Blame It On the Lame Duck

By SARAH N. LYNCH, Correspondent

Senator John McCain can take solace in one thing when he thinks back on his recent electoral defeat: Senator Barack Obama’s win does not really say that much about John McCain. Instead, Obama’s resounding victory was a referendum on President George W. Bush.

Shortly after NBC projected Sen. Obama the winner of the evening, people from around the world poured into the streets. They were excited to be witnessing a piece of history as voters overwhelmingly elected the nation’s first black president. But more importantly, they wanted to let the current administration know their true feelings.

The people are tired of this unjust and inhuman war that was spawn on a lie. They are struggling beneath the crushing weight of the economy that has come crashing down on them thanks to the lax regulations that let Wall Street cannibalize itself. They are sick of the United States using the Oval Office as a bully pulpit.

The crowds that gathered on Election Night were a stunning sight. They cheered in Kenya, the United Kingdom, France, Japan, New York City and Obama’s hometown of Chicago.

Here in Washington, a large crowd stood in front of the White House – not because it represents Obama’s future home for the next four years, but because they wanted to send Bush a message.

Yes, those crowded rejected John McCain, but it was not personal. Sure, it didn’t help that McCain ran a God-awful campaign.

He failed to vet Sarah Palin and wound up isolating independent voters and even some staunch conservatives who felt she was unqualified for higher office. He then yet again failed to vet Joe the Plumber, thrusting the man into the national spotlight for his criticism of Obama’s tax policy before he eventually discovered that Joe doesn’t even pay the taxes he owes now.

McCain resorted to petty arguments over why Obama was not fit for the presidency. He ran too many negative ads. His reaction to the collapse on Wall Street was chaotic and embarrassing to the GOP.

But none of that really mattered in the end. The truth is, no Republican had a chance of winning this election. George W. Bush’s disastrous policies have essentially left the Republicans with a large scarlet A on their chests.

Just ask John Sununu or Elizabeth Dole. They were both casualties of war. They finally lost their seats thanks to Bush, who hijacked his party eight years ago thanks to a stolen election in Florida.

John McCain should know this better than anyone. And although Palin was definitely the wrong pick, his aides should stop putting so much blame on her for their loss and instead direct their anger toward the right person: our lame-duck president.

That means that now, more than ever before, is the time for John McCain to truly be the maverick he claims to be. It means he must publicly reject the Bush legacy, call for his fellow GOP colleagues to do the same and steal his party back.

Only then can the Republicans hope to pick up the pieces and regain the confidence of the public.

Sarah N. Lynch can be reached at sarahnlynch@gmail.com.

Palin Didn’t Know Africa Was a Continent

By EUGENE MULERO, Correspondent

When piranhas run out of food, they start to devour themselves. That’s how the McCain and Palin staffs are acting lately. Their attacks on each other over which team F’ed the campaign have become vicious.

The latest assault came from the McCainers, which using Fox News’s Carl Cameron as proxy, ridiculed Gov. Palin for her geographical ignorance. Cameron reported on the O’Reilly Factor that “senior” sources told him Palin could not identify NAFTA’s members, she failed to prepare for national interviews, and at one point she was unaware Africa was a continent. The sources apparently said Palin thought Africa was a country—you mean it’s not a country?! (Kidding.)

All this doesn’t change my view of Palin. It has the opposite effect.

I am even more disappointed at the Maverick and his team (Steve Schmidt & co.) for being naïve. Why the heck would they pick a candidate who did not know NAFTA, had zero foreign policy experience and was unproven nationally?

Also, let’s remember, there are many Republican governors with more political readiness than Palin (ie, Connecticut’s M. Jodi Rell). I don’t think Palin cost the GOP the presidential election. President Bush did that.

Palin was a small town mayor, who came from humble beginnings, who loves the outdoors. Yes, we all recognized her acute ego, which blinded her from her political immaturity. But Palin was slowly building her GOP base to eventually make it inside the Beltway. The McCainers were the ones who brought her to us. And now they intend to destroy her (what are friends for).

After Tuesday, Maverick should be really aware that W. ruined his chances at the White House twice. In 2000, Karl Rove and his politicos destroyed his reputation in South Carolina. In 2008, Bush had destroyed the country’s confidence in a GOP White House, which made it impossible for a Republican to succeed him.

So while Palin spends the next four years studying Africa and cramming Wilsonian doctrine for a run in 2012, the Maverick should stop blaming the Hockey Mom for his demise.

