Mike Kueber's Blog

December 17, 2014

Bill Clinton on race relations post-Ferguson and post-Staten Island

Bill Clinton was recently interviewed by the modern Walter Cronkite, Jorge Ramos of Fusion TV (a network directed at millennials and Hispanics). During the interview, Clinton weighed-in on race relations in America in the aftermath of the Ferguson and Staten Island killings.  When asked if race relations in America were getting better, Clinton said “yes and no.”

  • Yes, there are more opportunities for blacks in business and the professions.
  • No, there is an on-going problem with the American majority acting out of fear because of preconceived notions based on race and socio-economic groups that don’t share the majority’s values and lifestyle, which results in arrest rates, with a wild racial disparity.

Clinton suggested that this on-going problem was manifested in the Eric Garner killing in Staten Island. While noting that Garner had six children, was overweight and afflicted by heart and lung problems, and was trying to supplement his income by illegally selling untaxed cigarettes, Clinton declared, “he didn’t deserve to die.”

The injustice to Garner prompted Clinton to comment on the Michael Brown killing in Ferguson. According to Clinton, even if the grand jury was right, with Brown “being super-aggressive and all that,” it is undeniable that Brown was chased down, unarmed, and shot.

Based on these two incidents, Clinton concludes that there is a huge problem because of the divide between the community and police. Further, this divide is caused (a) by preconceptions that are triggered in scared people, and (b) the fear of minorities in these communities that they are disposable and not important.

I find several flaws with Clinton’s position:

  1. As a factual matter, Brown was not chased down and shot. According to Grand Jury evidence, he was a fleeing felon who was pursued, but he wasn’t shot at until he turned and charged Officer Wilson. Are police not supposed to pursue fleeing felons? Are they not to shoot a charging felon who has already tried to take your gun?
  2. Clinton implies that the wide disparity with African-American arrest rate is based on more on racial discrimination than on actual criminal activity. What support is there for that suggestion?
  3. Clinton is using a straw-man argument in declaring that Garner didn’t deserve to die. Who has said that Garner deserved to die? His death was an accident precipitated by a sickly 350-pound guy resisting arrest.
  4. Clinton complains that the majority has a preconception (as well as a pre-wired DNA) to fear minorities from a lower socio-economic level, the same people who are arrested and incarcerated at alarming rates. It seems Pollyannaish for Clinton to think that people should ignore their common sense. He might be more effective if he focused on reducing criminal activity in those communities.

I think Charles Barkley has provided better insights on this issue.   He points out that the police are not the bad guys in these situations. Rather, they are the only people who are preventing these communities from devolving into the Wild West, much like northern Mexico. Instead of focusing on the police, Clinton should be focusing on how to transform these communities so that they share mainstream American values.

Ironically, Clinton ended his interview by lamenting about black parents with good values having to explain to their kids about the death of these two unarmed black men. That explanation doesn’t seem difficult to me. Both deceased men were criminals who resisted arrest. The one who acted in a “super-aggressive” fashion was shot in self-defense by a police officer; the other was a Goliath who was accidentally killed while being subdued.

This sort of explanation is far easier than trying to re-wire people to ignore the obvious.

April 21, 2012

Sunday Book Review #71 – Back to Work, by Bill Clinton

Filed under: Book reviews — Mike Kueber @ 10:42 am

Back to Work is a surprisingly lame book, given Bill Clinton’s reputation as a brilliant politician and a public-policy wonk.  It contains nothing that you won’t hear during a week or two on the mostly superficial TV & radio talk shows.

Not surprisingly, the liberal NY Times was impressed with the book.  In fact, it noted in a review that the slender book (192 pages) was actually three books in one:

  1. A series of shrewd talking points for the Democrats to use in the 2012 election;
  2. A self-serving reminder of how great times were under the Clinton administration; and
  3. A practical set of proposals to get the American economy moving again.

