Vancouver BC is an authentically grungy city. It looks the way a city is supposed to look and feel.
Seattle, on the other hand, ceased being a grungy city sometime in the late-90’s, after Mayors Rice and Schell, and their cohorts on the City Council, succeeded in shoveling public money to developers. Add the tech stock boom, easy credit, and sky-rocketing housing prices, and we got a city that has swept all its poor people right out of the city limits. And that was the plan, as Mayor Schell would have told you back then. Poor people don’t belong in our city, so they were forced to leave.
Which explains the city’s attitude today, with Mayor Nickels endorsing sweeps of homeless encampments and his refusal to deal with the Nickelsville tent city. No wonder he didn’t make it through the primary.
Unfortunately, when the poor left Seattle, most of Seattle’s character left with them.
Vancouver has several neighborhoods that have cleaned out the drug dealers and prostitutes, but have nevertheless maintained their unique, hole-in-the-wall stores, cheap ethnic restaurants, tiny artsy boutiques with handmade clothing, and a proliferation of affordable family housing. Of course, politicians and big businessmen in Vancouver would like their city to look like Seattle, but the majority of Vancouverites are pushing back and trying to hold on to what makes Vancouver so great.
Not so, in Seattle. Even the Fremont neighborhood has been sanitized and turned into an outdoor shopping mall. It’s a sad day when Vancouver can boast more vegetarian restaurants per square mile than Seattle has in its entire city limits.
It all boils down to two things: first, the price of rent. In Seattle, local coffee shops, used bookstores, and even the little storefront martial arts studios have all closed down because they can’t make the rent. (I feel compelled to point out that Vancouver has a Starbucks on almost every corner, just like we have here, but Vancouver still has great, small coffee shops, too. Seattle has maybe three or four left in the whole city.)
The second problem is attitude. Everyone in America wants to get rich right now, and that’s reflected not only in our borrowing and spending habits (we want to live like the rich but don’t really have the means for it), but also in our inability to use patience and hard work to achieve a vision of something unique.
For example, in Vancouver, a young clothing designer might decide to open her own storefront in a tiny neighborhood shop with cheap rent and make clothing that students can afford to buy. She would find it important and empowering to see lots of hip, young people wearing her clothes, and be happy to build business that way. But in Seattle, that same designer would choose instead to make a few items, place them in an expensive consignment shop, and price them well out of the reach of almost everyone but the wealthy. Then she’d try to build her “brand” through an idiotic Internet campaign, and try to get on a reality TV show for fashion designers, eventually learning how to fit in with the fashion industry’s standards. This is a route that ensures sterility, stifles creativity, isolates artists from the people who’d appreciate their work the most (most of whom are not rich), and in the process destroys a city’s cultural life and its streetscapes.
Maybe the economic downturn, which is based on unsustainable rents and housing prices, will change all that. Americans are already voting on the quality of merchandise in chain stores by becoming more choosy. We are literally waking up, smelling the coffee, and deciding that Starbucks isn’t any better than the stuff we make at home.
Maybe most American artists and entrepreneurs will give up on their “get rich quick” fantasies and search instead for fulfillment in their work. Falling rents just might make it possible for them to realize this new dream.
I hope so, for Seattle’s sake.
Sunday, August 30, 2009
Friday, August 28, 2009
What's This Dynasty Crap Anyway?
I’ve just come back from a vacation to Vancouver, BC. The hotel where I stayed provided me with a free newspaper every morning, which I enjoyed fully. Not only was the local news interesting, but Canadians’ views of US news were highly entertaining.
For example, the news of Sen. Edward Kennedy’s death. The Canadian press were respectful, but they couldn’t refrain from commenting on how the US press treated the Kennedys as if they were royalty, and how much the US media mourned the death of a political dynasty. The Vancouver Sun even printed a piece that speculated about which political family might replace the Kennedys: the Clintons? The Bushes? The Obamas?
Fighting back nausea, I turned to the opinion page, where I was happy to read commentary pointing out that, for a Democracy, the US sure has a strange love of aristocratic forms (i.e., “the political dynasty” bullshit). Oh, they are so right.
But there’s more to Kennedy worship than that. Most Americans believe we live in a meritocracy, where anyone can succeed with a lot of hard work, perseverance, brains, confidence, etc. The Kennedys were representative of that “pull yourself up by your bootstraps” philosophy in most people’s minds.
But what many Americans forget is that it also takes a great deal of luck and/or connections to make as much money as Joseph Kennedy Sr. did. The political success of his children is proof that money can open doors and create opportunities that aren’t available to, say, a homeless street kid who never graduated from middle school.
Amazingly, the Kennedys seemed to understand that. Old-style Democrats, they knew that folks often need a helping hand to climb the ladder out of poverty, and so they supported social service programs that other politicians (including most Democrats these days) sought to dismantle. They had a self-awareness that most politicians—and nearly all media personalities—lack.
So before we start talking about a dynasty to replace the Kennedys, let’s acknowledge that it’s not a particular political family that we’ll truly miss. It’s a strong and credible champion of the poor: someone who believes in equal access to education, universal access to healthcare, affordable housing, programs to address domestic violence, and services for people with disabilities.
We’re waiting.
