Unable to 'win', Bush Re-names the Enemy

Don Rumsfeld said that you go to war with the army you have --not the army you might want. Bush, losing his war against an enemy he didn't want simply re-named it. As a National Intelligence Estimate revealed that terrorism had gotten worse since 911, Bush renames an insurgency (against which it was losing) "al Qaeda in Iraq" against which he hopes to win. Re-naming is easier than winning. The GOP rationale goes like this: if the GOP can change the terminology, a war lost on the ground might yet be won in the focus group. It's the GOP way.

When people hear "al-Qaeda," it's natural that they think of Osama bin Laden and the Sept. 11 attacks. The insurgency, sectarian violence and opposition to the US occupation in Iraq are not about fighting al-Qaeda, but that's how Bush's fiasco there is being branded.

McClatchy Newspapers' Baghdad correspondent Mike Drummond exposed the sinister rhetorical shift, noting in a recent report, "US forces continue to battle Shiite militia in the south, as well as Shiite militia and Sunni insurgents in Baghdad. Yet America's most wanted enemy at the moment is Sunni al-Qaeda in Iraq. The Bush administration's recent shift toward calling the enemy in Iraq 'al-Qaeda' rather than an insurgency may reflect the difficulty in maintaining support for the war at home more than it does the nature of the enemy in Iraq."

--Al-Qaeda In Iraq Bush's Creation, Niagra Fall Reporter

"Al Qaeda in Iraq" might have been brilliant had it not been so transparent. In three little words, Bush wraps up a complicated lie of several hundred words. The man who "read three Shakespeares" and a Camus in a single weekend would have problems with that many words. Bush's consultants hope that just three little words might make the people forget that al Qaeda had not been in Iraq until the US attacked and invaded. It's the US in Iraq that is the problem, that has done the most damage, taken the most innocent lives. It is the US in Iraq which is a terrorist recruitment poster. Does it really matter what Bush chooses to call his victims?

Bush's response to criticism and opposition is typically GOP: blame the critics. About our nation's own intelligence agencies White House spokesman Peter Watkins is quoted in the Nation as having said "their hatred for freedom and liberty did not develop overnight. Those seeds were planted decades ago." This position is outrageous and incompetent. This utterly failed administration obviously lashes out blindly, stupidly at any criticism of his utterly failed and incompetent policies.

Though Bush has never been right, he is, like "big brother", never wrong. He's not "resolute", he's stubborn, stupid and pig headed. What are the odds that a man so lacking in talent or intelligence is so otherwise infallible and wise? Bush is wrong about terrorism. Bush's own criminal administration is the cause of it. He's not winning in Iraq, he's lost it. Winning implies an exit strategy that Bush doesn't have. Re-naming an "enemy" is not the same as defeating one.

For all those reasons, Bush's homestretch is no time to relax. Bush's zeal with respect to Islam consolidated radical theocratic zealots at home but inflamed and radicalized theocratic zealots abroad. Shakespeare was more eloquent. A plague o' both your houses.

His failure in Iraq and his sabre rattling toward Iran make this period the most dangerous in his occupancy. Despite having been thoroughly discredited --not by critics but by facts --Bush persists in waging a messianic campaign. Until a new GOP focus group had done its work, Bush called our enemies "evil doers". I always found it interesting that Bush targeted only those "evil doers" who were oil rich. Poorer "evil doers" get a pass. The lesson the world learned from Bush is simply this: if you wish to do evil, liquidate your oil assets.

If we can avoid a nuclear holocaust --despite Bush's best efforts to effect a nuclear armageddon -- it will be a relief to see the end of Dick "Darth" Cheney, a goulish, snarling specter of no humanity and less good will. The list of those already departed this evil administration include John Ashcroft, a baritone whose tones we could bear no more easily than his contempt for the rules of evidence, due process, and or freedom of speech. Also gone is Al Gonzales who got the job because Bush wished to appear friendly to the fastest growing population segment in the US. Gonzales was Ashcroft with a tan and just as much antipathy to the principles of our founding --the Constitution, the Bill of Rights, the presumption of innocence.

