Progressives and Obama (Part 3)

The latest issue of The Gay and Lesbian Review has a number of articles about the upcoming U.S. presidential election. For instance, in an essay entitled “The Critical Moment”, Massachusetts Congressman Barney Frank proposes that from the standpoint of GLBT rights, 2008 may well be the year that “the political system caught up with the country.” Frank is adamant that “on the question of protecting people against discrimination based on sexual orientation or gender identity, the voters have been ahead of the politicians.”

Timothy Patrick McCarthy also has an interesting essay in the “Election 2008 Issue” of The Gay and Lesbian Review, one in which he asks: “Is Barack Obama the Real Deal?” Following are excerpts from this particular essay.

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One of the many things I admire about Barack Obama is his willingness to admit his imperfections. “I am not a perfect candidate,” he is fond of saying, striking a chord of humility that makes him seem more human than most of our politicians. Obama wants us to know that he is fallible, yes, but not irreparably flawed.

After eight torturous years of a flawed administration that seems constitutionally incapable of admitting its own fallibility – even as it has presided over so many failures at home and abroad – it is refreshing to have a presidential candidate who can admit that he doesn’t have all the answers. So many of us are hungry to vote for a candidate who seems to understand that strong leadership requires an openness to new and different ideas, a willingness to grow and evolve, a capacity to learn from one’s mistakes. In light of the Bush Administration’s grotesque hubris, such humility seems almost revolutionary.

. . . When it comes to GLBT issues, Barack Obama is not a perfect candidate. His acrobatics on marriage equality suggest that he has a capacity for calculation just like any other politician. But we cannot withhold our support because of one issue, as important as it is to so many of us. Indeed, perhaps the “marriage issue” raises another important question: can we condemn Barack Obama – or any other candidate, for that matter – for failing to embrace all the positions we hold near and dear when we ourselves have not yet achieved a consensus about what we believe? Many of us want the right to marry, but not all of us by any means. And as we witnessed all too clearly in the recent ENDA vote in Congress, our community still has its own internal debates about the politics and priorities of GLBT civil rights. In other words, we too, are still struggling to form a more perfect union.

. . . Jesse Jackson was correct in saying that progressive change occurs whenever there is a combination of “an enlightened president and an energized electorate.” Together, we in the GLBT community, as with American voters in general, are as energized as we’ve been in recent memory. It remains to be seen whether Barack Obama will become the truly enlightened leader he seems to be. But if we continue to engage him in good faith, if we continue to press our demands on him, I am confident that he will become a more perfect candidate insofar as gay rights are concerned – a powerful straight ally who stands with us, rather than against us, in our ongoing struggle for freedom and equality. Together, Barack Obama and his queer supporters may just yet perfect the union.

- Excerpted from “Is Barack Obama the Real Deal?” by Timothy Patrick McCarthy (The Gay and Lesbian Review, September-October 2008).



NEXT: Part 4


See also the previous Wild Reed posts:
• Progressives and Obama (Part 1)
• Progressives and Obama (Part 2)
• An American Prayer

A Socialist Response to the Financial Crisis

The National Committee of the Socialist Equality Party, along with its presidential and vice presidential candidates, Jerome White and Bill Van Auken, has issued a statement unequivocally opposing the plan to bail out Wall Street with hundreds of billions of dollars of taxpayer funds.

Proposed by the Bush administration, the plan has been described as the largest government intervention in private markets since the Great Depression. Democratic presidential candidate Barack Obama and the Democratic congressional leadership, by and large, support the plan.

I appreciate the historical perspective and critical analysis the Socialist Equality Party statement provides, including its incisive critique of capitalism. However, like so many political statements, from either the left or the right, it is long on rhetoric and short on specifics.

For example, what exactly would “democratic control” of financial institutions by “the working population” look like?

Have there been (or are there) successful models of such control?

What are the actual steps by which “the working people” can “assume control of the financial institutions and use them for the common good, not corporate profit and personal enrichment.”

And who defines “the working people”?

Don’t get me wrong, I definitely remain a “socialist-leaning” guy, and I agree with Ronald Aronson that “many of our key values and starting points are drawn from a common historical source: the socialist tradition.”*

Yet at the same time I’m open to an economic system that acknowledges and encourages the best aspects of both capitalism and socialism, open to considering capitalism and socialism as, in the words of Jeremy Rifkin, “complementary ‘visible hands’ that continually balance individual self-interest in the market with a collective sense of responsibility for each other’s welfare.” According to Rifkin, “the social market-economy model practiced across the member states of the European Union comes closest to this mechanism.”

Having said all of this, I share now excerpts from the Socialist Equality Party’s response to the current financial situation.

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The plan, which is being rushed through Congress for passage this week, is the response of the government and the entire political establishment to what is acknowledged to be the greatest economic crisis since the Wall Street crash of 1929. It calls for an unprecedented transfer of public funds to the major banks and the American financial elite at the expense of the broad mass of the people.

Both the plan itself and the manner in which it is being imposed are deeply undemocratic. Exploiting the breakdown in US and global financial markets, the financial aristocracy, which is responsible for the crisis, is exercising its control over the government, both political parties, and the media to implement policies of the most far-reaching character without any genuine debate or discussion. As in the aftermath of 9/11, it is seeking to utilize the crisis to push through policies that would otherwise be considered entirely unacceptable.

None of the measures being carried out address the underlying causes of the financial meltdown, nor will they resolve the crisis. At most, they will only postpone the day of reckoning.

None of those who control the banks and finance houses are being held accountable, and not a penny is being provided to provide relief for millions of working class families who are losing their homes, their jobs, and their livelihoods as a result of the frenzied speculation that led to the crisis.

