Monday, September 29, 2008

Welcome To The Next Great Depression

Buddy, can you spare a Prozac? Oh, wait. This kind of depression won’t be cured with a pill. And a dime doesn’t buy as much today as it did in 1930.

Watching the House vote on a package to rescue the economy fall apart this afternoon was as traumatic as seeing Wall St. brokers leaping from windows in October, 1929 on the day of the great crash. Alright, so that never really happened but the metaphor is valid. And the tense, drawn looks on the faces of long-time Congressional correspondents as they reported the unfolding debacle told much more than they were saying: We’re in trouble, folks, and plenty of it.

I opposed early versions of the economic rescue plan. Treasury Secretary Hank Paulson’s first cut was the financial version of the Patriot Act or the Iraq War resolution granting absurd power with no oversight. Even the second and third drafts were mostly a fat cat handout with not much given back in return to protect the country.

Yet the fact is while the final version voted down by the US House is a bad law, because it had reasonable safeguards and limits it is seriously better than no law at all.

Now, if Nancy Pelosi and John Boehner cannot get a handful of members in their respective caucuses to change their vote when the bill comes up again after Rosh Hashanah, we are all toast.

Brokers may not be leaping from ledges but US stocks, most commodities except precious metals, and oil are falling out the allegorical window. As the Dow plummeted 700 points, the Standard & Poor’s 500 – a much more reliable barometer than the Dow – was plunging by more than 8%, with 490 of the 500 companies that make up the index declining.

Look out below!

Car Loans, Credit Lines

It may take a few weeks for the real impact to rear its devastating head but some businesses already are feeling the effects of what amounts to a credit lockdown.

For 15 years, until my sister died of cancer in 1999, Steve was my brother-in-law. For at least that long, he’s run a reasonably successful small business. I mean really small: He is the only employee. But the business is profitable, generates a decent cash flow, he pays his bills and his credit score is squeaky clean.

I spoke with him this morning to see how things are going. Mostly, I wondered if Hank Paulson was telling the truth – that credit is approaching lock-down – or exaggerating. Turns out he’s not, and it may be the first time in the history of the Bush administration that a cabinet secretary is being honest with the nation.

“Two weeks ago, I leased a new truck to replace the old one,” Steve says of the vehicle that literally drives his business. “I’ve always leased them through the same bank we used for 20 years, and I always got cars and trucks for prime-plus-one (percent). When I called the bank for a new lease, they told prime-plus-two and a half. I was stunned and asked why, because I’ve been a good customer.

“They told me it’s only because I’ve been a good customer for so many years that they’re able to give me a lease at all, and I’m getting it at their best rate.”

He ended up getting a better rate through the manufacturer’s finance company and took it. But the truck was only his first surprise.

Last week, he renewed his revolving line of business credit which finances his inventory purchases. Steve’s had a $25,000 line for ages yet, when he called his account manager, he was greeted with astounding news.

“I’m sorry but we’re going to have to reduce your line to $15,000,” my former brother-in-law was told.

Again, he asked why and, again, he heard the same rationale.

“That we’re keeping it (the credit line) open at all is because you’ve been such a good customer and have an excellent credit score,” Steve says the apologetic banker explained. “Otherwise, we would have closed your line entirely.”

The Beginning

Steve will not be the only business owner in the country to get the same gloomy news over the next 10 or 15 days. Without a turnaround in the re-vote – if and whenever it comes –owners of one employee companies to the chief financial officers of Fortune 100 companies will be hearing the same thing.

Indeed, rates for commercial paper – how larger businesses finance operations – are skyrocketing making borrowing money for everything from inventory to payrolls to receivables incredibly expensive. When September and October unemployment figures are reported, sadly well after the election, we are likely to see a huge jump in the number of jobless. Layoffs beget more layoffs and terrify everyone still hanging on to a job.

So retailers depending on the holiday season for the bulk of their annual sales and profits will be facing disappointing news: The unemployed don’t have cash for gifts and those still working will be pulling in their wings to wait out the storm.

Property tax revenue around the country has already dropped as home values plunge so state and local government – in many regions, often the state’s largest employer – will be forced to cut back and lay off. Next, the Treasury will see corporate and personal tax collections decline sharply, as well, which means either borrowing even more money from China – which is already nervous about its US dollar exposure – or reducing programs to help the swelling ranks of the needy.

