Undernews For 20 January 2009

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20 January 2009
PAGE ONE MUST
PEOPLE TEACH THEIR LEADERS HOW TO LEAD
From remarks at an Inauguration Day Assembly at Lausanne Collegiate School in Memphis, Tenn.

Pablo J. Davis - We'll hear much, rightly, about Barack Obama's becoming the first president of acknowledged African descent.

We'll hear much of his electoral mandate, the strongest of any first - term president in two decades. And his thoughtful, cool, and unflappable bearing, reassuring to so many in these difficult times.

We're right to consider this day historic. But if we see the Inauguration as the end of the story, we'll be making a great mistake. We need to think of this moment as a beginning.

Why? A character in one of German dramatist Bertolt Brecht's plays laments, "Pity this land, that has no hero." To which another character replies, "Pity the land that needs a hero."

Many people, fearful of the times and dazzled by the president - elect's qualities, see him as a political savior.

But there's a trap in such thinking. The presidency is hugely important, but presidents do not achieve by themselves, or strictly from above, or following a detailed plan.

Lincoln's emancipation of enslaved Americans, Teddy Roosevelt's progressive reforms, FDR's creation of safeguards for old age and widowhood - none of these goals sprang fully - formed from the brow of any of these men, great as they were. In each case, strong pressure from the people forced greater goals on the president.

Often in history, the people have led and the leaders have followed. Or, if you prefer, the people have taught their leaders how to lead.

This president, like all others, will on Day One find his desk piled high with IOU's from people and organizations of great wealth and power.

But will he hear from all of the people? Only if we see democracy as more than just elections - as 365- days- per- year dialogue and work between the people and the government.

What I say applies to those who supported Obama in the election and those who didn't.

The issues aren't abstract. Will you have decent work in coming years -- or, indeed, any work? Will you be able to stay in your home? Will you have access to health care? Will the country continue to wage wars, and to what ends? Will our political liberties survive?

Like it or not, government's actions, in our names and with our tax moneys, will have much to say about all this.

Stay informed. Learn about public - policy organizations. And above all let the new president and the Congress hear - - by letter, by phone, by email - - from you, from us, from "We, the people."
VOODOO ECONOMICS: THE AGGREGATOR BANK SCHEME
Paul Krugman, International Herald Tribune - Let me describe the position of a hypothetical bank that I'll call Gothamgroup, or Gotham for short.

On paper, Gotham has $2 trillion in assets and $1.9 trillion in liabilities, so that it has a net worth of $100 billion. But a substantial fraction of its assets - say, $400 billion worth - are mortgage-backed securities and other toxic waste. If the bank tried to sell these assets, it would get no more than $200 billion.

So Gotham is a zombie bank: it's still operating, but the reality is that it has already gone bust. Its stock isn't totally worthless - it still has a market capitalization of $20 billion - but that value is entirely based on the hope that shareholders will be rescued by a government bailout.

Why would the government bail Gotham out? Because it plays a central role in the financial system. When Lehman was allowed to fail, financial markets froze, and for a few weeks the world economy teetered on the edge of collapse. Since we don't want a repeat performance, Gotham has to be kept functioning. But how can that be done?

Well, the government could simply give Gotham a couple of hundred billion dollars, enough to make it solvent again. But this would, of course, be a huge gift to Gotham's current shareholders - and it would also encourage excessive risk-taking in the future. Still, the possibility of such a gift is what's now supporting Gotham's stock price.

A better approach would be to do what the government did with zombie savings and loans at the end of the 1980s: It seized the defunct banks, cleaning out the shareholders. Then it transferred their bad assets to a special institution, Resolution Trust Corp.; paid off enough of the banks' debts to make them solvent; and sold the fixed-up banks to new owners.

The current buzz suggests, however, that policy makers aren't willing to take either of these approaches. Instead, they're reportedly gravitating toward a compromise approach: moving toxic waste from private banks' balance sheets to a publicly owned "bad bank" or "aggregator bank" that would resemble the Resolution Trust Corp., but without seizing the banks first.