Eugene Mulero may be reached at eugene.mulero@gmail.com.

Why I Voted for Obama

By AMANDA KOCH, Assistant Managing Editor

I am a registered independent. I voted for Obama, and this is why (in no particular order):

1. I want my president to be smarter than me. I don’t want Joe Six-pack to be anywhere near the presidency. I appreciate that my president can beat me in the high school octathalon. In fact, I pray he does. And not by a little. By a lot. He should remember every important Supreme Court case, because I won’t. Maybe he should even be elitist, or at least he shouldn’t be forced to pretend he’s not. I am intelligent; my president should kick my ass in that respect. I eat arugula, the president should eat more; it’s grown by U.S. Farmers; you should probably eat it too, it’s good for you.

2. I don’t mind losing (and this may be the thing that bothers me most in McCain speak). When I played sports when I was younger – softball, volleyball, basketball, track – winning was everything. When I became an adult, compromise became everything. I don’t mind losing, as long as it works out for the better. In my life, in my business, I have to talk to people. Sometimes I have to back off, sometimes I have to push them. Honestly, it’s not about winning; it’s about accomplishing something better than what is going on now. I think Obama gets this.

3. I don’t think he’s a socialist, so he doesn’t seem so bad to me. I don’t think he’s going to take all my wealth and give it to the less fortunate. Actually, I don’t have a lot of wealth, so when my friends complain about this sort of thing I laugh to myself – we are the poor the rich are sharing with! But, even besides that, and this is where my disdain of all politicians plays in Obama’s favor. He doesn’t really mean what he says. Sure, maybe we’ll lean a little further in that direction, but not as much as he promises. We will never be a socialist nation.

4. I really don’t mind the rich helping the poor. Carnegie did it. Rockefeller did it. Gates does it. I do believe helping the poor is a virtue, so buck up. I also believe that my contribution to the betterment of society makes my country a more pleasant place to live – for me. Call it selfish, I call it self-preservation. I want to live in a nice place, so I help and better my community the best way I can. This is not a novel idea. Like I said, Carnegie did it; it just sucks that we don’t have as many helpful rich, so we have to force them to be helpful. If only they would realize, what’s good for them is good for me.

5. I’m tired. I’m tired of the way things are going and I need a change. It’s not good right now, and McCain does agree, fundamentally, with a lot of Bush policies, that makes him a loser. I do need a change. I’m not as afraid as change as some other people. Change is never as big, as traumatic, as you think. It’s just change, not the end of everything we know.

6. Obama is good for the world. Yeah, I know, overarching in an overbearing way. It may be trite and unnecessary to some, but I’d like to regain the respect of our allies. I’d like some acceptance in the world community – isn’t that what we preach to others? I’d also like some help, and we don’t get that now, because we are assholes. I try not to be an asshole to others.

7. The economy sucks and I think Obama will be logical and even-keeled when it comes to dealing with the economic troubles. That’s what we need, because, frankly, I don’t think any administration completely owns the economy, but they most definitely have to deal with it. Cool as a cucumber is better than pink as a pickle any day in any situation.

8. I think Obama owned the debates. It was close, but Obama explained things to me, and I understood. I got why his health care is a problem solver. I have no doubt McCain thought his proposal for health care was good, but am I eligible for his $2500 tax rebate on top of my employer health coverage? I still don’t know. On his web site it told me if I make $180,000 I can get better coverage than a member of Congress, with no increase in taxes. I don’t make this kind of money, and I am still wondering why he headed this section by addressing the middle class. Is $180,000 average for the middle class?

9. I think I’ll just add this at the end here, because after all this I want to be honest you – I really do not like Sarah Palin and her views, and I am really disappointed McCain chose her. He was OK in my view, he’s not the devil like some people think; I really think he thinks his policies will help America, even if I may disagree with some of them, but Palin was a poor choice. He catered to the far right even though he claims to be a “maverick”, and if he had chosen his own running mate he or she would undoubtedly be more centrist. His choice lacked political smarts, and he needs political smarts to get us through the labyrinth of world situations/communities/events/problems/triumphs/etc. Palin is the first failure of a possible McCain term. I do believe this.

