sleeping with tyrants

I recently listened to an interview with Aung San Suu Kyi from the BBC where she said:

It is not power that corrupts, but fear. Fear of losing power corrupts those who wield it and fear of the scourge of power corrupts those who are subject to it.

In Egypt today, we are witnessing a people uniting to free themselves from a crippling fear of Mubarak's scourge.

We are also witnessing the Obama Administration paralyzed by a fear of losing power. Losing power over a group of Arab dictators who have convinced us they are the necessary bulwark against a hostile Arab street.

The Administration fears losing a status quo which; however intolerable to millions of Arabs living under it's crushing heel, is a devil we know.

I believe Barack Obama is a smart, well-intentioned man who has surrounded himself with smart, well-intentioned staff. Their minds are focused upon the potential downsides to trusting the Egyptian people to forge their own course. The Administration's fear of losing influence prevents them honoring a people struggling to free themselves from their fear of the iron rod.

And the rest is just words.

When Common Sense Isn't Enough

I've set out my own views on gay marriage and equal rights for homosexuals in earlier posts here and here.

My argument has always been one of strategy, not results.

I still think establishing civil unions in all fifty states would be the quickest and most effective way to bring the right of marriage to all citizens regardless of sexual orientation, but the direct litigation campaign has taken precedence.

Today's federal district court decision in Perry v. Schwarzenegger is the first fruit of the direct litigation route and has brought the constitutional arguments concerning gay marriage sharply into focus.

Gay marriage proponents could hardly ask for a more common sense and matter-of-fact exposition on how California's Proposition 8 fails to pass constitutional muster.

While I'm persuaded by the reasoning, and take a professional interest in the craftsmanship, I also recognize I'm sympathetic with the outcome.

The more rational me recognizes that Judge Walker's decision rests entirely on a legal house of cards -- a very generous articulation of "fundamental rights."

The history of this debate over "fundamental rights" is as long and contoured as the history of the nation itself.

The current composition of our Supreme Court manifests a certain chapter in that debate, but a chapter which is highly unlikely to establish same-sex marriage as fundamental.

This Court is dominated by a political desire to circumscribe the expansion of "fundamental rights;" counterbalanced at the margin (Justice Kennedy) by a libertarian distrust of the state's authority to punish or sanction certain behaviors.

The identification of same-sex marriage as a fundamental right is not simply unpersuasive in their eyes. It's an incitement. A blatant example of how unprincipled and unhinged our constitutional jurisprudence has become. Further evidence of how unelected judges oppress individual conscience by championing their own personal values as "fundamental rights."

Indeed, the current court may prove to be the high water mark of this tide against expanding fundamental rights. Perversely, a Supreme Court ruling in this case may prove to be a sign that tide has begun to ebb.

Let's assume Perry works its way through the Ninth Circuit this year and reaches the Supreme Court in their October 2011 term. We should see a decision in June 2012, almost certainly reversing the district court, very likely on a 5-4 vote.

The final word? Hardly.

November 2012 we vote once more for president.

Will Perry be a symbol of the Supreme Court restricting our individual freedom to choose a mate or will it be a symbol of the Supreme Court vindicating the sanctity of the institution of marriage? You want to know where the majority of voters stand nationally, just watch the Republican Party squirm these next two years.

As with the abortion debate, same-sex marriage is an argument they don't want to win because the on-going debate is so valuable to them as a recruitment and fund-raising tool. The aggrieved and oppressed retain a unity in their opposition which falls apart in their ascendance. Republicans do much better as victims in opposition.

It's going to be messy and it's going to get loud, but that's how this conversation plays.

In terms of constitutional jurisprudence, I think same-sex marriage is a matter of equal rights and not fundamental rights. The equal rights argument is irresistible. The fundamantal rights argument is implausible until the vast majority of Americans are persuaded this is a matter of equal rights. Once that occurs, equal rights are fundamental rights. That is simply a matter of time, but it's clear from today's decision in Perry, it will be a long and winding path.