Sheila Bair, chairwoman of the Federal Deposit Insurance Corp., recently tried to describe how this would work: "The aggregator bank would buy the assets at fair value." But what does "fair value" mean?

In my example, Gothamgroup is insolvent because the alleged $400 billion of toxic waste on its books is actually worth only $200 billion. The only way a government purchase of that toxic waste can make Gotham solvent again is if the government pays much more than private buyers are willing to offer.

Now, maybe private buyers aren't willing to pay what toxic waste is really worth: "We don't have really any rational pricing right now for some of these asset categories," Bair says. But should the government be in the business of declaring that it knows better than the market what assets are worth? And is it really likely that paying "fair value," whatever that means, would be enough to make Gotham solvent again?

What I suspect is that policy makers - possibly without realizing it - are gearing up to attempt a bait-and-switch: a policy that looks like the cleanup of the savings and loans, but in practice amounts to making huge gifts to bank shareholders at taxpayer expense, disguised as "fair value" purchases of toxic assets.

Why go through these contortions? The answer seems to be that Washington remains deathly afraid of the N-word - nationalization. The truth is that Gothamgroup and its sister institutions are already wards of the state, utterly dependent on taxpayer support; but nobody wants to recognize that fact and implement the obvious solution: an explicit, though temporary, government takeover.

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THE MYTH OF ISRAEL'S STRATEGIC GENIUS
Stephen Walt, Foreign Policy - This image of Israeli strategic genius has been nurtured by Israelis over the years and seems to be an article of faith among neoconservatives and other hard line supporters of Israel in the United States. It also fits nicely with the wrongheaded but still popular image of Israel as the perennial David facing a looming Arab Goliath; in this view, only brilliant strategic thinkers could have consistently overcome the supposedly formidable Arab forces arrayed against them.

The idea that Israelis possess some unique strategic acumen undoubtedly reflects a number of past military exploits, including the decisive victories in the 1948 War of Independence, the rapid conquest of the Sinai in 1956, the daredevil capture of Adolf Eichmann in 1960, the stunning Israeli triumph at the beginning of the 1967 Six Day War, and the intrepid hostage rescue at Entebbe in 1976.

These tactical achievements are part of a larger picture, however, and that picture is not a pretty one. Israel has also lost several wars in the past -- none of them decisively, of course -- and its ability to use force to achieve larger strategic objectives has declined significantly over time. This is why Israelis frequently speak of the need to restore their "deterrent"; they are aware that occasional tactical successes have not led to long-term improvements in their overall security situation. The assault on Gaza is merely the latest illustration of this worrisome tendency. . .

In virtually all of these episodes -- and especially those after 1982 -- Israel's superior military power was used in ways that did not improve its long-term strategic position. Given this dismal record, therefore, there is no reason to think that Israel possesses uniquely gifted strategists or a national security establishment that consistently makes smart and far-sighted choices. Indeed, what is perhaps most remarkable about Israel is how often the architects of these disasters -- Barak, Olmert, Sharon, and maybe Netanyahu -- are not banished from leadership roles but instead are given another opportunity to repeat their mistakes. .

Those who refuse to criticize Israel even when it acts foolishly surely think they are helping the Jewish state. They are wrong. In fact, they are false friends, because their silence, or worse, their cheerleading, merely encourages Israel to continue potentially disastrous courses of action. Israel could use some honest advice these days, and it would make eminently good sense if its closest ally were able to provide it. Ideally, this advice would come from the president, the secretary of state, and prominent members of Congress -- speaking as openly as some politicians in other democracies do. But that's unlikely to happen, because Israel's supporters make it almost impossible for Washington to do anything but reflexively back Israel's actions, whether they make sense or not. And they often do not these days.
INAUGURATION GREAT FOR HOOKERS AND COKE DEALERS
NY Magazine - A brief phone survey of D.C.-area hookers found on Craigslist revealed that Barack Obama's inauguration is inspiring great hopes - for their business. A pair who work together expect 30 clients before Wednesday, all paying $200 a pop. Meeka, 21, a "sexy southern belle, new to town," has come into the city specially for the festivities. "I'm busy over the weekend," she told us. "I could make time for you, though." Karina, 26, traveled five hours to get here, and was already "pretty booked up."