10. After I realized my Palin rant was No. 9, I thought I should come up with a legitimate No.10. — so, I’m going to go back to Obama’s old-school argument which he used in debates. Iraq was a bad choice; Iraq was a horrible choice; Iraq was a mistake. I remember when the war was about to begin, and I was talking to my friend, I said, “What about Afghanistan? We aren’t done. How is Iraq more of a threat than a country like Iran?” If Obama had been president, I have not doubt he would have started the war against the Taliban and al-Qaida in Afghanistan, and, you know what, he probably would have won it, because he realized Iraq was a mistake, it was a distraction, it was completely unnecessary. We would never have even gotten into the Iraq mess, and maybe we’d even have the upper hand on al-Qaida.

It’s late and I’m tired, but I just wanted to sort this out. It helped to write it all down. I think I made a good choice. I do live in Jersey though, so does it even matter?

Amanda Koch can be reached at amandarosekoch@gmail.com.

Symbolism of an Obama Presidency Can’t be Denied

By MATT KENNARD, Columnist

I am caught in two minds by this election. I am fed up with the two-party system in the U.S., which has two wings of the same business party. If I was in a swing state I would vote for Ralph Nader. But there is something special in Barack Obama’s success. Not because of him per se, although the fact that his dad was a Kenyan farmer and he has now risen to the top is a great moment for the U.S. and the world.

I am talking about what he has come to symbolize – the anger and discontent he has co-opted. He will probably do what every other Democrat has done and sell out his constituency, but Obama has come to symbolize a fight back against the insanity of the Bush era, which has seen some of the most dogmatic and dangerous politicians in the history of this country, and their policies have been a disaster for Americans and world peace.

Obama is where he is because people are angry at the establishment, which has done them over again and again. Something must be said for his opposition to the war in Iraq as well, at a time when that was an unpopular position to take in this country, even though it was a completely insane second gambit in the war on terror.

I live in Harlem and there is a real buzz here which is very moving no matter what you think of the Democratic Party. This country used to be full of racism, but now the melting pot has won out. Obama is a testament, not to his own personality or talents, but to the hard work of the men, women and children who were killed, imprisoned and disdained when they were fighting for their civil rights decades ago.

This is a collective effort on behalf of many people. We should be glad that this symbol was electable, but the fight will continue so that he enacts some policies that will actually help people out, not, a la Clinton, oversee a widening of the gap between rich and poor and the bombing of more defenseless countries. The work is beginning now.

Matt Kennard can be reached at MattKennard@gmail.com.

There’s No Sunshine When You’re Voting

By CRYSTAL PROENZA, Managing Editor

This Sunday I witnessed democracy at its best. Or worst. I’ll leave that up to you to decide. I’ll only insert my very opinionated voice here and there to help sway you.

Hundreds of Floridians of all shapes and sizes stood (and sat) on line in the baking sun on a soggy library lawn to cast their early votes at a polling station in Broward County.

“We’re here to do our civic duty,” voters smiled under sun-shielding umbrellas while feasting on bag-fulls of snacks and drinks. After catching a glimpse of the local news, which promised long lines at early voting locations, thousands of voters came out to the polls prepared. Students read their homework; teachers graded papers; parents yapped on cell phones or looked over their kids’ shoulders as they level-uped on PS2s and DS Lites. One couple even brought along a box of Christmas cards to address.

I arrived unprepared. I personally didn’t believe the hype, thinking I’d wait an hour, tops. The longest I’ve ever waited to vote in my home state of New Jersey, in one of the most densely populated cities in the country, was about 10 minutes. Little did I know when I moved to the Sunshine State this year I’d be in for a six-hour frustrating waiting game just to practice my US-born given right to vote.

According to CNN, 24 million citizens voted early in the country as of Monday afternoon. “Why?” is what everyone is asking. “Why not vote on Nov. 4?” My fellow line formers told me it was because they didn’t want to get caught in long lines on Election Day. Many were afraid they’d get docked pay if they arrived at work late, or left early to vote before the polls closed. College students traveled home from elsewhere in the state to vote early because they had class on Tuesday. One woman said that she wanted to vote early because she had cast an absentee ballot in 2004, and found out later that her vote may have been lost with a number of ballots that went missing.

The Obama campaign had urged Floridians to vote early for weeks through phone calls, direct mail and home visits, and I assume some supporters had shown up for that reason. I hadn’t heard that anyone was asked to vote early by the McCain camp. After standing in line with about 600 people for six hours, it was pretty clear that most citizens showed up just to make sure their vote counted.