For example, the news of Sen. Edward Kennedy’s death. The Canadian press were respectful, but they couldn’t refrain from commenting on how the US press treated the Kennedys as if they were royalty, and how much the US media mourned the death of a political dynasty. The Vancouver Sun even printed a piece that speculated about which political family might replace the Kennedys: the Clintons? The Bushes? The Obamas?
Fighting back nausea, I turned to the opinion page, where I was happy to read commentary pointing out that, for a Democracy, the US sure has a strange love of aristocratic forms (i.e., “the political dynasty” bullshit). Oh, they are so right.
But there’s more to Kennedy worship than that. Most Americans believe we live in a meritocracy, where anyone can succeed with a lot of hard work, perseverance, brains, confidence, etc. The Kennedys were representative of that “pull yourself up by your bootstraps” philosophy in most people’s minds.
But what many Americans forget is that it also takes a great deal of luck and/or connections to make as much money as Joseph Kennedy Sr. did. The political success of his children is proof that money can open doors and create opportunities that aren’t available to, say, a homeless street kid who never graduated from middle school.
Amazingly, the Kennedys seemed to understand that. Old-style Democrats, they knew that folks often need a helping hand to climb the ladder out of poverty, and so they supported social service programs that other politicians (including most Democrats these days) sought to dismantle. They had a self-awareness that most politicians—and nearly all media personalities—lack.
So before we start talking about a dynasty to replace the Kennedys, let’s acknowledge that it’s not a particular political family that we’ll truly miss. It’s a strong and credible champion of the poor: someone who believes in equal access to education, universal access to healthcare, affordable housing, programs to address domestic violence, and services for people with disabilities.
We’re waiting.
Tuesday, August 18, 2009
Meanwhile, In Russia's Afghanistan...
While the US government condemns the sham trial and sentencing of Burmese politician and activist Aung San Suu Kyi, the Obama administration is notably silent on the continuing human rights crisis in Chechnya. In the past two weeks, two more activists were killed when a gang of armed men, some dressed in police uniforms, kidnapped and murdered the head of a children’s charity and her husband.
So many social justice and human rights workers have been killed in Chechnya in the past few months that a local radio station in Grozny, the Chechen capital, couldn’t find anyone to interview about the recent killings. Scanning down a list of Chechen charities revealed that every single one of the station’s contacts had been murdered.
The Kremlin-backed leader of Chechnya, Ramzan Kadyrov, is widely considered to be the man to blame for these killings. Kadyrov, a former Chechen separatist, gave up the cause to be Vladimir Putin’s man in Grozny. He was the compromise candidate who was supposed to bring stability to Chechnya; now Human Rights Watch blames him for running death squads that have murdered dozens of activists and journalists. Stability, apparently, comes at a steep price.
Yet Kadyrov is quick to point the finger at Russian President Vladimir Putin, saying that Moscow wants to discredit him and destabilize his government. It’s an absurd charge, given that Russia has fought multiple wars in Chechnya in the last decade, and is struggling to put down separatist, Islamic uprisings in Chechnya’s neighboring republics of Ingushetia and Dagestan. The last thing Putin wants is to topple Kadyrov’s government.
Kadyrov is obviously working with Putin’s blessing to suppress any and all forms of dissent in Chechnya, even when that dissent falls into the category of peaceful work on behalf of orphaned children. Kadyrov believes that Putin (so fond of his own bloodthirsty reputation) can stand a bit more slander, as long as it diverts the UN and the international media from the truth.
So far the US media has been happy to oblige, as long as US presidents are willing to shake Putin’s hand at international forums. A picture is worth more than a thousand words.
So many social justice and human rights workers have been killed in Chechnya in the past few months that a local radio station in Grozny, the Chechen capital, couldn’t find anyone to interview about the recent killings. Scanning down a list of Chechen charities revealed that every single one of the station’s contacts had been murdered.
The Kremlin-backed leader of Chechnya, Ramzan Kadyrov, is widely considered to be the man to blame for these killings. Kadyrov, a former Chechen separatist, gave up the cause to be Vladimir Putin’s man in Grozny. He was the compromise candidate who was supposed to bring stability to Chechnya; now Human Rights Watch blames him for running death squads that have murdered dozens of activists and journalists. Stability, apparently, comes at a steep price.
Yet Kadyrov is quick to point the finger at Russian President Vladimir Putin, saying that Moscow wants to discredit him and destabilize his government. It’s an absurd charge, given that Russia has fought multiple wars in Chechnya in the last decade, and is struggling to put down separatist, Islamic uprisings in Chechnya’s neighboring republics of Ingushetia and Dagestan. The last thing Putin wants is to topple Kadyrov’s government.
Kadyrov is obviously working with Putin’s blessing to suppress any and all forms of dissent in Chechnya, even when that dissent falls into the category of peaceful work on behalf of orphaned children. Kadyrov believes that Putin (so fond of his own bloodthirsty reputation) can stand a bit more slander, as long as it diverts the UN and the international media from the truth.
So far the US media has been happy to oblige, as long as US presidents are willing to shake Putin’s hand at international forums. A picture is worth more than a thousand words.
Saturday, August 15, 2009
Banking: Where It Pays to Keep Secrets
US banks posted record losses in the first quarter of this year, which was the worst quarter in history for Wall Street since The Great Depression. In one effort to stem the bleeding, big banks resorted to lobbying the Financial Accounting Standards Board (FASB) to repeal the mark-to-market accounting rule.
