This group is out of the political game by its own rules, since for it the situation is beyond the ability of politics to make a difference — except perhaps to make the situation worse.

The second group represents the establishment consensus, which is that the markets cannot solve the problem but the federal government can — provided it acts quickly and decisively enough.

The third group spoke Sept. 29, when a coalition of Democrats and Republicans defeated the establishment proposal. For a myriad of reasons, some contradictory, this group opposed the bailout. The reasons ranged from moral outrage at protecting the interests of the perpetrators of this crisis to distrust of a plan implemented by this presidential administration, from distrust of the amount of power ceded the Treasury Department of any administration to a feeling the problem could be managed. It was a diverse group that focused on one premise — namely, that delay would not lead to economic catastrophe.

From Economic to Political Problem

The problem ceased to be an economic problem months ago. More precisely, the economic problem has transformed into a political problem. Ever since the collapse of Bear Stearns, the primary actor in the drama has been the federal government and the Federal Reserve, with its powers increasing as the nature of potential market outcomes became more and more unsettling. At a certain point, the size of the problem outstripped the legislated resources of the Treasury and the Fed, so they went to Congress for more power and money. This time, they were blocked.

It is useful to reflect on the nature of the crisis. It is a tale that can be as complicated as you wish to make it, but it is in essence simple and elegant. As interest rates declined in recent years, investors — particularly conservative ones — sought to increase their return without giving up safety and liquidity. They wanted something for nothing, and the market obliged. They were given instruments ultimately based on mortgages on private homes. They therefore had a very real asset base — a house — and therefore had collateral. The value of homes historically had risen, and therefore the value of the assets appeared secured. Financial instruments of increasing complexity eventually were devised, which were bought by conservative investors. In due course, these instruments were bought by less conservative investors, who used them as collateral for borrowing money. They used this money to buy other instruments in a pyramiding scheme that rested on one premise: the existence of houses whose value remained stable or grew.

Unfortunately, housing prices declined. A period of uncertainty about the value of the paper based on home mortgages followed. People claimed to be confused as to what the real value of the paper was. In fact, they were not so much confused as deceptive. They didn’t want to reveal that the value of the paper had declined dramatically. At a certain point, the facts could no longer be hidden, and vast amounts of value evaporated — taking with them not only the vast pyramids of those who first created the instruments and then borrowed heavily against them, but also the more conservative investors trying to put their money in a secure space while squeezing out a few extra points of interest. The decline in housing prices triggered massive losses of money in the financial markets, as well as reluctance to lend based on uncertainty of values. The result was a liquidity crisis, which simply meant that a lot of people had gone broke and that those who still had money weren’t lending it — certainly not to financial institutions.

The S&L Precedent

Such financial meltdowns based on shifts in real estate prices are not new. In the 1970s, regulations on savings and loans (S&Ls) had changed. Previously, S&Ls had been limited to lending in the consumer market, primarily in mortgages for homes. But the regulations shifted, and they became allowed to invest more broadly. The assets of these small banks, of which there were thousands, were attractive in that they were a pool of cash available for investment. The S&Ls subsequently went into commercial real estate, sometimes with their old management, sometimes with new management who had bought them, as their depositors no longer held them.

The infusion of money from the S&Ls drove up the price of commercial real estate, which the institutions regarded as stable and conservative investments, not unlike private homes. They did not take into account that their presence in the market was driving up the price of commercial real estate irrationally, however, or that commercial real estate prices fluctuate dramatically. As commercial real estate values started to fall, the assets of the S&Ls contracted until most failed. An entire sector of the financial system simply imploded, crushing shareholders and threatening a massive liquidity crisis. By the late 1980s, the entire sector had melted down, and in 1989 the federal government intervened.

The federal government intervened in that crisis as it had in several crises large and small since 1929. Using the resources at its disposal, the federal government took over failed S&Ls and their real estate investments, creating the Resolution Trust Corp. (RTC). The amount of assets acquired was about $394 billion dollars in 1989 — or 6.7 percent of gross domestic product (GDP) — making it larger than the $700 billion dollars — or 5 percent of GDP — being discussed now. Rather than flooding the markets with foreclosed commercial property, creating havoc in the market and further destroying assets, the RTC held the commercial properties off the market, maintaining their price artificially. They then sold off the foreclosed properties in a multiyear sequence that recovered much of what had been spent acquiring the properties. More important, it prevented the decline in commercial real estate from accelerating and creating liquidity crises throughout the entire economy.