I have to admit, at first I was touched by the fact that so many of my neighbors and fellow Floridians cared about our government so much that they were willing to take hours out of their day to practice their “civic duty.” Then as the hour-three mark approached and we’d only moved around two sides of the library, with an entire parking lot loop to get through, I knew I wasn’t the only one who sat down in the grass and wondered, “What kind of country is this?”

Big bad America – we think we’re the epitome of democracy. The truth is, we can’t even run our own elections efficiently – never mind those of a country that we risk our own citizens’ lives to impose our voting processes on.

As voters turned sour, they broke the line, turning to each other to create conversation circles.

“I’ve never seen anything like this in my life,” was a frequently shared sentiment. These people were trying to avoid the chaos being promised on Nov. 4 and ended up right in the center of it. Slowly, the complaining turned into brainstorming about how the waiting issue could be resolved in the future. Some suggested more voting officials to make the process more efficient. Others suggested more machines. A large number of Broward County residents said they’d love to have online voting.

“If we can buy things with our credit cards online, why can’t we vote online?” a frustrated woman asked. Everyone agreed, there’s got to be a better way.

Whether Election Day voting goes smoothly or not, I know I won’t be the only angry American that spent a long Sunday learning how inefficiently our country’s democracy is being executed.

Crystal Proenza may be reached at proenza@gmail.com.

McMaverick Reaches New Level of Desperation

By EUGENE MULERO, Correspondent

I’m not funny. It took me about 13 years to accept that fact. Some people may laugh at a few of my comments, but I’m not one of those guys capable of commanding a room during a stand-up routine – I know, ’cause I’ve tried (it was awful).

I hate not being funny, because I love comedy. I always have. I grew up worshipping Rodney Dangerfield and would stay up late to watch HBO comedy specials, especially of George Carlin.

I remember one night, coming home from a PTA meeting with my mother when I was in fifth grade, I turned to her and said, I’m hosting Saturday Night Live one day.

She laughed, looked at me, and remarked, “I don’t think so.”

I resented that reaction because SNL was my second education. I grew up when Wayne’s World was still a new skit, Dennis Miller owned the Weekend Update desk and Dana Carvey transformed into President George H.W. Bush.

Now fast-forward to the spring of 2000: I was a senior in college and wrote an opinion column for The Setonian, the college newspaper. I was following the presidential race, and concluded in a brief 300-word piece that none of the presidential candidates impressed me. If I recall correctly, I described W. as “daddy’s boy,” Al Gore as the “robo-candidate,” Ralph Nader as “the old guy off his meds,” and finally John McCain.

For McCain I wrote: “He has such a bad temper, he reminds me of one of those guys who sells steak knives late-night on QVC and shouts at the cameras urging viewers to buy.”

Fast-forward again, to last weekend.

As a watched the SNL intro, McMaverick stood next to Tina Fey as Gov. Sarah Palin, in an infomercial skit. Then at one point, he turned to the camera with a set of steak knives by his side, “This is to cut the pork-spending…,” he said.

At that point I knew it was over for the Maverick. There was no way of winning, defeating Obama. When a campaign reaches the point that it dramatizes a lame joke found in a college op/ed, it’s time to call it a night.

I mean, I swear I just slapped that column together in a few minutes eight years ago, without really giving it much thought.

And here, at the eleventh-hour, the smartest guys in politics for the Republicans (ie, Steve Schmidt & Co.) let their man walk around the set of the most liberal forum in politics. And I wonder, for whom was the appearance appealing? Obama’s people would not change their minds just because Maverick was on their ‘fav’ TV show. And SNL does nothing for the GOP faithful.

Yes, I’ve heard the saying by the old American philosopher Yogi Berra, “it ain’t over, ’til it’s over.” But it’s over!

SNL is not the kingmaker. The show is where candidates go to launch their careers as pundits. Just ask Hillary and Giuliani. Maverick, who has hosted the show, should’ve known better.

Speaking of which, I just moved to a new apartment and need a set of steak knives.

Eugene Mulero may be reached at eugene.mulero@gmail.com.

Election Madness: Who’s the Boss?

By AMANDA KOCH, Assistant Managing Editor

I got my warm-up ballot the other day in the mail. I’ve voted before; I know what the ballot will look like and what I need to do, but I was sitting around with nothing else to do, and wanted to know who is running for freeholder [disclosure: in a subsequent Google search to find out what freeholders do I found that New Jersey is the only state that has them; other states call them county commissioners]. One person is running for freeholder in District 4 of Hudson County, N.J. Seriously, one person. What if no one votes for him?