Simply defined, the mark-to-market rule requires companies to value their assets at the price they would receive for those assets if they tried to sell them on the market right now. Because of the collapse of the credit markets in 2008, the loans and mortgage-backed securities that banks held on their books were worth next to nothing on the market, so they had to value them accordingly. This made their balance sheets look terrible, and their stock prices plummeted. Naturally, banks wanted to declare that their loans were worth more.
So the banking industry lobbied FASB to repeal mark-to-market accounting. Big banks wanted to value their mortgage-backed securities and other loans as if the principle and interest on those loans would be paid back 100%, as if none of their customers would default on their loans.
Shockingly, FASB agreed, allowing banks to use an accounting trick to hide the terrible state of their balance sheets. Unsurprisingly, banks’ second quarter earnings vastly improved. Investors began buying bank stocks again, deeming them a good deal. Many economists declared that the tide had turned on the financial crisis.
But now, FASB is considering reinstituting mark-to-market accounting for all financial products, including loans, mortgage-backed securities, and other derivatives. This is terrible news for the banking industry.
After suffering from a double wave of defaults—first, from subprime mortgage loans given to people with bad credit, then from prime mortgages given to people with good credit who borrowed more money than they could afford—US banks are now getting hit with a third wave of defaults on commercial real estate loans. Commercial loans extended to hotels, malls, retail outlets, and office-building developers have hit a default rate of 7%, approximately double what it was last year.
Economists don’t expect the fall in the commercial loan market to hit bottom for another three years, due to lingering unemployment and lagging consumer spending. This is terrible news for mid-size regional banks, in particular, who invested heavily in loans to commercial real estate developers.
A recent example is this week’s collapse of Colonial Bancorp, the sixth largest bank default in US history. Joining 76 other banks that have defaulted so far this year, Colonial is a sign of things to come. No wonder bank lobbyists are gearing up to inundate FASB with protests against mark-to-market accounting.
Transparency is the enemy, and they make no secret of it.
Simply defined, the mark-to-market rule requires companies to value their assets at the price they would receive for those assets if they tried to sell them on the market right now. Because of the collapse of the credit markets in 2008, the loans and mortgage-backed securities that banks held on their books were worth next to nothing on the market, so they had to value them accordingly. This made their balance sheets look terrible, and their stock prices plummeted. Naturally, banks wanted to declare that their loans were worth more.
So the banking industry lobbied FASB to repeal mark-to-market accounting. Big banks wanted to value their mortgage-backed securities and other loans as if the principle and interest on those loans would be paid back 100%, as if none of their customers would default on their loans.
Shockingly, FASB agreed, allowing banks to use an accounting trick to hide the terrible state of their balance sheets. Unsurprisingly, banks’ second quarter earnings vastly improved. Investors began buying bank stocks again, deeming them a good deal. Many economists declared that the tide had turned on the financial crisis.
But now, FASB is considering reinstituting mark-to-market accounting for all financial products, including loans, mortgage-backed securities, and other derivatives. This is terrible news for the banking industry.
After suffering from a double wave of defaults—first, from subprime mortgage loans given to people with bad credit, then from prime mortgages given to people with good credit who borrowed more money than they could afford—US banks are now getting hit with a third wave of defaults on commercial real estate loans. Commercial loans extended to hotels, malls, retail outlets, and office-building developers have hit a default rate of 7%, approximately double what it was last year.
Economists don’t expect the fall in the commercial loan market to hit bottom for another three years, due to lingering unemployment and lagging consumer spending. This is terrible news for mid-size regional banks, in particular, who invested heavily in loans to commercial real estate developers.
A recent example is this week’s collapse of Colonial Bancorp, the sixth largest bank default in US history. Joining 76 other banks that have defaulted so far this year, Colonial is a sign of things to come. No wonder bank lobbyists are gearing up to inundate FASB with protests against mark-to-market accounting.
Transparency is the enemy, and they make no secret of it.
Wednesday, August 12, 2009
Is Maliki the New Saddam?
The only rational justification that the Bush administration ever publically gave for the War in Iraq was the desire to replace a tyrant (Saddam Hussein) with a democratic government. That assertion has always been the hardest one for opponents of the war to counter, and it was the last justification that stood up to any kind of scrutiny. Until this week.
Iraqi Prime Minister Nouri al-Maliki has proposed a list of laws that will do away with most of the democratic reforms in Iraq’s new constitution. The draft laws include the following:
- A proposal to legalize a new government body, the State Ministry for National Security, which will run a “political crimes directorate.” The new directorate will monitor political parties and nongovernmental organizations (NGO’s) in much the same way Saddam’s Baath party monitored its opponents.
- A proposed law to give the Iraqi government complete control over NGO’s, including requiring government review and approval of every single donation and project undertaken, and every office opened and run by all NGO’s. Simple registration of a new NGO (as now required under Iraqi law and the governments of most western nations) is not sufficient, apparently.
- A law to put heavy restrictions on Iraqi media that would require all journalists to be licensed by the Iraqi government and would give the government say over who is hired and fired by media organizations. The law also allows the Iraqi government to censor specific stories that would “compromise the security and stability of the country,” and it forbids the use of anonymous sources.