The Times summed up the book as follows:

  • At a time when anti-government ranting dominates the Republican debates and the Democrats often seem on the defensive, Mr. Clinton serves up a succinct common-sense argument for why America needs a strong national government, why both spending cuts and increased tax revenues are necessary for addressing the debt problem (which is going to get worse given the demographics of an aging baby-boomer population and the high costs of interest payments), and why that debt problem “can’t be solved unless the economy starts growing again.

I recently noted to a fellow conservative that the Republican Party seems to have created a straw-man argument that the Democrats want to balance the budget on the backs of the rich, even though everyone knows (including the Democrats) that you could have a 100% tax on rich people’s income and still not balance the budget.  

But Bill Clinton and his book have more than a passing acquaintance with straw-man arguments.  In the book, he asserts, “The Republicans seemed to be saying that the financial crash and the recession that followed … were caused by too much government taxing, spending, and regulation.”  I don’t know of a single Republican who has made that argument, and I’d love to challenge Clinton to name one.  After setting up his straw-man argument, Clinton deftly explains that “the meltdown happened because banks were overleveraged, with too many risky investments, especially in subprime mortgages and the securities and derivatives that were spun out of them, and too little cash to cover the risks.”  Bill, tell us something we don’t already know. 

Another straw-man argument – Clinton claims that conservatives want to balance the budget by reducing foreign aid, even though everyone (including Republicans) knows that foreign aid consumes a very small percentage of the federal budget (about 1%). 

Although the book contains no great insights, it does contain two interesting statements:

  1. “For reasons that are unclear, the President and the Democratic Congress did not raise the debt ceiling after the election, in November or December of 2010, when they still had a majority.”  You’d think that Clinton could obtain clarify this matter, if he were really interested.
  2. From 1981 to 2009, the greatest accomplishment of the anti-government Republicans was not to reduce the size of the federal government but to stop paying for it.”  There is more than a little truth to this sarcastic talking point.

He also makes a statement that doesn’t seem credible:

  • After World War II until 1980, the bottom 90% of Americans consistently earned about 65% of the national income, and the top ten percent earned about 35%, of which 10% went to the top 1%.”  It’s hard to imagine the top 10% making only 3.5 times what bottom 90% make.

As the Times noted, Clinton has no modesty or humility about the good economic numbers during his presidency.  You can tell that he is just busting at the seams with pride. 

The real essence of Back to Work is that Clinton believes the anti-government forces in America have been winning the battle for 30 years and that they need to be defeated because government is needed for the following:

  1. National security;
  2. Safety net, including social security;
  3. Promote equal access to opportunity;
  4. Economic development;
  5. Oversight of financial markets;
  6. Protect public interests in the economy (clean air, clean water, safe food, safe transportation, safe workplace, civil rights);

Again, Clinton’s argument is a straw man.  There is actually very little debate over what government functions should be, but rather over how intrusive the government should be with those functions and over which level of government should before the function.  ObamaCare is a classic example on both fronts.

Clinton finishes the book by providing a long list (46) of programs that will get America working again.  Leading the list are ending the ongoing mortgage mess and getting corporations to start investing their dormant cash.  The objectives are obvious, but how to get there is not so obvious.    

If you aren’t interested in learning the Democratic talking points for 2012 or hearing a reminder of good the Clinton-administration economic numbers were, I suggest passing on this book.




June 28, 2011

Great presidents and continuing legal education

During the annual meeting of the State Bar of Texas, I had the good fortune of hearing presidential historian Douglas Brinkley give a talk on great presidents in America’s history.  I’m not sure how his talk qualified as continuing legal education for lawyers, but the state bar has almost unlimited power on that issue and it is very unlikely that anyone will complain.

