Dear Mr. Douthat,

You write,

I find it hard to believe that you’d be seeing this level of right-of-center enthusiasm if Obama had postponed cap-and-trade, avoided taking over GM, compromised more significantly on the stimulus, and taken the incremental route to health insurance expansion that Reihan Salam discusses here.

Really? Are you sure, Mr. Douthat? Because considering the amount of "Obama is gleefully bringing us to the end of the world!1!11!!1!!" expressed in some corners of the cable news channels and in the blogosphere, and how that has continually happened since the man first began making real headway in the polls en route to becoming president, I call bullshite on this. I'm not going to say that all of the right-of-center enthusiasm is due to race; I think a lot of it is due to fear of The Other - the same thing that made John Kennedy a suspicious figure in 1960.

In other words, what is energizing the Right and the Far Far On the Fringes Right isn't the fact that Obama is a liberal. It is that they perceive him to be an Ultra Liberal, one step behind being a socialist, Marxist, atheist; the truth of the matter is that Obama is left-of-center, but far more interested in reaching centrist solutions than he is in making the world in his Liberal image. The man is a compromiser. That is the reason the single payer proponents didn't even get a seat at the table when the healthcare discussion began. That is the reason he has tried to woo people like Chuck Grassley and Olympia Snowe. That is the reason he chose to simply bail out the banks, instead of using their teetering as the reason to break them into smaller entities; or initializing a government take over as liberaler economists like Simon Johnson (formerly of the IMF and current blogger at The Baseline Scenario) said was the only solution not guaranteed to fail (he later admitted his error on This American Life, after being called on it by one Adam Davidson). This could just be a crafty political move; but in truth, I think Obama hangs by the adage that the best solution is the one that leaves everyone at the table a bit grouchy.

So, what is energizing the Right isn't Obama, but the specter of an Obama that doesn't truly exist. For a long time now, I've pretty much thought that since Obama is going to be seen as Liberaller than the Liberalist Liberal by swaths of those on the right and those who just don't like him very much (unless the reason for not liking him lies in the fact that he isn't, actually, Liberaller than the Liberalist Liberal), he should have just gone hog wild and been that liberal hero of which the left has often dreamt. But that just isn't who he is; or, at the very least, it isn't how he has chosen to govern. And really, Mr. Douthat, if you think that Obama's liberalish impulses are what is causing the huge upswell on the Right, how do you explain this:

What’s really killing the Democrats, and what’s likely to hurt them the most come next November, is the growing enthusiasm gap — and its implications for candidate recruitment, fundraising, turnout, and all the rest.

If Obama really was the liberal candidate the left had dreamed of and the Right is using as a boogeyman, then there would be no enthusiasm gap. The progressive base would be just as enthusiastic about getting out the vote as the right is now. The problem is, again, that Obama just isn't that guy. He was never that guy. He is a capable guy; an inspiring guy; a guy who has acted as a change agent just by being elected, due to his heritage. I'll bet dollars to donuts he's going to be a great president. But he isn't the liberal's dream. And so, the liberal, knowing this, isn't too excited. The progressive isn't going to get comprehensive banking reform; isn't going to get a Public Option; isn't going to get a dismantling of a broken healthcare system; isn't going to get supports for the middle class; isn't going to get a bill that doesn't start out already compromised; is upset by the Stupack-Pitts Amendment; and is pissed that Don't Ask, Don't Tell still has not been repealed.

Obama's problem isn't that he is too liberal or isn't liberal enough - though I would definitely prefer if the man were to enact policies that were inherently more liberal, myself. It is how the world perceived him, and how part of that world perceives him still.

Obama's problem isn't that he is too liberal and if he'd only moved incrementally, he wouldn't have a backlash. It is that people like Sarah Palin are the idols of the Right; and their prescriptions tend to be, "Do nothing. Wait. Repeat".

Obama's problem is that the only people who seem to be riding high right now are those in banking, when the conventional wisdom is that banking is what brought the world to its economic knees, when banks are still foreclosing on houses and turning ordinary people out into the streets.

Mr. Douthat, you say,

I think it would behoove liberals to give serious consideration to the more direct explanation — namely, that some of the anti-Obama backlash has to do with Americans discovering, after an enormous Democratic sweep, that they preferred liberalism much more in theory than in practice.

