My Picks... Election 2008 Map Prediction

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Well, I'm being a little optimistic on a few states, but this is my pick for how the election unfolds. I was close on the Democratic primary - I only missed on Indiana in my private picks - so I thought I'd share these. I will admit that I know the Democratic mindset better than Republican, so I might be a bit off. Here's my reasoning on a few key states:

Pennsylvania: New York/New Jersey border will be heavy Obama, and I think middle america here can overcome their reservations.

Ohio: No geographic "Obama-friendly" borders, the rust belt still suffers from some racism, and Hillary won the primary.

Indiana: Home of the KKK, went slightly Hillary in the primary. Large swaths of the countryside are also fairly religious and conservative. Should go McCain.

North Carolina: Large African-American population and massive victory for Obama in the primary indicates a good chance of turnout carrying this state for him. I predict enthusiasm and organizational skills win the day for Obama here.

Virginia: Demographic changes in Northern Virginia, Mark Warner's Coattails, an Obama victory in the primary, and solid organization imply that Obama should squeak out Virginia as well.

Georgia: This should be closer than the polls suggest, and a significant African-american population and strong organization help Obama, but I think that Georgia's "southern Republican" mindset will win the day.

Florida: With Lieberman stumping for McCain, and Obama lenient towards Palestine and favoring talks with Raul Castro, I see the Jewish and Right-wing Cuban votes going McCain. Florida may go McCain by a solid margin.

New Mexico: Bill Richardson wins the state for Obama.

Nevada: Close call - I think general Obama enthusiasm and the California border should help, here. I don't know much about Nevada.

Colorado: I'm optimistic, I think Obama will pull through based on momentum and turnout, even though strong conservative elements suggest a good core turnout for McCain.

Overall - I think the polls are underestimating turnout and enthusiasm in the Democratic party. This won't be a blowout election, but Obama should win by a clear margin.

Financial Crisis: Part III – A New Regulatory Framework

One thing that is clear, following the debates last night, is that the candidates are a little sketchy on the precise reforms that are necessary to prevent another crisis. In Part II of this series, I cataloged the damages of the past few months, and proceeded to explain that we need to accept the reality that a large bailout, like it or not, is necessary for our country’s renewed financial health. The candidates, fortunately, seem to accept this reality. However, they seem unsure on exactly what we should do in terms of long-term reform. In this post, the third and hopefully final post on what I think needs to be done to resolve the crisis; I provide a set of suggestions on how we can reform our governance of financial markets to prevent a recurrence of the current situation. As I mentioned in the last post, some of my suggestions take a cue from Dean Baker at CEPR, though I do differ from him in a few areas.

Before I move into the diagnosis, however, here is a brief comment on my take on the candidates’ economic philosophies. From what I heard last night, I think that Senator Obama’s general philosophy coincides with my impression of specific measures that need to be taken, while Senator McCain seems to still oppose additional regulation in favor of finding bureaucrats to use as scapegoats for a crisis that they could not fully prevent. As I explained in Part I of this series, the Republican Congress of 1999 removed key regulations and handicapped regulators in dealing with this crisis. Blaming regulators for not having the tools at their disposals is nothing if not counterproductive. We need to fix the problems, not look for yet another person who we can blame.

Building with Bricks, Instead of Straw

So, exactly what should we do to prevent another catastrophe? Here are five potential reforms that could have a great deal of impact in reducing volatility and the bubble-bust cycle.

First, all forms of traded assets need to be traded on public exchanges regulated by either the Securities Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC). Believe it or not, not all of the instruments that are traded happen on these exchanges. Debt swaps, which are a major part of this situation (mortgage packages are debt securities, after all), are traded off of the exchanges. This makes it very difficult for regulators to access reliable information on the volume and volatility of trading.

Second, Fannie Mae and Freddie Mac need to be subject to more stringent oversight, and perhaps should remain renationalized. Their job, after all, is to repackage mortgages to maintain market solvency. They are a market facilitator, not a profit-focused institution, and a focus on short-term profits is a good part of what got us into this mess. At minimum, there should be two conditions: (1) Fannie and Freddie should be limited in size (in terms of the percentage of the mortgage market they are backing), and (2) Restrictions placed on the riskiness of mortgages that are backed by the institutions. Limiting their size ensures they don’t become overburdened and carried along with asset waves, and limiting the riskiness of their investments ensures they remain solvent and prevents Wall Street from gambling with taxpayer money.