Brinkley is a famous historian who is often interviewed on national news programs because he has the ability to present information in an interesting way, and his talk to at the annual meeting didn’t disappoint.  The talk was informal, and I suspect Brinkley could give it in his sleep.  His principal insights were:

  1. Although the talk was about presidents, Brinkley started with a non-president – Charles Thompson – who was a relatively unknown politician who did yeomen’s work in forming our union, but then was shut-out of a role in the newly-formed United States because he was too progressive for his time – i.e., he favored the emancipation of slaves and the liberation of women.
  2. George Washington’s signal achievement was to give up power after two terms.
  3. Thomas Jefferson saw that the Mississippi River was the spine of America and that religion has no place in a democracy.
  4. James Polk was successful because he established clear objectives (resolving the border issues with Mexico and Canada) and knew that wars of choice must be ended quickly.
  5. Lincoln’s challenges make the challenges faced by any other president seem highly manageable.
  6. Teddy Roosevelt created and led the conservation movement even though the public wasn’t demanding it.
  7. Franklin Roosevelt created the feeling that the federal government could solve all our problems.
  8. Harry Truman was horribly unpopular because he was too direct in trying to achieve his objectives, but his stock in history has skyrocketed.
  9. Dwight Eisenhower was an under-rated president who showed that America could be fiscally conservative and still do great things – e.g., NASA, interstate highways, and St. Lawrence Seaway.
  10. John Kennedy implemented things that worked (Peace Corp and SEALS/Green Beret), whereas his successor Lyndon Johnson spent too much money on things that didn’t work.
  11. Gerald Ford did a great job of extricating America from two problems – Nixon and Vietnam.
  12. Jimmy Carter brought morality to Washington.
  13. Ronald Reagan went with his gut and told Gorbachev to “tear down this wall.”
  14. Bill Clinton was relatively successful, but never did anything big and will always be remembered for the sex scandal.
  15. George H.W. Bush will be upgraded by historians because of his brilliant handling of foreign policy.
  16. Barack Obama is disposed to placate, not lead.  He acts like the only adult in the room, but doesn’t lead.  His greatest accomplishment will be getting elected.

Brinkley skipped over Bush-43, but someone during the Q&A asked if it was likely that Bush-43 would be upgraded by historians.  Brinkley did not think so because Bush-43 would be forever stained by the economic collapse at the end of his second term.  It’s ironic that Bush’s economic collapse not only resulted in the historic election of Barack Obama, but also may have fated Obama to the ignominy of a one-term presidency.

In my opinion, Brinkley skipping Bush-43 was bad enough, but skipping Richard Nixon, too, is unforgivable, especially when he found time to mention Jimmy Carter.  I will keep that in mind when reading Brinkley in the future.

June 9, 2011

Should Congressman Weiner resign?

The political talk shows are debating whether Congressman Anthony Weiner should resign.  Conservative Sean Hannity (FOX) thinks he should, while liberal Rachel Maddow (MSNBC) says that conservatives have a double standard for liberals based on their tolerance for the sexual philandering conducted by Louisiana Senator David Vitter.

Because I wasn’t familiar with Vitter’s situation, I had to look it up.  According to Wikipedia, he was a Louisiana congressman in 2002 who decided against running for governor when there were rumors of his involvement with prostitutes.  Vitter decided against running
for governor so that he and his wife could deal with marital problems.  Two years later, in 2004, he was elected to the Senate and the prostitute problem was apparently not an issue, but it reared its ugly head in 2007, when a criminal prosecution against the “D.C. Madam” revealed that Vitter was a customer between 1999 and 2001.  Shortly thereafter, the “Canal Street Madam” claimed that Vitter had been her customer in the 1990s.  Vitter responded with a press conference (with his wife) during which he asked the public for forgiveness.  He has since been re-elected.

Based on that history, I think Rachel Maddow is wrong in suggesting that Vitter’s case in analogous to Congressman Weiner’s.  In a sense, Vitter’s case is worse because he not only violated his marriage, he violated the law.  But his case is less serious because his transgressions occurred many years ago and he didn’t lie to the public about it.

Weiner’s case is actually more similar to the sex scandals of NY Governor Elliot Spitzer and President Bill Clinton.  Spitzer’s scandal involved current activity with a prostitute, and it led to his immediate resignation.  By contrast, President Clinton’s scandal involved a White House intern, and he loudly lied to the public about it.  Although he was impeached, he refused to resign and served out his term.