Thus, today’s inaction by the House may well spell the beginning of the start of Great Depression II. Since John McCain is already displaying all of the characteristics of Herbert Hoover, all that may save us is if Barack Obama turns out to be Franklin Roosevelt’s reincarnation.

Blame Game

And thus begins the blame game: Democrats blaming Republicans who are, truthfully, mostly at fault; Republicans blaming Democrats who, truthfully, share some of the blame; Dennis Kucinich blaming everyone; Bob Barr – is he still a presidential candidate? – blaming “government.” Eventually, everyone will blame everybody else and I’m sure that, with enough time, my friend Susan’s Daschundt Maxie will blame her two cats, Sasha and Evita. And vice versa.

Actually, there is a definite start date to this afternoon’s collapse and a specific person to blame.

Genuine blame for the reason a deal was needed, and fell apart can be traced to a tense night in December, 2000. The Supreme Court had just elected George Bush president by one vote. Congress was locked in a budget showdown with the outgoing Clinton administration. And a balding, bespectacled Phil Gramm strode onto the floor of the United States Senate the chilly evening of the 15th.

As Congress and the White House were hurriedly hammering out a $384-billion spending bill, Gramm quietly slipped in a 262-page amendment called the Commodity Futures Modernization Act. He boasted to the gathered solons that his measure ensures that neither the SEC nor the Commodity Futures Trading Commission – soon to be chaired by Gramm’s wife – would regulate an incredibly complicated new financial product called swaps, Gramm all but said he saved Wall Street by "protect(ing) financial institutions from overregulation" and "position our financial services industries to be world leaders into the new century."

Even Nazi Germany’s Third Reich lasted a few years a longer than it took Wall St. to collapse under the weight of its own greed, hauling the global economy down with it in the bargain.

So here we sit, teetering on the edge of the precipice, wondering if our futures will be just grim or totally bleak while Washington scratches its bewildered head, calculating what to do next with the election looming a mere 39 days away.

Those who voted against the bill – a lethal combination of hard right Republicans and far left Democrats – may be gleeful this evening at their success. But it’s a fool’s folly to be happy about what the United States House of Representatives did today. How will they explain their decision to what will surely be the largest swelling of unemployment, homelessness and despair seen in their various districts since the 1930s?

McCain’s Gambling Past Rolls Craps

Guest post by Denis Campbell, editor of The Vadimus Post (

“Daddy needs a new pair of shoes!” and the dice cubes fly.

John McCain loves craps. It is routine for him to wager and lose $25,000 in a session as to play the “suspend the campaign and return to Washington to save the Bailout” gambit or petulantly select an unknown for Vice President as the table runs hot. The problem is it’s also routine for him to become petulant, moody, churlish, angry and flash that fiery, scary temper when his luck runs cold.

Dice are funny. There’s nothing here but pure, dumb luck. A compulsive gambler will tell you, a hot dice run creates a sugar high bigger than any ten year old can imagine and… dark, erratic, moody behaviour where one tries to quickly recoup losses digging the hole deeper when they run cold. You are completely at the mercy of two clear red silicon composite boxes with painted white numbers.

Barack Obama plays poker, very well. Poker requires cool under pressure, patience, skill, discipline and an ability to play the man as well as your card hand. Poker players know when to hold, fold or push their chips all-in for the highest percentage advantage. Do it successfully and increase your winning percentage dramatically. The house never beats you. You beat yourself. And luck is something to use and respect.

I’m an improving poker player as well as political contributor to WPT (World Poker Tour) Magazine. It’s where those who like to play the game go to learn strategy from top experts and pros. I was asked to handicap aspects of the Presidential race and predict the odds of online gaming again becoming legal in the USA . New York Times reporters Jo Becker and Don van Natta, Jr. did an excellent job of tying John McCain and his lobbying buddies to Indian casino gaming.

Not as deeply reported is a piece of legislation that helped his casino buddies more than locations on certain reservations. John McCain and his lobbying pals eliminated their online competition, by making it illegal for any company to use the Federal Banking payment processing system to process Internet gaming transactions. It was buried deep in a shipping port security bill passed at midnight when Congress adjourned September, 2006 to return home and contest mid-term elections.