Third, we should establish a public administrative body to assess the riskiness of investments, much as Moody’s and Standard and Poor do now. One of the chief problems leading up to the crisis was the incestuous and corrupt nature of the rating organizations. In essence, they were “in cahoots” with the investment bankers. This public organization should work in tandem with the Federal Reserve. In fact, one key measure that could be put in place to add some teeth to the body would be to place a risk premium on the interest rates charged by the Fed, if a bank allows its balance sheet to sour. A declining credit rating could also automatically trigger negotiations and intervention by the Fed. This could operate in much the same way as debt covenants between private corporations and banks do today. A side benefit of this system is that it forces banks to lend more conservatively, which could stem the trend of Americans piling up their debt until they can barely make minimum payments. It could help reinvigorate a culture of saving now and spending later, rather than the opposite trend that has appeared in today’s consumer culture. High domestic savings rates are almost universally accepted as signs of a healthy and sustainable economy.

Fourth, we need to find a way to break into what has been dubbed the “Wall Street-Treasury Complex” by Columbia economist Jagdish Bhagwati. Hank Paulson, for example, was CEO of Goldman Sachs from 1999-2006 – presiding over the height of the bubble – before becoming Secretary of the Treasury. Preventing this is even more important with respect to the Federal Reserve. Federal Reserve members should go through a full appointment process, requiring the “advice and consent of the Senate” (see Article II, Section 2, paragraph 2 of the US Constitution), as is the case for most other federal officials (e.g. Supreme Court Justices). This could be a requirement of a full senate vote (the standard procedure). Another approach that might make sense is the approval of both the Senate Banking and House Financial Services committees (current Chairs: Chris Dodd and Barney Frank), since many congressmen may not understand the “ins and outs” of finance. In either case, there needs to be an approval process by which the duly elected representatives of the American people have a voice.

Fifth, we should implement two targeted and small tax policies that can minimize speculation and volatility, while at the same time taxing those responsible for this mess in the first place – making them pay for most of it, and not the average taxpayer. The first tax would be a tax on financial transactions, valued at less than 1%. This tax has negligible impact on those investors who are buying and holding for a longer time period, but has a significant impact on the profit margins of speculative day-traders. One estimate suggests this tax could bring in $100 billion in extra revenue. The second tax is a parallel measure attached to currency trading (another 1% or lower tax), known as a “Tobin tax” for the economist who came up with the idea. It has the same impact, removing the profit incentive on speculative currency trading and forcing people to buy and hold for longer periods. This helps to prevent the flight of portfolio capital and precipitous currency devaluation. The proceeds of this tax could be diverted to the foreign exchange reserves, allowing for the US to manage our currency more effectively and combat Chinese currency undervaluation. This will be particularly useful as our economic clout diminishes relative to rapidly developing economies (e.g. China, India, Brazil, Russia), and the dollar ceases to be the “standard” currency of international trade.

The list I have outlined above is in no way meant to be exhaustive. I do think that the above measures could have a beneficial impact, stabilizing the global economy and focusing our energies on productive economic activities, rather than speculative finance. As usual, I welcome any comments you all may have.

Financial Meltdown: Part II - Bailing Out the Banks

As I write, Congress and the President are wrangling over what to include in a massive bailout package, intended to save Wall Street from itself. In Part I of this series, I provided what a friend termed the "antebellum" to this lovely financial conflagration. I'm going to assume you've all read that post, so you might want to read it before tackling this one. Part I details the domestic economic and regulatory causes of the current crisis, and can be found here. The current post is divided into two parts: an overview of the current situation and an assessment of what is needed to bail out the system. There is going to be a third part, discussing what to do to prevent a recurrence.

