Friday, October 31, 2008

Halloween Fright: Democrats Will Reshape Courts

Steven G. Calabresi, a professor of law at Northwestern University, has a really scary piece in the Wall Street Journal. Obama and Democrats are going to transform the courts into all-time citadels of activism.

Calabresi starts slowly, noting “one of the great unappreciated stories of the past eight years is how thoroughly Senate Democrats thwarted efforts by President Bush to appoint judges to the lower federal courts.”

In the key District of Columbia Circuit Court, Reagan appointed 8 judges, an average of 1 a year. But Bush was able to name only 4. Two seats on this court are vacant, and Obama will fill those 2, plus the seats of 2 older Clinton appointees who will retire, and most likely the seats of 4 older Reagan and George H.W. Bush appointees who may retire as well. As a consequence, the legal left will once again have a majority on the nation's most important regulatory appeals court.

The balance will shift as well on almost all of the 12 other federal appeals courts. Obama will swing 9 of the 13 (not counting the Ninth Circuit, which the left solidly controls today). On the Supreme Court, 6 of the current 9 justices will be 70 years old or older on January 20, 2009. There is a widespread expectation that the next president could make 4 appointments in just his first term, with maybe 2 more in a second term. We are poised for heavy change.

Here’s what’s really frightening: Obama's extreme left-wing views about the role of judges. He believes that judges ought to decide cases in light of the empathy they ought to feel for the little person in any lawsuit.

According to Calabresi:

 Obama in July 2007 said: "[W]e need somebody who's got the heart, the empathy, to recognize what it's like to be a young teenage mom. The empathy to understand what it's like to be poor, or African-American, or gay, or disabled, or old. And that's the criteria by which I'm going to be selecting my judges."

 This means plaintiffs should usually win against defendants in civil cases; criminals in cases against the police; consumers, employees and stockholders in suits brought against corporations; and citizens in suits brought against the government. Empathy, not justice, is the federal courts’ mission.

 In September 2001, Obama noted that the Warren Court "never ventured into the issues of redistribution of wealth and sort of more basic issues of political and economic justice in this society," and "to that extent as radical as I think people tried to characterize the Warren Court, it wasn't that radical."

 Obama added the Court "didn't break free from the essential constraints that were placed by the Founding Fathers in the Constitution, at least as it has been interpreted;" that the U.S. Constitution has so far only guaranteed negative liberties from government—with no right to welfare or economic justice.

 This raises the question of whether Obama supports the Constitution as it is written. Does his provision of a "tax cut" to millions who pay no income taxes foreshadow constitutional rights to welfare, health care, Social Security, vacation time and the redistribution of wealth?

 Federal judges must take an oath of office to "administer justice without respect to persons, and do equal right to the poor and to the rich." Obama's emphasis on empathy in essence requires judges to violate this oath. Instead of a blindfolded person weighing legal claims fairly on a scale, Obama wants to tear the blindfold off, so the judge can rule for the most deserving of empathy. The legal left believes the federal courts are very right-wing now. The reality is different. Federal courts hang in the balance.

 Obama could give us a constitutional right to welfare; a constitutional mandate of affirmative action wherever there are racial disparities, without regard to proof of discriminatory intent; a right for government-financed abortions through the 3rd trimester; the abolition of capital punishment and the mass freeing of criminal defendants; ruinous shareholder suits against corporate officers and directors; and huge punitive damage awards against businesses such as those selling fattening food.

Wednesday, October 29, 2008

Bad Editors Responsible for Media Bias

The sheer bias in the print and television coverage of this election campaign is not just bewildering, but appalling. And over the last few months I've found myself slowly moving from shaking my head at the obvious one-sided reporting, to actually shouting at the screen of my television and my laptop computer.

-- Michael Malone, "Silicon Insider" columnist

Malone is a journalist who’s previously worked for the San Jose Mercury News, Forbes, and the New York Times, produced three series for PBS, and wrote 12 books. He thinks he understands why media bias for Obama and Democrats is so extreme this year: bad editors. Malone writes:

Picture yourself in your 50s . . . discover[ing] that you're presiding over a dying industry. The Internet and alternative media are stealing your readers, your advertisers and your top young talent. . . The Newspaper Guild is too weak to protect you any more, and there is a very good chance you'll lose your job before you [reach] retirement.