I also see that Jeffrey “Jeff” Boss is running for president. Now surely, Joe Biden’s name is actually Joseph, and Bob Barr’s name is undoubtedly Robert. So who does this guy think he is? I decided he made his name up, because actually that is a pretty kick-ass name, so it’s either that or he’s just lucky.

Then I notice that Jeffrey Boss is running for senator. Something shady is going on here.

What makes it even more of a mystery is that “Jeff” is listed in Column C for president, the very first ‘nomination by petition’ column after the two major party nominees; whereas Jeffrey is listed in Column E, the last of the hopeful senators. I have no idea how the nominees are assigned columns, but it would be logical to assume candidates are listed by importance starting with Column A, the most important.

“Jeff” is more important than Ralph Nader and Bob Barr according to the ballot. I wonder why I’ve never heard of him and his split personality, the senator.

All this will be easy to solve. If he’s on Wikipedia then he is legitimate; after all the freeholder of District 4 has a Wikipedia entry. If he’s not on Wikipedia, he is obviously a fraud and not to be trusted.

OK, so he wasn’t on Wikipedia, but he does have his own Web site where you can read about his plans if elected president, and about how the government is trying to kill him. Although if the government really is trying to kill him, albeit ineffectually, I don’t see how they are going to let him win the presidency. But we all have dreams, right?

This bit of information on his potential assassination also confirms my belief of name deceit.

Then I notice all the other candidates have party names written in the top corner of their section, everything from the Constitution Party to two different Socialist parties. All other nominees had this describer except for “Jeff.”

I realize now, candidates are not listed by importance.

That knowledge is drilled home when I look at everyone’s Web sites and realize Boss has the worst one. It looks like he made it himself. Even Chuck Baldwin of the Constitution Party has a better Web site.

A few weeks ago, TIME magazine said I was a rational voter, which caused me to be too informed and get confused. I disagree, I am well-informed and not at all confused. I spent about an hour looking up the ten candidates, and I decided I am going to vote for Chuck Baldwin and his running mate, Darrell Castle, because I’m pretty sure I like Castle’s name the best out of all the candidates.

Amanda Koch can be reached at amandarosekoch@gmail.com.

McCain Meets with Chilean Dictator in 1985

By TOMÁS DINGES, Correspondent

On Thursday, the Huffington Post published an article showing that John McCain had a secret meeting with the dictator Augusto Pinochet of Chile in December 1985. That same year various human rights reports condemned the country for violations against personal freedom and political liberty, not to mention torture.

Below are three paragraphs from the original article posted on the Huffington Post.

“The trip was arranged by Chile’s ambassador to the United States, Hernan Felipe Errazuriz. According to a contemporary government document obtained from Chile, Errazuriz arranged for a special government liaison to help McCain while in Chile for the ’strictly private’ visit, and described him as ‘one of the conservative congressmen who is closest to our embassy.’

“McCain, a member of the House Foreign Affairs Committee at the time, made no public or private statements critical of the dictatorship, nor did he meet with members of the democratic opposition in Chile, as far as could be determined from a thorough check of U.S. and Chilean newspaper records and interviews with top opposition leaders.

“McCain’s visit with Pinochet took place at a moment when the Chilean strongman held virtually unrestricted dictatorial power and those involved in public, democratic opposition were exposed to great risk.”

It came also at a moment when “methods of torture reported include beatings, electric shocks to the genitals and other parts of the body and rape of women prisoners,” according to an Associated Press report.

Only 12 days later Democratic Sen. Edward Kennedy was welcomed with eggs and a road blockade when he visited in a show of support to the Catholic Church and human rights groups.

That year the current Miss Chile was born, John Denver visited and the brothers Vergara were killed.
It is also the year in which the Inter-American Commission on Human Rights published a review of the human rights situation in Chile, from 1973 to 1985.

It was published in September 1985. Here are some excerpts.

Under the section, Right to Personal Liberty:

“As may be seen from the foregoing account, the right to personal freedom has suffered a sustained deterioration because of the measures adopted by the Government of Chile during the period covered by this report. The periods of preventive detention have increased, from 48 hours under the earlier system to 20 days in the situation the present regime provides for. ”

That might seem of interest to McCain.