Make no mistake: The working people, who are the victims of the financial parasitism of the ruling elite, will foot the bill to bail out those who have enriched themselves by plundering the social wealth. The massive expansion of budget deficits and the national debt as a result of this plan will be used to justify a brutal assault on basic social programs, education, housing and the wages, jobs, pensions, and health benefits of the working class.

. . . The real source of the financial crisis is not and cannot be discussed by any of the official institutions or any of the political representatives of big business, whether Republican or Democratic. It is the capitalist system itself, which has for decades sought to overcome its fundamental contradictions by engaging in ever more parasitic and fraudulent forms of financial manipulation—piling up debt while dismantling the productive infrastructure of society.

American capitalism has become the global leader in the creation of personal wealth for the ruling elite entirely separated from the creation of real value in the process of production. The current economic breakdown, which threatens the world’s people with catastrophe, is the inevitable result.

The alternative to the naked dictatorship of capital and the impoverishment of the working people is socialism. The Socialist Equality Party insists that if the resources of the American people must be mobilized to avert an economic catastrophe, then the American working people should assume control of the financial institutions and use them for the common good, not corporate profit and personal enrichment.

We propose that the major banks and financial institutions be nationalized and turned into public utilities, operated under the democratic control of the working population. The vast financial resources that they control must be used to provide decent education, housing, health care, retirement benefits and good-paying jobs for all.


* Writes Aronson: “Socialism’s values continue to nourish community life. Much of our world continues to be organized collectively, democratically, and socially, operating according to need and not according to profitability – in schools and cooperatives; libraries and nonprofits; local, state, and federal government programs. September 11 and Hurrican Katrina showed the undying need for extensive and intensive structures of community. The socialist standards of fairness, democracy, equality, and justice for all are as much a part of daily life as are capitalism’s values of privilege, unequal rewards, and power.”


See also the previous Wild Reed posts:
R.I.P. Neoclassical Economics
Capitalism on Trial
A System That’s Not Going to Survive
The Wrong Type of Government Intervention
John le Carré’s Dark Suspicions
A Lose/Lose Situation
Reality Check

Recommended Off-site Link:
How Socialism Works - HowStuffWorks.com.
Socialist Equality Party - Statement of Principles (Part 1) - World Socialist Web Site, September 25, 2008.

Fernando Lugo

. . . on Liberation Theology and the Changing Political Landscape of Latin America

Earlier today Democracy Now! hosts Amy Goodman and Juan Gonzalez interviewed the newly-elected president of Paraguay, Fernando Lugo, who is currently in New York for the 63rd session of the United Nations General Assembly.

Lugo, a former Roman Catholic priest, was known as the “Bishop of the Poor,” and often led anti-government protests and worked for peasant rights. After resigning his position as bishop in 2006, he campaigned and won the presidential election on a platform of land reform and anti-corruption.

In the following excerpts, Lugo talks about the history and role of liberation theology in Latin America and the wider Catholic Church; the impact of U.S. foreign policy; and the rise of progressive governments throughout Latin America.

(Note: Lugo’s responses have been translated.)

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Juan Gonzalez: Liberation theology has also had a lot of controversy in Latin America. You came to political awareness as a priest and a bishop who espoused liberation theology. It’s not regarded well by the hierarchy of the [Roman] Catholic Church today. What’s the role of the Catholic Church in Latin America today? Is it part of the change for progress, or is it still holding back progress?

Fernando Lugo: Liberation theology is a theology that emerged in Latin America, and it is a pastoral theology that cannot be judged from a doctrinal or a dogmatic standpoint. There are controversies, yes, because there is freedom of thought. Theology is to develop a free way of thinking. One doesn’t necessarily need to be in agreement with all of the other thinking of the Church. It has become a philosophical and sociological tool, very important for analyzing social reality.

Moreover . . . in the letter that he wrote to the bishops of Brazil . . . John Paul II [said] that liberation theology that was born in Latin America is now part of the theological heritage of the universal church. There is recognition of that theology. There may be different tendencies, and within those tendencies, some might be called into question, others might be criticized.


Amy Goodman: [What has been] the effect of the war in Iraq on you in Paraguay, the global economic crisis, and your advice for President Bush in dealing with other countries?

Fernando Lugo: Some think that the war in Iraq is very far from Latin America, but the effects that it’s having are worldwide. I think that it would not be good for a country to provoke a war in one part of the world and try to speak of peace in another part. I think that world leaders will demand coherence in policy, both foreign policy and internal policy. So I think that those contradictions, those controversies, these spaces of dialogue and confrontation, such as the United Nations, need to be clarified and set out a line, the line of humanity, of peace, of truth, of justice, that it needs to build justice in the modern world . . . We reject all types of violence, wherever it may come from. Violence has never brought a solution to any problem that humankind has faced. And I think that [we as] leaders need to fully grasp this.


Juan Gonzalez: Did you ever expect, when you were a parish priest, that there would be so much progressive development, so many liberal and rebel leaders, really, coming to power in so many of the governments throughout Latin America?

Fernando Lugo: I think Latin America is changing. More than progressive governments or leftist governments, I think that there is a citizen consciousness that has grown and that calls into question and somehow sets the framework for the direction that national leaders need to have. I think that the major force — in our national constitution, we say that sovereignty resides with the people, and it is the people’s power, when it is organized, is to set out the direction for countries. And I think that’s what’s happening in Latin America.

To read the complete transcript of Democracy Now!’s interview with Fernando Lugo, click here.


See also the previous Wild Reed posts:
“Bishop of the Poor” Elected as President of Paraguay
John Pilger on Resisting Empire

Holding McCain Accountable to His Falsehoods

Senator John McCain on The View, where Joy Behar, third from right,
said two of his advertisements were “lies.” (Steve Fenn/ABC).

Frank Rich had an insightful column in yesterday’s New York Times. Following are highlights (with thanks to Michael in Norfolk for bringing this piece to my attention).