Overview: They Huffed, and Puffed, and Blew the House Down

Over the past few months, and especially in recent weeks, the entire operations of Wall Street have been turned upside down. Earlier this year, there were five major stand-alone investment firms on Wall Street. Earlier this month, the four largest still remained. Now there are none. Both major publicly guaranteed housing firms had to be nationalized by the government. Even normal mortgage institutions, protected by regulations governing loan-loss provisions, have required substantial assistance. The federal funds rate, in a time of upward pressure on inflation due to commodity prices, remains at a mere 2%. Given the speed of things, let's take stock of the principal damages. Here is a list of those companies requiring significant government intervention thus far.

Investment Banks: Smallest to Largest
Bear Stearns: Government brokered a buyout by JP Morgan Chase, valued at $10 per share. The government issued a $30 billion to JP Morgan Chase to support its purchase.
Lehman Brothers: Bankrupt, government unwilling to save, currently being scavanged by Barclay's PLC.
Merrill Lynch: Purchased by Bank of America to avoid insolvency.
Morgan Stanley: Announced it would become a "bank holding" company (like Citigroup), subject to stricter regulation.
Goldman Sachs: The giant investment firm, long the envy of Wall Street, also announced it would become a bank holding company, subject to stricter regulations. Warren Buffet has announced he will but $5 billion in preferred stock, and the company will issue another $5 billion in common stock to raise capital.

Other Institutions:
American International Group (AIG): Massive insurance company with over $1 trillion in assets. Government bailout of $85 billion for a 79.9% equity share in the company and ability to suspend dividends to common and preferred stock.
Fannie Mae/Freddie Mac: Federal takeover (79.9% equity) and bailout valued at $200 billion. Combined, the two institutions hold debt and mortgage-backed securities valued at around $5 trillion. The current agreement requires that "each GSE’s retained mortgage and mortgage backed securities portfolio shall not exceed $850 billion as of December 31, 2009, and shall decline by 10% per year until it reaches $250 billion."
IndyMac: Seventh-largest mortgage originator in the US, largest bank in Los Angeles area, with assets of around $32 billion (deposits valued at $19 billion). Taken over by FDIC, which guarentees deposits up to $100,000 (and 50% thereafter).
Washington Mutual: Largest Savings and Loan institution in the US, assets valued at over $300 billion. Worries persist about its financial health.

As far as I know, that covers all of the major problems in the past few months. Although, at the rate things are going, I might have missed one. In general, it might be an exaggeration to say that the financial sector is reverting to a pre-1929 conditions, but not by that much. The economy, despite media hyperbole, is not going to crash to Great Depression levels. The country should remain fairly well protected from that level of crash. Social security, Medicare, Medicaid, unemployment insurance, and the FDIC did not exist until the New Deal. Accounting standards and financial regulation through the SEC are also significantly stronger than before the Depression. Each of these measures affords some containment and security, a buffer against hard times.

However, if you will recall my previous post, one of the crucial post-1929 pieces of financial legislation was Glass-Steagall, which separated investment banks from mortgage banks. The repeal of that particular provision of Glass-Steagall in 1999 was a monumental mistake and opened the economy to systemic financial risk. The collapse, acquisition, or change of the investment banks into bank holding companies serves to exacerbate this problem, by and large. The increased concentration of capital into mega-banks concentrates management, distorts market incentives, and removes a layer of insulation from the financial markets. It connects personal deposits even more directly to risky investments taken on by the investment bankers. It also concentrates wealth in the hands of fewer institutions, meaning if one institution collapses, it in itself creates systemic risk. Imagine is Citigroup, with assets of over $2 trillion, were to go bankrupt! Perhaps the only ray of sunlight is that the bank holding companies are all subject to tighter regulation than normal investment banks, and access to deposits and the required loan-loss provisions can make the collapse of an institution more difficult.

Suffice it to say that the contagion has spread throughout the system, and no one has gone untouched. What is needed is a constructive solution with significant long-term components, based in an understanding of where the economy stands. What this means is that any bailout program needs to address long-term regulations as urgently as it needs to ensure short-term financial solvency. This trend could be disastrous if it continues.