. . . desperate times call for desperate measures. Even if you have to risk everything on a single Hail Mary play. Even if you have to compromise the principles that got you here. After all, newspapers and network news are doomed anyway -- all that counts is keeping them on life support until you can retire.

And then the opportunity presents itself -- an attractive young candidate whose politics likely matches yours. . . offers the prospect of a transformed Washington with the power to fix everything that has gone wrong . . . With luck, this monolithic, single-party government will crush the alternative media via a revived fairness doctrine, re-invigorate unions by getting rid of secret votes, and just maybe be beholden to people like you in the traditional media for getting it there [emphasis added].

Like I said, here.

Monday, October 27, 2008

Obama’s Sandbox

Obama won’t have the initiative on domestic policy. That role will be with the Democratic congress. And the nature of the Democratic Party—it’s a collection of interest group hierarchies that gain power by respecting and deferring to each other—means union views on trade protection will seriously inhibit America’s and Obama’s ability to expand our economy through free trade.

Make no mistake, free trade and the economic expansion it produced has helped move America and the world toward prosperity for over 60 years, my entire lifetime. We are going to suffer because unions hold a misguided, Michael Moore-type view of how job creation works. For nearly three decades, the U.S. has been blessed by being able to ignore union bosses. No longer.

International economics aside, Obama will have relatively free rein to shape and execute foreign policy and national security. He names the key officials involved, and congress can’t keep pace with swiftly developing world events. Foreign policy is fun. It involves lots of nice food and drink, big speeches, travel, and TV face time. Wherever Obama goes, he comes in at the top of society, with all that that involves. In the end, it’s why folks most want to be president.

Fortunately for Obama, Bush leaves the world a safer place than it was in 2001. Al Qaeda is on the run. Contrary to what Obama says about Afghanistan’s being the “main front,” al Qaeda is in Pakistan (not Afghanistan) because it has nowhere else to go. It would have much rather prevailed in oil-rich Iraq, in the heart of the Middle East, less than a 500-mile straight shot to Israel.

Bush has also impressed Russia and China with his willingness to use force in Iraq and elsewhere, a language they understand. Obama, for all his appeasement rhetoric, will have a group of sober advisors around him who know how to handle Russia and China. They realize both powers respect force, not chatter.

Obama nevertheless faces two great “militants + the bomb” challenges in Iran and Pakistan. And he needs to find a two-state solution to the Palestinian question. Richard Haass, the head of the Council on Foreign Relations, shows pretty well in his Newsweek “Memorandum to the president-elect” that solutions are hard to find. Still, I’m sure Obama welcomes the opportunity, finally, to act, not instruct.

It’s his sandbox.

Market Still Searching for Bottom

The stock market reacted to good news today by sinking to new 5-1/2 year lows. Sales of new homes rose 2.7% in September, and Frederic Ruffy, options strategist at, said, “With respect to the housing market, it appears that the bar had been set too low: The actual numbers were not nearly as bad as [economists had] forecast."

The market ended up discounting good housing news, falling off the edge in the last half hour in an all-too-frequent pattern, and closing at the day’s lows. My FOX INDEX, which measures the distance to a healthy market (12,000 Dow, 1,300 S&P, 2,500 NASDAQ), dropped 280 points in the final half hour to -5,269, its new low (index less than 3 months old—we run the FOX INDEX whenever it hits new lows). It’s now 78% of the way from healthy to the bottom the market hit in October 2002, at the end of the last bust.

“Baked into the pie”: Reduced Freedom Under Democrats

Michael Barone of US News takes a crack at Obama’s wish list. He predicts Obama, Sen. Harry Reid, and Speaker Nancy Pelosi will have no trouble raising taxes on the rich. Not me. I predict Republicans have made such an issue of tax increases that Democrats—the party of the wealthy anyway—will, with the exception of allowing Bush’s temporary tax cuts on higher incomes to expire, rely on deficit spending, not tax increases, to finance their costly programs.