Under the section, Political Rights at Present:

“The intolerance of any form of opposition by the Government of Chile that follows from the exposition in Section C of this Chapter, and the absence of channels of participation of the Chilean population as a consequence of the rigid application of the provisions of the 1980 Constitution, have helped to generate serious social problems which have begun to emerge more forcefully since 1983.”

So in case the situation in Chile is not clear enough, a final section from the report concludes: “It must therefore be concluded that the right to personal freedom has been and is seriously violated by the Government of Chile, which is consequently creating a pervasive state of insecurity in the population and giving rise to conditions for the commission of extremely serious violations of the right to physical integrity and life, as follows from the accounts contained in the respective chapters.”

That also might be of some interest to McCain.

1985 also was the year in which a team of five doctors visited Chile as a delegation of the American Human Rights Committee. According to press reports at the time, the group, citing firsthand accounts of torture victims, said that Chilean physicians were aiding the Chilean security apparatus in an effort to kill fewer victims and make torture more effective. The job … “examine the blindfolded victims to assess before, during and after how much torture the victim is able to withstand.”

An Associated Press report from 1985 states the following:

“Since 1981 the U.S. State Dept. has recorded 286 cases of torture in Chile with the number increasing each year. Statistics kept by the Chilean Commission for Human Rights are more than three times higher.

In the past six months, however, the focus of the torture has apparently shifted from extracting information from political prisoners to “communicating with the population about the reign of terror that now exists, said Dr. Robert Lawrence, chief of medicine at Cambridge Hospital.”

McCain. How could you? What has changed in your judgment between then and now?

Tomás Dinges can be reached at tdinges@gmail.com.

Religion 101: McCain’s Problem

By EUGENE MULERO, Correspondent

Newsweek reported this week that McCain has been telling advisors not to hit Obama with the Rev. Jeremiah Wright stuff because it would be reminiscent of what the Bushies did to him in 2000 – alleging that his adopted daughter was an illegitimate child he had with an African-American prostitute.

I don’t buy that McMaverick is not bringing up Wright in the campaign because it reeks of racism.

My theory is that McCain – once considered the Evangelical’s least favorite Republican – has jumped in the deep end of the religion pool. For this campaign he sought and received the support of über-religiosos: Pat Robertson & Co. Even before Jerry Falwell died, McCain went to his throne and kissed his ring.

I remember when the media pumped Rev. Wright’s memorable: “Not ‘God save America, but Goddamn America!’” At the time, some of my friends and colleagues were shocked – ‘how could Obama support this guy?’ they thought.

I, on the other hand, didn’t blink for a second. What Wright said was no more shocking than what some of the really masterful Evangelicals have been spewing for decades on their TV “sermons.” Robertson, for one, advocated nuclear force on Hugo Chavez – a nuclear attack on Venezuela?!

And the other Maverick, Gov. Palin, has attended services where religious leaders decried the “witchcraft” in society.

There have been a few reports that Maverick’s team, or the not-so-distant 527s, will shove Wright’s “Goddman” down our throats.

If they do, expect Team Obama to fight fire with fire by highlighting Maverick’s flip-flop on the Religious Right.

Eugene Mulero may be reached at Eugene.Mulero@gmail.com.

How Wall Street Became a Mess

By BRIAN LYNCH, Special to Taking Back Politics

What went wrong on Wall Street? It is the most critical question of our time, and we have got to get the answers right. When the “experts” start telling us how they’ll fix things, we need an independent understanding of the problem or we risk making even bigger mistakes. Unfortunately, the back story here isn’t so simple. It can’t be reduced to bullet points without the narrative. Nor can it be told without arousing some people’s ideological filters.

I unwittingly began learning about the problems before the question arose. The financial journalist in my family started sending me reading material so I wouldn’t be so clueless when we talked about her job. What seemed to me like interesting, but useless information, suddenly became relevant when the sky started falling. I’m not an economist, but I want to share what I’ve learned so far.

The Players

As I see it, this story has lots of moving parts so I’ll start by introducing the players. It’s a cast that includes Congress, the commodities markets, banks, mortgage companies and the housing industry, investment firms, insurance companies, federal regulators, the super rich and a guy named Joe.

Let’s start with Joe. He represents all the folks who always wanted to buy a home, but couldn’t afford it. He was always on the outside looking in at the American dream because mortgage lenders had standards. Nothing personal Joe, but federal regulations required that lenders could only loan money to those who could actually pay it back. This even applied to Fannie Mae and Freddie Mac, the two largest mortgage companies that have a special federal mandate to grease the wheels of home ownership.