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Just as the Bushies once flogged uranium from Africa, so [Sarah] Palin ceaselessly repeats her discredited claim that she said “no thanks” to the Bridge to Nowhere. Nothing is too small or sacred for the McCain campaign to lie about. It was even caught (by The Christian Science Monitor) peddling an imaginary encounter between Cindy McCain and Mother Teresa when McCain was adopting her daughter in Bangladesh.

. . . If you doubt that the big lies are sticking, look at the latest Washington Post/ABC News poll. Half of voters now believe in the daily McCain refrain that Obama will raise their taxes. In fact, Obama proposes raising taxes only on the 1.9 percent of households that make more than $250,000 a year and cutting them for nearly everyone else.

. . . You know the press is impotent at unmasking this truthiness when the hardest-hitting interrogation McCain has yet faced on television came on The View. Barbara Walters and Joy Behar called him on several falsehoods, including his endlessly repeated fantasy that Palin opposed earmarks for Alaska. Behar used the word “lies” to his face. The McCains are so used to deference from “the filter” that Cindy McCain later complained that The View picked “our bones clean.” In our news culture, Behar, a stand-up comic by profession, looms as the new Edward R. Murrow.

. . . For all his fiery calls last week for a Wall Street crackdown, McCain opposed the very regulations that might have helped avert the current catastrophe. In 1999, he supported a law co-authored by [Texas Senator Phil] Gramm (and ultimately signed by Bill Clinton) that revoked the New Deal reforms intended to prevent commercial banks, insurance companies and investment banks from mingling their businesses.

. . . Whatever blanks are yet to be filled in on Obama, we at least know his economic plans and the known quantities who are shaping them (Lawrence Summers, Robert Rubin, Paul Volcker). McCain has reversed himself on every single economic issue this year, often within a 24-hour period, whether he’s judging the strength of the economy’s fundamentals or the wisdom of the government bailout of AIG.

. . . The twin-pronged strategy of truculence and propaganda that sold Bush and his war could yet work for McCain. Even now his campaign has kept the “filter” from learning the very basics about his fitness to serve as president — his finances and his health. The McCain multihousehold’s multimillion-dollar mother lode is buried in Cindy McCain’s still-unreleased complete tax returns. John McCain’s full medical records, our sole index to the odds of an imminent Palin presidency, also remain locked away.

– Frank Rich


See also the previous Wild Reed posts:
Saying “No” to Torture and the Republican Agenda
Marching on the RNC
Historic (and Wild!)
Reality Check
Catholic Democrats
An American Prayer
Progressives and Obama (Part 1)
Progressives and Obama (Part 2)

A Little Too Fluid?

I’ve long admired and appreciated the writings of Catholic author and theologian Diarmuid O’Murchu (pictured at right). Indeed, in the past, I’ve contended that at the ecumenical council that’s long overdue for the development and articulation of a sexual theology that draws from and honors the broad and rich reality of human sexuality, O’Murchu’s perspective should definitely be included. However, his latest book has tempered my enthusiasm, and leaves me with more questions than answers.

In The Transformation of Desire: How Desire Became Corrupted – and How We Can Reclaim It, O’Murchu devotes one chapter to “Erotic Desire and the Homosexual Experience.” Yet strangely, the only “experience” he seems to draw from are of those of heterosexual folks he has counseled in “couples-counseling.” Accordingly, his conclusions about the homosexual orientation seem to be entirely drawn from heterosexual experience. This rather problematic shortcoming seems lost on O’Murchu, no doubt because he rejects, throughout his book, the “rigid divisions” between heterosexuality and homosexuality.

O’Murchu begins his chapter on erotic desire and the homosexual experience by positing the following thesis: “Sexual orientation suggests a sexual fluidity that can be embraced by wholesome desiring.” It soon becomes clear that O’Murchu’s understanding of “sexual fluidity” calls us to transcend those previously mentioned “rigid divisions” between heterosexuality and homosexuality.

Of course, it’s not the first time I’ve read about the “fluidity” of human sexuality, and I’ve long concluded that sexual orientation is indeed a spectrum – with most of us positioned somewhere along it. I also think that, by and large, once we discover where it is on this spectrum that we feel whole and integrated, we stay put.

Yet O’Murchu suggests that as “right relating” human beings we should all “entertain possibilities of being intimate with each other,” meaning, I take it, that we should all acknowledge (at the very least) our potential bisexuality. Yet is he saying that bisexuality is ultimately superior to either heterosexuality or homosexuality? Of course, O’Murchu may well reject these labels on the grounds that all three are limiting and potentially divisive. Be that as it may, I still find his suggestion rather, er, challenging!

In the next part of his chapter on erotic desire and the homosexual experience, O’Murchu explores the “confusing evidence” that arises from the fact that “in the homosexual world, desire is often equated with sexualized behavior rather than with deeper psychological needs.” Sadly true.

And then there’s the “suppressed evidence” – real life stories “often consigned to internalized oppression.” In exploring further such “suppressed evidence,” O’Murchu shares observations from his fifteen years as a couples-counselor, mainly with heterosexual couples. In this “experiential context,” O’Murchu has come to recognize that:

Sexual orientation is not a fixed, hormonally determined phenomenon. [Actually, most researchers conclude that hormones do play some role in determining sexual orientation. British researchers, for instance, have recently stated that: “It would appear that sexual orientation is biological in nature, determined by a complex interplay of genetic factors and the early uterine environment.”] Over [the] years I met many [straight] married persons trying to make sense of feelings around same-sex desires. Some rashly jumped to the conclusion that they were truly homosexual and rapidly proceeded to break up an otherwise enriching marital relationship. [Question: If they weren’t “truly homosexual” how then would O’Murchu describe them?] More traumatic was the awareness of being a bisexual person, continuously taunted with the allegation of being sexually confused, leaving one feeling isolated and even rejected by significant others. [How does O’Murchu distinguish between those not “truly homosexual,” yet experiencing “feelings around same-sex desires,” and those who become aware of their bisexuality?]