I say, helping maintain the status quo, in terms of the banks especially, isn't a particularly liberal philosophy. You say some of the anti-Obama backlash is due to people figuring out they don't really like liberalism. I say the anti-Obama backlash is because the guy didn't turn out to be the messiah. I say, the anti-Obama backlash is because ordinary people still don't feel as if their interests are being served, and yet they see bankers walking away with million dollar bonuses. And what they see is the status quo in politics, the status quo on Wall Street, and the status quo in the big firms where the hot shots make the money. And the only people who are not reaching that status quo is what they see as the ordinary citizen.

Democrats were swept into Congress as much because they weren't Republicans as because they were Democrats. Democrats had to prove, and prove quickly, they were different than the Republicans, that they weren't beholden to the same moneyed interests, that they could make a difference and that they would make a difference for the average citizen. Democrats are, I'm sad to say, failing that test. More than not liking big proposals, I'm willing to wager the ordinary American citizen doesn't like big proposals that dawdle in the halls of Congress, not getting passed and then becoming progressively worse until they pass with absolutely no one happy, or just fade away.

But really, Obama's real problem, the real reason there is an enthusiasm gap, is because it is frickin' hard to govern. Especially when the other side won't play. And so, it is infinitely easier to work up enthusiasm when your side is out of power - because you don't have to make compromises and can tell tales about how much better your side would be handling things without having to offer proof. Meanwhile, the other side is stuck actively making and eating the head cheese. Which, honestly, is much, much harder to be happy about.

"The Next Culture War"

Maybe it's just because I'm a stingy Yankee, but David Brooks' column "The Next Culture War" makes sense to me. Now, I don't have the enmity toward Brooks some other feminists have, mostly because I don't care about him and rarely read his column. I know he said some stupid things about feminists' dislike of then-governor and vice-presidential candidate Sarah Palin; but plenty of other people said stupid shit about feminists' dislike of Sarah Palin - and about Sarah Palin herself - so that's not the biggest news ever. A reason to not read him on gender issues, possibly.

What I love about this particular column is this paragraph:

It will have to take on what you might call the lobbyist ethos — the righteous conviction held by everybody from AARP to the agribusinesses that their groups are entitled to every possible appropriation, regardless of the larger public cost. It will have to take on the self-indulgent popular demand for low taxes and high spending.

There are other good ones. I just happen to like this one a lot. Mostly because commercial farm subsidies piss me off.

Quote of the Day

But, you know, one day, we will have American meat in Europe; and one day, we will have more cheeses from France in United States, and we will make love together and that will be fantastic. By the way, you look very good.

- Lionel Gerard, Professional Cheese Guy, optimistically opining about the future and hitting on David Kestembaum

Via the Planet Money Iron Chef/Economist competition from yesterday's Fancy Food Economics podcast. 

If you haven't listened yet, I totally would. Between Adam Davidson's faux bugles incident, Chana Joffe-Walt's recantation of the evolution of the vanilla bean plant in Madagascar, and David Kestembaum's trek to find the most expensive food item, it's well worth it.

Plus, then you can vote for who did the best! Polls close tomorrow at 1 PM.

I voted for Adam Davidson. I totally believe him that his convo in Arabic referenced a Griffin. 

Why I Should Take The Time To Watch Television:

Exhibit A:

Visit msnbc.com for Breaking News, World News, and News about the Economy

I discovered this awesome song featured on the Rachel Maddow Show while I listened to both last thursday's and friday's shows at work in an attempt to maintain my sanity, and because I had a meeting that ran long on friday preventing me from listening to thursday's show then. What this means is that I missed out on this greatness, and was unable to respond to it in a timely fashion. However, I do think the song is terrific.

Ideology And Change

Something occurred to me after I responded to a friend's comments (and this friend is probably sick of his comments being turned into blog posts, but he's the most incendiary commenter I've got, so to him I say, "Tough"), and that is that no matter how good a friend you are with someone, no matter how many conversations you have with them, assumptions about their reactions to things or their beliefs can go horribly awry. This friend wrote,

"What if John McCain had come into power and his remedy for the country was continued deregulation of the private sector and broad-based cuts in entitlement spending?