Alaa Talibani, head of the NGO committee in the Iraqi Parliament, said: “So many articles in this law go against what it means to have a free civil society, against the fundamental principles of liberty, and even against our own constitution.”
That, as Saddam Hussein might say, is the point. The US people, however, should rigorously question the whole point of having engaged in a long, bloody conflict just to replace one dictator with another.
[Source: “Iraq’s Maliki Seeks Tighter Media Grip,” Charles Levinson, The Wall Street Journal, 8/8/09.]
Tuesday, August 11, 2009
Now We Bomb Hospitals?
Assassination is banned by a US federal executive order issued by President Gerald Ford in the 1970’s. The Bush administration, however, resurrected assassination in its the War on Terror. Unfortunately, the Obama administration has not only taken up the torch, but has vastly expanded a CIA program that uses unmanned aerial drones to summarily execute suspected Taliban and Al Qaeda leaders…and anyone who happens to be in the vicinity.
These are not “surgical strikes.” Aerial drones fly at very high altitudes to avoid detection. Some carry cameras to locate suspicious clusters of people, while others carry high-powered bombs to target groups of people in the hope that someone of importance is killed.
Over the weekend, US officials boasted that Baitullah Mehsud, a suspected Taliban leader, had been assassinated by a missile fired from a CIA-controlled aerial done. At first, US officials told the New York Times (and the paper faithfully reported) that Mehsud, a diabetic suffering from kidney failure, was killed while receiving medical treatment on the roof of his father-in-law’s villa. No sooner had the strike been reported than conflicting information emerged.
An Associated Press article appearing in the Seattle Times on Saturday, August 8th, said that Mehsud was killed along with his wife and several bodyguards while hooked up to an intravenous drip and undergoing treatment for “stomach problems.” The Wall Street Journal quoted Pakistani officials saying that Mehsud was “undergoing treatment for a kidney ailment.” Almost certainly he was receiving kidney dialysis at the time—not something that can occur on the roof of his father-in-law’s villa. Also, the article stated that Mehsud was killed when a missile targeted the second-story balcony of a building where he was receiving treatment. No mention was made of any rooftop.
In fact, it appears that Mehsud was killed when the CIA bombed a medical clinic—probably the only facility that offers kidney dialysis in the Waziristan frontier. We can believe with some confidence that his wife and bodyguards were not the only ones killed in the bombing, but medical personnel and other patients were included in the death toll. In addition, anyone who lives in South Waziristan who needs kidney dialysis will now die without access to the complex, sterile equipment and medical personnel required to keep them alive.
Let’s remember what’s been forgotten by US officials and the US press: the bombing of medical facilities is a war crime, a direct violation of international law and the rules of warfare. It doesn’t matter if the enemy is receiving medical treatment at the time. It doesn’t matter if the clinic is treating Hitler or Osama bin Laden, or Baitullah Mehsud, or enemy foot soldiers. Hospitals and clinics are off limits.
Nevertheless, US officials were jubilant. They happily theorized that the death of Mehsud would cause a fatal fracture among the Waziristan tribes who’ve been helping Mehsud target the Pakistani government. Scholars of Pakistan and observers on the ground in Waziristan had a different view. In the Seattle Times report, Karim Mehsud, a lawyer in Peshawar who had met Baitullah Mehsud, was quoted as saying, “Another Baitullah will emerge. This is an ideological war, this is not a local problem.” Almost everyone agrees that Baitullah Mehsud was responsible for focusing his tribe’s attention away from Aghanistan and towards the Pakistani government; now that he’s gone, his 10,000-man guerilla army is free to reunite with the Taliban and once again attack US troops in Afghanistan.
More than 360 people have been killed in over 40 drone attacks in Pakistan this year. Pakistan has publicly condemned each and every one of these attacks as a violation of Pakistani sovereignty. But both Pakistan’s foreign minister and the chief of its Interior Ministry have hailed the assassination of Mehsud as a major success. The Pakistani military has been preparing (with dread) for a offensive against tribal elements in the rugged, mountainous region of Waziristan, spurred on by heavy urging from the US government. The Pakistani government is now hopeful they can avoid the effort and expense altogether, much to the Pentagon’s dismay.
Not only is our government engaging in assassination prohibited by US law, but it’s also engaging in international war crimes, for the sake of expediency, and with the excuse that it will “save American lives” and “help end the war in Afghanistan.” Nothing could be further from the truth. When you assassinate an enemy’s leader, someone will inevitably take his place. In the case of Baitullah Mehsud, who’s been ill for some time now, the preparations for succession are probably already complete. A new leader of the Mehsud tribe will arise swiftly and without most of the infighting so ardently expected by CIA officials.
One more thing we can easily surmise: the man who replaces Baitullah Mehsud will be more radical and more bloodthirsty. And he’ll be looking for revenge.
Sources:
“Taliban leader in Pakistan reportedly dead,” Joby Warrick, Joshua Partlow, and Haq Nawaz Khan, Associated Press, reprinted in The Seattle Times, 8/8/09
“U.S. Drone Kills Chief of Taliban in Pakistan,” Matthew Rosenberg, Zahid Hussain, and Siobhan Gorman, The Wall Street Journal, 8/8/09.