And budget constraints in a bad economy will limit Democrats’ spending. Barone notes, however, there are issues pushed by Democrats that have no budgetary costs. And they will likely come to pass:

• One is the "fairness doctrine," which is intended to shut down talk radio, the one communications medium in which conservative voices are dominant.

• Another is the so-called card check bill, which [means] secret-ballot unionization elections, required now, would be a thing of the past. The aim is to vastly increase union membership, pumping money into a Democratic pressure group.

• Also “baked into the pie” is trade protectionism. The breakdown of the Doha Round and Speaker Pelosi's refusal to bring the Colombia Free Trade Agreement to a vote mean that both multilateral and bilateral trade liberalism channels will be clogged.

1. Less freedom. 2. Less freedom. 3. Less free trade.

Saturday, October 25, 2008

Stoning Sarah

Daniel Henninger of the Wall Street Journal offers some plain talk on media treatment of Sarah Palin:

The stoning of Sarah Palin has exposed enough cultural fissures in American politics to occupy strategists full-time until 2012. We now see there is a left-to-right elite centered in New York, Washington, Hollywood and Silicon Valley who hand down judgments of the nation's mortals from their perch atop the Bell Curve.

It seems only yesterday that the most critical skill in presidential politics was being able to connect to people in places like Bronko's bar or Saddleback Church. When Gov. Palin showed she excelled at that, the goal posts suddenly moved and the new game was being able to talk the talk in London, Paris, Tehran or Moscow. She looks about a half-step behind Sen. Obama on that learning curve.

Lorne Michaels, the executive producer of "Saturday Night Live," lives on the forward wave of American life. This week he gave his view of Sarah Palin to "I think Palin will continue to be underestimated for a while. I watched the way she connected with people, and she's powerful. Her politics aren't my politics. But you can see that she's a very powerful, very disciplined, incredibly gracious woman. This was her first time out and she's had a huge impact. People connect to her."

Friday, October 24, 2008

A Wave. A Tsunami.

At a breakfast with reporters Friday morning, Democratic strategist James Carville urged the assembled to look around, and remember how everything looked today. "Nothing will be the same" after Election Day, Carville suggested. "This place is going to get hit" with political change on a scale folks haven't seen before. . . Washington's ruling class is about to undergo massive political upheaval. . . The country seems poised for another "wave" election, where the close seats fall in one direction. "We've not had a leader elected in this kind of environment in our lifetime," said [pollster Stan] Greenberg. You have to go back to 1930 and 1932 to see two wave elections in a row.

--Eleanor Clift, Newsweek

1930. 1932. The first two post-’29 Crash elections. In an entire article about Democrats storming to massive victory, this is as close as Clift gets to crediting the real source of the upcoming Democratic sweep— the well-timed Crash of ‘08.

Seattle P-I associate editor Kenneth Bunting, in a similar “We Win! We Win! We Win!” column, at least notes:

There is little doubt that Obama's political fortunes were aided by the timing of the nation's awful economic crisis. Liberal analysts who won't admit that reality are in a similar state of denial as conservative ones who won't acknowledge that McCain's tactics, lack of message and vice presidential choice have backfired.

McCain’s tactics? Lack of message? Oh, of course that disaster Palin. Don’t think so. McCain was hit by a tsunami, a real October surprise, but the media will continue claiming they elected Obama and a Democratic congress by exposing the frauds running against them.

Here’s more crashing wave reality. My FOX INDEX, which measures the distance to a healthy market (12,000 Dow, 1,300 S&P, 2,500 NASDAQ), dropped 1,200 points over the week to -4,992, its new low (index less than 3 months old—we run the FOX INDEX whenever it hits new lows). It’s now 74% of the way from healthy to the bottom the market hit in October 2002, at the end of the last bust.

Thursday, October 23, 2008

Fact: Media Trashes McCain

Howard Kurtz, who watches media at the Washington Post, has the latest on media bias from the Project for Excellence in Journalism. Post-convention coverage of McCain is 57% negative to 14% positive, a ratio of 4:1 negative. For Obama, the figures are 29% negative, 36% positive, a 4:5, negative/positive ratio. The McCain-Obama differential has grown since the Wall Street meltdown to 5:1 negative stories on McCain, 5:1 positive for Obama. Kurtz adds, in an editorial comment, it was McCain who said, "the fundamentals of our economy are strong."

