Friday, October 3, 2008

How Low Can He Go, Part II

From Dan Froomkin's White House Watch at the Washington Post on Thursday:

The newest CBS News poll finds: "President Bush's overall job approval rating has dropped five points from last week and is now the lowest of his presidency. Only 22% of Americans approve of the job he's doing -- a new low -- while 70% of Americans disapprove -- a new high. President Bush's job approval rating has dropped 68 points from his all time high of 90% back in October, 2001. . . .

"Just 18% of Americans approve of the way President Bush is handling the economy, while 77% of Americans disapprove. Even a majority of Republicans disapprove of the President's handling of this issue."

Massimo Calabresi reports that in the latest Time poll, Bush's "approval rating is 23%, the lowest number ever found by Abt/SRBI, the company that conducted the poll for Time; 73% of respondents disapprove of his performance as President. Only 26% approve of his handling of the current financial crisis."

Gee, those numbers make the 26 percent approval rating in the latest Washington Post/ABC News poll that I wrote about yesterday look pretty good.

Don't Blame FDR and Carter for the Finanacial Mess and Bailout

Contrary to what the Republi-cons would have you believe, the financial mess isn't the result of the FDR's New Deal, Carter, or simply because of subprime loans.

First, understand the recent legislative and regulatory changes, which were summarized in this New York Times article, Don’t Blame the New Deal:
"But the failures that have landed us in the mess we are in today are not mainly structural. To assert that they are masks deeper failings and sets false terms for the upcoming debate on regulatory reform.

Under a law passed in 1994, for example, the Federal Reserve was obligated to regulate banks and nonbank lenders to curb unfair, deceptive and predatory lending. Alan Greenspan, the former Federal Reserve chairman, ignored his responsibility, even as junk mortgage lending proliferated in plain sight.

Mr. Greenspan later said the law defined “unfair” and “deceptive” too vaguely. If so, he should have asked Congress for clarification. Instead, he did nothing — and the Republican-led Congress did not question him. When Ben Bernanke took over as Fed chairman in early 2006, the negligence continued. It was not until mid-2007, after the housing bubble had begun to burst, that federal regulators offered guidelines for subprime lending.

The systematic dismantling of laws that called for regulation also contributed to the current crisis.

In 1995, Congress passed a law that restricted the ability of investors to sue companies, securities firms and accounting firms for misstatements and pie-in-the-sky projections. That helped inflate the dot-com bubble and contributed to the Enron debacle. It also engendered a sense of impunity that helped to foster the excessive risk-taking so prevalent in the mortgage mess.

Then, in 1999, Congress dismantled the Glass- Steagall Act, a pillar of the New Deal, which separated commercial and investment banking. That enormous change was undertaken with no thought or effort — or desire — to regulate the world that it would help to create. Now we know that an entire “shadow banking system” has grown up, without rules or transparency, but with the ability to topple the financial system itself.

But perhaps no deregulatory effort had more catastrophic effect than the 2000 law that explicitly excluded derivatives, including those credit default swaps, from regulation under the Commodity Exchange Act of 1936.

And there is probably no greater missed opportunity than the reform of Fannie Mae and Freddie Mac passed by the House in 2005. If the law had been enacted, the takeover of those companies may have been avoided. It failed in large part because President Bush wanted to fully privatize them and feared that if they were adequately reformed, privatization would lose steam.

Indeed, it was in the Bush years that antiregulation and deregulation found full expression, fueled by an ideology that markets know best, government hampers markets, and problems will magically fix themselves."
Then there was the development and enormous recent growth of CDOs (colateralized debt obligations) and CDSs (credit default swaps). A rule change made by the the Securities and Exchange Commission in 2004 under a Republi-con President and Congress is the primarily reason these new financial instrument spun out of control. See:

You can listen to the associated audio Back Story with The Times's Stephen Labaton, which includes excerpts from the SEC meeting in April 2004, or even an audio recording of the whole meeting, and hear meeting participants laughing about the risk.

These changes were made based on a faulty assumption, that the financial institutions and regulators understood and properly evaluated the risk(s) involved. As we now know, that was not true. See:

Deliberately ignorant assumptions and stupid decisions to reach a desired conclusion and objective, does that remind you of anything? Can you say Iraq?

But of course, the Rebubli-cons never had much concern for objective reality. So something must be done. See:

All Hail The Great Palin

Thank goodness for the soft bigotry of low expectations. See:
  • Washington Post, Palin Takes On A New Foe: Her Image by Tom Shales (my favorite so far)
  • Washington Post, Joe, and Sarah Six-Pack by Dana Milbank (next favorite)
  • Washington Post, The VP Debate: Palin's Big Mistake by Eugene Robinson (pithy)
  • Washington Post, The VP Debate: She Won Fersure, Also by Kathleen Parker (She's the heretic. Her conclusion: "And the question remains: Is she ready to be president should the need arise?")
  • Washington Post, The VP Debate: A Victory -- of Sorts by Michael Gerson (Favorite line: "It was strange to hear the possibility of a nuclear war described as "the be all, end all of just too many people.")
  • Washington Post, The VP Debate: Sarah the Speedy by Harold Meyerson
  • Washington Post, Hockey Mom on Thin Ice By E. J. Dionne Jr. (Good conclusion: "As for McCain, he found himself in a political hole and threw the dice with Palin. At the time of her selection, voters were often compared with "American Idol" watchers who put personality and stage presence above everything else. But it turns out that Americans take the presidency very seriously. And surviving 90 minutes on a stage with Biden did not transform Palin into a plausible president.")
  • Washington Post, Hail Mary vs. Cool Barry by Charles Krauthammer (Almost an endorsement: "Once Ronald Reagan convinced America that he was not menacing, he won in a landslide. If Obama convinces the electorate that he is not too exotic or green or unprepared, he wins as well. . . he's got both a first-class intellect and a first-class temperament. That will likely be enough to make him president.")