These are not “surgical strikes.” Aerial drones fly at very high altitudes to avoid detection. Some carry cameras to locate suspicious clusters of people, while others carry high-powered bombs to target groups of people in the hope that someone of importance is killed.
Over the weekend, US officials boasted that Baitullah Mehsud, a suspected Taliban leader, had been assassinated by a missile fired from a CIA-controlled aerial done. At first, US officials told the New York Times (and the paper faithfully reported) that Mehsud, a diabetic suffering from kidney failure, was killed while receiving medical treatment on the roof of his father-in-law’s villa. No sooner had the strike been reported than conflicting information emerged.
An Associated Press article appearing in the Seattle Times on Saturday, August 8th, said that Mehsud was killed along with his wife and several bodyguards while hooked up to an intravenous drip and undergoing treatment for “stomach problems.” The Wall Street Journal quoted Pakistani officials saying that Mehsud was “undergoing treatment for a kidney ailment.” Almost certainly he was receiving kidney dialysis at the time—not something that can occur on the roof of his father-in-law’s villa. Also, the article stated that Mehsud was killed when a missile targeted the second-story balcony of a building where he was receiving treatment. No mention was made of any rooftop.
In fact, it appears that Mehsud was killed when the CIA bombed a medical clinic—probably the only facility that offers kidney dialysis in the Waziristan frontier. We can believe with some confidence that his wife and bodyguards were not the only ones killed in the bombing, but medical personnel and other patients were included in the death toll. In addition, anyone who lives in South Waziristan who needs kidney dialysis will now die without access to the complex, sterile equipment and medical personnel required to keep them alive.
Let’s remember what’s been forgotten by US officials and the US press: the bombing of medical facilities is a war crime, a direct violation of international law and the rules of warfare. It doesn’t matter if the enemy is receiving medical treatment at the time. It doesn’t matter if the clinic is treating Hitler or Osama bin Laden, or Baitullah Mehsud, or enemy foot soldiers. Hospitals and clinics are off limits.
Nevertheless, US officials were jubilant. They happily theorized that the death of Mehsud would cause a fatal fracture among the Waziristan tribes who’ve been helping Mehsud target the Pakistani government. Scholars of Pakistan and observers on the ground in Waziristan had a different view. In the Seattle Times report, Karim Mehsud, a lawyer in Peshawar who had met Baitullah Mehsud, was quoted as saying, “Another Baitullah will emerge. This is an ideological war, this is not a local problem.” Almost everyone agrees that Baitullah Mehsud was responsible for focusing his tribe’s attention away from Aghanistan and towards the Pakistani government; now that he’s gone, his 10,000-man guerilla army is free to reunite with the Taliban and once again attack US troops in Afghanistan.
More than 360 people have been killed in over 40 drone attacks in Pakistan this year. Pakistan has publicly condemned each and every one of these attacks as a violation of Pakistani sovereignty. But both Pakistan’s foreign minister and the chief of its Interior Ministry have hailed the assassination of Mehsud as a major success. The Pakistani military has been preparing (with dread) for a offensive against tribal elements in the rugged, mountainous region of Waziristan, spurred on by heavy urging from the US government. The Pakistani government is now hopeful they can avoid the effort and expense altogether, much to the Pentagon’s dismay.
Not only is our government engaging in assassination prohibited by US law, but it’s also engaging in international war crimes, for the sake of expediency, and with the excuse that it will “save American lives” and “help end the war in Afghanistan.” Nothing could be further from the truth. When you assassinate an enemy’s leader, someone will inevitably take his place. In the case of Baitullah Mehsud, who’s been ill for some time now, the preparations for succession are probably already complete. A new leader of the Mehsud tribe will arise swiftly and without most of the infighting so ardently expected by CIA officials.
One more thing we can easily surmise: the man who replaces Baitullah Mehsud will be more radical and more bloodthirsty. And he’ll be looking for revenge.
Sources:
“Taliban leader in Pakistan reportedly dead,” Joby Warrick, Joshua Partlow, and Haq Nawaz Khan, Associated Press, reprinted in The Seattle Times, 8/8/09
“U.S. Drone Kills Chief of Taliban in Pakistan,” Matthew Rosenberg, Zahid Hussain, and Siobhan Gorman, The Wall Street Journal, 8/8/09.
Monday, August 10, 2009
The Program Only an Idiot Could Love
All the hype about the cash for clunkers program, that it’s “the best economic stimulus we’ve undertaken yet” are based on the estimate that consumer spending drives 60-70% of all economic activity in the US, if not the world. So any tiny impetus for consumer spending, even a mere $3 billion worth, will have an enormous impact, far greater than the hundreds of billions of dollars approved in the Economic Stimulus Spending Act. Or so the reasoning goes.
The bulk of the money in the Economic Stimulus Spending Act was approved for “shovel-ready” infrastructure projects. Unfortunately, many of those projects are still waiting for the first shovel of dirt to be turned over. Time’s a-wasting. The construction season will be over soon, and it’s becoming clear that most of those projects wont’ get underway until next spring.
Hence the excitement over the cash for clunker program. A tiny blip of consumer spending! Let us rejoice!
But not so fast. The Federal Reserve and the Commerce Department reported last week that, in June, consumer borrowing fell for a fifth straight month. The US public is using its cash to pay down its debts, not to spend. Economists expected a decline of $4.1 billion in consumer credit in June; the actual total was $10.3 billion, almost double the May decline of $5.4 billion. Credit card use in June dropped by $5.3 billion, the tenth monthly decline in a row, a record for the US economy.