Banks traditionally competed for well-qualified mortgage loans as a way to invest our money. Some of the loans they kept and others they sold for profit. These were boring investments, but banking regulators required conservative investments to keep our money safe.

Next are the insurance companies. In addition to insuring our cars and homes, they insure companies against business losses. They too were under federal regulations to invest our premiums wisely so they would always have the funds to pay out any claims.

Investment firms like Lehman Brothers helped people and businesses to invest their extra cash in the economy, usually through the sale of stocks and bonds. That means buying and selling stock on exchanges where companies sell a stake in their business to raise the cash they need to run it. Investors buy stocks to share ownership in the company and, hopefully, in its profits.

A less well understood player here are the commodities exchanges, also known as the “futures” markets. If you’re thinking “pork bellies,” you are on the right track. It’s a place where people who actually produce certain goods like wheat or oil go to “hedge” or manage their risk to ensure their financial stake in the things they produce against the possibility that it might not sell or return a profit.

Consider the farmers, for example. They plow their money into the ground and hope for a harvest. But a huge crop surplus in the fall could cause prices to collapse, leaving them with no money to buy spring seed. Farmers need to “hedge” their investment in crops to ensure that future market prices will at least cover their costs. At the same time, the futures market helps set prices for the goods we buy today.

There are two types of commodities traders: “hedgers” who want to ensure their financial stake in a product, and “speculators” who agree to buy the product at some future date even if its value falls below what they agreed to pay. These purchase agreements are called “futures contracts.” Futures contracts are traded back and forth on federally regulated exchanges, much like stocks or bonds.

These investments are often very profitable, but sometimes the losses can be disastrous. Even so, the commodities market has operated successfully for over 150 years, keeping prices in line with supply and demand. This is due in no small part to federal regulations and monitoring by the Commodity Futures Trading Commission (CFTC) to prevent any cheating.

For years, this more or less transparent arrangement of distinct financial institutions remained separated by a fire wall of federally imposed checks and balances. This resulted in a relatively stable economy and general prosperity.

Prologue to Crisis

Enter the super rich, who need no introduction except to say they are wealthier and more numerous than ever before. They saw the opportunity to make lots more money if only the government would step aside. In fact, they realized that the money they could make would far exceed what it would cost to buy Congress and elect presidents. Corporate lobbying soon became part of the cost of doing business, and part of the culture of Washington. One by one, federal restrictions began to fall and the parts in this story started to move.

Soon banks could offer insurance or buy stocks. Investment houses and insurance companies could take “positions” in the futures market or offer money market accounts. Mortgage companies could use home loans as collateral to create and sell bonds, so they bundled them together and sold them to investors as “mortgage-backed securities.” In short, the distinctions between our financial institutions faded as all the players moved into more profitable, but higher-risk investments.

Wall Street still wanted more. They didn’t like federal restrictions in the commodities market, so their Congress (no longer ours at this point) allowed them to buy and sell various types of private futures-like contracts off exchanges and therefore outside of any federal control. It’s called the “over-the-counter” market, and purchase agreements here are called “swaps,” rather than “futures contracts.” Today, trillions of dollars worth of these swaps change hands every year with no federal oversight. Recent concerns have been raised that some institutional investors are working both inside and outside of the commodities markets to inflate prices and boost their profits. Oil and food prices are among the targets of current investigations, although little wrongdoing has been proven to date. Stay tuned!

As our federal rules fell, it created an explosion of creative new ways to make money, and the wealthy of the world got a whole lot wealthier.

Hmmmm … how to invest all this wealth? That became the billionaire’s problem worldwide. And here is where it all begins to unravel.

Events in Motion

The world’s wealthiest investors began looking around for good places to put all their money and decided the U.S. housing market was a sound bet. Buying mortgages directly is too messy, however, so they started gobbling up those mortgage-backed securities. The demand for these investments became enormous. Soon, the source of these securities, qualified home buyers, became scarce. There weren’t enough mortgages to satisfy the demand.

Market pressures on Wall Street lead them to put pressure on Washington to ease credit qualification for home mortgages. The loosening of credit accelerated home buying, especially by Joe and his friends who never qualified for mortgages before.

Housing demand soon pushed home prices through the roof, creating the “housing bubble.” Still, the insatiable appetite for mortgage-backed securities continued driving lenders and realtors to evermore creative ways to market houses and squeeze people into supersized mortgages while home prices sky rocketed.