I'm sure you wouldn't think this plan would help our country out of the financial crisis. But I'd imagine you also wouldn't want it to work because it would justify further deregulation and encourage the government to make fewer transfer payments in the future. That doesn't mean you wouldn't want the economy to improve necessarily. You simply wouldn't want our recovery to be connected with policies you believe are ultimately bad for the country."

Here's where he's right: I wouldn't believe that McCain's plan would work. Here's where he's wrong: if the plan was put in place to lift us out of an economic recession and the economic community had reached a broad (though not unanimous) consensus that this is what it would take to do it, I wouldn't hope for its failure. Because although I have an ideology, it has one strong basis and that is what is ultimately good for the people. If something that goes against the grain of my ideology actually is ultimately good for the people, if something that goes against the core of what I think is right and good saves jobs and homes and makes our world better, then it is my ideology that needs to change to reflect that. If this plan worked, then I would have to reassess whether or not those policies I disagree with were ultimately bad for the country, or if I was wrong about them and their application. I would be remiss not to; I would be foolhardy to cling desperately to a belief system meant to make America better if an alternate system proved to do the same thing.

Here's also where my friend is wrong: I may have an ideology, but on economic matters I'm not to the far left; I'm more of a slightly-left-of-center person than anything else on economic fronts. I am a capitalist. I believe in markets. And although I'm more of a Keynesian than anything else, that has more to do with the negative impact a truly self-correcting market economy would have on the "little" people (and some bigger ones) than a hard and fast ideology about economic theory. I tend to think we do economics wrong in America; I tend to think that our regulatory practices are too influenced by lawmakers' interests in terms of making the lobbyists and the campaign contributers happy. I tend to think that doesn't work so well. But then, although I'm mostly ambivalent, I do still think that in many ways, our economic system - like our political system - is the worst, except all of the others that have been tried. For my part, my economic ideology is driven by the more pragmatic "will it work?" than anything else. For my part, I don't think that what we've been doing lo these past 8 years (and if you really want to think about it, more) really has. For my part, I think it means something, something bad, when the disparity between the wealthy and the really not is as large as it is; as Bill Moyers points out, "In 1960, the gap in wealth between the top 20% of our country and the bottom 20% was thirty fold. Now it is 75 fold." For my part, I'm outraged by the amount of Americans living below the poverty line. For my part, I'm dismayed by the amount of Americans who don't have access to quality and affordable health insurance. My belief in economic theory and what is best for the economy is somewhat mitigated by my worry over the average American. So if deregulation worked, then I would have to rethink my casual faith in Keynes' work and go more for Milton Friedman.

Those people being crushed by the economic downturn right now are why I'm not willing to give those who hope for Obama's failure any leeway. Because ideology comes second to making those people's lives better; because an ideological win means less when American citizens are jobless and homeless and feeling hopeless. On a strictly ideological level, I'm not really for bailing out banks, or the auto industry. Those people make a lot of money, and they've squandered a lot of capital - both monetary and political. But on the other side of that is that if the banks fail, then a whole mess of people who haven't squandered a lot of capital - who don't have a lot of capital to squander - end up pretty royally screwed by the system they bought into. So, from a pragmatic standpoint, I'd rather save the banks because to do anything else would be to cut off my nose to spite my country's face. And above it all, above political ideology and economic ideology and social ideology, I'm really very patriotic. Seriously. I tear up when I hear the Star Spangled Banner, and the reason why I give money to political organizations and the reason I write letters and the reason why I am interested in following the political scene and talking about the political scene and writing about the political scene is that not only do I love my country but I think my country can do better. I think we can reach higher and accomplish more and do better by our citizens, especially those who are too often left on the side of the road during public discourse. And because of that, my ideology in some regards is fairly flexible. And this is one of those times when my beliefs are.

Crying Wolf

"If we don't do this, we will be known as the party of Herbert Hoover forever."