Americans are paying down their debts, which is making the US economy suffer. Nevertheless, we could argue that this is a good sign for individual US households, except for one sobering fact: total personal debt still lingers at $2.503 trillion (not counting mortgage debt and home improvement loans). We all have a long way to go to pay off our credit cards, student loans, and auto loans.
Which is why cash for clunkers may be a good deal for the US economy (at least in the short term), but it’s a very bad one for US households, which don’t need to take on new auto loans right now—no matter how nice it is to get a government rebate check. This is yet another way that the Republicans’ anti-tax mantra has damaged the American psyche; we will do anything to get something back from the IRS, even if it kills us.
And let’s not forget the cost to society and the environment to junk all those clunkers (a requirement of the program) instead of keeping the perfectly good ones running and recycling the real clunkers for parts. Meanwhile the auto industry is gearing up to use dwindling resources to make new cars to fulfill the demand created by the cash for clunkers program.
Replacing a 1999 17-mpg pickup truck with a new 2009 model that gets 18-mpg makes no sense whatsoever. That $3 billion in taxpayer money could have been spent much more efficiently if the government had randomly handed out $4,500 checks. Or given the money to state and local governments to plug their budget holes, to prevent layoffs in state and county governments, to provide homeless services, to fund more transit services (which would truly help the environment), to pay teacher salaries, or to prevent billions in government service cuts all over the country.
Cash for clunkers? What idiot came up with that one? Probably someone who was taking money from the auto industry, the only real beneficiary of the program.
By the way, both of Washington state’s senators, Maria Cantwell and Patty Murray, voted in favor of the program. They need to explain why.
[Source: “U.S. Consumers Reduce Debt for Fifth Month in a Row,” Jeff Bater, The Wall Street Journal, 8/8/09.]
The bulk of the money in the Economic Stimulus Spending Act was approved for “shovel-ready” infrastructure projects. Unfortunately, many of those projects are still waiting for the first shovel of dirt to be turned over. Time’s a-wasting. The construction season will be over soon, and it’s becoming clear that most of those projects wont’ get underway until next spring.
Hence the excitement over the cash for clunker program. A tiny blip of consumer spending! Let us rejoice!
But not so fast. The Federal Reserve and the Commerce Department reported last week that, in June, consumer borrowing fell for a fifth straight month. The US public is using its cash to pay down its debts, not to spend. Economists expected a decline of $4.1 billion in consumer credit in June; the actual total was $10.3 billion, almost double the May decline of $5.4 billion. Credit card use in June dropped by $5.3 billion, the tenth monthly decline in a row, a record for the US economy.
Americans are paying down their debts, which is making the US economy suffer. Nevertheless, we could argue that this is a good sign for individual US households, except for one sobering fact: total personal debt still lingers at $2.503 trillion (not counting mortgage debt and home improvement loans). We all have a long way to go to pay off our credit cards, student loans, and auto loans.
Which is why cash for clunkers may be a good deal for the US economy (at least in the short term), but it’s a very bad one for US households, which don’t need to take on new auto loans right now—no matter how nice it is to get a government rebate check. This is yet another way that the Republicans’ anti-tax mantra has damaged the American psyche; we will do anything to get something back from the IRS, even if it kills us.
And let’s not forget the cost to society and the environment to junk all those clunkers (a requirement of the program) instead of keeping the perfectly good ones running and recycling the real clunkers for parts. Meanwhile the auto industry is gearing up to use dwindling resources to make new cars to fulfill the demand created by the cash for clunkers program.
Replacing a 1999 17-mpg pickup truck with a new 2009 model that gets 18-mpg makes no sense whatsoever. That $3 billion in taxpayer money could have been spent much more efficiently if the government had randomly handed out $4,500 checks. Or given the money to state and local governments to plug their budget holes, to prevent layoffs in state and county governments, to provide homeless services, to fund more transit services (which would truly help the environment), to pay teacher salaries, or to prevent billions in government service cuts all over the country.
Cash for clunkers? What idiot came up with that one? Probably someone who was taking money from the auto industry, the only real beneficiary of the program.
By the way, both of Washington state’s senators, Maria Cantwell and Patty Murray, voted in favor of the program. They need to explain why.
[Source: “U.S. Consumers Reduce Debt for Fifth Month in a Row,” Jeff Bater, The Wall Street Journal, 8/8/09.]
Friday, August 7, 2009
What will hurt the poor: higher bus fares
Forget the bag fee as a burden to the poor. What we should really be incensed about is the King County Council’s proposals to raise money for Metro bus service. Their brilliant ideas have included abolishing the ride free zone downtown—widely used by the poor to navigate from one downtown service provider to another—to raising bus fares by 25-cents per year for the next four years. Yes, by 2013, riders would be paying $3 for a one-zone, peak hour trip and $2.75 for a one-zone, off-peak trip. If you live in low-income housing in the cheaper parts of the county outside of Seattle, your fare will be $3.50 for a peak hour trip.