It would seem that all Bushies have problems with the Fourth Amendment, about which the Bush line was that "reasonable suspicion" not "probable cause" was the standard upon which investigations and/or arrests were made. Not surprisingly, the Bushies are dead wrong. All one need do to end this stupid debate is to simply read the Fourth Amendment for one's self.

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

Amendment IV, Bill of Rights, US Constitution

Given the record of this administration, this Orwellian nightmare, it is surprising that the actual text of the Bill of Rights is still available. Perhaps, the de-centralized nature of information is the only thing not anticipated by Orwell, who foresaw, it seems, every other outrage to civilization, Democracy, and the spirit of free inquiry and truth.

Bush who cannot pronounce "Machiavellian" ought not indulge Machiavellian machinations. That Bush thinks himself smart proves he's not. Bush labels "terrorist" anyone who disagrees with his stupid policies, his incompetent regime, his illegal war and occupation. Author E.L. Doctorow got it right when he called Bush the "unfeeling President". The lack of "feelings", the utter lack of empathy describes evil itself. And that's what he have soiling the White House with venom.

E.L. Doctorow: The Unfeeling President

Doctorow might have added that Bush is also lazy and incurious. His arrogance is inversely proportional to his intelligence. Many world leaders have been liars but none so transparent. I want to play poker with Bush and then retire. Bush will leave a legacy of state-approved torture, illegal wiretapping and domestic surveillance, concentration camps, kidnappings, the coddling of corporate polluters.

The Creation of Doctorow's "Ragtime"

Additional Resources

• E. L. Doctorow’s “The March.”
  by John Updike
• New York State Writer's Institute

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Hamden Rice: Housing Bubble Lessons from 'It's a Wonderful Life'

by Hamden Rice

You can understand a lot about the current financial crisis surrounding the sub-prime mortgage market if you understand a premise of the movie, "It's a Wonderful Life."

And no, I'm not talking about the run on the bank scene, but it's a starting point on understanding what is going on. In one of my career guises, I used to draft mortgage backed security and credit card receivable security trust instruments for Wall Street investment banks.

In IAWL, you may recall, George Baily ran a small savings and loan, a kind of bank. George took in deposits from small depositors and lent the money to new homeowners as mortgage loans. There were two distinct banking sectors -- the thrift institutions (savings and loans associations, and savings banks) and commercial banks. Evil Mr. Potter ran the local commercial bank. Commercial banks dealt almost exclusively with business organizations, not with consumers. Many thrifts were so small, that, as in IAWL, they themselves deposited their money in commercial banks.

George Baily's problem was that he could only loan out as much money as he took in as deposits in his local community (actually, only a percentage of the deposits). So, during the New Deal, the Roosevelt administration created the Federal National Mortgage Association (affectionately known as Fannie Mae). The original system was designed to help George Baily if he found himself in this situation: that he had a bunch of homeowners paying their mortgages, but also had potential new borrowers, but had run out of deposits with which to make new loans.

Fannie Mae allowed George to sell his existing mortgages. In finance, this "paper" has value -- it is a promise by some homeowner to continue to make his monthly mortgage payments, and is backed by the right of the lender to seize the house if the payments stop, auction it off and use the sale to recoup his loan (that's foreclosure). It is easily valued using "discount to present value" calculations. The only thing that's hard to value is the risk that the homeowner will default and go into foreclosure. (There is also pre-payment risk -- banks don't like it when you pay off a loan early -- but that's a different and complicated story, and irrelevant to the crisis.) To eliminate this uncertainty, Fannie Mae guaranteed the mortgages.

So, Fannie Mae came up with this system. George would bundle his mortgages in convenient units, and send them to Fannie Mae. Fannie Mae would slap a guarantee on them (backed up by the credit of the US of A), and send them back to George. George could now sell the mortgages, and receive the money to make new loans. The homeowner wouldn't know the difference because George remained the "servicer" (ie collector) of the loan.

Fannie Mae was wildly successful. It financed a great deal of the explosive housing growth of the post war era. It helped little S&L's like George Baily's grow into very big banks, so that the difference between thrifts and commercial banks virtually disappeared.