I think Spitzer did the right thing in resigning.  His continued public service as governor would have been severely compromised, and he placed the public interest above his own.

But I also understand President Clinton’s decision to stay on the job.  Although he violated his marriage and probably violated the law, he concluded that his transgressions were unrelated to his job performance and didn’t preclude him from continuing to lead the country.  Based on his job-approval rating at the end of his 2nd term, I think he was correct.

Vitter’s case was actually the least scandalous because it happened several years ago and he was not a chief executive like Spitzer and Clinton.

Congressman Weiner is not a chief executive, either, which makes it more likely that he can continue to effectively do his legislative job.  Furthermore, he didn’t break any law.  So, I think the decision to stay or go is up to him.  Because he’s a career politician, he will probably stay on the job unless he can figure out something better to do with his life.

June 5, 2011

Welfare as we know it in 2011

Liberals often complain that America doesn’t provide a world-class safety net for its poor, especially since 1996 when President Bill Clinton promised to “end welfare as we know it.”  Conservatives respond that reports on the demise of welfare in America are greatly exaggerated.

Prior to 1996, the cornerstone of American welfare was the Aid to Families with Dependent Children program (AFDC).  AFDC was an open-ended entitlement, with each state given limitless money by the federal government.  Thus, there was no incentive for states to direct welfare funds to the neediest recipients or to encourage individuals to go off welfare because the state lost federal money when someone left the system.  Furthermore, there were social-engineering complaints that AFDC encouraged poor women to have kids and remain unmarried.

In 1996, President Bill Clinton and the Republican-controlled Congress passed the Personal Responsibility and Work Opportunity Reconciliation Act (PRWOR), which gave control of the welfare system back to the states.  The PRWOR, which gave each state a flat-rate per state based on population, eliminated the AFDC and replaced it with a new program called Temporary Assistance for Needy Families (TANF), with the emphasis on temporary.  It encouraged states to require some sort of employment search and imposed a five-year lifetime limit on cash assistance.

TANF was generally considered a success by liberals and conservatives because it resulted in a steep drop in the number of people on welfare (from 12.3 million receiving AFDC in 1996 to 4.4 million received TANF in 2010), increased employment, and reduced child poverty.  In the aftermath of the financial crisis of 2007-2008, however, liberals are reconsidering whether the earlier good numbers were merely a fortuitous result of a booming economy.  With that in mind, President Obama used his Economic Stimulus Act of 2009 to again base federal grants to the states on the number of people signed up for welfare rather than at a flat rate, which will encourage states to maximize participation in their welfare programs.

Earned Income Tax Credit (EITC)

Although AFDC and its successor TANF are what most people think of when referring to government welfare, these programs are only a small part of America’s patchwork of welfare.  In fact, TANF is not even the only current cash disbursement to the needy – the other is the Earned Income Tax Credit (EITC).  The EITC, started in 1975, provides a tax credit to low- and moderate-income workers, and when the EITC exceeds the
amount of taxes owed, it results in a tax refund to those who qualify for the credit.  For tax year 2010, the maximum EITC for a person or couple without qualifying children is $457, with one qualifying child is $3,050, with two qualifying children is $5,036, and with three or more qualifying children is $5,666.  In 2004, the program cost $34 billion.

Supplemental Nutrition Assistance Program (SNAP)

SNAP is the modern-day successor to the Food Stamp program, which was created by the Food Stamp Act of 1964.  There are currently 44 million Americans receiving food stamps, and program costs nearly $50 billion.  Although liberals sometimes contend that food stamps primarily benefit African-Americans, actually 43% of all beneficiaries are white, 33% are African-American, 19% Hispanic, and 2% Asian.  Welfare reform in 1996 imposed some duration limits on receiving food stamps, but these limits do not apply to children, who comprise 49% of the beneficiaries.
Illegal immigrants are not entitled to food stamps, but their citizen children are.

