“This election is not about issues” so much as the candidates’ images, said McCain campaign manager Rick Davis, in one of the season’s most notable pronouncements. Sadly, no truer words have been spoken.
As I’ve watched everyone focus on Sarah Palin’s babies and hunting prowess, I’ve been especially frustrated that the real issues that we should be taking about, like the economy, the environment and health care, are being virtually ignored. I feel like we are witnessing a reality television-like election where the winner, instead of taking home a cool million, gets to be President of the United States.
The issue of paramount importance, the one that is being paid lip service but is not being thoroughly examined, is how can we possibly get out of the massive monetary mess that we are in. What mess you ask? Let us see what has happened over the past few years shall we?
First off, in case you forgot, we are a nation at war. We have been fighting in Afghanistan for almost 7 years and invaded Iraq, a sovereign nation that had nothing to do with the 9/11 attacks – remember, we went to war on stove piped and completely false intelligence – over 5 years ago.
How much has this cost? Good question – one that almost no one ever asks. With enactment of the FY2008 Supplemental and FY2009 Bridge Fund (H.R.2642P.L.110-252) on June 30, 2008, Congress has approved a total of about $859 billion for military operations, base security, reconstruction, foreign aid, embassy costs, and veterans’ health care for the three operations initiated since the 9/11 attack.:
Yup, we’re about to hit $1 trillion. Can you hear Dr. Evil in your head saying that number? I can. Unfortunately, it’s not as funny as it was when I first heard him saying it in 1998. Back then, I saw the movie before I moved to Europe for six months. While there I traveled the continent and paid in Lira while in Italy, Guiders while in Holland and Francs while in France. More about the Euro in a bit though – I’m getting ahead of myself.
More recently, say over the past two years, we’ve witnessed the painful near collapse of our nation’s housing market. This collapse was driven in large part by the U.S.’s addiction with debt. We espouse a “live for today / not for tomorrow” mentality that has strongly taken root in this great land of ours. Savings accounts have gone the way of the Dodo, instead we now have been charge cards that incur a debt that will be paid off “some day.”
Then, for some mysterious reason, debt addicts were allowed to upgrade from charge cards to mortgages. People were given loans that they could never repay to buy homes they could never afford in a short sighted rush by banks to increase corporate profits.
Why were these banks so willing to make these risky loans? Simply put, because they were flush with cash and were able to polish a turd. China was buying up trillions of 20 year Treasury Notes which allowed the Federal Reserve to loan money to private banks at astonishingly low rates. These banks then just gave the money away because they were able to hide the fact that they were loaning money to losers with new magic trick – “safe” debt instruments created out of the broken apart bits of the risky mortgages. They said “Well, we know a few of these people are going to default but overall most won’t [wrong]. So, what we’ll do is break down all of these shit loans into tiny bits and then group the bits based on likelihood to default. Voila! A polished turd!
Well, as one foreclosure led to the next, those “safe” debt instruments lost all their value and mostly everyone got pretty hurt in the resulting crash, rich and poor alike. Don’t believe me? Just check out what happened to Bear Sterns. Somewhere, a managing director is crying over a lost Ferrari. Trust me.
So far, as a direct result, 11 banks have failed in 2008 alone and we’ve probably not yet seen the bottom either. By the end of 2009, Moody’s predicts that nearly 2.8 million U.S. households will either face foreclosure, turn over their homes to their lender or sell the properties for less than their mortgage’s value.
To prevent further mortgage related problems, our government has been forced to initiate a bailout of Freddy Mac and Fanie Mae. Yes, they have dumb names but they guarantee half of the $12 trillion (there’s that trillion word again) mortgage market. In essence, they are too big too fail because if they fail, possibly the entire US housing market could collapse and then we might as well go back to the gold standard.
Are you wondering what this will bailout will cost? It could cost tax payers anywhere from $25 to $100 billion. Compared to the war cost though this is not that much.
Since we’re just throwing money around, we might as give Georgia (the nation, not the state) $1 billion in aid as a reward for provoking Russia into a war and losing two of their territories in the process. I mean come on! Georgia had to have known that Russia was going to go ape when it attacked those two terroritories. I am definitely not defending Russia’s actions – they brought a bazooka to a knife fight – but why are we rewarding Georgia for their stupidity? Still, $1 billion is chump change compared to the war cost and the Freddy & Fannie bailout.
Last but certainly not least, have you either walked through SoHo and gotten hit by a European carrying 17 shopping bags? No? Okay then, have you traveled abroad lately or decided against it when you saw how much everything costs? The dollar’s slide, more like free fall, is more than annoying, it’s a very troubling sign that all is not right in our economy. In the past decade , the Euro has come from nowhere to become a serious currency that is used by individuals for commerce and by governments for their reserves. It is worth a lot more than the dollar though still less than the British Pound. If I still lived in abroad, I would definitely hop across the pond right now to do some shopping. It’s like America is on sale.