In order to “honor our true selves, and especially our desiring as psychosexual people,” O’Murchu suggests the following be included in “a revamped psychosexual ethic.” I tend to agree with much of what he writes, but perhaps because of my bias as a self-identifying gay man, I find his discussion on the homosexual orientation rather limited. He also fails to follow through on some of this thoughts and ideas – which I find somewhat vexing.

· Sexual orientation is not a fixed commodity. Our sexuality is a form of erotic energy which is highly polymorphous – and has been for thousands of years of human evolution. [Why must it be either “fixed” or “polymorphous”? Can’t it be “both/and”? I think it’s experienced that way for most people. I’ve had sexual fantasies involving women, mainly when I was a teenager, yet I’m predominately drawn to men – sexually and, most importantly, relationally. Because of this I consider my sexual orientation to be homosexual. I view it not as a “fixture” but as a gift. Unwrapping our gifts can take time. (It can also be confusing and messy for some!) Yet once we recognize our gifts we should honor them accordingly.] For most people it seems to follow a heterosexual path of unfolding; this may be due to the fact that biological determinants point it in that direction, and as several evolutionary biologists claim, it may also be the fruit of evolutionary development, viewed within a Darwinian perspective.

· The rigid division between heterosexuality and homosexuality is the product of a culture addicted to dualistic clarity. [I think the key word here is “rigid.”] It is a clarity of the rational mind that fails to honor the developmental dynamics of the inner soul. For all of us the psychosexual life-journey probably carries elements of the bisexual space, and this is about a great deal more than biological preconditioning.

· While allowing for a preponderance of heterosexual culture, several people within that orientation, and many within long-term marital relationships, do experience a desire to connect homosexually. This seems a healthy and normal form of psychological growth, currently frowned upon by the dominant culture. [I know a man who regularly hooks up with other men for sex via the internet. He recently told me that he’s currently seeing four guys – all of whom are married to women. The “desire to connect homosexually” may be a “healthy and normal form of psychological growth,” but clearly the ways that such connecting takes place can be anything but healthy – psychologically and physically. Elsewhere in the chapter, O’Murchu laments the “toxic secrecy” that he has experienced in the relationships of the couples he has counseled. It’s truly tragic that this secrecy continues for some once they choose to start “connecting homosexually.” I’m curious as to how O’Murchu would suggest a supposedly straight man respond to his desire to “connect homosexually.” Unfortunately, O’Murchu does not explore such questions in his book.]

· Some people clearly identify with a homosexual condition as their life-long orientation. Human culture has known of gay and lesbian couples for several centuries and some of them have maintained life-long relationships. The allegation that homosexual relationships are more fickle and unreliable than heterosexual ones, is at least in part attributable to the hostility in the dominant culture towards any alternative mode of relating.

· Because of the cultural reluctance – and at times overt hostility – to view this polymorphous development in a more benign and enlightened way, abusive sexual behaviors flourish in our time. Sexual dysfunctionality is on the increase, taking a heavy toll on growing numbers of people, while sexually related addictions seem to be more widespread. We need a more holistic context if we hope to address these issues with greater insight and resolution. [I totally agree with this last sentence, but it seems clear to me that we’re still figuring out this “holistic context.”]

· What are frequently considered to be deviant sexual behaviors, e.g., transvestitism (cross-dressing), S & M, etc., may also carry cultural meanings that merit a more nuanced interpretation. One notes, for example, that several cultures exhibit such patterns of unconventional behavior: the native American berdache, the kathoey of Thailand, the xaniths of Oman, the hijras of India, the mahus of Polynesia, and the hsiang ku of China. In all cases, these are regarded with a certain kind of spiritual respect, commonly attributed to a person endowed with shamanic capabilities.

O’Murchu concludes his chapter on erotic desire and the homosexual experience by pointing us “towards a new mutuality.” He suggests that homosexuality is not about the physical behavior of two people of the same gender, but rather a cultural statement about each and every one of us. [Can’t it be both? Ah, there’s my Sufi-side coming through again!]

“Our human capacity to connect and love might be much better served if we adopt a less rigid view of sexual orientation,” writes O’Murchu. “When all of us can entertain possibilities of being intimate with each other, and society has transcended its voyeuristic capacity for judging and condemning us, then I guess we will not become more promiscuous but more caring and loving. I also suspect we will become more sexually mature and, as a consequence, more courageous and determined to bring about a world of right relating where maturity and justice can thrive.”

Again, I question if such a “world of right relating” is dependent on the universal embodiment of O’Murchu’s “highly polymorphous” understanding of erotic energy.

Do I need to lighten up or are my doubts and questions reasonable? I welcome my readers’ thoughts on this matter.


See also the previous Wild Reed posts:
Remembering Alfred Kinsey’s Legacy of Liberation
Making Love, Giving Life
What Is It That Ails You?
Relationship: The Crucial Factor in Sexual Morality
Joan Timmerman on the “Wisdom of the Body”
Daniel Helminiak on the “Non-Negotiables of Human Sex”
Remembering Karl Heinrich Ulrichs

Road Trip to St. Louis

Part 6: Hannibal

(NOTE: This is the last installment in a series of posts documenting my road trip to St. Louis last month with my friends Kathleen and Joey. This final installment focuses on our return trip to Minnesota, via the town of Hannibal, Missouri - a river town that is significant for reasons that you’ll discover below.)


Above: Our journey from St. Louis to Hannibal involved crossing a tributary of the Mississippi via a ferry.



Above: Hannibal, Missouri - Wednesday, August 20, 2008.