Low-income housing (Section 8)

Section 8 of the U.S. Housing Act of 1937 authorizes the federal government to provide rental-housing assistance.  It currently provides benefits, primarily through the Housing Choice Voucher program, to 3.1 million low-income households.  Typically, tenants pay about 30% of their income for rent, while the rest of the rent is paid with federal money.  Thus, the more income that a beneficiary makes, the less the federal government will subsidize.

Medicaid and ObamaCare

Medicaid was created in 1965 as a part of the Social Security Act, and although participation by each state is voluntary (states pay for almost one-half of all costs), all states have participated since 1982 when Arizona joined.  It is a means-tested health program, but poverty alone does not necessarily qualify someone for Medicaid.  Beneficiaries (over 60 million) are primarily low-income households with children (45 million),
disabled people ((9 million), and poor old people in nursing homes (6 million).   ObamaCare will significantly expand the scope of Medicaid by providing coverage to all adults with income up to 133% of the poverty line.  The cost of Medicaid is already approaching $400 million a year and will skyrocket under ObamaCare.


To summarize, America still provides welfare through TANF, but there is a five-year lifetime limit on cash payments.  The EITC provides a tax credit to low-income workers, primarily those with kids.  SNAP provides food to low-income people, and there are no duration limits to children.  Section 8 provides housing at a cost that is limited to 30% of a person’s income.  And finally Medicaid under ObamaCare will provide full medical coverage.

The only thing left is the job that candidate Obama promised to everyone who wants one, but as a conservative wag noted, what
left-thinking person wants a job when they already have all of these other fine benefits.

April 25, 2011


Washington Post blogger Greg Sargent posted an interesting entry today about “deficit hawks.”  According to Sargent, the term has been unfairly appropriated by the Republican Right, even though the Right is often more interested in drying up all streams of government revenue than it is in eliminating the deficit. 

This deficit-hawking started with Ronald Reagan in the late 70s, when he argued for lowering taxes, balancing the budget, and rebuilding America’s defenses.  When pressed to prioritize these conflicting values, Reagan said there was no conflict.  This prompted a moderate Republican opponent (Bush-41) to coin the term “voodoo economics.”

I think blogger Sargent makes a good point.  If you claim to be a deficit hawk, that should mean that reducing or eliminating the deficit is so important to you that you are willing to sacrifice other values – such as your opposition to raising taxes – in order to address the deficit problem.  If you aren’t willing to raise taxes to reduce the deficit, then you are more accurately described as a believer in smaller government or an adversary of big government.  Paul Ryan is a believer in smaller government, not a deficit hawk.  By contrast, the Gang of Six senators are deficit hawks.

Sometimes I think the anti-war liberals are still resentful of being labeled doves during the Vietnam War, as opposed to the pro-war conservatives being labeled hawks.  Most alpha Americans think doves are a little squishy.  NY Times columnist Maureen Dowd has tried for years to get back at the hawks by name-calling those who didn’t serve in Vietnam – she particularly enjoys calling VP Dick Cheney a chickenhawk.  (Although that term is considered an epithet, the NY Times is apparently OK with its usage by columnists.)  I wonder, however, if Dowd has taken this labeling to its logical conclusion – i.e., under his classification, Bill Clinton and Barack Obama are chickendoves.  Don’t think they’d like that appellation.

April 14, 2011

Obama takes a whack at the deficit by raising taxes on the rich

Yesterday, President Obama announced his plan to gain control over America’s deficit.  Part of his plan is to raise the taxes of the rich.  Not surprisingly, the NY Times editorial board and columnist Nicholas Kristof commended Obama’s plan, but they both thought a truly courageous stand would have been to increase the taxes of the middle class, too, so as to avoid draconian spending cuts.

Of course, there are counter-opinions that any tax increase is political suicide.  If you doubt that, recall that the last person who campaigned on broadly raising taxes was presidential candidate Walter Mondale, who suffered one of the most lopsided electoral defeats ever in 1984.