I recently posted a link to an in-depth analysis by CEPR. What follows is my take on how we should modify financial governance in the wake of the current crisis. My take on long-term regulation is somewhat similar to Dean Baker at CEPR, but I do disagree with him on how to handle the current bailout. Also, his article is a bit technical and geared towards those with a significant background in economics and finance; I will try to make mine more accessible.

Bailing Out the Banks, but Not the Bankers

Given the sheer magnitude of the current situation, the primary focus of a bailout should be on efficiently flushing the toxic assets from the financial system. It is tempting to quail at the size of the Bush Administration’s proposal, but a full-fledged purge is exactly what the current situation requires. Japan in the 1990s attempted a succession of small stimulus plans and rescue packages, yet the economy remained in the doldrums for a decade, and the banks have only recently become profitable again. On the other hand, following the advice of the IMF, South Korea allowed the banking sector to collapse following the burst of the East Asian real estate bubble in 1997-8, and the economy underwent a severe contraction. In fact, the one country that survived the crisis with the least pain was Malaysia, which made sudden and decisive use of capital controls to prevent the flight of foreign portfolio investment (currently a problem for the US, as well).

In practice, this means that we need to put concerns about the national debt on hold until the financial system recovers. It is tempting to assume that debt, as debt, is a bad thing for the economy. However, government debt is not the same thing as your personal credit card debt. What matters is the cost of meeting debt-service obligations, and whether the debt-creating expenditures create more growth than debt-service. In the case of rescuing the US financial system, it is almost certainly money well spent. Additionally, talk of US debt problems are somewhat overblown. Government debt, by itself, has virtually zero correlation with the health of the economy. Consider that Japan has the 2^nd-highest debt-to-GDP ratio and remains at the center of innovation. A number of countries that have low debt-to-GDP ratios remain underdeveloped (see the CIA World Factbook). Keeping this in mind, a $700 billion bailout is only 5% of the USA’s $14 trillion GDP. Even if all that money is not repaid, this takes out debt-to-GDP ratio from 61% to 66% - hardly a dire increase. The United States is not likely to run out of creditors, as we are the main anchor of the global financial system, and 5% of GDP is certainly a reasonable price tag for the targeted removal of toxic assets from the financial system.

If we look around, we can also see a lot of recrimination and blame. This is tempting, but somewhat counterproductive. Certainly, we need to strictly limit “golden parachute” payoffs to the executives that ran their companies into the ground. Just as certainly, these limits will likely not be as strict as the CEOs deserve (if you make a company bankrupt, I don’t personally think you deserve anything). However, we should not attempt to blame the shareholders and wait until companies absolutely need rescuing to do anything. Dean Baker suggested that shareholders need to be punished – but most shareholders are not board members, most are people who invested their retirement savings in a 401(k) mutual fund that then invested in these companies. Even if they did invest on their own, given the faulty risk ratings on many of these assets, and a lack of insider info, they could not be expected to know that profits would not continue – particularly since this bubble has been 5-10 years in the making, and most financial analysis only goes back to ten year averages (at most). Perhaps board members deserve to take a loss, but we should not punish innocent investors for making a decision based on the information that was available to them before the bubble burst.

It might be thought that I’m coddling Wall Street, despite my claims that executive compensation needs to be limited. What I have in mind is a two-step process; the limitations on Wall Street come in the form of regulations intended to prevent a recurrence of this disaster.

There are two things that need to be addressed in making this bailout effective and efficient, without unduly burdening the government or rewarding institutions and executives who ran themselves into the ground. Here I take two cues from Dean Baker. First, given the corruption and incestuous nature of the private risk appraisal industry, preventing gaming of the proposed auction process is a real problem. One way to avoid this is to make executives personally liable for the misreporting of auctioned assets - allowing them to be sued for assets that underperform (e.g. default more often than) their risk rating (outside a statistical margin of error, say +/- 5%). Faced with potential lawsuits, executives would think twice about misrepresenting risk to the US Treasury. Second, the government should not be responsible for repaying loans to companies that it bails out, if those loans were made within the financial quarter preceding the bailout. The creditors who made those loans, for instance to Bear Stearns or Lehman Brothers, had access to their books and knew their financial situation when they agreed to make the loans – they should be forced to suffer the consequences. This should prevent creditors from making last-minute high-return loans risk-free in expectation of government bailouts should default occur.