Above and below: The river town of Hannibal is famous for being the boyhood home of Samuel Langhorne Clemens, better known as author Mark Twain. More specifically, Hannibal served as the inspiration for the fictional town of St. Petersburg in two of Twain’s most famous works, The Adventures of Tom Sawyer and Adventures of Huckleberry Finn.

At the time of Twain’s boyhood (the 1840s), Missouri was a slave state in the Union. Growing up in such a place and time, Twain was exposed to the institution of slavery. As a result, slavery and other aspects of Southern culture would later become important themes in his writing - most notably in Adventures of Huckleberry Finn, a book that has been described as “the great American novel.”

The main theme of Adventures of Huckleberry Finn is the title character’s journey in awareness and belief in the right thing to do even when the majority of society believes that it is wrong. Thus Huck ignores the rules and mores of his age to follow what he thinks is just, i.e., helping the runaway slave, Jim. The book has become required reading in many schools throughout the U.S. - and beyond! For example, it was a required text in my high school English class in Australia in the 1980s.




Above and below: Various historical sites related to Mark Twain, along with sites depicted in his works of fiction, have become an important part of Hannibal’s legacy. One of these sites is the childhood home of Twain (above right) and the “Tom Sawyer fence.”




Above: A replica of the home of Tom Blankenship - a childhood friend of Twain’s and the inspiration for the character of Huck Finn.

In his Autobiography, Mark Twain wrote: “In Huckleberry Finn I have drawn Tom Blankenship exactly as he was. He was ignorant, unwashed, insufficiently fed; but he had as good a heart as ever any boy had. His liberties were totally unrestricted. He was the only really independent person - boy or man - in the community, and by consequence he was tranquilly and continuously happy and envied by the rest of us. And as his society was forbidden us by our parents the prohibition trebled and quadrupled its value, and therefore we sought and got more of his society than any other boy’s.”

I recall reading in one of the museums in Hannibal that at one point Blankenship’s older brother brought food and water to a runaway slave hiding out on an island in the Mississippi. This continued for some time until the runaway’s unfortunate drowning.



Above: Mark Twain and his two greatest characters - Huck Finn (left) and Tom Sawyer.



Above: With Joey in the “Huck Finn House” - August 20, 2008.



Above: Joey, lost in the works of Mark Twain at a museum book shop.



Above: A corn field not far from the hamlet of Michael, Missouri!



Above: On the road and homeward bound! We spent the night of Wednesday, August 20, in Des Moines, Iowa. We arrived back in the Twin Cities the following day at around 3:00 p.m.


See also the previous Road Trip to St. Louis posts:
Part 1: Following the Mississippi
Part 2: Dubuque
Part 3: St. Louis
Part 4: The Arch
Part 5: Carondelet

The Wrong Type of Government Intervention

Being the socialist-leaning guy that I am, you might think that Id be happy with the U.S. government’s recent “bold plan” of intervention in the financial crisis on Wall Street. Not so.

Why? Because it’s the wrong type of “intervention.” What the U.S. government is doing is a “quick fix” intervention on behalf of private (and reckless) business interests. It’s not a carefully thought through action for the long term common good of the public – the sphere that government is supposed to serve.

Authentic socialist values nourish community life and, as author and lecturer Ronald Aronson notes, “conceive a society that provides for the needs of every individual, including adequate means to live a decent life and develop each person’s capacities.” I don’t see Wall Street and so-called “free market” capitalism conceiving such a society or nourishing such community life. And since the U.S. government is more of a plutocracy than a democracy (i.e., the rule of money generally trumps the rule of the people), perhaps it’s not surprising that the government is engaging in this type of corporate pandering at tax payers’ expense.

As Bill Van Auken perceptively observes: “If the cataclysmic events in the financial markets over the past week have revealed anything, it is the complete subservience of every branch of the U.S. government and both major political parties to the banks and the biggest capitalist interests. Behind the façade of American democracy lies a dictatorship of finance capital that, under conditions of crisis, exerts its power directly and nakedly.”

Of course, the type of government “intervention” that’s needed and that would nourish community and protect the public interest, is a level of regulation of the private business sphere that would prevent such financial crises from occurring in the first place.

As a recent Wild Reed post has documented, this “melt-down” on Wall Street came about as the result of banks and investors taking risks on bad debts; as the result of irresponsible behavior of many within the corporate and banking worlds. In particular, we’ve seen insurance companies like AIG acting as a speculative investment banks/hedge funds. If we had regulations with real teeth, such behavior would not be tolerated but viewed as criminal and dealt with accordingly. Instead, we have a government not just stepping in and bailing out these crooks but, as Nomi Prins points out, “taking on the risk of items it cannot even begin to understand, because if it had understood them, this would never have gotten to the point to which it has gotten.”

Prins (pictured at right) is one woman who knows what she’s talking about, being as she is a former investment banker turned journalist. In fact, she used to run the European analytics group at Bear Stearns. She’s also the author of two books: Other People’s Money: The Corporate Mugging of America and Jacked: How Conservatives Are Picking Your Pocket.

Earlier this week, Prins was interviewed by Amy Goodman on Pacifica Radio’s Democracy Now! program. Here’s a little of what she had to say about the current crisis for U.S. and global capitalism. (I especially appreciated Goodman’s injection of a little humor into the interview when she asks Prins: “Could this [nationalizing of insurance] lead to single-payer healthcare?”).

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Amy Goodman: How did it get to this point? How did it go beyond insurance?

Nomi Prins: In AIG and in Lehman and with Merrill and every other company on Wall Street that has faltered or is faltering, it’s about taking on too much leverage and borrowing to take on the risk and borrowing again and borrowing again, twenty-five to thirty times the amount of capital, the amount of money that they had to basically back the borrowing that they were doing. Human regular borrowers cannot do this. This is something that is an item only of the banking industry.