Obama, of course, is constrained to raising taxes only on the rich because of his famous campaign pledge against raising taxes on anyone except those who make more than $250k.  Violating that pledge would expose him to the same ridicule that Bush-41 received after breaking his “Read My Lips” promise.

Personally, I agree with the NY Times that the taxes of the middle class should be raised, but I would also raise the taxes of the lower class.  Conservatives have always loved the idea of everyone paying something, and Obama seemed to accept that concept in his speech yesterday:

  • As a country that values fairness, wealthier individuals have traditionally borne a greater share of this burden than the middle class or those less fortunate. Everybody pays, but the wealthier have borne a little more. This is not because we begrudge those who’ve done well -– we rightly celebrate their success. Instead, it’s a basic reflection of our belief that those who’ve benefited most from our way of life can afford to give back a little bit more.” 

Obama’s rhetoric makes sense, but it doesn’t reflect the fact that nearly half of American taxpayers pay no income tax.  In fact, because of the earned income tax credit, millions of Americans are refunded tax money that they never paid. 

Because of demagoguing by liberals, you might not recall that the Bush tax cuts were not solely for the rich.  Instead, his tax cuts were designed to benefit all taxpayers, with the rich to benefit proportionately less.  That same approach should be used to increase taxes.  Shared sacrifice means everyone, including poor, middle class, and rich, as well as seniors, juniors, and tweeners.

Other carps

The following are some incidental carps that I have about the Obama address yesterday:

  • Obama paid lip service to America’s fundamental faith in the free market, but the bulk of his speech revealed that he placed a higher value on the role of government:

“From our first days as a nation, we have put our faith in free markets and free enterprise as the engine of America’s wealth and prosperity. More than citizens of any other country, we are rugged individualists, a self-reliant people with a healthy skepticism of too much government.  But there’s always been another thread running through our history -– a belief that we’re all connected, and that there are some things we can only do together, as a nation. We believe, in the words of our first Republican President, Abraham Lincoln, that through government, we should do together what we cannot do as well for ourselves.”

  • Obama acted like everything was rosy until Bush-43 screwed things up.  Personally, I have no recollection of those halcyon days in 2000 when America wasn’t obsessed with the actuarial time bombs associated with Social Security or more problematically, Medicare and Medicaid:

As a result of these bipartisan efforts, America’s finances were in great shape by the year 2000. We went from deficit to surplus. America was actually on track to becoming completely debt free, and we were prepared for the retirement of the Baby Boomers.”

  • After noting earlier in his speech that no one wants their taxes increased, Obama opined that the rich actually do want their taxes increased:      

“I say that at a time when the tax burden on the wealthy is at its lowest level in half a century, the most fortunate among us can afford to pay a little more. I don’t need another tax cut. Warren Buffett doesn’t need another tax cut. Not if we have to pay for it by making seniors pay more for Medicare. Or by cutting kids from Head Start. Or by taking away college scholarships that I wouldn’t be here without and that some of you would not be here without.  And here’s the thing: I believe that most wealthy Americans would agree with me. They want to give back to their country, a country that’s done so much for them. It’s just Washington hasn’t asked them to.”

I suppose I shouldn’t have expected Obama to stake out a reasonable budgetary position like the Bowles-Simpson plan to start with.  The Ryan budget proposal obviously was unacceptable to most Americans; rather it was designed to satisfy conservatives.  Similarly, Obama’s position probably appears reasonable to liberals.  I hope there are enough pragmatists in the middle, like the “gang of six” in the Senate, who want to end the posturing and actually do something to get a handle on our deficit.