Many of those involved in S&Ls were ruined. Others managed to use the RTC system to recover real estate and to profit. Still others came in from the outside and used the RTC system to build fortunes. The RTC is not something to use as moral lesson for your children. But the RTC managed to prevent the transformation of a financial crisis into an economic meltdown. It disrupted market operations by introducing large amounts of federal money to bring liquidity to the system, then used the ability of the federal government — not shared by individuals — to hold on to properties. The disruption of the market’s normal operations was designed to avoid a market outcome. By holding on to the assets, the federal government was able to create an artificial market in real estate, one in which supply was constrained by the government to manage the value of commercial real estate. It did not work perfectly — far from it. But it managed to avoid the most feared outcome, which was a depression.

There have been many other federal interventions in the markets, such as the bailout of Chrysler in the 1970s or the intervention into failed Third World bonds in the 1980s. Political interventions in the American (or global) marketplace are hardly novel. They are used to control the consequences of bad decisions in the marketplace. Though they introduce inefficiencies and frequently reward foolish decisions, they achieve a single end: limiting the economic consequences of these decisions on the economy as a whole. Good idea or not, these interventions are institutionalized in American economic life and culture. The ability of Americans to be shocked at the thought of bailouts is interesting, since they are not all that rare, as judged historically.

The RTC showed the ability of federal resources — using taxpayer dollars — to control financial processes. In the end, the S&L story was simply one of bad decisions resulting in a shortage of dollars. On top of a vast economy, the U.S. government can mobilize large amounts of dollars as needed. It therefore can redefine the market for money. It did so in 1989 during the S&L crisis, and there was a general acceptance it would do so again Sept. 29.

The RTC Model and the Road Ahead

As discussed above, the first group argues the current crisis is so large that it is beyond the federal government’s ability to redefine. More precisely, it would argue that the attempt at intervention would unleash other consequences — such as weakening dollars and inflation — meaning the cure would be worse than the disease. That may be the case this time, but it is difficult to see why the consequences of this bailout would be profoundly different from the RTC bailout — namely, a normal recession that would probably happen anyway.

The debate between the political leadership and those opposing its plan is more interesting. The fundamental difference between the RTC and the current bailout was institutional. Congress created a semi-independent agency operating under guidelines to administer the S&L bailout. The proposal that was defeated Sept. 29 would have given the secretary of the Treasury extraordinary personal powers to dispense the money. Some also argued that the return on the federal investment was unclear, whereas in the RTC case it was fairly clear. In the end, all of this turned on the question of urgency. The establishment group argued that time was running out and the financial crisis was about to morph into an economic crisis. Those voting against the proposal argued there was enough time to have a more defined solution.

There was obviously a more direct political dimension to all this. Elections are just more than a month a way, and the seat of every U.S. representative is in contest. The public is deeply distrustful of the establishment, and particularly of the idea that the people who caused the crisis might benefit from the bailout. The congressional opponents of the plan needed to demonstrate sensitivity to public opinion. Having done so, if they force a redefinition of the bailout plan, an additional 13 votes can likely be found to pass the measure.

But the key issue is this: Are the resources of the United States sufficient to redefine financial markets in such a way as to manage the outcome of this crisis, or has the crisis become so large that even the resources of a $14 trillion economy mobilized by the state can’t do the job? If the latter is true, then all other discussions are irrelevant. Events will take their course, and nothing can be done. But if that is not true, that means that politics defines the crisis, as it has other crisis. In that case, the federal government can marshal the resources needed to redefine the markets and the key decision-makers are not on Wall Street, but in Washington. Thus, when the chips are down, the state trumps the markets.

All of this may not be desirable, efficient or wise, but as an empirical fact, it is the way American society works and has worked for a long time. We are seeing a case study in it — including the possibility the state will refuse to act, creating an interesting and profound situation. This would allow the market alone to define the outcome of the crisis. This has not been allowed in extreme crises in 75 years, and we suspect this tradition of intervention will not be broken now. The federal government will act in due course, and an institutional resolution taking power from the Treasury and placing it in the equivalent of the RTC will emerge. The question is how much time remains before massive damage is done to the economy.