Wednesday, October 22, 2008

Pelosi and Reid Will Rule America

Mike Gerson is a Council on Foreign Relations senior fellow, a Washington Post columnist, and was (2001-06) Bush’s chief speechwriter. He has written about how Obama will govern; an analysis with which I agree.

Implicitly, Gerson makes two major points:

1. Obama is a reconciler.

Obama does not appear to view himself as a lapsed radical. He sees himself as the reconciler of opposites, the seer of merit on both sides, the transcender of stale debates. He is the racial healer who understands racial anger.

Obama is the reassuring figure who gained fame telling the 2004 Democratic convention America needs to come together. As Gerson says, Obama’s “entire manner douses inflammatory charges of extremism.”


2. Pelosi, Reid and the Democratic congress have an agenda “the reconciler” won’t stop.

The least responsible, least respected, least popular political institution in America -- the Democratic-led Congress -- [will] also be the most emboldened. Democratic leaders with large majorities [will] be pushed by conviction and hubris, and pressured by Democratic constituencies, toward divisive measures that punish and alienate businesses, seek backward-looking political vengeance and impose cultural liberalism.

Biden Unplugged

From Kirsten Powers, New York Post columnist:

On the stump recently, Sen. Biden declared he had "three words" for what the nation needs: "J-O-B-S."

Lucky for him, his name isn't Dan Quayle, or that would have followed him for the rest of his career.

Tuesday, October 21, 2008

The Restoration

We have noted efforts to parallel current developments to the New Deal's coming in 1933. Now Paul Rubin in the Wall Street Journal has an article, “Get Ready for the New New Deal.” Rubin writes, “this election has been fought on the margins, over marginal issues.” I agree. It’s like 1932, when Roosevelt famously attacked Hoover for his deficit spending and promised a balanced budget. The big jolt won’t be the campaign, it’ll be what follows. Rubin says, “this election will make more than a marginal difference. It might fundamentally change America.”

But how? The New Deal was an earthquake for America in 1933, but it makes a difference we’ve experienced that shake already. Obama’s not prepared or able to offer America something radically new. Instead, we’re going back to the time when our intellectual, liberal elite last totally controlled Washington and tried to make us love Big Government, the great days of the New Deal and Great Society, before Vietnam ruined it all.

It’s the American Restoration, putting the meritocracy back in power, where they believe they rightfully belong. In the English Restoration of 1660-1679, Charles II [top picture] got things right side up again, gave the nobility their lands back, and returned the Royalists to power after Oliver Cromwell’s ghastly interregnum, when Puritans ruled the landscape and even abolished Christmas celebrations. As Charles II restored the bawdy theaters, as Roosevelt brought back martinis [picture] with his end to Prohibition, Obama’s Restoration—fueled by the richest political campaign in history—will make our wealthy, secular, Europeanized cultural elite dominant again over mainstream America.

Mao Again Turns in Grave: Farmers Can Sell Land

China has given farmers control over their land. On Sunday, the ruling Communist Party Central Committee [pictured] voted to allow farmers to "lease their contracted farmland or transfer their land use right" (government retains nominal title over all Chinese land, but lease guarantees have successfully fueled urban China’s development). The party worries about the growing urban-rural income gap, and hopes land consolidation will boost the scale of farm production, while sales will provide rural residents funds for new businesses. The party’s goal: double rural area per-capita disposable income to $1200 annually by 2020.

China has held back on individual farmland ownership because it fears landlords once again dominating landless peasants. Leaders are also concerned about China’s rapidly disappearing arable farmland. Central government policy is to hold the line at 120 million hectares of farmland, but China’s already down to 121.7 million hectares, as Beijing pleads with local governments to control “strictly” land sales for urban development.

Monday, October 20, 2008

Democrats Near Filibuster-proof Majority

Reid Wilson at “Real Clear Politics” has the latest on the senate races. And it’s looking very, very bleak for those of us who want brakes on America’s lurch to the left. Democrats are one seat from an outright majority of 60. If current trends continue, they will be there.