All of the women, who charge between $100 and $300 per hour, voted for Obama. Charlie, who implores clients to "come start my engine, bad boy," said she would even provide her services to Barack Obama, despite potential costs to his nascent presidency. Lei, a male prostitute, spoke to us at his plush apartment in an upscale neighborhood. "I actually just finished with a client who was from out of town, the South, I think," the youthful-looking 38-year-old - who is from an Islamic country, and was in an arranged marriage for eight years before coming out of the closet - told us. "I hope the inauguration will bring more business. If it's guys here by themselves on business, then it will."

Obama's inauguration might also make history for D.C. cocaine dealers - although there is no basis to the rumor that some are dyeing their product black. Over five days, one 29-year-old expects to earn cash in the high five figures from out-of-towners, not least because bars are open until 5 a.m. and there are a few hundred parties. The dealer, who grew up moshing to D.C. punk, laid out $3,000 to stock up because he plans on moving "serious weight." On Saturday, lounging in the back room of the Rock N Roll Hotel nightclub, he slipped a bag of coke into the hands of a venerable fortysomething European reporter. "I've had people calling me about this for weeks," the dealer says, as the reporter hands him $60. "I just sold out. I gotta re-up."
RUBIN, TOP ADVISOR TO OBAMA, PLAYED MAJOR ROLE IN FISCAL DISASTER
Dean Baker, Prospect - The Wall Street Journal told readers that former Treasury secretary and Citigroup honcho Robert Rubin is playing a central role in designing President Obama's economic policy. It would have been appropriate to note that with the possible exception of Alan Greenspan, Mr. Rubin is the person most responsible for the policies that lead to the current crisis.

Mr. Rubin was a staunch advocate the policy of one-sided financial deregulation under which the government ignored prudential regulation while continuing to allow major banks to benefit from the government's "too big to fail" insurance policy. Mr Rubin also actively promoted an over-valued dollar which led to the enormous trade deficit of recent years. In addition, he had a "bubbles are fine" approach that allowed huge asset bubbles to grow unchecked.

The WSJ does note that Mr. Rubin personally profited from these policies in his role as a top Citigroup executive, but it does not point out the extent to which he was directly responsible for the policies that have produced the worst economic downturn since the Great Depression. If Mr. Rubin is in fact playing a large role in determining the economic policies of the Obama administration, this should be serious cause for public concern.
TOM FRIEDMAN: THE GEORGE BUSH OF THE NY TIMES
Matt Taibbi, NY Press - Just when you begin to lose faith in America's ability to fall for absolutely anything - just when you begin to think we Americans as a race might finally outgrow the lovable credulousness that leads us to fork over our credit card numbers to every half-baked TV pitchman hawking a magic dick-enlarging pill, or a way to make millions on the Internet while sitting at home and pounding doughnuts - along comes Thomas Friedman, porn-stached resident of a positively obscene 114,000 11,400 square foot suburban Maryland mega-monstro-mansion and husband to the heir of one of the largest shopping-mall chains in the world, reinventing himself as an oracle of anti-consumerist conservationism.

Where does a man who needs his own offshore drilling platform just to keep the east wing of his house heated get the balls to write a book chiding America for driving energy inefficient automobiles? Where does a guy whose family bulldozed 2.1 million square feet of pristine Hawaiian wilderness to put a Gap, an Old Navy, a Sears, an Abercrombie and even a motherfucking Foot Locker in paradise get off preaching to the rest of us about the need for a "Green Revolution"? . . .