Reprinted by permission of Stratfor

current-events

Paulson wants your money

You! Fork it over!

Well, the vote on that bogus bailout plan certainly was a squeeker, but apparently the citizens knew which side was up, even if Congress didn't. Reports from representatives' offices say that the incoming emails, phone calls and passenger pigeons was roughly 100-1 against a bailout, and this was without any community organizers rousing the citizenry.

Of special note are the several hundred professional economists around the country who think the holdup bailout - or at least the scam plan as originally proposed by Treas Sec Hank Paulson - was naked theft, and signed a petition to that effect. See here.

But what to do, what to do? This really is a mess, with worldwide ramifications - the queen of England had her allowance frozen, Gadzooks! - and stock markets globally are falling over the proverbial cliff. McCain was clueless, but the godlike Obama actually came up with a plan, which has been endorsed by George Soros, no less, although I wouldn't be surprised to learn that Soros wrote the plan himself and slipped it to Barry in the dark of the night. Anyhoo, from the Economist, here's George:

Mr Paulson’s record does not inspire the confidence necessary to give him discretion over $700bn. [No shit] His actions last week brought on the crisis that makes rescue necessary. On Monday he allowed Lehman Brothers to fail and refused to make government funds available to save AIG. By Tuesday he had to reverse himself and provide an $85bn loan to AIG on punitive terms. The demise of Lehman disrupted the commercial paper market. A large money market fund “broke the buck” and investment banks that relied on the commercial paper market had difficulty financing their operations. By Thursday a run on money market funds was in full swing and we came as close to a meltdown as at any time since the 1930s. Mr Paulson reversed again and proposed a systemic rescue.[Hank's wife is on the board of AIG, BTW]

Mr Paulson had got a blank cheque from Congress once before. That was to deal with Fannie Mae and Freddie Mac. His solution landed the housing market in the worst of all worlds: their managements knew that if the blank cheques were filled out they would lose their jobs, so they retrenched and made mortgages more expensive and less available. Within a few weeks the market forced Mr Paulson’s hand and he had to take them over.

Mr Paulson’s proposal to purchase distressed mortgage-related securities poses a classic problem of asymmetric information. The securities are hard to value but the sellers know more about them than the buyer: in any auction process the Treasury would end up with the dregs. The proposal is also rife with latent conflict of interest issues [You think?]. Unless the Treasury overpays for the securities, the scheme would not bring relief. But if the scheme is used to bail out insolvent banks, what will the taxpayers get in return? [Ooh, ooh - I know the answer to that one= zip, zero, and a lifetime of tax slavery!]

Barack Obama has outlined four conditions that ought to be imposed: an upside for the taxpayers as well as a downside; a bipartisan board to oversee the process; help for the homeowners as well as the holders of the mortgages; and some limits on the compensation of those who benefit from taxpayers’ money. These are the right principles. They could be applied more effectively by capitalising the institutions that are burdened by distressed securities directly rather than by relieving them of the distressed securities.

The injection of government funds would be much less problematic if it were applied to the equity rather than the balance sheet. $700bn in preferred stock with warrants may be sufficient to make up the hole created by the bursting of the housing bubble. By contrast, the addition of $700bn on the demand side of an $11,000bn market may not be sufficient to arrest the decline of housing prices.

Something also needs to be done on the supply side. To prevent housing prices from overshooting on the downside, the number of foreclosures has to be kept to a minimum. The terms of mortgages need to be adjusted to the homeowners’ ability to pay.

The rescue package leaves this task undone. Making the necessary modifications is a delicate task rendered more difficult by the fact that many mortgages have been sliced up and repackaged in the form of collateralised debt obligations. The holders of the various slices have conflicting interests. It would take too long to work out the conflicts to include a mortgage modification scheme in the rescue package. The package can, however, prepare the ground by modifying bankruptcy law as it relates to principal residences.

Bearing in mind that Joe Biden was a prime sponsor of the piece of shit Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 [sic, sic, sic & sic], that last bit is probably a non-starter, too.





current-events

Groping through the fog of war

A carrier group of the US Navy on patrol in the Persian Gulf

The events of the last several days, occurring under the cover of the opening of the Olympics in China, may be the foreshadowing of the "October" surprise that has been predicted by the blogosphere for some time now.