Let’s not kid ourselves. Poor people ride the bus because it’s cheaper than maintaining a clunker that breaks down all the time. It’s cheaper than gas. It’s cheaper than car insurance. It’s cheaper than parking and new tires and radiator fluid and oil changes and new brake pads.
But it’s not so cheap that people don’t feel the sting when fares go up, and they will if the county council passes this insane increase. Council members Julia Patterson, Reagan Dunn, Kathy Lambert, and Pete von Reichbauer need to hear from you:
Julia.patterson@kingcounty.gov or 206-296-1005
Reagan.dunn@kingcounty.gov or 206-296-1009
Kathy.Lambert@kingcounty.gov or 206-296-1003
Pete.vonreichbauer@kingcounty.gov or 206-296-1007
Of course, these are all representatives from conservative, rural and suburban districts on the south and east side of the county. You might also want to contact the other county council members and ask them to out-vote this coterie. Larry Phillips and Dow Constantine, in particular, are so busy running their campaigns for King County Executive that they’re probably not paying close attention to what their colleagues are doing. Visit the king county council website at www.kingcounty.gov/council/Councilmembers.aspx to get the complete contact information for all council members.
Let’s not kid ourselves. Poor people ride the bus because it’s cheaper than maintaining a clunker that breaks down all the time. It’s cheaper than gas. It’s cheaper than car insurance. It’s cheaper than parking and new tires and radiator fluid and oil changes and new brake pads.
But it’s not so cheap that people don’t feel the sting when fares go up, and they will if the county council passes this insane increase. Council members Julia Patterson, Reagan Dunn, Kathy Lambert, and Pete von Reichbauer need to hear from you:
Julia.patterson@kingcounty.gov or 206-296-1005
Reagan.dunn@kingcounty.gov or 206-296-1009
Kathy.Lambert@kingcounty.gov or 206-296-1003
Pete.vonreichbauer@kingcounty.gov or 206-296-1007
Of course, these are all representatives from conservative, rural and suburban districts on the south and east side of the county. You might also want to contact the other county council members and ask them to out-vote this coterie. Larry Phillips and Dow Constantine, in particular, are so busy running their campaigns for King County Executive that they’re probably not paying close attention to what their colleagues are doing. Visit the king county council website at www.kingcounty.gov/council/Councilmembers.aspx to get the complete contact information for all council members.
Tuesday, August 4, 2009
The Bag Fee and The Poor
Edmonds has become the first city in our state to ban plastic grocery bags. The Edmonds City Council considered a 20-cent fee similar to Seattle’s Referendum 1 (which is up for a vote on August 18th), but opted instead for an outright ban. They’re joining the distinguished ranks of other cities who’ve chosen to ban nuisance plastic, like Washington DC, San Francisco (which banned the bags in 2007) and Los Angeles (whose ban will go into effect next year). A few nations around the world have banned or discouraged their use: France and Germany (“Old Europe”), India, and…you’re gonna cringe…China has also seen the light. So what are we waiting for?
Well, we might be waiting for progressive, social justice groups to support this measure. Most have been unwilling to weigh in, probably because they buy the argument that the 20-cent fee will impact the poor more heavily than the rich. Possibly true. Possibly not.
It didn’t help that Danny Westneat wrote in his Seattle Times column on July 29th that the Central Area Motivation Program (CAMP) is against the bag fee. They did an informal survey of their clients, which entailed handing out reusable bags to food recipients and requiring that they bring them back on future trips to the food bank. CAMP found that the poor have a hard time remembering to bring back their reusable bags.
But there were problems with their informal survey. For one thing, CAMP didn’t say how many of their clients don’t speak or understand English well; this can effect whether or not their clients really understand that they should reuse the bags CAMP furnished to them. The same is true for folks who are mentally ill or cognitively impaired. It may take a few tries before these folks grasp the concept. So do we give up just because they don’t get it right the first time? Most people don’t remember to take their reusable bags with them the first couple of times they go to the grocery store—until they get in the habit of remembering to grab them before they head out the door. The poor are no different in that respect.
There were other problems with the survey. Food banks often see a high turnover in clientele. How many of the people who showed up without reusable bags ever received one from CAMP in the first place?
In addition, the survey doesn’t take into account the willingness of green progressives to regularly donate reusable bags for use in food banks, homeless shelters, and other programs that serve the poor. Nor did Westneat mention that part of the money raised through the bag fee will be used to purchase reusable bags for the poor. You might argue that those dollars could be better spent buying food or other services for low income people, but why does it have to be a zero sum game? Can’t we help the poor and the environment at the same time? I think Seattle residents are humane enough to do both, even in tough economic times.
Well, we might be waiting for progressive, social justice groups to support this measure. Most have been unwilling to weigh in, probably because they buy the argument that the 20-cent fee will impact the poor more heavily than the rich. Possibly true. Possibly not.
It didn’t help that Danny Westneat wrote in his Seattle Times column on July 29th that the Central Area Motivation Program (CAMP) is against the bag fee. They did an informal survey of their clients, which entailed handing out reusable bags to food recipients and requiring that they bring them back on future trips to the food bank. CAMP found that the poor have a hard time remembering to bring back their reusable bags.