Since our last look, another seat has shifted to Democrats—Norm Colman’s in Minnesota, meaning comedian Al Franken will be U.S. Senator Franken for the next six years. Two other seats are in real jeopardy—Mississippi (yes, Mississippi) and Mitch McConnell’s in Kentucky (yes, McConnell!). McConnell [pictured] is in trouble because he led the fight for Bush’s financial rescue plan, and because fellow Kentucky Republican Senator Bunning has been on the warpath against Bush’s plan. If one of these two goes Democrat, the party will have its filibuster-proof majority of 60.

Here’s a silver lining for Republicans. Should corrupt Alaska Senator Ted Stevens be acquitted in his current corruption trial, Stevens will probably keep his threatened seat, meaning Democrats will have to add one elsewhere to reach 60.

Sunday, October 19, 2008

Whose to blame: Fannie and Freddie?

Was our economic crisis caused by the GSEs (Government Sponsored Enterprises)? Stuart Taylor, in the National Journal, thinks so. He writes that “Powerful Democratic (and some Republican) advocates of affordable housing”, including Senate Banking Chair Chris Dodd, Sen. Chuck Schumer, and House Finance Chair Barney Frank have been the GSEs' “most potent and ardent champions”. Taylor adds, “the agencies and their employees have orchestrated a gigantic lobbying effort [of] more than $174 million . . . made campaign contributions of more than $14.6 million . . . the largest going to Dodd and Barack Obama.”

Taylor reports that:

• Because Freddie and then Fannie had been ravaged by accounting scandals that led to the departure of Fannie CEO Franklin Raines [picture], a Clinton administration official who had collected $90 million from 1998 through 2004, Alan Greenspan warned government to restrain the GSEs.

• When Daniel Mudd succeeded Raines in 2004, according to the New York Times, "his company was under siege. Competitors were snatching lucrative parts of its business. Congress was demanding . . . more loans to low-income borrowers. Lenders were threatening to sell directly to Wall Street unless Fannie bought . . . their riskiest loans. So Mudd . . . steered Fannie into [the darkest] corners of the mortgage market.”

• In summer 2005, the Senate Banking Committee adopted a bill to impose tighter regulation on Fannie and Freddie, with all Republicans voting for, all Democrats voted against in committee and Democrats killing it on the floor.

• In 2005, Fannie and Freddie began buying subprime and "alt-A" mortgages with virtually no down payments taken out by people with low credit scores and low incomes relative to their monthly payments. To finance more and more affordable housing, the GSEs dramatically lowered their traditional underwriting standards.

• Between 2005 and 2007, Fannie and Freddie "sold out the taxpayers" by financing almost $1 trillion in highly risky mortgages. . .their special privileges as GSEs enabling them to lend at high rates and reap enormous profits for their stockholders and executives while borrowing at low rates based on the government's implicit promise to rescue them from failure, as in the end it did.

Saturday, October 18, 2008

Whose to blame: Deregulators?

The Economist thinks so. Here’s evidence that something bubble-like was going on in the financial sector: the financial industry’s share of the stock market climbed from 5.2% in 1980 to 23.5% last year (see chart).

The financial sector grew because traders learned how to corner an ever larger share of the world’s wealth through use of currency deregulation, the end of national controls on capital, markets for futures and options, and currency swaps, interest rate swaps, and finally the infamous credit default swaps (CDSs) that were never even run through a market to fix a nominal value on them. CDSs nearly bankrupted the world’s 18th largest company, AIG.

The Economist says governments should have regulated the markets for these new instruments. In the 1920s, margin allowed for unsecured stock purchases that led to the Crash of ‘29. Something like that happened over the last decade with swaps, yielding the Crash of ‘08.


This blog and others have looked to 1933 as the model for what’s to come. Democrats, in control of everything, turning a Republican mess into a “new deal” that transformed America. Another model, one less comfortable to Democrats, is the one I lived through in 1981—the arrival of Reagan and the conservatives. Yes, Democrats with glee will reverse “the Reagan revolution” and the peace and prosperity Reagan’s policies of less government, lower taxes, and a strong national defense generated over the following 25 years (21 of which had Reagan, the Bush family, or Gingrich in power).