The Best and the Brightest

As President Obama reviews his options for continued American involvement in Aghanistan, I've been rereading David Halberstam's 1972 survey of our descent into Vietnam, "The Best and the Brightest."

One theme prevails in reading this history now nearly forty years after it was written. Halberstam's focus on the individual decision-makers feels misplaced. For all their talents and weaknesses, these men were not in control of events, let alone equal to them. They were the products of an earlier time, just as today's Administration is inevitably out of time. America's disastrous adventure in Vietnam was, by all historical measures, the inevitable product of a hugely complex political and social struggle which dwarfed the men who led us into full-scale war as surely as it dwarfed the millions of casualties which resulted.

The American political mood made it impossible for our elected leaders to find an exit strategy short of victory. The Vietnamese themselves made that victory impossible.

The lesson here for Afghanistan is quite simple.

We can be certain our Afghan adversaries will make victory impossible. Their advantages are profound. They have more at stake and, unlike us, they have nowhere else to go. We will tire of this war. We deceive ourselves and our allies to suggest otherwise. We consign thousands and thousands of as-yet unblemished bodies and minds to the meat grinder of a campaign we cannot finish. It is time to declare victory and go home.

Sadly, of course, we won't.

The Obama Administration has a second term to think about. Their political opponents will criticize whatever the Administration chooses to do, but most certainly any strategy that "leaves Afghanistan to the Taliban and Al-Qaeda."

We the People dither. Afghanistan is a righteous cause for a handful of reasons: We were attacked and have a right to defend ourselves from further attacks; the Taliban viciously oppressed the Afghan people, particularly their women; having created a power vacuum, we have a moral duty to help rebuild the country; leaving short of victory emboldens our enemies and discourages our allies. All true, to some degree, and all irrelevant when one acknowledges the cost in lives and limbs against the absolute inevitablity of our eventual withdrawal without achieving any one of those goals.

Halberstam would say our fate is in the hands of those decision-makers in war council at the White House, as though the outcome were actually in the balance. I think our fate is already sealed by the short-sighted, contradictory, and ultimately naive impulses which possess our body politic and will take generations to gestate. I would love to see Barack Obama prove me wrong.

credit crisis for everyone

An entertaining, fundamentally sound, animated illustration of the current credit crisis well worth your time:

http://www.crisisofcredit.com

When Does a Recession Become a Depression?

Answer: A few months ago.

How do I know?

Let's look at the evidence.

1. Mere recessions are generally triggered by pricing shocks; depressions by the collapse of a credit bubble.

2. Mere recessions do not require the effective nationalization of the pillars of global finance.

3. The national housing industry has been in a full-fledged depression for more than two years now without any evidence it has reached bottom.

4. The usual market mechanisms for liquidating insolvencies are not operational.

Much is made of comparisons to various post-Great Depression downturns as guidance to the likely path of this current crisis. Most recent recessions have resulted from transitional shocks; anti-inflation monetary policy shifts in the 1950's, the oil price shocks of the 1970's, the interest rate squeeze on inflation leading to the "Carter/Volcker/Reagan Recession" of the early 1980's, the dot-com bubble bursting at the beginning of this decade. By definition, each of these recessions included a period of "negative growth" in the GDP and some degree of increased unemployment.

Statistically, we are well into another period of negative growth in our GDP and rising unemployment. Beyond this statistical similarity, the nomenclature of "recession" obscures a more profound difference. Like the Great Depression -- and unlike all of the interim recessions -- our current crisis is the result of a credit bubble bursting, characterized by a profound and pervasive insolvency throughout the international credit markets.

The scope of this systemic insolvency is breathtaking.

The United States alone has extended credit, loan guarantees, and cash infusions exceeding $1 trillion in an effort to head off the serial collapse of the world's largest financial institutions. While serial collapse has been forestalled for now, the scope of insolvency actually appears to be growing.