Soon, Joe was able to buy a house without putting money down or buying mortgage insurance. To shoehorn buyers into supersized homes, adjustable rate subprime mortgages were created so buyers could initially pay less than the full mortgage rate. At certain intervals their payments would increase until they reflect the full interest rate plus back payments for the initially lower rates. Can’t make those payments in the future? No problem! Home buyers were assured that their home values would soar allowing them to sell their house at a profit before the higher payments came due.

Bad-faith mortgages began creeping into the system, increasing in number until it became a flood.
Everyone involved turned a blind eye because everyone seemed to be making money.

Back on Wall Street, these bad-faith loans continued to underwrite mortgage-backed securities, turning them into junk bonds. But credit-rating agencies did not raise any alarm bells, and their failure to do so helped perpetuate the sale of these securities all over the world. All the major banks purchased them. To keep up the appearance of being conservative investors, banks hedged these investments on the over-the-counter swaps market. They bought what are called “credit-default swaps,” which would pay back some of the value of these investments in case the bonds went bad.

Some investment firms and insurance companies were eager to deal in these credit-default swaps as they seemed like easy money. Bonds almost never go bust, right? One insurance giant, American International Group, Inc. (AIG), sold over $45 billion worth of these credit-default swaps.

For some global perspective on the crisis, it is estimated that there are about $65 trillion worth of credit-default swaps on the over-the-counter market today. Contrast that with our national Gross Domestic Product, which is only $14 trillion ― or against the Wall Street bailout, which is a meager $700 billion by comparison.

The whole house of cards began to collapse when Joe’s friends, along with millions of middle-income home buyers duped into subprime mortgages, discovered they couldn’t make their payments because the interest rates jumped while their home values fell. That meant refinancing was no longer an option for them. Banks and mortgage companies started foreclosing on homes at record rates. This created a glut of houses on the market that collapsed the already inflated home prices. The U.S. housing bubble burst with a bang heard around the world.

The impact was immediate. Fannie Mae and Freddie Mac lost hundreds of billions of dollars almost overnight. The government was forced to buy them out to prevent massive housing foreclosures.

Banks and investment firms started to collapse from the sudden loss of capital. Mortgage-backed securities defaulted. AIG and others were on the hook for billions in credit-default swaps. The Treasury acted again and bought AIG to prevent an immediate cascade of bank failures. Even so, Washington Mutual, Lehman Brothers and other huge banks imploded. The stock market went on the skids. Foreign investors and foreign banks lost billions of dollars in equity as well. Our hapless president and our blind-eyed Congress thrashed about for ways to prevent economic Armageddon.

They passed the $700 billion “rescue” package after loading it up with pork to satisfy its detractors.
It’s too soon to tell if the rescue plan will help. It may be too little too late. As I write, the worldwide economy continues its free fall with no bottom yet in sight. It’s not too soon to begin to look for answers.

Where to Look Next

This is a very simplistic description of the events leading up to this crisis. The facts here are subject to change as new information emerges. There are many more players to look at, more details to uncover and lots of blame to be assigned. The culprits who tilted the system to feather their nests must be brought to justice. Yet the broader outlines of what went wrong are slowly becoming clear and should serve as a guide to search for answers.

The main point for now is that we have to understand what went wrong so we aren’t taken for a ride by those offering to fix things. There are certain areas where we should be looking for the root causes. A critical examination of Congressional lobbying and campaign-finance practices is certainly needed. This crisis is a repudiation of the market fundamentalism that has guided politicians and businesses for over 20 years. The notion that free markets always self-correct is dead wrong. So we need a healthy debate on the role and importance of government in the regulating of commerce. We should reconsider the ethical standards to which we hold public corporation accountable. We have to develop a better understanding of modern markets and the regulatory agencies such as the Securities and Exchange Commission and the CFTC, which are supposed to protect us from abuses and economic meltdowns.

Perhaps above all, we need to take a good look at ourselves as citizens. Are we paying enough attention to what was going on in our country? Are we actively participating in civic affairs? Do we keeping ourselves well-informed and demand full disclosure from government, corporations and the media?

When we saw mortgage brokers and bankers running amok, we should have sounded alarm bells and held our representatives more accountable. So many of us knew things weren’t right, but we did nothing. As citizens, we must never neglect our responsibilities to each other to stay vigilant, informed and mobilized when necessary to promote the welfare of our communities and our nation.

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