That's Dick Cheney discussing the bail out of the Big Three auto makers. Now, aside from the bit of hyperbole, I can definitely understand why, if a Republican wasn't so keen on this bill, they would not be swayed by Cheney. After all, this is the dickweed who visited everyone on the Hill he could think of to drub up support for a war that wasn't necessary, citing facts we didn't have, and making it seem like if they the Republicans did not fall in line not only would Cheney and the Bush Administration be upset but America herself would be in danger. Now, after all of that, would you be inclined to believe this guy when he started waxing poetical? I mean, he has a lower approval rating than Bush, who is holding steady at around 28% (and who are these people?!). He is part of one of the most maligned administrations; he lied straight to Republicans faces before, and his war and his administration is part of the reason why the Republicans have been losing so badly lately. If I wasn't inclined to bail out the auto makers anyway, nothing this man could say to me would make me change my mind. In fact, had I been inclined to vote to save the auto industry, I would be rethinking my position if it agreed with Cheney's. Because the man is, to be frank, an asshat.

But what gets me here is how some people are up in arms over the fact that the Republicans on the Hill have broken with the Republicans in the White House. Because now that we agree with Bush and Cheney, obviously everyone should see the light as well. There are valid reasons to not want to bail out the Big Three. I don't happen to agree with them, because as interesting an idea a self-correcting market is, I care more about the hundreds of thousands of workers who will be laid off than I do about how laissez faire economics is best for the economy; and how certain companies should fail because they are a blight and a tumor upon said economy. I don't disagree in theory; but in practice, I think we should also consider those who would be adversely affected by the removal of this blight. And how that adverse affect would then reverberate in an already bad economic situation.

But I don't blame the Republicans on the Hill for this; not entirely, anyway. Because the White House should have been smart enough to send someone with less political baggage - and less negative history - than Dick Cheney if they were serious about having their point of view considered in a fair and unemotional fashion. They should have learned from their childhood tales. Eventually, the boy who cries wolf isn't rescued, but gets eaten. And Cheney and the Bush administration are guilty of crying wolf too often.

Yikes Is Right

I kind of love this video from The Daily Show; maybe I'm giving Americans too much credit, but I'm not sure that we need to be treated like kindergardeners in order to best understand the economic crisis. Props aren't always a bad thing; drawings aren't always a bad thing. I had a philosophy professor who used stick figures to better demonstrate her examples. It worked partially because she had as much fun making them and having us guess what they were as we did guessing what they were. And because there was never the feeling that she thought we were idiots. That cartoon, the domino demonstration, even PBS' attempt to explain the financial crunch, all make it seem like those on camera think that those of us sitting on our couches are somehow incredibly mentally deficient.

Which is why I have been enjoying NPR's Planet Money podcasts. These are people who do not talk down to me; that may be a product of their medium. Visuals do not translate well over audio communication, and so the opportunity to bring out the cartoons and the oversized dominoes is very much lessened. At the same time, these seem to be people assuming that those of us who are not economists and who may have had no clue about how an economy ran until about a month or so ago can at least grasp the very basic facts of the situation. And they explain everything in grown up words.

In Defense Of Banks

(Note: This post deals mostly with the mortgage lending industry. I know much, much less about the investment banking industry, and so will touch on it much more gingerly.)

I'm going to have to do something I never wanted to do: defend the banking system in America. My defense? Banks aren't stupid. They aren't. Look, I know that is hard to believe, what with the current banking crisis and all, and yes they are a little bit stupid and a lot myopic and short-sighted and all that jazz. But they aren't completely idiotic. Which is what we'd almost have to believe if we are going to place a majority of the blame (or even a good deal of the blame) on the people who took out the mortgages instead of on the banking institutions themselves. I know what you're thinking. Why should I pay attention to the crazy rantings of a literature major who never took a finance class in her life? I'll tell you why. It is because a big part of why I'm jobless right now is that I worked in the mortgage industry. Also, my mother works in the mortgage industry. All of her friends work in the mortgage industry. And I've gotten to hear a lot about banking and the rules and regulations and such both growing up and while I spent my summers working there along with working there after college. Plus, I got passed around from department to department, so I have a pretty good idea of how the mortgage industry works. I also kind of feel like Marisa Tomei with rattling all of that off, but I think it is important to note that I actually do know a bit about what I'm talking about.