The pillars of US finance are generally not lending to one another except where compelled by the feds to do so.

Common sense suggests we are somewhere towards the beginning of a multi-year period of "negative growth" with no identifiable basis for recovery now in sight.

Consider the amount of time necessary to actually deleverage illiquid, loss mounting assets when there is no market for them. Unless these assets can be sold off to government, many will be held to maturity and swaps to cover risk of default will last as long. How can anyone determine the solvency of a financial institution under these circumstances? Under these circumstances, how can anyone imagine the private sector and traditional market forces can resolve this crisis?

The News Gets Worse

I'm lying in bed with a temperature of 102' reading the business press on Citi II, the second unprecedented bailout of Citigroup in less than six weeks.

The federal government has now committed nearly $350 billion to Citigroup alone in direct capital infusions and guarantees on Citi's "toxic" and potentially toxic mortgage-backed securities portfolio. This is bad news - - despite the rosy reaction of stock markets around the world.

First, it is now obvious the Bush Adminsitration's ever-evolving "TARP" program was never up to the task. The federal government found it necessary to guarantee over $300 billion in Citigroup debt-backed assets to make Citigroup sufficiently credit-worthy to borrow from other banks -- its only hope of remaining a going concern as an international bank. As the other major banks line up to strike similar deals - - and they must - - the TARP's original claim that there were $700 billion in toxic assets out there will be revealed for the arbitrary and naive number it was.

Nor is Citigroup yet out of the woods. These capital infusions and guarantees are only meant to create some kind of floor under it's mortgage-backed securities exposure and provide the liquidity to make Citigroup a less risky borrower on the world's capital markets. Citigroup's other questionable loan portfolios - - particularly its credit card, commercial real estate, and other securitized debt - - will continue to sour as economic activity slackens.

The federal government is struggling on a daily basis to restore lender confidence and liquidity within the international capital markets. It has tried guaranteeing commercial paper, money market fund deposits, expanded FDIC deposits, interbank loans, and now finds it must place a floor under the mortgage-backed securities exposure of major banks. The evidence suggests the core purpose of federal government intervention is to do whatever is necessary to avoid another Lehman-sized bank failure. That's a reasonable goal, but we need to recognize it for what it is -- an ad hoc reaction to impending disasters as they arise.

However reasonable a goal in the near-term, the decision to forestall free market restructuring of these financial institutions has serious potential long-term implications. In other words, twice in the past six weeks Citigroup has reached insolvency - - its liabilities exceed its assets. The entire financial sector recognizes this and, understandably, won't lend to an insolvent bank or buy its short-term debt. Twice in the past six weeks the federal givernment has stepped in to pad the asset column with capital infusions exceeding $50 billion.

This time, the federal government has also guaranteed 90% of potential losses on over $300 billion of these assets at Citigroup, but they remain on Citigroup's books. It will take decades for many of these assets to be retired and Citigroup will have to retain reserves against these possible losses during that period -- money that might otherwise provide liquidity to the economy through business and personal loans. Repeat that same story among the other major banks and you can see how much dead weight in potentially bad loans will hang over the financial sector for years to come. There are no private buyers for these assets at this time at any price. Even the federal government backed off buying these assets from the banks after TARP was passed -- choosing less costly guarantees instead.

Normally - - and for smaller banks and businesses facing insolvency - - the liability side of the ledger is reduced through restructuring (selling off assets to pay down liabilities and focusing on a core business to generate sufficient cash to pay down the rest over time) or bankruptcy. The federal government has taken bankruptcy off the table for the likes of Citigroup. Without the fear of bankruptcy, the impetus to restructure is less urgent. In fact, the political will to tackle the extreme dislocations which may occur when the behemoths of the financial world all face insolvency simultaneously, and so must restructure simultaneously, can disappear. Faced with a choice between certain pain now and perhaps less pain extended into the distant future, most politicians will choose the latter. This is what happened in Japan, resulting in their infamous "lost decade," humbling an economic powerhouse thought to be more saavy and politically disciplined than the United States during its meteoric rise in the 1980's.