But recall Reagan first year excesses that hint at the coming 2009. Under David Stockman, tax and budget cuts reduced aid to education, welfare, and food stamps, and budget policies that took place, in Stockman’s words, in an atmosphere where "none of us really understands what's going on with all these numbers" helped produce a sharp economic contraction that led to 10.8% unemployment by December 1982. To get the tax cuts through congress, Stockman said, “The hogs were really feeding. The greed level, the level of opportunism, just got out of control.” The deficits that began under Stockman dominated American economic policy discussion until Clinton and a Republican congress brought them under control in the late 1990s.

Meanwhile, James Watt was taking a hatchet to environmental policy (bad), and Reagan himself (with Transportation Secretary Drew Lewis) dealt a major blow to unions by breaking the striking air traffic controllers union (good—but unions expect Obama to just as dramatically help unions by passing a law to take away the secret ballot in union elections).

When the new folks get power, expect extremism.

Wednesday, October 15, 2008

Brits have the best analysis

From the person who located this video:
"How did these comedians see it coming when financial reporters did not? Yes, it really is this bad. Another example of humor that is deadly accurate. I worked on Wall Street for a few years, elbow to elbow with 'top' investment bankers. It was one big casino with the saps in pensions funds and savings and loans (and us) being used to finance the game and cover the losses."

Amazingly, the video was recorded in 2007. Watch it here.

Tuesday, October 14, 2008

“Politico” Also Spots Dems’ “New Deal” Redux

It’s tough to stay ahead of the national press. Martin Kady, in the online “Politico,” today has an article entitled, “Democrats’ plan: New Deal 2.0?” that is very much along the lines of my “The Coming of the New Deal." I shall be content to have had a one-day lead.

Monday, October 13, 2008

The Coming of the New Deal

the first two years of the Roosevelt Administration. . . what anni mirabilis [remarkable years] they were! Those who lived through them can still recall the electric excitement, the surging vitality, the mounting hope, the exhilaration that came over the American people after years of futility and frustration. It was, said Rexford Tugwell, "a time of rebirth, after a dark age.". . it ushered in the welfare state; it repudiated laissez-faire; it marked the rise of labor to a position of equality with industry and capital in our economy; it shifted the center of gravity from state to nation. . . from legislative to executive authority

--Henry Steele Commager, reviewing in January 1959 The Coming of the New Deal, 1933-1935 by Arthur M. Schlesinger Jr.

The stage is set for an American “new deal” in 2009. We seem ready for, in Tugwell’s phrase, "a time of rebirth, after a dark age." As in 1933, Democrats will have all the levers of power in their hands. And the country will look to Obama for action. The situation may not be, as French president Nicolas Sarkozy says, "Le laisser-faire, c'est fini” [is finished]. But people are shifting toward big government.

On the eve of the Democratic convention last August, Ronald Brownstein provided a sober look at the kind of changes we might expect from an Obama administration. In events where policy will pull between left and middle, expect the powerful, pent-up forces of the left—concentrated in the Democrats’ newly enlarged congressional majorities—to prevail. After all, as Brownstein notes, “Obama was shaped by an inner-city Chicago environment in which most political pressure came from the Left.”

The changes could be big. Brownstain quotes former (1984-88) presidential candidate Gary Hart saying, "We are now at the cusp ... of the end of the Nixon-Reagan-Bush era. Obama is poised. . . to be a transformational president and to redefine politics for the next 20 or 30 or 40 years."

Although Brownstein writes, “Obama hasn't attached a label to his agenda” like “New Deal,” preferring instead “change” that allows for maximum flexibility, Brownstein’s evaluation suggests an updated New Deal is on its way:

Pump-priming. Obama portrays increased public spending on infrastructure, education, research, and other priorities as a key to prosperity, and he has emphatically sided with liberals who say that such investments take precedence over reducing the federal deficit. His programs just for alternative energy, infrastructure, and health care add up to $800 billion over 10 years, and the figures will certainly go higher. And, as Brownstein says, Obama won’t embrace any deficit-reduction target.