First things first: the idea that some of this mortgage crisis was brought about by people lying on their applications is untrue. The main problem with this idea is that even if mass amounts of people were lying on their mortgage applications and getting mortgages anyway, the bank would still be at fault. The reason is simple; if one person manipulates the system, the system is not necessarily compromised and that person is responsible. If a large amount of people are able to manipulate the system, to the point where the system breaks, then there has been a systemic failure. Those people who screwed the system are still responsible, but the system is also to blame because it failed to work properly. I would contend that the system would be more to blame, because it disregarded the holes in the system and allowed itself to be compromised. It would mean that a majority of people working on that side of the bank, in departments like closing, post closing, and quality control, were complete idiots - along with the people who designed the mortgage approval process as well. It would mean that not one person in the whole system recognized that a great number of people were lying. It would mean that Quality Control should get a new name. It would mean that Post Closing failed in all of its duties. It would mean that Closing was approving files without even a cursory glance. Banks do not get all of their mortgage information from the customer. Banks also get access to credit reports and look at pay stubs and generally do a pretty thorough job. There are always going to be a few people who manage to beat the system, but for the most part the system runs fairly smoothly in this regard.

Second up in the blame game in many conversations are the people who bought houses they could not afford. This is ignoring a couple of salient points. There are very few people who could not, in that moment, afford to buy a house that got a mortgage anyway. Those people are out there; but if nothing else, the banking industry generally does catch these applicants and denies them. If a person (or couple) absolutely could not afford the mortgage or the home upon walking into a banking institution, they generally did not get the loan. Banks do not approve loans they know will fail. If too many of those loans were getting through, again, it is a situation where the blame is inequitably divided. The customer is to blame in part for applying for a loan s/he knew s/he could not afford. But the bank is more to blame because they are the institution with the stamp. The applicant's job is to apply for the loan. The banking institution's job is to verify whether or not this applicant could afford the loan, or if they were going to default. It would be like someone under 21 attempting to get served at a bar. The greater fault lies with the bartender who serves the underage patron than with the patron.

But the most important thing to recognize is that both of those scenarios make up a limited portion of the mortgage industry. The majority of the mortgage industry is not nearly as black and white. It deals with risk. If Will Smith were to walk into a bank and wish to take out a mortgage on a cozy little two bedroom cottage, the bank is in a relatively low risk situation. If I walked into a bank and wished to take out a mortgage on a cozy little two bedroom cottage, the risk attached to such a loan would be significantly higher. The act the banking industry attempted (and failed) to perform was by approving more and more high risk loans. These loans generated a good deal of income while the economy was good, allowing those banks to venture further beyond the border of the safe risk amount. It was a gamble that just kept paying off, and in many instances it was a gamble the industry as a whole encouraged banks to make. During the period of economic expansion, banks faced considerable risk of a take over by another financial institution. Bigger, more successful, banks were buying out smaller banks and banks that had less of a profit margin. Investors, stock holders, and CEOs of these mortgage institutions wanted to see significant growth each quarter in an industry that almost demands a longer view. Most loans are written to be paid off in 15 years or 30 years; the stress to grow exponentially when one's product requires longevity increases risky practices. In an eat or be eaten world, banks were more apt to make what seemed to be good short term decisions; the only problem with that is that those decisions were bad for the long term.

Those decisions were bad long term ones for a variety of reasons, but I think it is important to note that every mortgage lending institution I know of has a Construction Department. The Construction Department is in charge of, obviously, construction loans - loans that pay for the building of new structures. And those structures, during the housing boom, were valued for more than their worth much like many houses were. There came a point in the industry where the supply of these constructed houses far exceeded the demand, and that partially explains the collapse. It also clearly demonstrates a version of tulip bulb mania in which at one point in time houses were worth a certain amount because there were more people clamoring to own (and capable of owning) homes than there were homes (McMansions, mostly) they desired, but over the years the market had been flooded with those homes and thus devalued themselves while still attempting to sell at the same price when those homes were in a competitive market. The system corrected itself by devaluing homes (creating a buyer's market, if anyone had money with which to buy), which in turn made those high risk loans all the more risky. An additional problem is the fact that Lines of Credit are tied directly to the value of a homeowner's abode, so a person could have had $300,000 available on his LOC one day and $120,000 on that same LOC the next (those numbers are, of course, entirely hypothetical).