Because of it's success, the government did two things: it created other similar organizations, while pushing them off the federal government's books. In other words, Fannie Mae became semi-private and although it continued to guarantee home loans, it did so by charging a fee, to originators, kind of like an insurance company.

By the 80s and 90s, some entrepreneurs realized that you didn't have to be a bank to act like a banker. You could really just skip the whole deposit side of the business. Developers were early alternative mortgage originators, for example. They would package their mortgages, get the guarantee and instead of selling them to banks, they would sell them to a trust or special purpose corporation that they themselves had created. This trust or spc would then sell trust certificates or shares that represented the right to receive a portion of the flow of mortgage payments from thousands of homeowners.

This was the birth of the "asset backed security" or "mortgage backed security" market. It was a process called "dis-intermediation," because it took banks out of the role of "mediation" between depositors (investors) and borrowers (homeowners).

The market for asset backed securities was vast -- almost unimaginable to the layman. A single tranche of asset backed securities was usually in the $500 million range in the 90s when I was doing this stuff.

All sorts of investors bought asset backed securities -- individuals, pension funds, insurance companies, commercial banks, thrift institutions, hedge funds, investment banks -- everyone and anyone.

Another thing that happened in the 90s is that mbs creators realized that they could reach new markets for home loan borrowers through "over-collateralization" and the use of derivatives. This was the "sub prime" market. In other words, keep in mind that whether it is a little George Baily operation or a billion dollar mbs trust, what makes the investment safe is that ultimately, behind every loan is a house. If the homeowner stops making payment, the bank (or mortgage holder) seizes the house, sells it and recoups the face value of the loan. There are delays and costs from foreclosure, but these are manageable. If it is a Fannie Mae guaranteed loan, there is also the guarantee, but the sub-prime market is largely un-guaranteed.

But if the borrowers are poor or have sketchy credit histories, the creators could allay their fears by putting more stuff into the trust than was being lent out ("overcollateralization" -- ie too much collateral, backing up the loan). (When the loans were all paid off, some lucky uber investor, usually the creator or an institutional investor, got all the extra stuff, and the trust bursted open with goodies like a Mexican pinata!)

The techniques of overcollateralization allowed banks and mbs creators to make loans to poorer people and people with poor credit histories, and allowed them to turn them into mortgage backed securities that investors felt comfortable buying.

Now, here is why there is a crisis.

Whether we are talking about George Baily, or a five billion dollar mbs trust, the thing that makes it work is that the value of the underlying property (someone's house) is always enough to recoup the loan if the homeowner defaults and goes into foreclosure.

But what if the value of the house is not enough? That sounds impossible and usually is, because real estate always goes up in price.

Until now.

When real estate prices decline, this puts banks (or mbs trust) "under water" -- that is, if they have to foreclose on a homeowner, and auction the homeowner's house, the value of the house will not be enough to cover the loan.

As more and more homeowners default, are foreclosed, and have their houses auctioned off, the price of houses in the area collapses even faster.

When this happens to banks, it causes bank failures -- eg during Bush I's S&L crisis.

When it happens to the fairly new, gigantic asset backed securities market, it causes something more grave. All those institutional investors may lose money. The uber investors who bought the "something extra" from the over-collateralizations are looking at being wiped out (no pinata goodies for you, my friend!).

This leads to an overall liquidity crisis. Institutions that thought they had money in the bank in the form of asset backed securities may have nothing, which causes them to sell other assets to get their balance sheets in order.

So, that's what's going on. So I guess in the end, it is a little like the run on George Baily's little savings and loan, except multiplied by a billion or so, and there is no beloved, trustworthy Jimmy Stewart character to explain that people can't get their money because it's in their neighbor's house, and there isn't a Clarence the angel making sure of a happy ending for all.