April 2, 2011

Sunday book review #21 – All The Devils Are Here

I’ve read a spate of books on the sub-prime mess and the resultant financial meltdown, but I decided to read one more because I had inadvertently bypassed the book with probably the best reviews – All the Devils Are Here, by Bethany McLean and Joe Nocera.  And I’m glad I did, because I read things in this book that I hadn’t read before.  Among the things I learned:

  • Peer pressure.  Countrywide Financial and Fannie Mae initially resisted the urge to venture into subprime mortgages, but eventually relented because of shareholder pressures to match the profits of less-traditional competitors who jumped into subprime mortgages with both feet.
  • Corrupted politicians.  The success of financial firms depended heavily on their ability to effect legislation and regulations that accommodated the way the firms wanted to operate.  Although the role of money in purchasing this ability is obvious, it is less obvious whether the politicians are complete whores or merely compromised public servants.
  • Home ownership.  The ostensible reason for subprime mortgages was to increase home-ownership in America.  Democrat Bill Clinton pushed the concept for idealistic reasons, and Republican Phil Gramm concurred because he had learned that home ownership, along with a job with a private employer, was the best indicator of a propensity to vote Republican.  Although subprime mortgages gave home-ownership a statistical bump, the subsequent meltdown caused ownership by mid-2010 to return to its pre-bubble rate of 66.9%.  Furthermore, between 1998 and 2006, only 9% of the subprime mortgages went to new homeowners; the other 91% went to people refinancing or moving into a different house.
  • Dual culpability of Wall Street.  Wall Street not only packaged the toxic assets as AAA securities, but also facilitated and encouraged the growth of the subprime mortgage companies.  These companies couldn’t have grown like they did if Wall Street hadn’t made available unlimited warehouse lines of credit for additional toxic mortgages.  Furthermore, Wall Street actually preferred the subprime mortgages because of the higher returns.

In addition to providing those insights, the authors did an excellent job of profiling the personalities of key people involved in this scandal.  Compared to other things that I’ve read about Anthony Mozilo of Countrywide, he is treated somewhat sympathetically.  The same is true of AIG’s Greenburg and Cassano.  A fascinating excerpt:

  • “In his mind, [AIG-Financial Products, which pioneered the credit-default swaps] had no deficiencies.  Cassano’s devotion to FP was also why his former colleagues all say that he would never, ever do anything that he thought  might damage it.  Which, in retrospect, was the most surprising thing about him.  Joe Cassano was positively risk adverse.  Ever since Howard Sosin’s departure in 1993, Greenburg had insisted that FP executives defer half their compensation to protect against deals that later went sour.  Cassano himself went much further.  In 2007, for instance, he was paid $38 million, but pulled out only $1.25 million, keeping the rest in his deferred compensation pool.  He had no incentive to take foolish risks.”

Treasury Secretary Hank Paulsen comes off as a savior, which is consistent with Bush-43’s treatment of him in Decision Points.  The authors are less generous to Alan Greenspan, who is treated like a radical disciple of Ayn Rand.  

The book contains especially good descriptions of the historic evolutions of banking giants like Goldman Sachs and AIG, facilitators like Fannie Mae and Moody’s, and flashes-in-the-pan like Ameriquest. 

It is disturbing to read about the low-level fraud engaged in by the mortgage originators/brokers, but everyone in the system turned a blind eye.  The book describes an Ameriquest brokerage where the brokers routinely doctored documents, misled clients, and lied to regulators – all in an environment of rampant drug use.

All the Devils Are Here ends on a less than sanguinary note by describing the so-called Dodd-Frank bill that was passed mid-2010.  Yes, a new consumer-protection agency may curtail the most abusive practices by creditors/originators/brokers and, yes, the Fed has increased authority for dealing with systemic risk.  But these and other technical changes included the 2,300-page legislation failed to chart a new course for Fannie Mae and Freddie Mac, which is a critical unresolved issue.  And most importantly, legislation can’t instill morality on Wall Street.

February 25, 2011

Mitch Daniels and the Bennett Test

Joe Klein writes a column for Time magazine.  Although I rarely agree with him, I agreed with his endorsement this week of the Bennett Test, which was developed by William Bennett, America’s education secretary under Ronald Reagan, to assist voters to detect (and reject) pandering politicians.   The Test is simple:

  • If a candidate tells you only things you want to hear, if he asks nothing of you, then give him nothing in return, certainly not your vote, because he is not telling you the truth.”