Sorry for the length – it’s been a complicated couple of months on Wall Street. Part III of this series will address long-term regulations to prevent a reoccurrence of this mess.

Bailout Terms?

Well, I haven't had time to do my own diagnosis of the current situation, to make long-term suggestions. In the meantime, here is an excellent and detailed piece by Dean Baker at CEPR on what the terms of the bailout should be. His take leans a little further towards heavy regulation then I would, but many of his suggestions have a great deal of merit.

Shameless Promotion II

So, my wonderful girlfriend had a print of one of her paintings selected as "Today's Best" on Zazzle! Check it out here: http://www.zazzle.com/fate_untangling_our_mistakes_print-228309324394495039

Financial Meltdown: Part I

Well, I think it’s about time I weighed in on the current financial crisis. Sorry this took me so long, but I needed time to do some real research to sort through all the opinions. What follows is an analysis of the root causes and history behind this crisis, as well as who to blame (because blaming people is so much fun!). This is part I of II, because the next post will assess the government’s response and what should be done.

First off, let’s get one thing clear. This is not the fault of the Bush Administration. Frankly, the only real things the Bush Administration did to contribute were (a) allow deregulation to stay around and (b) spend too much money on ill-founded wars. Their fault lies in overextending the government’s resources so they don’t have the resources to properly handle what they’ve been given. This crisis has been building since before Bush was elected.

If we can’t blame “everyone’s favorite target,” then who can we blame? No one person is 100% responsible, but a significant portion of the blame is shared by Alan Greenspan and the Republican Congress of 1999-2000. Each of these entities shares some responsibility the twin causes of the current crisis: the housing bubble and deregulation.

Let’s start with the easy case, and the immediate cause of this crisis: the housing bubble. The fault for the housing bubble lies squarely on the shoulders of the Federal Reserve. That means Alan Greenspan. Housing prices have declined 20% since this crisis began, but that’s only half of the 70% increase in real terms they saw from 1973-2007 (170%*-20% = -34%). In comparison, housing prices remained steady in real terms from 1948-1973 (source: CEPR). This has a direct correlation with average fixed-rate mortgage rates and the federal funds rate over that period. Mortgage rates peaked in 1981 at around 16-18%, and have steadily declined since. It’s understandable that Paul Voelcker would want to begin lowering these rates; the initial spike was a monetary policy move to stem the inflation of the late 1970s, and rates needed to come back down eventually. However, Greenspan continued the trend through 1992, with the federal funds rate bottoming at 3%. Since 1992, the funds rate has not peaked above 6.5%, and has remained below 6% for the majority of that time. In essence, Greenspan allowed the economy to overheat, precipitating the tech bubble burst, and now the housing bubble, by keeping the cost of credit at artificially low rates, allowing companies and homeowners to live beyond their means for an extended period of time. Eventually, that time runs out.

The second case, deregulation, is a little more complicated. However, if we want to play the blame game, the majority of the blame falls on three Republican Congressmen: Representatives James Leach (R-IA) and Tom Biley (R-VA) and Senator Phil Gramm (R-TX). These three gentlemen were behind one monumentally foolish piece of regulation: the “Gramm-Leach-Biley Financial Services Modernization Act of 1999” (official Senate site). Gramm-Leach-Biley repealed part of the “Glass-Steagall Act of 1933.” To begin with, let me provide a little history.

The Glass-Steagall Act was an extremely important piece of New Deal legislation intended to combat the collapse of the financial sector that precipitated the Great Depression. It had two crucial provisions: (1) establishing the Federal Deposit Insurance Corporation (FDIC), which insures bank deposits up to a value of $100,000, and (2) prohibiting bank holding companies from owning investment banks, insurance corporations, securities firms, hedge funds, etc. The first key provision, the FDIC, is still in place. But Gramm-Leach-Biley repealed the second key provision, allowing the merger of mortgage banks with insurance, investment, and commercial banking services. For example, shortly after Gramm-Leach-Biley was passed, Citibank became Citigroup following its acquisition of Travelers Group (an insurance company). It is worth noting that Gramm-Leach-Biley was passed with well over a 2/3 majority and was veto-proof.