--Hamden Rice via Democratic Underground

It's a wonderful life

Often referred to as one of the best films ever made, this holiday classic is out of copyright and is available for everyone to enjoy again and again. Plot: George Bailey spends his entire life giving up his big dreams for the good of his town, Bedford Falls, as we see in flashback. But in the present, on Christmas Eve, he is broken and suicidal over the misplacing of a loan and the machinations of the evil millionaire, Mr. Potter. His guardian angel, Clarence, falls to Earth, literally, and shows him how his town, family, and friends would turn out if he had never been born. ~Tommy Peter(IMDB)

The Ballad of the Existentialist

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"Just get over it" or why they called it the Great Depression

Other titles for this trippy survey might include "I'm Forever Blowing Housing Bubbles" or "Brother, Can You Spare a Stock Option that's Actually Worth Something?" or "Rock me, Alan Greenspan!"

When oil is traded in Euros --not dollars --there will be fire sales on nostalgia for the housing boom and those days, now only dimly remembered, when the dollar was "good as gold".

I'm Forever Blowing (housing) Bubbles

Britons Withdraw Billions in Bank Run

Monday, September 17, 2007 9:08:30 AM

Shares in one of Britain's largest lenders tumbled another 30 percent Monday as customers, driven by fears of insolvency, made run on the bank and withdrew billions.

Treasury Secretary Alistair Darling sought to assure depositors that their money was safe, even as former U.S. Federal Reserve Board chairman Alan Greenspan warned of difficulties ahead in Britain's booming housing market.

Trading in the bank's shares was briefly suspended Monday morning, but not before they tumbled 140 pence to 298 pence ($2.81 to $5.98), on top of a 31 percent fall Friday. By late morning, shares hovered around 300 pence. ...

Amid all this frivolity, a gentle reminder from Alan Greenspan. Ah ...by the way...the war crime still going on in Iraq was all about oil.

Greenspan admits Iraq was about oil, as deaths put at 1.2m

Peter Beaumont and Joanna Walters in New York
Sunday September 16, 2007
The Observer

The man once regarded as the world's most powerful banker has bluntly declared that the Iraq war was 'largely' about oil.

Appointed by Ronald Reagan in 1987 and retired last year after serving four presidents, Alan Greenspan has been the leading Republican economist for a generation and his utterings instantly moved world markets.

In his long-awaited memoir - out tomorrow in the US - Greenspan, 81, who served as chairman of the US Federal Reserve for almost two decades, writes: 'I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil.'

What took ya' so long, Alan! The Cowboy's been saying this for years. Uh...Alan ... can ya' spare a bro a dime?

Connie Frances: Brother Can You Spare a Dime?

There was a time --somewhere between the Great Depression and the administration of Richard Nixon who took the US off the gold standard, that the dollar was actually worth something.

What's weighing on the markets?

Traders are worried by the market direction
Stock markets and bond markets around the world are wobbling over the impact of higher interest rates. But why are financial markets so rattled?

What is happening to interest rates?

The last few years have seen very low interest rates around the world.

Central banks have kept short-term interest rates low as inflation seemed contained and growth was modest, especially in Europe and Japan.

And the bond markets, which set long-term interest rates, have also kept long-term rates - which normally are higher because of worries about future inflation - near the same low levels.

...

Ginger Rogers: We're in the Money!

We're in the money, we're in the money;

We've got a lot of what it takes to get along!

We're in the money, that sky is sunny,

Old Man Depression you are through, you done us wrong.

We never see a headline about breadlines today.

And when we see the landlord we can look that guy right in the eye

We're in the money, come on, my honey,

Let's lend it, spend it, send it rolling along!

Oh, yes we're in the money, you bet we're in the money,

We've got a lot of what it takes to get along!

Let's go we're in the money, Look up the skies are sunny,

Old Man Depression you are through, you done us wrong.

We never see a headline about breadlines today.

And when we see the landlord we can look that guy right in the eye

We're in the money, come on, my honey,

Let's lend it, spend it, send it rolling along!

But almost 40 years of GOP bullshit from Richard Nixon, Ronald Reagan, Bush and Bush the lesser, takes its toll.

Where ARE those Marching Saints?

I find it hard to look at the Houston skyline without thinking about how it got there and what it portends for the rest of the world.

A Crude Awakening

Now ..."...just get over it" or why they called it the Great Depression.

Addtional Trips

• A Crude Awakening: The Movie
• Bush War Crimes Trial
  
• Bush Should Stand Trial For Capital Crimes
• The Cost of the War

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Oil Imperialism
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