The Security and Accountability For Every Port Act of 2006 (or SAFE Port Act) had language inserted as Title VIII of the Act. The Unlawful Internet Gambling Enforcement Act prohibited the transfer of funds from a US financial institution to any Internet gambling site.

What, you might ask, do online poker and Internet gambling have to do with Port Security? Nothing, it was a brilliant legislative manoeuvre. They could rightfully defend it to colleagues by saying they did not make gambling online illegal, something they could never stop, so they focused on those trying to cash their winnings, so why bother?

“I’d call it the John McCain, Rick Davis, Jack Abramoff and Scott Reed Personal Enrichment Act” said a Republican Congressman defeated for re-election that year and who asked not to be named, “these guys were all in it up their eyeballs.” “It gave their Indian casino buddies free reign and made sure 95+% of all gaming occurred in their casinos,” he continued. Americans were thus forced to apply for foreign credit cards or work with international friends to transfer winnings.

All the act did was make the IRS’ job of tracing funds more difficult. Log on any evening to Party Poker, Full Tilt Poker or a dozen other sites and despite the language all use (except Party Poker) prohibiting US players or payments processed to US accounts, you will see major US city represented at 8-10% of the seats on their tables.

Congressman Barney Frank, (D-MA), Chairman of the House Banking Committee has been unable to move a bill deleting Title VIII language because of Republican filibuster threats. Professional poker players in the USA , people who make their living playing and representing the game testified before his committee on this unlawful restraint of their trade. The gaming lobby has kept this from coming to a vote, led by John McCain, Scott Reed and Rick Davis.

Last week I had a lengthy interview with Russell Means’, head of the Lakota Indian Nation that withdrew from all Treaties with the US Government in December of last year. He is running to become the Chief of the Sioux Tribe in Pine Ridge, an election where, he said, “two years ago, despite having only about 2,700 registered voters, more than 4,000 paper ballots were cast, counted and certified (despite the tribal court ruling it was indeed a fixed election), by the Tribal Council and Bureau of Indian Affairs.”

Until now, no one has cared. Indian gaming and the control of Reservations by the BIA has kept them dirt poor, dependent and under the control of John McCain’s friends. (More to come later this week in the full Means interview).

So the tiniest bit of the light has crept on to the Indian gaming scene. We will throw the door open and watch the cockroaches scatter into the woodwork shadows. This story about Indian gaming and election rigging is just the tip of the exploitation iceberg. What lies under the surface is very damaging indeed.

Senator McCain, you may have, as you said in the debate the other evening, fought earmarks. Unfortunately your inner lobbyist and gambling demons are much harder to slay than saying “thanks but no thanks to that bridge to nowhere.”

“It’s 7-out, line in, Senator” You just lost your money to the house.

Sarah Palin’s Feminine Wiles Fall Short

A guest post from Sharon Lyle, publisher of the LA Progressive e-newsmagazine at

Shortly after the Katie Couric-Sarah Palin interview, a slew of reports hit the Internet assessing the VP candidate’s performance. Try as I might, I was hard pressed to find a single report that looked favorably on Palin’s delivery. Slate’s Christopher Beam said that Palin resembled, “a high-schooler trying to BS her way through a book report.” New York Times reporter Bob Herbert said “the idea that the voters of the United States might install someone in the vice president’s office who is too unprepared or too intellectually insecure to appear on, say, “Meet the Press” or “Face the Nation” is mind-boggling.” He then likened the election of Palin to “putting an unqualified pilot in the cockpit of a jetliner.

So when I watched the Palin-Couric interview, I wasn’t completely surprised to see Palin fumbling. I suspected this would surface sooner or later. Why else would the McCain campaign shield her from the media for so long? Just two days earlier when Palin was to meet with Afghan President Hamid Karzai, campaign aides told reporters they could not go into the meetings but the photographers and video camera crew were invited in. When a couple of major news outlets reportedly threatened to remove their camera crews altogether, campaign spokeswoman Tracey Schmitt was quoted as saying the reporter ban was a miscommunication.

Still, when watching the events of that day on CNN and MSNBC and reading about them in other media, it was impossible to get a grasp of the dialogue exchanged between Palin and Karzai or any of the other foreign leaders she met that day. The average citizen is still left wondering — who is Sarah Palin?