Relief. Obama wants to increase income, payroll, capital-gains, and dividend taxes on upper-income families earning at least $250,000 annually to pay for federal tax credits or checks to 95% of families, with those near the median getting about $1,100 a year.

Beyond Social Security. Obama’s health care plan will require insurance companies to compete in publicly structured exchanges not only with each other but also with a government-run insurance plan. Because of the add-ons Obama will require (no disqualification for pre-existing conditions, mandatory coverage of all workers), the government-run plan may end up covering most people.

Alphabet soup. FDR created several government agencies to regulate the economy, and according to Brownstein, Obama will “subject businesses to an array of federal mandates.” Obama has sharply criticized legislation Clinton signed that deregulated the banking and telecommunications industries, saying, "Unfortunately, instead of establishing a 21st-century regulatory framework, we simply dismantled the old one -- aided by a legal but corrupt bargain in which campaign money all too often shaped policy and watered down oversight."

Civil liberties. FDR appointed the first of the Warren Court justices who expanded civil liberties in the 1950s-70s. Obama will allow gays and lesbians to serve openly in the military, will repeal the Defense of Marriage Act signed by President Clinton, will reduce the use of mandatory minimum sentences, and he leans sufficiently toward individual rights that, in the words of Jeffrey Rosen, a George Washington University law professor, Obama will be "our first president who is a civil libertarian."

Isolationism. FDR had to go along with the isolationism of the 1930s. Obama sides with the Left—today’s isolationists—in his recoil from free trade, his commitment to withdrawal from Iraq, and his willingness to meet with the leaders of rogue nations.

Brownstein left out another Obama-FDR parallel: support of unions. Republicans are alarmed about trade union insistence, supported by Democrats, on ending the secret ballot’s protection of workers from union bosses and thugs who will run union organization elections. The bosses want public elections that insure organizers know exactly how workers vote.

Friday, October 10, 2008

The Crisis of the Old Order

the causes of the depression are to be found chiefly in the malpractices of our own Government during the Twenties - the failure of government to adjust itself to profound technological changes; the search for economic self-sufficiency; the bankruptcy of a philosophy which clung tenaciously to shibboleths like the balanced budget and the gold standard. . . the Hoover Administration was all but paralyzed in the face of a crisis that quickly became a disaster.

--Henry Steele Commager, reviewing in March 1957 The Crisis of the Old Order, 1919-1933 by Arthur M. Schlesinger Jr.

Schlesinger admired Roosevelt and wrote 3 volumes about him. His first volume, The Crisis Of The Old Order, 1919-1933, blamed the Great Depression on Hoover and Republicans. Whatever the truth, then and now, historians will likely follow Democrats and the media in blaming our current economic crisis on Bush and Republicans, setting the stage for a new order under Obama and a Democratic congress, bringing massive policy changes come January.

The bleak economic climate grows bleaker. We’ve just ended the worst week in the Dow Jones index’s history. My FOX INDEX, which measures the distance to a healthy market (12,000 Dow, 1,300 S&P, 2,500 NASDAQ), dropped another 1,000 points over two days to -4,801, its new low (index two months old—we run the FOX INDEX whenever it hits new lows). It’s now 71% of the way from healthy to the market bottom hit in October 2002, at the end of the last bust.

Wednesday, October 08, 2008

Bottom Line: Find Housing Bottom

The good news: central banks in the U.S., the EU, Britain, Canada, China, Australia, Sweden, and Switzerland all coordinated lower interest rates to boost economic activity. The bad news: markets tumbled yet again; my FOX INDEX, which measures the distance to a healthy market (12,000 Dow, 1,300 S&P, 2,500 NASDAQ), dropped another 900 points to -3,819, its new low (index two months old—we run the FOX INDEX whenever it hits new lows). It’s now 57% of the way to the bottom the market hit in October 2002, during the dotcom bust bear market. No guarantee the current market won’t tear right through those 2002 lows.

At bottom, we’re looking for the point where housing prices hit bottom. James R. Hagerty and Ruth Simon, writing today in the Wall Street Journal, make these points about what’s happening to housing:

 nearly one in six U.S. homeowners are "under water"; owing more on a mortgage than their home is worth and threatening a default that would further stress credit markets. Also, loss of equity makes people less rich and less inclined to shop.