We saw the pushing of legislation to impose massive sanctions on Iran, still gathering steam on Capitol Hill, and the suspicious moves of what may be a gigantic armada heading towards the Persian Gulf to initiate a blockade of Iran, an act of war; the armed invasion of South Ossetia by the former Soviet Union republic of Georgia and the subsequent bashing of Georgia's army by a revitalized Russian army under the no-nonsense leadership of Russia's Prime Minister Vladimir Putin, and Poland's surprise announcement that they are going to allow the installation of anti-missile batteries on their soil; none of this bodes well, and many people are justifiably scared silly, given the insane clownishness of the current administration leadership, and a president who just might be drunk on his ass 24/7.

With the corporate media in the United States repeating the blatant lie that Russia had invaded Georgia, despite the clearly established fact that it was Georgia (probably with the encouragement of the office of the Vice President), who initiated a bloody barrage (using serious weaponry, here) against the citizens of South Ossetia, Americans are in a fog as to what the hell is actually going on in their name.

Since nobody in the blogosphere has access to real time satellite imagery of the Gulf, the "armada's" movements are something of a mystery. In fact, even Iran's flagship online news outlet, Press TV, is only reporting that "All coastal movements in the region are being carefully monitored."

Lots of handing waving, but not much real information. In the meanwhile, the clock is counting down for Bush's departure. Let's hope when he does get on that last helicopter ride, it's destination is not Mount Weather.

Anybody seen Cheney lately?



current-events

Forget Iraq: The weather will kill us all

Rising sea levels will create new seashore in North America

The rich world's policy on greenhouse gas now seems clear: millions will die.

Our governments have set the wrong targets to tackle climate change using outdated science, and they know it - George Monbiot (Tuesday May 1, 2007)


The nay-sayers and the doom-mongers ought to gather in one room and have a big food fight over their precise (and selfish) objections to the reports of global climate change. The outcome of that encounter won't change one quanta of the reality of the changing climate.

Note that phrase: "changing."

Changes in the Earth's climate are historic and nobody is arguing against that. The point is that humans are contributing in a major and ahistoric fashion, and it can and should be abated for any number of very sound economic, military, cultural and environmental reasons.

Yes, Earth's climate has gone through changes in the past, some quite abrupt, like the sudden global chilling that brought on the Ice Ages a little over ten thousand years ago. There is warming as well, which gave us the Age of the Dinosaurs; which, by the way, lasted 250 million years.

Each of these (only) two examples was caused by temperature changes of a piddling two degrees Celsius.

However, recent icepack core samples from the Antarctic (time span: approximately 1 million years) show a rapid and unprecedented climb in average temperature starting at the beginning of the Industrial Age.

I suggest that there should be major alarms at any rapid change in climate, which change is what ALL the models are showing us. We need to be aware of the extent so we can make preparations, whether your economy is based on tulips, are a housewife buying cabbages, or are a Marine colonel planning a beach assault ("Where did the beach go?"). Not to mention the massive human migration that will go along with these changes.

Sure, a handful of scientists disagree with the findings of the IPCC, but over 1,200 others signed their names to it. My bet is on the battalion of climatologists who think we should be a tad concerned.

Bear in mind that the average temperature increase is just that: an average.

Local weather patterns can be very chaotic, while micro-events can be quite severe. The extremes in a geographic range are what are of concern. Summers could see temperatures as high as 120 F in Northern Europe, and as low as -40 F in Northumbria, for example, and very swiftly. Are you looking forward to that? Sea levels will rise; are you willing to just sit around and wait for the Thames (in the UK) to broach your attic at high tide? Temperatures in sub-Sahara Africa will go through the roof on occasion. Are you going to house the millions of displaced Africans trying to get out of the oven that Africa will become?

By the way, the uranium that powers your nuclear power plants comes from Africa. The political, economic and military consequences of mining operations in Niger et al, in the face of climate heating are almost beyond contemplation. Chew that over for a while.

The UK's Ministry of Defense recently released report Strategic Trends 2007 states that climate change WILL severely impact many areas of concern to everyone. And, I might add, despite your hysterical objections.