So, the overall question is “From where do all of these problems stem?” I posit that they can be traced back to the single greatest failure of the Bush Presidency – the failure to use the human capital that was spontaneously raised after the 9/11 attacks.
At the end of 2001, our entire nation was motivated to sacrifice and start “rebuilding” America. We wanted to flex our freedom loving muscles to serve our communities and show the world what it meant to be an “American.” We reflexively and defiantly wanted to live up our “shining city on the hill” ideal. Organizations like Citizen Corps and Freedom Corps were formed and existing ones like AmeriCorp and the Peace Corps saw huge increases in the amount of applications they received. Many other similarly themed institutions, ones intent on helping local communities whether domestic or abroad, received extraordinarily large amounts interest. In the end, where did all of this energy and interest go? To the mall to go shopping. Who told them to go there? Their fearless [cheer] leader President Bush.
Bush sadly chose to focus on the wrong capital. He thought that keeping monetary capital flowing through this nation’s economy was more important than harnessing the human capital that had presented itself before him. This decision to waste this country’s motivation sent the absolute wrong message to the American public: you don’t need to spend your time and energy, just simply spend your cold hard cash. We’ve unfortunately been living its result.
Extraordinary deficit spending, the irrational housing market, the funky debt instruments that were developed to fuel it, the past decade’s hedge fund largess, the highly leveraged private equity deals that have saddled so many companies with unnecessary debt – all of these stem from the present not being grounded in reality. “Merrily, merrily, merrily, merrily life is but a dream” goes the song, right?
Who needs to sacrifice? Who needs to save? Me? Hell no – I’m going to get rich or die trying. I’m going to get onto reality TV, grab my 15 minutes of fame and then never let go as I fade into D list celebritydom. That is what it means to be an American. It means to be a child always and forever. It means that responsibility is overrated.
Now, every party has a bill at the end. If you’re at a wedding, while you always should try to “cover your plate” it’s either the parents or the kids are paying for the caterer & band so who is fronting tab for our American misadventures? While America institution sell major stakes to keep themselves solvent (i.e. JPMorganChase sold a 10% stake to the UAE), from the average citizen’s standpoint, everyone is on the hook for the Freddy & Fannie mess. As for the war, who do you think is paying for the $1 trillion bill?
Well, since we’ve been at war, have you been asked to ration your food purchases? Has anyone ask you to buy a victory bond? I mean, how quaint and World War II-ish does that sound? Have you seen a major fund drive on TV to buy snacks, phone cards or even body armor for our troops? No? Me neither.
This is not a small problem. This is the hidden cancer that is destroying our nation. We have the dubious and disgusting distinction of living through the first time in our nation’s history where a war was fully funded by the next generation. You read that right. Read it again in case you just learned this fact. My daughter and my grand kids are the ones who will be paying for our Afghan and Iraqi adventures. Not you and not me. The only ones who are paying right now, and theirs is more of an emotional cost, are the 1.3 million men and women on active duty along with the 669,281 civilian personnel and the 1.1 million National Guard and Reserve members. These 3 million people represent 1% of America’s population. The other 99% are getting away scott free, that is unless they have kids and care about their children’s future.
America’s first secretary of the Treasury, Alexander Hamilton, identified the Revolutionary War debt as a threat to the nation’s very existence. Ever since, Hamilton’s principles for securing the country through sound finances have guided leaders from Madison and Lincoln to FDR and George H. W. Bush as they have fought to protect the United States — with the invention of the greenback, a progressive income tax, Victory Bond campaigns, and cost-sharing with allies.
Robert D. Hormats’s recent book titled The Price of Liberty strongly criticizes the Bush administration for failing to adhere to the principles that have paid for 230 years of American liberty. The author isn’t some tree hugging Suburu driver, rather he is the vice chairman of Goldman Sachs (International) and a managing director of Goldman, Sachs & Co. He has served in numerous presidential administrations and is a former member of the board of directors of the Council on Foreign Relations. He actually sounds pretty conservative. I think the problem is even worse than we thought.
So, back to the present and the campaign that has less than 60 days to go. The campaign has definitely become more US Weekly than US News and World Report and that really troubles Frank Rich who wrote in his 9/6 column that:
America loves nothing more than a new celebrity face, and the talking heads marched in lock step last week to proclaim her a star. Palin is a high-energy distraction from the top of the ticket, even if the provenance of her stardom is in itself a reflection of exactly what’s frightening about the top of the ticket.
What he finds frightening is that McCain’s “decision-making process is impetuous and, in its Bush-like preference for gut instinct over facts, potentially reckless.” McCain’s gut didn’t tell him to stay from the Keating 5. If we start to focus on the issues, namely the fiscal insanity of the last 7 years, I think that electing Barack Obama President is the last best hope for my daughter’s and my country’s future.