Like George W. Bush with his Bushisms, Friedman came up with lines so hilarious you couldn't make them up even if you were . . . Remember Friedman's take on Bush's Iraq policy? "It's OK to throw out your steering wheel," he wrote, "as long as you remember you're driving without one." Picture that for a minute. Or how about Friedman's analysis of America's foreign policy outlook last May: "The first rule of holes is when you're in one, stop digging. When you're in three, bring a lot of shovels."

First of all, how can any single person be in three holes at once? Secondly, what the fuck is he talking about? If you're supposed to stop digging when you're in one hole, why should you dig more in three? How does that even begin to make sense? It's stuff like this that makes me wonder if the editors over at the New York Times editorial page spend their afternoons dropping acid or drinking rubbing alcohol
UN CHIEF APPALLED BY GAZA DAMAGE
BBC - UN Secretary-General Ban Ki-moon says he is appalled by Israeli attacks on a UN compound in Gaza after seeing the destruction for himself. Mr Ban said that those responsible should be held accountable and demanded a "full investigation" through proper judiciary systems. He was speaking in front of the smouldering remains of the UN food warehouse destroyed by Israeli shells. . .

Mr Ban is the first international leader to visit Gaza for several years, entering through the Israeli-controlled Erez crossing and driving through the bomb-damaged northern suburbs to Gaza City.

He described the rockets as indiscriminate weapons and said the attacks by Hamas are violations of basic humanitarian law.

However, he also called on Israel to end its blockade of Gaza, saying the embargo only strengthens Hamas by fuelling desperation in the impoverished enclave.

Appearing stern and at times angry, Mr Ban called the attacks on Gaza "outrageous" and demanded guarantees that it would never happen again. . .

"I am just appalled. I am not able to describe how I am feeling. This was an outrageous and totally unacceptable attack against the United Nations."

CRASH TALK

Progressive Review - Mark Zandi from Moody's Economy.com estimates that each dollar of refundable tax rebates only boosts GDP by about $1.26, while each dollar of infrastructure spending could provide a $1.59 boost. . . Here are some of Zandi's examples of what a dollar spent by the government will deliver in economic benefits:

$1.73 Food stamps
$1.59 Public works
$1.36 Aid to states
$0.30 Corporate tax cut
$0.29 Make Bush tax cuts permanent.

Burke Hays, Idaho Statesman - A recent Associated Press article noted that 691,000 youth went hungry in 2007. These figures increased 50 percent from 2006, and the Department of Agriculture predicts the numbers will continue to rise through 2009. . .

Increasing food stamp benefits fosters economic recovery faster than rebate checks. Because food stamps target the poorest Americans, 90 percent of the cash benefits are spent within two weeks of receipt. Middle - and upper - income earners take much longer to spend their stimulus checks, if they spend them at all.

Increasing food stamp benefits fosters immediate economic growth, but it is also a long - term investment in our neediest and hungriest children. A study in the prestigious journal Pediatrics noted the deleterious long - term effects of child hunger, including chronic illness, behavioral issues, and psychiatric stress.

A similar study in the American Journal of Public Health found that hungry children are more likely to demonstrate poor academic achievement and to repeat grades compared to their peers. Children who do not perform well in school have difficulty continuing their education beyond secondary school and obtaining adequate employment. Feeding our hungriest children now ensures a productive and educated work force to sustain America's economic future. . .

FURTHERMORE . . .

Inaugural message of the day (From Dockers) - Celebrate our 44th President with Free Shipping

READER COMMENTS

NOTE: You can post your comments on any of the above stories by going to our Undernews site and searching for the headline. Once posted, a copy is immediately mailed to the Review and we pick some of the most interesting to publish here. http://prorev.com/indexa.htm

THE NON - COMBAT TROOP TRICK

The interpretations used by the Bush administration to undermine the SOFA with the relabeling of troops as "support", the Pentagon and Adam Mullen insistence on a conditions based withdrawal, and the justifications that will be used to ignore the SOFA agreement are being pushed by the US military & Co to undermine Obama. Obama, realizing his binds, appointed Gates as a scapegoat, because he knows the US military will not be withdrawing by the Obama deadline. It's not all Obama, look deeper.