This is the real danger of these successive bailouts. We are watching the transfer of decision-making authority from the collective rough and tumble of the free markets to the White House. We know free markets can be brutal things and Citigroup filing for bankruptcy would likely shake financial markets to their core. We also know no White House will be able to resist the political pressure of major contributors for long - - allowing businesses which should have failed in a free market to drag on.

In sum, a pattern is emerging which strongly suggests the federal government will continue to prop up the biggest firms, encourage restructuring through mergers where solvent buyers can be found, and pour money into the capital markets in the hope greater liquidity and inflation eventually create a market for the toxic assets weighing down the big firms' balance sheets. The pattern strongly suggests we are reducing pain in the near-term, but extending it over time. Where "economists" a year ago questioned whether we would even see a recession, they now speak confidently about a recession lasting several quarters to a year. A year from now, they will be talking about an extended period of low- to no-growth stretching into the next decade. Five years from now, they'll be criticizing the powers that be today for showing too little resolve, propping up firms they should have allowed to fail.

Off-Kilter -- Baseball and Steroids?

(. . . and now for something completely different.)

This morning I actually wrote a letter to Sen. Patrick Lahey's office as follows:

The emerging doping scandal in baseball is an excellent opportunity for Senator Leahy -- in his capacity as Judiciary Chair -- to champion an issue with national notoriety and potential positives for himself, the Democratic Party, and Congress as an institution.

- The self-evident success of doping for those who indulged, in terms of their careers and statistics, is a direct threat to public health as young aspiring athletes cannot hope to match the performance of their heroes without doping themselves.

- The scandal has brought the national past time into ill repute - - deepening public skepticism towards a sport which holds tremendous romantic/emotional value to many.

- Doping, like any form of corruption, poisons optimism towards institutions and casts a pall of suspicion upon all future excellence in sport.

- National sports, being businesses, have no real incentive to clean up doping as the heightened individual performances sell tickets, create heroes, and generate revenue.

- The inability of professional sports to regulate themselves and the dearth of meaningful political leadership on this issue continue to erode public confidence in institutions.

The only way to effectively combat their use is a public repudiation of steroid use, the results of that use, and a clear commitment to effective testing for the future. It's clear there's no incentive within baseball to do this and I would think steroid use is as high in other sports as well. Firm, practical congressional leadership on this issue can demonstrate Democratic leadership and a positive role for government at very little cost to taxpayers.

The Senator should outline a series of Congressional hearings on doping in baseball in the context of a comprehensive amnesty akin to South Africa's "Truth and Reconciliation" hearings. Congress would grant immunity from federal prosecution to those who testify. Congress would further compel Major League Baseball to offer immunity from league discipline for those who testify. Anyone seeking to receive this amnesty would be required to provide a sealed written proffer within a designated three month window after which any further amnesty requests would be at the discretion of the congressional committee conducting the hearings. While those who proffer and testify would receive immunity, their testimony could be used in the prosecution of others who failed to seek amnesty and federal prosecutors would be encouraged to pursue such cases.

These hearings would achieve three important goals. First, they would place Senator Leahy, the Democrats, and Congress overall at the forefront of the issue; demonstrating clear, decisive, and practical leadership on an issue which is otherwise wholly negative for sport and American culture as a whole. Congress needs some clear, effective, practical successes to change the public mood towards the institution.

Second, the limited-term amnesty offer should flush out players, suppliers, developers, labs, and team officials in a single burst. The slow, sapping trickle of scandal would be stopped and all the dirty laundry would be aired in one set of hearings. The anxiety generated by the amnesty offer and the accountability wrought by the hearings would place bookends around the "steroid era" and allow everyone to walk away in the end feeling that it had been exposed and rooted out.