And not only was all that borrowing happening, but there was no transparency to the Fed, to the SEC, to the Treasury, to anyone who would have even bothered to look as to how much of a catastrophe was being created, so that when anything fell, whether it was the subprime mortgage or whether it was a credit complex security, it was all below a pile of immense interlocked, incestuous borrowing, and that’s what is bringing down the entire banking system.


Amy Goodman: How has Wall Street changed? And how does this meet everyday people? Lehman, bankrupt; you’ve got AIG nationalized, same with Freddie and Fannie; you’ve got the takeover of Merrill Lynch, now part of Bank of America — happened over a weekend.

Nomi Prins: It’s insane, actually. It’s bad math, and it’s a bad precedent, because they’re not simply bailing it out with putting taxpayers’ money through the Fed into taking on the risks of these companies; they’re taking on risks. They’re not bailing out and selling debt; they are taking on the risk. They’re becoming — the Fed is continuing to become a larger and larger hedge fund. And it’s doing it with taxpayer money, and it’s doing it with the future debt of the United States.

So, for the one thing, they’re not attaching any rules to these bailouts. You know, you bail out Bear Stearns, effectively you’re putting up $30 billion to take Bear Stearns’s junk and say, “Alright, we’ll back the junk. JPMorgan Chase, you take Bear Stearns. We’ll back whatever junk is there.” But there’s no decision to say, “But, you know, you’ve got to tell us what’s there. And JPMorgan, by the way, as you’re taking on this bank, you have to explain to us what you really have. And Bank of America, you have to explain to us what your risks are.”

I know that at Bank of America they were struggling with their own risks and trying to figure out what was going on in their own company, and now they have assumed Merrill Lynch. That creates a tremendous institution, where the Fed is now obligated, when that starts to have more and more trouble, which it will.


Amy Goodman: What started all this?

Nomi Prins: What started all of this was a complete lack of transparency and regulation in the banking system. If we go back to a history where we had a similar situation on Wall Street, which was 1929, when we had a stock market crash followed by a Great Depression, in 1932, when FDR was elected and Herbert Hoover was ousted, right after that, we put together — he put together —


Amy Goodman: But interestingly, FDR didn’t come in on a plank of changing everything the way he did. It happened — didn’t it? — after he became president with —

Nomi Prins: He had to take a look at the banking system, which was undermining the general economy, which had undermined the general economy, and say, “You know what? We do not understand what’s going on here. We have two types of banks. We have speculating investment banks, and we have commercial banks that deal with the public, take deposits, take savings, make mortgage loans, understand what’s going on. We’ll back those. The government will back those commercial institutions that deal with the public. It will not back speculative investment banks. And, by the way, those two things have to split. You pick a side. You want to be an investment bank? You be an investment bank. You want to be a commercial bank? We’ll back you. The Fed will back you. We will be there. We’ll create an insurance company, the FDIC, to back deposits for the public. We’ll have your back.” There was no — there was no agreement to have the back of the speculative investment banks.

Over the years, these things have merged and merged and merged. And in late 1999, [the] Glass-Steagall [Act]* was repealed, killed, died in Congress. And now you have a situation where everything that went wrong up until the creation of that act is happening now with a lot more capital and a lot more international interplay and a lot more money on the federal government to have to bail out when things go wrong. So, we have gone backwards in banking history, and having Merrill be a part of Bank of America is a tremendously big accident waiting to happen. Bear Stearns’s assets part of JPMorgan — they’re all part of recombining speculation and commercial.


Amy Goodman: Nomi Prins, you worked at a number of these places, like Bear Stearns. You worked at Lehman Brothers, too, now bankrupt. Let’s talk about the money that Obama and McCain get. According to the Center for Responsive Politics, Obama, it’s nearly $10 million from the securities investment industry; McCain, it’s nearly $7 million. So Obama actually gets more. Employees of Merrill Lynch, the investment bank that’s been taken over by Bank of America, have given the largest corporate money to Senator McCain’s campaign, Merrill employees giving some—close to $300,000 to McCain, close to $200,000 to Obama. Lehman Brothers, which filed for bankruptcy, given—has been the eighth-largest corporate giver to Senator Obama’s campaign. Democrats have become increasingly reliant on Wall Street money. The industry ranks as the third-biggest giver to Senator Obama’s presidential campaign. How does this influence the debate, and what are the proposals of the two men?

Nomi Prins: Well, the proposals of McCain have to do with—well, they’re very nondescript. Basically, he says there is a greed situation, and we need to contain it. And we need —


Amy Goodman: And he says we have to set up a commission.

Nomi Prins: We need to set up a commission to understand what’s going on. Well, we have seven different regulatory bodies in Washington, and they’re supposed to be watching various aspects of the financial community. And we have state ones that are supposed to be watching over insurance companies. So we actually have regulatory agencies. And Obama has basically said the same thing. He wants to strengthen the ones that do exist.

The problem is being connected to Wall Street, in terms of your funding. And Washington, in general — Wall Street, in general, was the biggest contributor to all of the politicians in Washington over the last decade. It’s where the most money comes from. So you have a situation where that money doesn’t want oversight, even when it so badly mismanages and over-leverages and over-bets and gets into such a tremendous problem that we haven’t seen. They don’t want the regulation.

What you should do, what the candidates should do, is step back and say, OK, well, you know what? Instead of having them dictate the terms and us coming in to bail them out with no strings attached — we’ll bail you out, and we won’t even ask you to explain to us what the heck has been going on with your balance sheets; we’re taking stuff on we don’t even understand — actually have to make it transparent and actually have to dissect the businesses back into a form where speculative businesses and commercial businesses are once again separated, at least until our government can understand what’s going on and understand the hook onto which they’re taking American public money to bail them out.


Amy Goodman: Maybe injecting a little humor here, could this lead to single-payer healthcare? I mean, we’re talking about nationalizing of insurance.