But as I sat through more of the interview with Couric, Palin’s ability to stay on point was even worse than I’d imagined. Couric seemed to rattle Palin, zooming in on hard-hitting questions while staring with a blank face — looking directly and unwaveringly at Palin as she stumbled and bumbled to find a coherent answer. Palin squirmed in her seat as an apparent uneasiness seemed to rise from within but Couric refused to offer up a smile or a nod. While watching this exchange, it occurred to me that maybe the problem was that one of Palin’s tools was rendered ineffective with Couric.

The Alaskan Governor is an attractive woman – perhaps she is adept at using her charm and beauty to distract from other possible shortcomings. Couric didn’t seem to be biting and Palin was clearly operating outside of her comfort zone.

To see if I was on to something with this theory, I went to YouTube and replayed the Palin interview with Charles Gibson of ABC, carefully observing the way she handled Gibson. Within the first 7 or so minutes into day 1 of the first interview, Sarah Palin addressed Charles Gibson as “Charlie” no less than five times. At one point, when they were on the grounds of her home in Alaska, she touched his arm. These are subtle gestures that can easily be dismissed as personal style but when compared to the way she interacted with Katie Couric, I’m not so sure. In replaying the Couric interview, I never heard Palin refer to Couric as “Katie”. Theirs was a strictly professional exchange and this did not seem to work in Palin’s favor.

According to a recent CNN/Opinion Research Corporation poll, “ 62 percent of men questioned have a favorable opinion of the Alaska governor, nine points higher than women.” The poll also indicated that there is a gender gap when it comes to whether Palin is qualified to serve as president. Fifty-seven percent of male respondents said Palin was qualified, 14 points higher than women. I don’t doubt the McCain camp chose Palin for this very reason.

In a piece entitled, “Desperately Searching for Sarah,” NBC National Journal Reporter Carrie Dann asserts that web searches say something about what we really want to know. NBC News uses an online research company, Hitwise, to compile and analyze what people are searching for on the web. According to Dann, “Palin” searches caused web traffic to spike to almost 30 times that of any other candidate by the date of Palin’s convention speech.

Dann says volume fell almost as quickly as it rose but added that searches containing the keywords “Sarah Palin legs”, “Sarah Palin Vogue”, and “Sarah Palin sexy photos” have outranked searches for legitimate policy positions such as earmarks investigation since Palin entered the race. Dann claims that NBC believes that what people search for says a lot about how the campaigns are making their message stick. I don’t know what the Palin searches say about the message the McCain campaign is sending but it seems to say something about how a large percentage of men are thinking.

But, although the polls indicate that Palin is favored by men, it is not all men. Even conservatives such as George Will are saying enough is enough. Fareed Zakaria has asked that she step down and Jack Cafferty’s exasperation over the spector of a Palin presidency can only be given justice by providing you with the video to watch for yourself (see below).


So this takes us to the question of how Palin will handle next Thursday’s debate. Next Thursday, the debate will be moderated by veteran journalist Gwen Ifill. A couple of months ago, there were some who were disgruntled that Ifill had been relegated to moderate the VP debate and not one of the presidential debates considering her senior status and exemplary performances at moderating in the past. But now, I have to admit, it makes me smile just thinking of Gwen Ifill sitting in the moderator seat on Thursday.I predict, that unlike John McCain who avoided eye contact with Barack Obama, Sarah Palin won’t avoid making eye contact with Joe Biden. She knows where her strength lies and she’ll invite it. It gives her an edge over her opponent that all attractive women sense. Biden will be in a precarious position but I trust that he’s up to the task. This Thursday’s debate will be a dance of balance. Biden doesn’t need to sit and memorize talking points but he will have to be mindful that this is not the typical debate.

What’s important to Palin is that she feel comfortable enough to not make a complete fool of herself on this, one of the most watched debates in the history of television, debating a man who has more experience dealing in the matters of foreign policy than she has in every aspect of her life. She is going to need to draw strength from being able to use her charm.

She will likely not avoid looking into Biden’s eyes but looking at Ifill, now that is another thing altogether. We’ll all watch and see how that works for her.

I, like millions of other Americans, will be there watching taping and watching again as this monumental time in American history gets played out.