 Among people who bought within the past five years, 29% are under water.

 Among mortgages on one- to four-family homes, 9% were a month or more overdue or were in foreclosure in the second quarter-- the highest level since surveys began 39 years ago.

 On a national basis, home prices peaked in mid-2006 after rising 86% since January 2000. Since peaking, that index has fallen 13%.

 In the second quarter, the median home price was 1.9 times average pretax household income, close to the 1.87 times income norm for 1985 through 2000, before the boom.

That last point is good news. But the article notes housing markets don't tend to turn around quickly. Last round, Los Angeles prices peaked in June 1990, bottomed only in March 1996, and didn't get back to 1990 prices until 2000.

Monday, October 06, 2008

Bad Economy, Democrats Gain in Congress

The Dow is below 10,000 for the first time in four years. My FOX INDEX, which measures the distance to a healthy market (12,000 Dow, 1,300 S&P, 2,500 NASDAQ), dropped to -2,925, its new low (index only two months old—we run the FOX INDEX whenever it hits new lows or less likely highs). Of course, bad news for the economy is good news for Democrats, who are now set for significant gains in Congress.

Stu Rothenberg, in his “Political Report," has Democrats picking up 12 House seats. That’s in line with the “Real Clear Politics” average of the generic Congressional votes, which shows Democrats at +10.3%, roughly 2% better than the generic vote on the eve of the 2006 election, and suggesting a Democratic gain beyond their current 36 vote majority.

Most significantly, Democrats seem on the verge of major Senate gains, a concern addressed earlier here. The “Real Clear Politics” average of state polls indicates the Democrats are favored to pick up 7 Senate seats—Virginia, New Mexico, Alaska, Colorado, New Hampshire, and now, even North Carolina and Oregon [Sen. Gordon Smith, pictured]. Rothenberg makes the same call. With 58 seats, Democrats would likely be able to find two Republicans (try Snowe and Collins of Maine, Specter of Pennsylvania) to cut off filibusters and push through their liberal agenda and activist court appointments. Wow.

Friday, October 03, 2008

Panic to Recession

Congress passed the rescue plan; thank you U.S. senate, including McCain and Obama. Yet the stock market slumped to lows not seen since 2005. Wall Street worries the government’s plan may not free up credit. My FOX INDEX, which measures the distance to a healthy market (12,000 Dow, 1,300 S&P, 2,500 NASDAQ), dropped to -2,429, its new low (index only two months old). Job losses for September reached 159,000, the highest figure in five years , and total job losses for 2008 are already 760,000. Unemployment, which held steady at 6.1%, may rise to 7% before the downturn is over.

Panics are awful, but may be over quickly. We seem to be in a recession.

Thursday, October 02, 2008

Debate’s Eve: Will Palin Flunk Politicspeak?

Ross Douthat, the Republican editor of Atlantic, says about Sarah Palin’s performance [pictured w/Tina Fey], "'proficiency on television’ is simply a prerequisite for capable leadership in a mass democracy.” But then Douthat adds,

there's a sense in which the apologists for her performance are getting something right: In the process of performing very, very badly on national television, Palin is holding up a mirror to the rest of the political world, and revealing how the mix of talking points, bluster, obfuscation and BS that nearly all national politicians traffic in as a matter of course sounds when it's filtered through someone who isn't practiced in it, and isn't ready for the spotlight. Her performances reflect badly on her readiness for the vice presidency, no question - but they reflect badly on our whole compromised, spin-happy political class as well.

Douthat has a book, Privilege: Harvard and the Education of the Ruling Class, that takes it for granted we have such a class. And of course we do. Now, Douthat is importantly saying that class has a language that Sarah Palin and millions of other Americans don’t speak, like British upper class English, attacked by George Bernard Shaw in his version of “My Fair Lady.” The Chinese scholar class took this to its extreme with wenyan, a written language the common person cannot understand without the classical education that separated scholar/rulers from the masses. We see this more commonly in the U.S. with “lawspeak.” Now Douthat has discovered we have a “politicspeak.”

It’s all so undemocratic.