According to Klein, only a handful of presidential candidates in the last ten elections have satisfied the Test – John Anderson in 1980, Bruce Babbitt in 1988, Bill Clinton in 1992, and Ron Paul in 2008.  The purpose of his column this week was to anoint another – Indiana governor Mitch Daniels. 

Prior to reading the column, I knew nothing about Daniels, which suggests he is not a glory hound.  That’s a good thing.  Klein reports that when Daniels spoke at this year’s Conservative Political Action Conference, he refused to “throw red meat” and instead warned that deficit-cutting would be difficult – neither the military nor the elderly would be spared.  This candor and the absence of demagoguery qualified Daniels under the Bennett Test.

While I am similarly impressed with any candidate who qualifies under the Bennett Test, I was even more impressed with Daniels’ substantive positions as described by Klein:

  • He was unrelenting in his attack on the liberal welfare state, but he did it substantively.
  • By calling out his own party’s nasty caucus and making a plea for a bigger Republican tent: “We need people who never tune in to Rush or Glenn or Laura or Sean.”
  • “Our main task is not to see that people of great wealth add to it but that those without much money have a greater chance to earn some.”
  • He posits the federal deficit as an overwhelming “red menace.” 

Klein agree with Daniels on the first three positions, but opines that the “red menace” is not as serious as “the hollowing out of the American middle class, of American industrial capacity; the lassitude in our education system; the greed and laziness that are our affluenza hangover.”

I agree with Daniels on all four positions, especially that the deficit is the dominant issue of the day.  Furthermore, I suggest to Klein that the third dot point – affording opportunity to those without much money – will do much to address the problems that Klein wants to address – i.e., the disappearing middle class, the decline of education, and laziness.

Klein concludes by noting that any candidate who shows intellectual honesty is doomed to irrelevance.  Let’s hope not.

January 13, 2011

The emergence of “Slick Barry” at the Tucson memorial service

This morning on the talk show “Imus in the Morning,” Don Imus interviewed FOX News’ Chris Wallace about President Obama’s speech at the Tucson memorial service.  Imus suggested that it was one of the best presidential addresses he had ever heard, and he complimented Matthews’ colleague Charles Krauthammer for delivering a similar post-speech analysis on FOX News immediately after the speech. 

Wallace (son of Mike Wallace of “60 Minutes” fame) earned Imus’ wrath by being less fulsome in his praise.  Wallace agreed that the content and delivery were excellent, but opined that the speech at 34 minutes was too long.  According to Wallace’s research, Ronald Reagan, Bill Clinton, and George W. Bush had delivered similar gold-standard speeches in 10-15 minutes.  Imus would countenance no criticism of the Obama masterpiece and responded that the speech wouldn’t have taken so long if he hadn’t been interrupted by applause so often. 

For those of you who might have missed the speech, you might be surprised to learn that there was continual applause at a memorial service.  I turned my TV on just as AZ governor Jan Brewer was completing her address.  Shortly, thereafter former AZ governor, current Homeland Security secretary Janet Napolitano was introduced to read a passage from the Old Testament, and the crowd erupted with screaming applause – before and after.  The service was in a university arena, and the sound seemed to emanate from an arena full of 14,000 young girls seeing Taylor Swift or Miley Cyrus for the first time.  I have heard no explanation of what caused this memorial service to transform into a political rally.

And there is no doubt that it was a political rally.  Although President Obama has received plaudits for forcefully repudiating the liberal charge that the crazed killer was empowered by vitriolic talk from conservatives, the remainder of Obama’s speech belies those plaudits and shows him taking the low road, not the high road. 

The high road would have consisted of stopping after the repudiation of the baseless liberal charges.  But instead President Obama stepped down to the low road by claiming that a nine-year-old victim who dreamed of political service would have wanted government discourse to be more civil.  So let’s resolve to make this change for her.

How slick is that?  In the name of a nine-year-old victim, Obama is able to bash those who vigorously opposed his policies.  Slick Willy would be proud.

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