Nomi Prins: You might as well nationalize insurance.


Amy Goodman: And why does that have to be humorous?

Nomi Prins: Well, no, exactly right. If you’re effectively nationalizing a portion of the banking—you’re nationalizing the worst portion of the banking system is what you’re effectively nationalizing. But you’re not even doing that, because you’re not running as a public entity. You’re taking on risk you won’t be able to understand, and you’re not even trying to. So it’s even more dangerous.

With health insurance, which actually those companies have not sort of been involved in this, because they haven’t had the same derivatives, type of financial services, speculative activity that AIG has under its umbrella, which is the real reason it is imploding, you could actually put some money into something that preempts a problem happening and helps people get healthcare.


Amy Goodman: [Imagine] you’re being called in by Senator McCain and Senator Obama to make your recommendation to them. They would maybe give you fifteen seconds, if they give you that. Nomi Prins, what are you going to tell them?

Nomi Prins: It’s very simple. You don’t understand the system, so you know what? You take some guts, and you create a situation where you dissect the system. You don’t merge it; you dissect it. And you make accountable what is going on within each segment of the speculative and commercial banks, so that you know what’s going on, as was had to do in 1933, because that will create an actual stable system that the government can actually understand and quantify.


* According to Michael Hudson: “Glass-Steagall was designed to prevent what has happened. It was designed to keep investment banking apart from commercial banking. Now you have the banking system taking—merging with the most crooked companies in the country, like Countrywide Financial that’s under indictment by attorney generals all over the country. You’re having the banking system commit its deposits and its space to recycle the savings not into industrial investment, but into exploitive loans.”


Recommended Off-site Links:
Why Fed Reform Won’t Work - Nomi Prins (Slate, March 31, 2008).
Obama’s Response to Financial Meltdown: Deception and Subservience to Wall Street - Bill Van Auken (World Socialist Web Site, September 19, 2008).

See also the previous Wild Reed posts:
A System That’s Not Going to Survive
R.I.P. Neoclassical Economics
Capitalism on Trial
John le Carré’s Dark Suspicions
A Lose/Lose Situation
John Pilger on Resisting Empire

Opening Image: Treasury Secretary Henry Paulson talks with reporters after meeting with Congressional leaders on the current economic crisis Thursday, September 18, 2008 on Capitol Hill in Washington. At right is Federal Reserve Board Chairman Ben Bernanke, 2nd right is Speaker Nancy Pelosi, D-Calif., and second left is Securities and Exchange Commission Chairman Chris Cox. Paulson says the government is crafting a plan to rescue banks from bad debts that are at the heart of Wall Street’s worst financial crisis in decades. (AP Photo/Lauren Victoria Burke)

Classic Dusty

In his excellent book, The Complete Dusty Springfield, Paul Howes notes the following about Dusty’s 1964 recording of “Can I Get a Witness.”

Having tackled a Supremes number [“When the Lovelight Starts Shining Through His Eyes”] for her first album [1964’s A Girl Called Dusty], Dusty took a second crack at recording a Motown song with another Holland/Dozier/Holland outing, Marvin Gaye’s 1963 US hit “Can I Get a Witness.” Dusty’s rasping vocals provide the call to [background vocal group] the Breakaway’s response and, from the pounding piano intro through to the fade, the song just never lets up. It’s a performance that other British female singers could only dream of.

. . . In the 1960s, the track was only ever mixed to mono. However in the 1990s, stereo mixes were produced in both the UK and the States. The US mix has the edge as it captures and even enhances the excitement of the original mono release and is probably nearer to the Motown sound than Dusty would ever have imagined possible.

See also the previous Wild Reed posts:
• Classic Dusty
• Remembering a Great Soul Singer
• Yeah, Baby, Yeah!
• Shelby Lynn Celebrates Dusty Springfield
• Time and the River
• Soul Deep


Recommended Off-site Link:
• Dusty Springfield – Woman of Repute

A System That's Not Going to Survive

As I’m sure most of you know, the US government recently seized control of insurance giant American International Group (AIG) in an unprecedented $85 billion bailout. The Federal Reserve Bank made the deal on Tuesday to save AIG from collapse in what the New York Times describes as “the most radical intervention in private business in the central bank’s history.” Of course this move comes amidst a series of financial crises that are shaking Wall Street and global financial markets.

Last night, The Newshour’s Ray Suarez interviewed Allan Meltzer (pictured above), a professor of political economy and public policy at Carnegie Mellon University.

I found what Professor Meltzer had to say about the financial crisis in the U.S. to be very helpful in understanding what’s happening and why. Perhaps you will too.

Following are excerpts from this interview.

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Ray Suarez: Professor Meltzer, did the Fed do the right thing [in bailing out AIG]?

Allan Meltzer: No. There were bids on the floor for AIG. AIG didn’t take the bids. It thought it could get a better deal from the government. That’s a bad way to run the system. . . . We can’t afford to run a system and we won’t be able to where the bankers make the profits and the public takes the losses. That just is not viable.

The government is here to protect the public interest. What it’s doing is protecting private interests. And that’s a big mistake and one that we shouldn’t continue to tolerate.

We’ve gotten through now a whole range of these firms. The government has salvaged a number of them. That just puts all those losses onto the taxpayers. That’s not where they belong.


Ray Suarez: But [it’ been said by some that] there were very few choices because of the unique status of AIG in the world markets.

Allan Meltzer: AIG has four parts. One of them was in trouble. The other three make money. It could be sold. It should have been sold. It should have gone as a private company to some other private company. And that was an option that was available.