Third, the depth and breadth of the testimony elicited would allow the hearings to expand into all professional sports and give Congress an opportunity to maintain leadership in a positive way regarding future anti-doping efforts. The testimony should seriously weaken the leagues and players' unions to the point Congress can impose a strict anti-doping regime for the future.

How often does Congress, as an institution, get the chance to be the good guys -- guardian of the national past time and the leadership in a meaningful anti-corruption campaign?

There remains the question of how to handle the record books tainted by doping and how to institute effective anti-doping procedures for the future. The amnesty from discipline would not reach the record books. Instead, once the amnesty and hearings are concluded, each league would convene a records commission made up of fans, journalists, ex-players, and league officials to reach a policy on how to handle doped statistics.

As for future anti-doping, I'd recommend Senator Leahy use the public condemnation of the leagues to threaten a significant television revenue surcharge upon each league to fund an independent national anti-doping agency with adequate resources to independently test for existing and as yet undeveloped doping agents. This independent organization would also need sufficient R&D resources to keep up with the illicit industry. If leagues and their unions can agree to a comprehensive and aggressive testing regime of their own they would be exempt from the tv revenue surcharge.

This is a no-brainer to me. A one-off air-the-dirty-laundry process with a finite end would generate favorable leadership points for Sen. Leahy, the Democratic Party, and Congress as an institution. It would demonstrate positive, practical leadership to a country which seems quite cynical about the national political leadership. It would also become the model for any future anti-doping intervention by Congress - - a significant disincentive to doping for young and future athletes as well.

Off-Kilter - Harriet Miers, Abortion, and the Supreme Court (Valley News Op-Ed)

While no fan of George Bush or his judicial nominees, I can’t help but wince at Steve Nelson’s Oct. 16 assessment of Supreme Court nominee Harriet Miers. As usual, this nomination was greeted by a torrent of verbiage telling us what a Supreme Court justice “should be.” These criteria, unsurprisingly, change with each nominee and generally reflect the political convictions of the writer. In Nelson’s column, we learn that he doesn’t like Miers, but the arguments say a great deal more about Nelson than they do about Miers.

First, Nelson makes the mistake of patronizing his opponents. He begins by gleefully rubbing his hands over the political storm that greeted Miers’ nomination. Citing the backlash within social conservative circles, Nelson questions how these critics can be so dense, claiming one “needn’t have supernatural powers” to know who Miers is and why she was nominated.

Lacking supernatural powers myself, I come to a completely different conclusion as to who she may be and why she has been forwarded by this administration. I think the Miers nomination speaks volumes about George Bush’s limited room to maneuver and reflects the Republican Party’s increasingly strained coalition.

Controlling both houses of Congress and the White House, the GOP could conceivably ram through another Robert Bork or Antonin Scalia, but has chosen not to. Why? The pundits and media, sniffing fire hydrants, blame Bush’s ham-handed management or simply enjoy the whiff of internal dissension so much they don’t bother digging further. I think the answer is plain to see and the social conservative backlash confirms it. The Republican Party cannot afford to see Roe v. Wade, the landmark ruling on abortion rights, overturned.

Bush knows this, the Republican leadership know this, and now they’re doing back flips to obscure the fact from their social conservative supporters.

The Republican Party is a delicate balance of factions united in their opposition to the social and fiscal policies of the Democrats. With each passing year in power at both ends of Pennsylvania Avenue, it’s becoming more difficult for the Republicans to stake out ground on fiscal matters. Conveniently, the Republicans can continue to stoke partisan outrage and oppose the Democrats’ social policies so long as Roe remains law.

Should a Republican-appointed Supreme Court overturn Roe, all bets are off. The outrage at what social conservatives see as government-sanctioned murder would be transformed to the outrage that libertarians, social liberals and a huge number of non-ideologues would feel at government intrusion into the most intimate, personal matters of conscience. Repudiation of Roe v. Wade by the Supreme Court would be a watershed event dwarfing the groundswell in social conservative circles that greeted the original decision, likely splitting the current Republican coalition irretrievably.