The military are not usually given to arm-waving; contrary to popular opinion, the military are not unintelligent. Also, you might want to take a gander at NASA's own contribution to the subject, available here: The Next 50 Years, which projects alarming sea level changes, droughts & desertification, abnormal animal migrations, diseases such as malaria spreading northward, etc., if we continue our present rate of expelling CO2 emissions. NASA's report was written in 2001.

The consensus has been building for some time; and it is a consensus.

In closing, I am put in mind of the old biddy's adage, "An ounce of prevention is worth a pound of cure."


Update: The US Senate Committee on Environment and Public Works, chaired by Senator Barbara Boxer (D-CA), has released a side-by-side comparison of the report as presented on Tuesday October 23, 2007 by Dr. Julie Gerberding, Director of the Centers for Disease Control and Prevention (CDC). The presentation has been heavily edited by the White House, trimming 6 of the original 12 pages in the report. Here's a screenshot of one pdf released on the 25th of October by the Committee.

Click on image for more readable version

Two highly informative pdf's (including an eye-opening redlined version) illustrating the White House's editing of the CDC report are available here and here.

More sad evidence that this administration doesn't give a crap about you.


current-events

The Cold War!! It's on again!!

Cold War air warrior returns

Those pesky Russians, no doubt as a response to the Shrub's attempt to plant a Missle Shield on their very doorstep (namely, in Poland and the Czech Republic) have resumed Bear aircraft overflights. These flights, once the bane of SAC and NORAD, had been suspended with the end of the Cold War and the fall of the Berlin Wall.

With a range of thousands of miles (approx. 15,000 kilometers) and capable of delivering megatons of nuclear bombs - or several atomic-warheaded cruise missiles - into the heartland of America, the Tu-95 Tupolev (NATO code name "Bear") gave the boys at Strategic Air Command their paycheck's worth of interception training, not to mention keeping their radar skills sharp.

As an aircraft buff, it's nice to see these relics up and flying and providing the Air National Guard with some real-time training.

Look for contrails near you soon.

Update: UK scrambles new Typhoons

current-events

No worries, Mate

Ft Devin, Mass. detention center

There are only two months to go until General Petraeus presents his assessment of the Surge; Senate Repugs are battling Dems to a standstill in the ongoing debate about defunding the troops preparatory to a withdrawal from Iraq; and we're hearing lots of paranoid noise across the Internet about a possible false flag operation that would allow the Shrub to assume dictatorial powers and Take Over the World.

This operation would theoretically take the form of a terrorist incident of such scope and mendacity that all Americans will quake in their collective boots and will cry out for a total lockdown of the country. The scenario calls for the Shrub to declare a National Emergency and invoke his authority under the Warner Appropriations Act of 2007 (HR-5212) to federalize the National Guard – or what’s left of them; he then sends Congress home and begins the roundup of the usual suspects while simultaneously nuking Iran with bunker busters.

Granted, there’s lots of craziness going on lately and people who worry about these things have lots of things to be worried about; presidential hopeful Senator John McCain recently sang - to the tune of “Row, Row, Row Your Boat” - “Bomb, bomb, bomb Iran,” to a cheering American Legion audience; Department of Homeland (sic) Security chief Michael Chertoff recently announced that he had an attack of stomach gas and this inspired him to announce with near-certainty a terrorist attack on the Homeland - wherever that might be - “sometime this summer.” Adding fuel to the paranoia is the existence of Executive Order 12919, an obnoxious piece of gobbeldygook originating in the Clinton administration. (You really need to follow that link; the list of executive orders concerning federalization of private property alone is enough to make one very, very nervous.)

This EO is a controversial (but not controversial enough, IMHO) document which theoretically streamlines federal governmental response (and executive consolidation of power, e.g. the “unitary executive”) in the event of a catastrophic event such as a nuclear war or asteroid strike, although it presumably could be triggered by something as minor as a threat to poison the water supply of a major American city. The signing of this document was enough to trigger mass hysteria and hand-wringing among the more sensitive of civil libertarians, and perhaps rightly so, as members of Congress apparently never even heard of this stealth EO until it hit the blogosphere. (The “liberal” mainstream media ignored it completely.)