But there were problems with their informal survey. For one thing, CAMP didn’t say how many of their clients don’t speak or understand English well; this can effect whether or not their clients really understand that they should reuse the bags CAMP furnished to them. The same is true for folks who are mentally ill or cognitively impaired. It may take a few tries before these folks grasp the concept. So do we give up just because they don’t get it right the first time? Most people don’t remember to take their reusable bags with them the first couple of times they go to the grocery store—until they get in the habit of remembering to grab them before they head out the door. The poor are no different in that respect.
There were other problems with the survey. Food banks often see a high turnover in clientele. How many of the people who showed up without reusable bags ever received one from CAMP in the first place?
In addition, the survey doesn’t take into account the willingness of green progressives to regularly donate reusable bags for use in food banks, homeless shelters, and other programs that serve the poor. Nor did Westneat mention that part of the money raised through the bag fee will be used to purchase reusable bags for the poor. You might argue that those dollars could be better spent buying food or other services for low income people, but why does it have to be a zero sum game? Can’t we help the poor and the environment at the same time? I think Seattle residents are humane enough to do both, even in tough economic times.
Monday, August 3, 2009
Dark Pools and Other Financial Arcana
“Dark pools” and “flash trading” sound like terms you’d find in a Harry Potter movie. But if you work for a large investment bank, these terms are as familiar as stocks and bonds and the NYSE. Too bad mom and pop investors don’t know what they are or how they can affect the value of your savings. The Wall Street Journal defines dark pools as “private markets where large orders are transacted.” [Source: “Traders Blamed for Oil Spike,” Ianthe Jeanne Dugan and Alistair MacDonald, WSJ, 7/28/09.]
Usually used by investment banks, hedge funds, and mutual fund brokers to disguise large purchases and sales of stocks and mutual fund shares (the trades are undertaken anonymously and don’t appear on any public exchange), dark pools are privately run and not subject to regulation by any governmental authority. Recently the SEC has recommended that dark pools register with the government and provide basic information on their activities. The companies that own and run dark pools are largely in favor of this mild increase in scrutiny, probably because they fear the SEC and Congress will close them down entirely if they don’t submit to some form of regulation.
The companies that utilize dark pools to avoid price run-ups or steep declines are resisting the government’s move to bring their activities to light. They argue that dark pools smooth price swings and thereby benefit small investors who would be afraid to invest in a more volatile market. But that’s the very best reason to regulate or shut down dark pools entirely. As with mortgage fraud, the federal regulators must go after any mechanism or scheme that makes the act of investing in the stock market and/or mutual funds seem safer than it really is. If people fully understand the risks of what they’re doing, they will make better choices for themselves. At the very least, we can hope that fewer people will unwittingly commit financial suicide by borrowing money on a line of credit or taking out a second mortgage in order to pour that cash into the stock market.
I can’t even pretend to understand how flash trading works. But I do know that it’s one of many strategies that takes advantage of the speed-of-light trading that’s evolved since the computerization of the markets. With the introduction of the Internet, broadband, fiber optics, and other technological marvels, high-volume traders can now make vast sums of money on the fraction-of-a-penny difference between the millisecond when an order to buy or sell a security is placed and when that order is actually fulfilled. Money can also be made on how trades are routed through our vast computer system, because vultures wait at every step of the way to skim fractional cents. Not so very long ago—about ten or twelve years in the past—skimming fractional cents was considered fraud. Not anymore. Now it’s considered the right of every financial behemoth; a right that must be ardently protected...if you believe the big financial firms that are lobbying Congress and the SEC to stop any proposal that would ban flash trading.
Usually used by investment banks, hedge funds, and mutual fund brokers to disguise large purchases and sales of stocks and mutual fund shares (the trades are undertaken anonymously and don’t appear on any public exchange), dark pools are privately run and not subject to regulation by any governmental authority. Recently the SEC has recommended that dark pools register with the government and provide basic information on their activities. The companies that own and run dark pools are largely in favor of this mild increase in scrutiny, probably because they fear the SEC and Congress will close them down entirely if they don’t submit to some form of regulation.
The companies that utilize dark pools to avoid price run-ups or steep declines are resisting the government’s move to bring their activities to light. They argue that dark pools smooth price swings and thereby benefit small investors who would be afraid to invest in a more volatile market. But that’s the very best reason to regulate or shut down dark pools entirely. As with mortgage fraud, the federal regulators must go after any mechanism or scheme that makes the act of investing in the stock market and/or mutual funds seem safer than it really is. If people fully understand the risks of what they’re doing, they will make better choices for themselves. At the very least, we can hope that fewer people will unwittingly commit financial suicide by borrowing money on a line of credit or taking out a second mortgage in order to pour that cash into the stock market.
I can’t even pretend to understand how flash trading works. But I do know that it’s one of many strategies that takes advantage of the speed-of-light trading that’s evolved since the computerization of the markets. With the introduction of the Internet, broadband, fiber optics, and other technological marvels, high-volume traders can now make vast sums of money on the fraction-of-a-penny difference between the millisecond when an order to buy or sell a security is placed and when that order is actually fulfilled. Money can also be made on how trades are routed through our vast computer system, because vultures wait at every step of the way to skim fractional cents. Not so very long ago—about ten or twelve years in the past—skimming fractional cents was considered fraud. Not anymore. Now it’s considered the right of every financial behemoth; a right that must be ardently protected...if you believe the big financial firms that are lobbying Congress and the SEC to stop any proposal that would ban flash trading.
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