Now, why is all of this so bad? Doesn’t this simply make the financial sector more dynamic and flexible? Shouldn’t that be a good thing? Well, another word for “dynamic and flexible” is “volatile”.

Sometimes, a piece of legislation is put in for a legitimate reason. The reason for the Glass-Steagall provisions was to prevent another run on the banks, like the one that happened in 1929-1930. The FDIC ensures that people get their money, even if a bank collapses, and the separation of savings banks from commercial and investment banks prevented banks from taking huge losses on speculative investments and using people’s savings to back them up. Gramm-Leach-Biley changed all that, allowing the merger of the different classes of institutions. (Sidenote: European and Japanese systems allow the merged types too, but have a significant government dialogue and oversight over the types of investments made, which helps to minimize volatility and ensure longer-term investment goals.)

So what happened in the crisis? In order to raise capital, the savings/mortgage bank subsidiaries of financial corporations (e.g. the Citibank portion of Citigroup) issue mortgages. The investment portions of different corporations (e.g. Bear Stearns, Lehman Brothers) then packaged a number of mortgages into securities – including blending subprime and prime mortgages together under one risk rating – and purchased portions of those securities to provide extra operating capital to the banks, allowing the mortgage banks to make more loans (including mortgages). After all, the excess money had to go somewhere! The insurance portions of the new conglomerates (e.g. AIG, Travelers Group) then insure the risk of taking on these new mortgage-backed securities in case of default. The conglomerates are then faced with risk from the same mortgages in three different sections of their books. Originally, this was hailed as “risk-diversifying,” and in cases of normal operation, it might be – after all, in a period of stable housing, it provides a measure of security as mortgages are felt to be safe. Unfortunately, it happened during a housing bubble, and further exacerbated the number of mortgages being offered. Eventually, you run out of reliable clients. Some people don’t own houses because their credit isn’t good enough and they don’t have the income (I should know, I’m a graduate student!)

So, the subprime housing bubble bursts. Now, rather than losses being confined to one sector, they are magnified throughout the entire financial system. Bear Stearns was the first to fall, then Lehman Brothers, then AIG, and Merrill Lynch. Only two of the original five investment firms have escaped relatively unscathed – the largest two, Morgan Stanley and Goldman Sachs. Even the quasi-public mortgage backers – Fannie Mae and Freddie Mac – have needed a bailout. Quite simply, deregulation was a mistake, premised on a foolish assumption that growth can happen indefinitely. Well, it can’t. The market needs to undergo periodic corrections, and regulation exists to make sure that those corrections don’t cause the whole system to collapse. More on this and the government response in the next post.

Hypocrisy in High Heels

So, after my last post about Sarah Palin, people suggested I was being too harsh - that she's a woman and was mayor and then governor of a republican state is impressive, that no one would ask questions about "who will care for my five kids - one pregnant and 17, the other five and Down syndrome?" if she was a man, that I was somehow wrong for calling into question the experience and moral fiber of a woman who wishes to be, arguably, the second-most powerful politician in the United States.

Malarky. Enough with the hypocrisy, people.

I got a bad vibe from Sarah Palin. I got a bad vibe from her life choices because she reminded me of the cheerleader captain who was dating the quarterback, who's parents' had money and was used to getting everything handed to her on a silver platter, but would cut your throat if you so much as disagreed with her. I got a bad vibe because she professed "family values" while deciding that being vice president was more important than making sure her children - one of whom needs emotional support, another who has special needs - have BOTH parents around. (Oh, by the way, I would call any man who did the same a misogynist jerk, too - not that it matters.)

Well, folks, it looks like my bad vibe has been confirmed. Ask yourself this: what would happen if you elected the high school cheerleader captain mayor of your town? Are you cringing yet? If not, maybe you should be. You would sit by and watch as she rewarded all of her high school friends, and then punished anyone who so much as disagreed with her. You would see experts fired from their jobs and replaced with incompetents, and watch as real government fell apart.