Agreed. As a military wife - all his talk about "bringing troops home" is bull crap. He's simply diverting them to Afghanistan. My husband has also been asked to "volunteer" for another tour to Iraq next year and, if not, he will go to Afghanistan instead. But of course that won't ever make the media.

So, when the peace loving liberal Democrats were rallying to bring our troops home, You, my dear "military wife" was probably out bashing us and supporting the war. But now, when we are actually trying to bring our troops home, you think it's all "bullcrap" as you like to put it.

THE HIDDEN REASON ISRAEL WANTS GAZA UNDER ITS CONTROL

Contrary to what you say, Israel does not want Gaza under its control and gave it to the Arabs in 2006, who destroyed it and used it for a terrorist training camp. The natural gas off the coast of Haifa is well within the territorial waters of Israel, who this discovery belongs to. - tmrfiles

Only when the Jewish world finally turns to stand with Rachel Corrie and their Palestinian brothers and sisters, will we finally see an end to the monstrous, devouring entity which is the state that calls itself Israel.

LIGHT RAIL VS. BUS RAPID TRANSIT

Here in Boston we have the Silver Line, which is a rapid bus line. It has its I've lived in a lot of major cities around the world and have noticed that a well equipped fleet of buses is faster and more efficient than light rail.

I used to live in Cleveland Ohio in the '70s and preferred riding the light rail system to riding the bus. The buses, even the new ones, were slow, crowed, noisy and smelly. Cold in the winter and hot in the summer. I now live in central Florida and wish there was light rail here as the traffic is the absolute pits. - Chris

Another thing is that if there's a traffic problem, a bus can make a detour, but a train is stuck on its tracks - assuming light rail would run along established roadways. - xilii

Boston's "Silver Line" has one major advantage. The dedicated lane brings the busses out of the traffic for most of the trip. In most other areas the busses are a major cause of congestion. In addition the bus lane is used illegally by all kinds of Boston car scofflaws but at least they are out of the main flow of traffic.

Trains running down the middle of the street are the worst disruptor to car, bus and traffic. We have those in Boston, too, and it's a nightmare. But when the trolleys have a dedicated median, they still affect traffic by destroying flexible movement along the route, and that is especially true for walkers, who have to be fenced away from crossing the tracks. - wellbasically

LEMON SOCIALISM AT ITS WORST

Marx mentioned that democracy will only survive until its citizens discover they can vote themselves money from the treasury, then they will bankrupt it. - Joseph

BYE BYE BUSH

I always knew Bush was an arrogant, narcissistic, spoiled, brat who should be prosecuted for treating the citizens of the US and people of the world like an all expense paid backyard, toe - tappin birthday BBQ in his honor (that he had to pay people to attend), but I've never read his entire blundering history in one place. I'm even more embarrassed for his father, mother, Jeb, Laura, the twins and our country. He should be spanked and put in time out and I'm sure it's not too late. Thank God Obama gave us the hope and courage to clean up his mess. Best reading ever! I'm passing it on.

WAR CRIMES

"If we whitewash the abuses of the past eight years, we'll guarantee that they will happen again." No more important words have been spoken on this subject, and the real test of what Obama is all about is how he counteracts those abuses, or whether he will. - robbie

GREEN PARTY ON ISRAEL

So the Green Party has finally permanently self - destructed and made a total laughingstock of itself. There's no way it can overcome these actions or ever again gain any kind of credibility. A sad day when a party that was founded to promote progressive ideals and tolerance has openly embraced the vilest sort of bigotry and hatred imaginable. Once antiwar, they are now the very opposite, openly supporting terrorism and direct attacks on innocent civilians. Truly disgusting. Maybe the Gazans will help fund it, but no decent American will now have anything to do with it.

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