Unasked in all this anxiety and fretting is the question, who’s going to do all this taking-over and martial-lawing? Have any of these people (whether conspirator or anti-conspirator) ever looked at a map of the United States? Its one thing for a president to declare martial law for a continent-spanning country and quite another to have it actually go into effect.

Consider this: It’s about 3,100 miles from Washington, D.C. to Seattle, Washington. (That’s roughly the distance from London to Teheran, Iran.) Let’s say some idiot terrorist bombs the Holland Tunnel in New York state, the Shrub declares a national emergency and calls out the troops. According to the paranoids, the plan is to bring in National Guard units from distant states; this reduces the odds that the troops will be likely to resist orders to shoot “dissenters” and “protesters” because they are not fellow staters; further, out-of-state Guardsmen will have no compunction in shooting, clubbing, or herding non-fellow states-people into “internment camps.”

But is that true? It seems to me that the National Guard of any state has just about had it with this president. And anyway, how do you get these Guardsmen across the country? How do you get the governor of Washington state (for instance) to release the troops to federal control, or better yet, why would the governor of Washington state even call the Guard up in the first place, only to have it federalized right out from under him?

Governors aren’t stupid; they can very plainly see what the feds have done with their Guard units in Iraq. Ditto for the officers and certainly ditto for the Guardsmen themselves. In the event of a true national emergency, any sane governor will want his Guardsmen at home where he can use them when and as he (or she) sees fit. Additionally, how do you force a governor to call out the Guard? Have a federal marshal put a gun to his or her head? No, this “martial law” thing is one big can of worms for all concerned and, I submit, an unnecessary worry.

So how about a military coup? Considering that most of the paranoid scenarios call for – simultaneously - a declaration of martial law, a nuclear attack on Iran, and the rounding up of civilians all over the country, we’re talking about a fucking revolution right there. It’s far more likely that the governor of a big state (or several governors of several states) calls out the National Guard and sends it to Washington, D.C. to arrest the president and anybody else hanging around the White House.

And about bloody time, if you ask me.

current-events

One monkey don't stop no show

"Thanks for taking the bullet for me, Gonzo"

The cabal that runs the White House must have thanked whatever dark lords presently preside over this country when former Attorney General John Ashcroft quit.

Ashcroft is no pushover. In fact, he is a deeply religious and somewhat morally rigid man, who would no longer put up with the neocons' immoral shenanigans and interference with his Justice Department. He announced that he was out of there.

The neocons were at a loss; they desperately needed a frontman to help push their consolidation of presidential power and John Yoo was occupied elsewhere spinning webs of lies and deceit. But - low and behold! - right there in their midst was a weak-willed, shifty, and easily manipulable sycophant that they could plop into the Attorney General's chair. He would do what he was told, and then conveniently forget about it: Gonzo the Forgetful.

It wasn't just that this guy possessed no critical faculties - which he doesn't - but his brain had grown so mushy in the dank and fetid air of the underground West Wing office that he occupied as counsel to the President that, like Golum, he could no longer tell right from wrong, or yesterday from the month before.

Yesterday's performance before the Senate Judiciary Oversight committee was beautiful - a tour de force of the high political drama of lies, evasions, prevarications, and just downright stupidity that is the modus operandi of the neocon architects of the New American Century.

It's not that the neocons don't think that their stupid ideas are stupid and won't hold up under close scrutiny, it's that they can't be bothered having to explain their vision of a Pax Americana to the likes of you or me, or for that matter, to the Congress. So they just go and do what they do: kidnap and torture suspected enemies of the state, lie about their reasons for invading foreign countries, fire federal prosecutors when they get too close to the money, and - when finally questioned by previously supine Congress-critters - shove a fall guy out in front. When their stupidity is exposed they simply (like Rumsfeld) move down the hall, or (like Paul Wolfowitz) bail and take up posts at the World Bank, where they try to pull the same shit all over again. Except the World Bank is not staffed by myopic political dirtbags; it's run by hard-nosed moneymen who don't tolerate fucking with their institutional reputations.

So the Gonzo sideshow is over, but the circus hasn't left town yet. There's lots more demonstrations of levitation and porous memory to come, and possibly another Shock and Awe waiting in the wings. And don't be too surprised if a major city is vaporized by a stolen nuclear bomb (they still haven't found any of the missing 20-100 nuclear devices from the former Soviet Union stockpile). Finding those missing nukes (or bin Laden, for that matter) would be doing their job, a distraction from spreading their fungus over Washington.