Maybe I'm exaggerating. Maybe not all high school cheerleader-beauty queens are like that. But one thing is for sure, Sarah Palin is like that. You want evidence? Here's a five page NY Times article, full of incriminating evidence and examples of why Palin isn't fit for the PTA, let alone VP: Once Elected, Palin Hired Friends and Lashed Foes.

Just for good measure, here's a nice op-ed in The Nation, as well: Lipstick on a Wing Nut

Shameless promotion

The book I was doing research on for Dr. Robin Broad and her husband, John Cavanagh (director of the Institute for Policy Studies) has finally been published. It's a short volume (ca. 100pp) tracking the rise and fall of the "Washington Consensus" and the rise of alternative development movements. It coud serve as a decent introduction to the field, or an interesting alternate perspective for those who have read Jeff Sachs or Tom Friedman.

If anyone is curious, you can get it from Amazon, or Barnes and Noble, or Borders, or Paradigm Press. If you're a Barnes and Noble member, it appears chepest, at $13.72. Otherwise, Paradigm press (the publisher) is cheapest at $14.41. The other two sites charge the full list price of $16.95.

Book opening is at Busboys and Poets (for those of you in DC), October 10th from 6-8pm.

Clean, Green, Driving Machines!

Well, given the incredible amount of press "green technology" is receiving, I decided it's about time I started bookmarking some sites to see what's actually out there. After all, news articles, even from respected publications, can only tell you so much. I firmly believe that the news is no substitute for think tank policy briefings, academic journals, and scholarly books. Of these sources, the first are typically free and readily available. They also tend to be more recent and provide plenty of statistics - though academics tend to be better about in-depth analysis and careful, narrow interpretation of statistics.

In any case - I found a decent site on new car technology, called the Green Car Journal - main website is here: http://www.greencar.com/. The website doesn't have the best layout, but it does have a fair amount of information on different types of automobile technology and op-eds. It's not just PR for the auto companies, either - some of the experts are from places like Sierra Club, Oceans Futures, and Natural Resource Defense Council, among others.

Some interesting sub-pages include: (1) expert opinions, (2) Reviews of specific cars, (3) Historical perspectives on clean energy advancement, and (4) Directory of environmental auto manufacturers and organizations.

I haven't had a chance to check it all out, but so far it looks promising. Anyone interested in the topic would do well to take a look.

Later posts in this "miniseries" may include different think tanks approaches to environmental economics and foreign policy initiatives.

Sarah Palin: McCain Blunders Yet Again

Well, I've been saying over, and over, and over again that McCain is the wrong choice, and just does not understand how to get elected. Part of it is his age, part of it is his lack of tech-savvy (or even proficiency) in the information age, but part of it is just plain disconnect and foolish mistakes. The most recent blunder falls into this last category - McCain clearly doesn't have a clue what he needs for his Vice President, just as he doesn't know what to say to become President. In many ways, its the same issue: McCain isn't sure where to stand to get the best advantage, so instead he is waffling and flip-flopping - both on issues, and in terms of political calculus.

Let's think about this for a minute. What was it that McCain needed in a VP pick? He's running on a platform of independent-minded conservatism and experience to lead. Obama has responded, rather effectively, by picking one of the most independent and experienced Democrats in the Senate: Joe Biden - a pick in many ways reminiscent of JFK-LBJ, except that Biden is also likable, in addition to being well-connected. McCain needs to pick amongst four goals, then: (a) consolidate his leadership experience to bring out the distinction, (b) reach across the aisle to disillusioned democrats/independents who consider Biden too left-leaning (he is a textbook democrat), (c) consolidate the conservative base-vote, especially in vulnerable "pink" states (e.g. GA, NC, perhaps VA), and/or (d) find a way to appeal to younger voters or women.

So who did McCain choose? He picks Sarah Palin, The forty-four year old, first term governor of Alaska (only in her 2nd year), who's only other political experience include being mayor and city councilmember of Wasilla, Alaska (population 5,500). Oh, she was also a TV sports reporter, and owns a commercial fishing business. She is opposed to McCain on the one major national in Alaska - ANWR drilling. She supports it, he opposes it.