Due to the nature of the loan game, in which many take adjustable mortgages in the idea that in a couple of years the mortgager can refinance at a lower adjustable rate if the market is fair, the downswing was a disaster for the high risk loans that were so profitable merely a year earlier. In this way, the market kind of screwed itself, because it depended upon banks to be able to perform like other institutions and create consistent and large profit margins. Thus, my own personal "Biggest Blame" for this whole mess is not the mortgage lenders or the customers themselves but a financial system that demands short term success at the expense of long term success. In order for banks to maintain their independence, they engaged in risky business practices. As long as the economy was good, Wall Street rewarded those risky business practices. Once the economy shifted, those risky practices were not nearly as profitable, and now the mortgage industry is in a fairly stupendously bad free fall. Obviously, there are many different solutions that need to be put in place over the next months and years, and there is the necessity of a bail out. But one thing we need to take heed of is what happens when short term profits come at the expense of long term stability, especially in an industry that supplies long term products. We need to come up with a different way of analyzing their success and failure on the global markets; we need to recognize that we should not expect large profit margins each quarter due to the nature of the product itself. If we hadn't focused so much on short term profit, then banks would not have had to engage so many high risk mortgages to ensure their survival from financial quarter to financial quarter when the market was good. And if banks had been more picky and less "eat or be eaten", then less of them would be in financial straits now.

"Don't You Know What STAT Means?"

"I don't know what STAT means." -Jay Smooth makes my day just a little bit brighter.

Seriously, watch this. I defy you not to laugh, especially when he goes all ER.

The End of Conservative Policy (Economic Edition)

I need someone to explain to me what is good about the conservative economic plan; I've never been a fan of conservative theories in general, but their economic policies have always struck me as particularly obtuse. I could never imagine something like the trickle down theory of economics working, merely because my grasp of human nature is such that I think once we have something we covet -money, clothing, whatever- we are not, as a group, likely to willingly give it up even for the good of the populace. We will hold onto what we covet unless there are laws or regulations dictating that we do otherwise. Perhaps I am wrong about the inherent selfishness present in human nature; but I think the current economic crisis belies that idea. The money that was supposed to make it down to the middle and lower classes via tax cuts for the most wealthy and tax incentives for the corporations never did show up; at least, not in my household and probably not in many others. I'm not entirely sure how it was going to trickle down anyway; perhaps someone who knows the intricate details of Reaganomics could do more to inform me if it was supposed to influence merely the prices of items on the market or if it was supposed to be in the form of raises. I was always caught up in the fact that it didn't work in the 1980s and it did not work this time around either. My outbursts on the matter were so annoying that a teacher of mine in high school 'recommended' that I not take Econ with her, and that I should probably take Law and Society instead; I took that advice, partially for her sake and partially for my own, but that means I know less about economic matters than any self-respecting political junkie should.

What I do know is that what annoyed me about Reagonomics in high school and prior to high school continues to bother me to this day; I also profoundly agree with Rachel Maddow when she said (paraphrased from tonight's show) that those who despise government and do not believe it is the answer to a nation's woes should probably not be elected to actually run the government. I also dislike the deregulation of industries. As I see it, regulation is a must; an addendum to my previous rule of thumb regarding human behavior is this: morals generally are not voluntarily applied to corporations or those who wish to make money, and that most of those wishing to make money will do so by any means necessary, even if it means ignoring what would be common sense for long-term growth. One only needs to read The Jungle to understand why regulation is important. Barring that, one only has to look at Wall Street and our nation's financial 'strength' circa October 29, 1929 through 1939. And that only took our involvement in a world war to bounce back from. Regulatory practices seem like a good idea, mostly because the conservative idea about a free market being self-correcting is in actuality true. The problem with that self-correcting function being that much of the country cannot truly handle such fluctuations like a market correction. It is my belief, and perhaps the wrong one, that it is better to stymie potential and gratuitous windfalls if doing so also allows for a certain amount of control when the market heads in the opposite direction. It means less exhilarating growth, but it also means less abysmal lows as well. As someone who has never been much of a risk taker in any medium, that sounds like a fair balance to me.

Considering that even conservatives are working fiercely against the natural correction of the market, I am calling into question whether or not belief in the conservative philosophy -at least, the economic fork of that philosophy- is coming to an end. I can only hope that some of it does die, and with a whimper instead of a bang. But then, I'm more of a pump-primer, Keynesian economic policy girl myself. If anyone could tell me why I am wrong in aligning myself with that philosophy, I'd be much obliged.