Pollsters from both parties have known this for decades and, oddly enough, Roe is a centerpiece in recruiting for each.

Viewed in this context, Miers is certainly a stealth nominee, but her ideology is meant to escape detection not from the Steve Nelsons of America, but rather from the core social conservative supporters the Republicans will depend upon in 2006 and beyond. Some will dismiss this analysis as fanciful or too clever by half, but they ignore the evidence. Why do Republican court nominees always skirt the Roe controversy at their hearings? None hesitate to discuss Brown v. Board of Education despite the fact that its practical meaning remains subject to litigation in cases about desegregation and reverse discrimination.

If Republicans were confident that a majority of voters felt Roe was an obvious injustice, they wouldn’t hesitate to press the issue, using nomination hearings to press home the fact that Democrats were out of touch with that majority. As it is, the Republicans couldn’t even muster a majority of senators to support an avowedly anti-Roe nominee. Many social conservative activists are up in arms because they see the Miers appointment consolidating the 5-4 decision in the 1992 Casey ruling, which saw three Republican nominees, Sandra Day O’Connor, Anthony Kennedy and David Souter, join the 5-4 majority and hold fast on Roe as settled law. Chief Justice Roberts has already hinted he views Casey, and consequently Roe, as settled law. Miers shows every indication of lacking the overt ideology that has made Clarence Thomas and Antonin Scalia heroes among social conservatives.

Bush campaigned twice on the position that he would appoint overt ideologues such as Scalia and Thomas to the Supreme Court if elected. He’s blatantly reneged on that promise, and one must ask why. Why endure the internal dissension and public attacks for going back on his word? Because he has no choice.

Besides misreading Bush’s motives, Nelson’s column also indulges in intellectual bigotry. In Nelson’s universe, all “born-again” Christians such as Miers are social conservatives lacking Souter’s “agile and open mind.” He then offers George Will and David Brooks — two columnists who earn their bread writing condescendingly and authoritatively about every topic imaginable — as proof that Miers lacks “intellectual distinction.” Apparently Will possesses “the list” of our nation’s best legal minds and Miers doesn’t appear on it. Brooks, for his part, finds Texas Bar Association newsletters full of “vapid abstractions,” which any lawyer can tell you is a hallmark of every bar association newsletter in this country. Nelson cozies on in with these odd bedfellows to regale us with a novel legal distinction between judges who decide cases based on “an objective review of the facts” (apparently a bad thing) and those who properly hover in the ether of constitutional jurisprudence, “arguing late into the night about the Bill of Rights” and matching up “a contemporary social reality to the philosophical underpinnings of our republic.”
It’s no surprise Nelson disdains an “objective review of the facts” regarding Miers’ nomination, as he’s already reached his own decision.

Going for the jugular, Nelson impugns Miers’ character for choosing corporate law over public interest law or an academic career. He concludes that Miers “has shown no interest in or capacity to do the work for which she has been nominated.” Giants of American jurisprudence from John Marshall to Earl Warren had no judicial experience prior to joining the Supreme Court. There was a time where practical knowledge of the world, whether in politics or private practice, was considered far more important than “intellectual distinction” displayed in an academic career. Academics may disagree, but the core responsibility of judges is to make decisions, important decisions, often in less than ideal circumstances, often presented with strong arguments on both sides. The Supreme Court has precious few slam-dunk decisions, no matter what Justice Scalia may say.

The essential quality for a good judge is an ability to set aside preconceptions and remain wary of one's own bias so one may fairly weigh the opposing arguments that come before them. I don’t know whether Miers will be a great, or even good judge. I do know those who support or condemn her on the basis of the meager public record we now have before us clearly do so in ignorance and presume a great deal in so doing. Rather than shedding light on the Miers nomination, Nelson has simply made clear why we’ve never had a columnist nominated to the Supreme Court.