As for us patsies, don't expect Congress to do it's job and impeach these criminal assholes; that would be too real, and there's a 1% chance they might not get reelected as a result, which for them is the center ring and the only thing that really counts.

Have a great weekend.

Comedian says New American Century not funny

Steve Bhaerman is a writer/deconstructionist comedian, who makes a living making people laugh in his role as cosmic comic Swami Beyondananda. In the following piece, he takes a break from comedy to unload about what he thinks is going wrong with this fair republic of ours.

As he points out, correctly, this administration has many things to answer for; but most importantly, that this fight many of us find ourselves in is not about party affiliation or conservative/liberal alignment, but of right vs wrong.

I should note that I got this article in my email in-box just moments after hearing a Republican senator on the Senate Judiciary committee (Tom Coburn, R-OK) call for Attorney General Gonzales' resignation today (and don't forget John Sununu of Vermont, a leading Republican, who called for "his head" back in March).

Bringing Down the House of Lies

The Final "Leg" of the Journey

By Steve Bhaerman

04/19/07 "ICH" -- -- It's a bit of a mixed feeling to realize that millions and millions of people who didn't get this distinction two, four or six years ago now understand that the "political' issues we now face aren't about right and left, they're about right and wrong. On one hand, what took you so long? On the other, thank God and welcome aboard.

Although the media has downplayed it -- it doesn't fit with the general stupidization program of creating a lot of heat but very little light -- more and more actual conservatives and even members of the religious right are coming to see the Bush-Cheney regime as a rogue administration and a thin cover for criminal enterprise. Such right wing stalwarts as former Georgia Rep. Bob Barr and Richard Viguerie (one of the architects of the far right wing) have formed an organization to protect our civil liberties from our own government. Chuck Baldwin, an associate of Jerry Falwell, has become an open advocate of impeachment and writes a very articulate column. These folks are far bolder than the Democrats in this regard, and they will play a key role when impeachment happens -- and it will.

Now some of you reading this who have a deeper spiritual understanding of love, forgiveness and the ways in which we do indeed create our own reality might be wondering "Gee, this whole impeachment thing seems pretty 'anti'. Shouldn't we be focusing on what we want instead of what we don't want?"

Indeed, the point can be made that the failure of the Democrats in 2004 -- aside from the minor issue of voting fraud in Ohio and Florida -- had to do with John Kerry's approach of "Vote for me, I'm not as bad as George Bush," and failure to articulate any compelling positive vision. However, the real issue goes much deeper.

Ending The American Hostage Crisis

It has nothing to do with loving or hating George Bush, whose policies have educated and awakened more Americans than all of the "progressive" leaders combined. It does have to do with what we need to recognize as the American Hostage Crisis.

The American people -- and particularly our soldiers in Iraq -- are being held hostage by a ruthless criminal cadre (this is not hyperbolic invective; the definition of "criminal" is "one who commits crimes"). The people up until now have been blackmailed into supporting a war of choice with the cynical cry, "Support our troops." As if our troops sent themselves over there and now we have to rescue them.

Read the rest at ICH: "The Final Leg of the Journey"

The dog ate my email

Hard drive failure, maybe?

This is rich: Senator Patrick Leahy (D-VT) on the Senate floor yesterday, in response to the assertion that this incompetent Bush administration can't find the Gonzo's emails.

"They say they have not been preserved. I don't believe that!" Senate Judiciary Committee Chairman Patrick Leahy shouted from the Senate floor.

"You can't erase e-mails, not today. They've gone through too many servers," said Leahy, D-Vt. "Those e-mails are there, they just don't want to produce them. We'll subpoena them if necessary."

Well, good luck on that, Senator. Just bear in mind that these are the same people who have bugged every telephone in the country (and most of the rest of the world, to boot), but can't find a 6'5" dialysis-machine-toting terrorist, wanted in every state and most of the territories, with both hands and a road map.

Update: Scratch that last. Make it a dozen intelligence agencies, a seeing-eye dog, and a road map.

Dogmas of the quiet past

The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so we must think anew and act anew. ~Abraham Lincoln