. . . I've been following these problems for 40 or 50 years. You know, it always comes down at the end to this. Someone goes to the secretary of the Treasury or, in this case, the chairman of the Fed and says, “If we don’t do this, we’re going to have a terrible depression. It’ll be known as the Bernanke Depression. And if you don’t act, there’s going to be a disaster.” Well, that’s not always the case. And these disasters should be headed off early or should be left to the marketplace to settle. They made these mistakes, and they should pay for them.


Ray Suarez: What about [the] point that, given the amount of money that the federal government has already put on the line, the AIG bailout was necessary to make – to save those previous investments?

Allan Meltzer: Well I’m not in favor of those previous investments, either. I agree that the government has been going into this and, as it goes into this, it encourages people to say, “Well, we’re not going to take any of those deals from the marketplace because we might get a better deal from the government.” And sometimes they do.

I would say we ought to look at Lehman Brothers. They let Lehman Brothers fail. Within a few days, just a few days, Barclays was there buying up some of Lehman’s assets, the same thing.

AIG has a terrific insurance company all over the world. It has a premiere place in China, and it’s doing very well there. It has a big aircraft leasing business. It does very well there. It has three major divisions that make money.

It's hard to believe that somebody wouldn’t come in on a fire sale, just the way Bank of America came in on a fire sale of Merrill Lynch.

And, you know, this has been a crisis where people on Wall Street were telling us in January, “This is like the Great Depression.” Well, that was just an overstatement. It was a problem for them, a serious, major problem for them. But the rest of the economy is struggling along, doing pretty well, no depression.


Ray Suarez: Very briefly before we go, Professor, does the size of this intervention constrain the Fed from future action? If there’s another AIG waiting in the wings, will it be unable to act because it’s already got so much money on the line?

Allan Meltzer: Well, today, the Treasury came in to borrow money on a special issue for the Federal Reserve. Now, usually it’s the Federal Reserve which is financing the Treasury. Now we have the Treasury financing the Federal Reserve.

Well, that means they’re not going to run out of money. They’re not going to let them run out of money. And, indeed, the Federal Reserve can print money. So it’s not going to run out of money. That’s not where the risk is.

The risk is that, each time we do one of these bailouts, we encourage other people to take more risks and come for bailouts. So we end up with a system in which the bankers make the profits and the public takes the losses, in which the public interest is subverted to the private interest. And that’s not a system that’s going to survive.

_____________________________________

Professor Meltzer’s perspective is similar to that of Michael Hudson (pictured at left), president of the Institute for the Study of Long-Term Economic Trends, an economics professor at the University of Missouri, Kansas City, and the author of the 1972 book, Super-Imperialism: The Economic Strategy of American Empire.

Hudson was interviewed yesterday by Amy Goodman on Pacifica Radio’s Democracy Now! Here’s a brief excerpt:

Amy Goodman: Michael Hudson, we’re talking government bailout, which means taxpayers stuck with the bill. Do you think this is the right move?

Michael Hudson: No, it’s the worst possible move, and it puts the class war back in business with a vengeance. Wall Street has been preparing for this for years, because every financial analyst knows that the debts can’t be paid. And the question that Wall Street has, if you’re going to take a gamble on bad debts that can’t be paid, how are you going to come out a winner? And there’s only one way of coming out a winner, and that’s to make the government bail you out.

This has been known for years, because it’s inherent almost in the mathematics of compound interest. Every banker I know knew that the loans they were making were going to go bad. They were trying to sell them to somebody else, ultimately expecting them to end up with some sovereign wealth fund.

And now, McCain is saying that this is the result of fraud and incompetence. The government has now bailed them out. But by bailing them out—Wall Street was coming to terms with the bad debts. When Bear Stearns went under and when Lehman Brothers went under, this began to wipe away the bad debts. And when the debts exceed the ability to pay, there’s only one thing any economy can do, and that’s wipe them out. Instead, the government is trying to keep the fiction alive. And what Paulson did yesterday, in bailing out AIG, was to try to lock in whoever is the next president not only to further bailouts of Wall Street, ostensibly to protect the public money, but to make it impossible to write down the debts of the four million homeowners that are expected to default this year, impossible to write down the debts of companies that have issued junk bonds, impossible for the country to get rid of this excess of debts that can’t be repaid. And you’re having really a war now of creditors against debtors.

And this is what Wall Street has been preparing for. It needed an emergency to do it. It’s really not an emergency at all. This has been building up for many years. Everybody expected it. And breathlessly now, the Secretary of Treasury has done it.


Amy Goodman: But, of course, the argument was, if you don’t bail out AIG, it could lead to a global financial meltdown.

Michael Hudson: It’s a meltdown of the gamblers. . . . These are people who’ve gambled. You had McCain saying they’re gamblers. If these people have gambled, we’re talking about derivative trades, billions of dollars of bets on which way interest rates will go, billions of dollars of bad loans beyond the ability of debtors to pay. Why on earth would you want to bail out these creditors?


Amy Goodman: So, what would happen if you didn’t?

Michael Hudson: Then you would prepare the ground for writing down the debts of the homeowners that have no way of repaying the exploding mortgages. Those interest rates are going to be jumping up this year. You would be able to bring the debts down to the ability of the economy to pay, and you would save these four million homeowners from defaulting and being kicked out of their houses. Now they’re going to be kicked out of the houses. The houses will be vacant. The cities are going to now say, “Gee, we’re going to have to cut the property taxes to enable the debts to be paid to save the financial system.” So, if they cut the property taxes, they’re going to have to cut back local expenditures, local infrastructure. The economy is being sacrificed to pay the gamblers.


See also the previous Wild Reed posts:
R.I.P. Neoclassical Economics
Capitalism on Trial
John le Carré’s Dark Suspicions

Recommended Off-site Links:
Panic Sell-Off on Wall Street - Barry Grey (World Socialist Web Site, September 18, 2008).
Europe Gripped by Fear of Global Crash - Stefan Steinberg (World Socialist Web Site, September 18, 2008).