Oh, did I mention, she also has a pregnant 17-year old daughter; and her youngest daughter (4 months) has Down's Syndrome. (Edit: A quick explanation about where this is going. I have a Down's syndrome uncle whom I love - but I also know that they require a lot of time and energy to raise, time and energy a high-powered politician doesn't have, especially the VP of the United States. The family troubles and emotions caused by adjusting to having a young, pregnant daughter and shotgun wedding pose a similar "life challenge" and take time, at least in the short term. As my comments below suggest, it seems a poor choice on Palin's part to become a VP candidate at this time.)

So, time for a quick analysis:

(a) The choice of Palin - an underqualified, inexperienced politician - would already have tanked McCain's chances at buttressing his experience advantage. That's before considering that Ms. Palin doesn't really have the time or energy (at this juncture) to play catch-up. Quite frankly, and at the risk of sounding insensitive, she has too many family distractions. Her daughter is 5 months pregnant, and will be having the baby the moment she gets to the White Hourse (if she does). The youngest, Trig, is 4 months old and has Down's Syndrome, which means she will have to devote a significant amount of time to raising the child - a luxury she cannot afford as VP. She is probably a very nice person, and Trig is probably a wonderful baby, but the fact of the matter is that mental handicaps take time and energy. To devote proper time to her family, she cannot be a high-powered politician. Even worse, what happens if McCain has a heart attack or some other illness? He isn't young, and now an overexerted and inexperienced VP is forced to take command. It makes me more than a bit worried.

(b) Palin is unlikely to reach accross the aisle, she runs on a textbook "family values"/social conservative platform and supports ANWR drilling - neither appeal to Democrats. She's also from Alaska, which is conceived of as out of touch with or different from the lower 48, for better or worse.

(c) If she's running on a conservative platfrom, isn't she likely to consolidate the base vote? Maybe, but I doubt it. Again, here we have the "skeletons in the closet" issue. She's young, for one, which doesn't appeal to a lot of skeptical conservatives, who prefer age and experience in national security matters. For another, just as damaging, her 17-year old daughter just had an out-of-wedlock child. They are marrying, but that is quite obviously a "shotgun" wedding - don't we often expect better of our leaders than ourselves? Perhaps she garners some pity, but pity doesn't win a presidential election.

(d) Finally, wouldn't the struggles of a younger, attractive (she's had pictures taken by Vogue), mother-figure appeal to younger and women voters, and help to contrast with McCain? Maybe, but again I doubt it. First of all, her obvious youth will serve to contrast McCain's equally obvious age. If that was the goal, a better option would have been to pick a mid-50s VP candidate who still remains "in touch" with the changing landscape - but doesn't create huge "contrast" worries. As far as women are concerned, maybe that will help a bit, but I think this is a superficial attempt that underestimates the intelligence (or at least cynicism) of the voting public. Do we really think John McCain has women's interests in mind, in the same sense Hillary did, just because he picks a female governor as his running mate? I doubt it, I think people are too skeptical for that. He might get some votes, but not enough to offset the weaknesses involved.

Instead, I think McCain would have been better playing to his strengths, and using them to draw out Obama's weaknesses - particularly given the Republican attack machine behind him. Someone like Joe Lieberman or Michael Bloomberg would have scared me as a VP candidate, because they would seriously buttress McCain's "experience" advantage, and both are "across-the-aisle" candidates with serious pull. Lieberman strengthens campaigning in Connecticut and probably guarantees Florida, though he weakens the conservative base vote (never McCain's strength). Bloomberg is somewhat liberal on social issues, but he spearheaded the post-9/11 economic turnaround in NYC - though recent wall street troubles would hurt him - he still would have a buttressing effect and might guarantee Florida. Perhaps another candidate with experience and judgment could be found - Romney, for example - who has economic and health care knowledge, ran a conservative social platform, and has some pull in NE.

Whoever he picked, another choice would almost certainly have been better than Sarah Palin. She undermines his strengths and does minimal work to buttress his weaknesses.