Why Are Democrats Acting Like Republicans?

As the whole world knows by now (blogtopia is the whole world, right?) pro-Clinton diarists at Daily Kos have “gone on strike” against Daily Kos. Which means, as Kos pointed out, that they are boycotting DK.

Hillel said it first, and it still is news: That which is hateful to you, do not do to others. And if you do, don’t expect sympathy.

I have been trying to understand why this internecine war is going on between supporters of the two candidates for the Democratic nomination. Don’t we all want the same thing — to get progressive, liberal values back onto the country’s agenda?

I keep coming back to this intuitive sense that in some way these bitter divisions mirror the divisions between Americans in general, which started when Pres. Bush ordered the invasion of Iraq and have been getting wider and deeper ever since. It’s almost like Democrats are acting out the pathology that feels normative now.

Via Joe Gandelman, Tom Watson (a Clinton supporter) sees a big part of the problem in “boorish, Stalinist behavior online – the kind of ‘you’re either with us or against us’ attitude we saw so much of when the Bush crowd was flying high. It’s disturbing, particularly because so many of the targets are women. This is not the Democratic Party many of us have worked for; this is not the progressive blogosphere we’ve supported.” (Emphasis is mine.)

Shorter Tom: It’s because Obama’s supporters are acting like Republicans.

But Obama supporters (of whom I am one) feel just as strongly that the absolutism and rigid thinking has been mostly on the Clinton supporters’ side.

Although I have made the above argument myself, and still think it’s true, I point it out here to highlight a larger point: Maybe the anger and bitterness and hostility originates in a pattern of public discourse that we, as Americans, have been saturated with in the past eight years. We’re used to it by now, even as we object to it when we see it in our opponent.

Joe, in adding to Tom’s thoughts, seems to touch on this (emphasis mine):

On the other hand, bitterness in this race can be seen all around. Where progressive and moderate bloggers and commenters used to get worked up arguing about George Bush, there is now a real angry, scolding tone in many comments left by Clinton and Obama supporters.

Is War Causing the Recession – Pt 1

The “R” word – Recession – has been in the news more and more in the last few months. But does everybody know what is the definition of a recession?

First – What is a recession? According to Wikipedia a recession is

In macroeconomics, a recession is a decline in a country’s gross domestic product (GDP), or negative real economic growth, for two or more successive quarters of a year.

GDP is defined as the total market value of all final goods and services produced within a given period of time.

Another definition, not official, of a recession is when output declines and unemployment goes up.

Slowing economic growth means a decrease in GDP. GDP can slow when consumers spend less, when the government spends less or when business become inefficient. All three need not be present.

Spending Pulse, a subsidiary of Master Card has reported declines in consumer spending in two of the last three months with February’s decline at 1.1%.

Presently, the U.S. government is running a $175 billion a month deficit, so the government is sure spending a lot of money. But as opposed to the Viet Nam era when deficit spending occurred, by and large, in the United States, our current deficit spending is being done in the Middle East. It is not money that can be recycled by American consumers.

So, we know what a recession is and what can cause one. Now what? Well, it seems as if all the experts are blaming the credit crunch, the tightening of credit, on the sub-prime crisis. And part of it may be caused by the housing problem. But, the Federal government is trying to borrow dollars to finance its’ $175 billion a month deficit. And when there is competition for money, the cost goes up. The cost of money is figured in the interest rate that must be paid to get the money.

In this discussion I want to make sure that there is no confusion in whether going to war was the right thing to do. That is absolutely not part of my discussion. The morality of this war or any war is up to society to decide. Economics does not get into moral judgments.

What I want to focus on is not how much the government is spending but where it is coming from. And it is my contention that financing any external event (Iraq & Afghanistan wars) with borrowed money can lead to a recession.

More to come.

U.S. Army Reservist Says Surge Is Working; Petraeus Says It’s Not

Anthony Diaz, a U.S. Army Reservist with the rank of staff sergeant, writes in today’s Washington Post about the progress he sees in Baghdad:

Since I arrived here last August, I have been struck by four things: the financial commitment we have made to reconstruction; the precipitous decline in violence; the inklings of representative government; and the small yet significant progress in communal relations between the mostly Shiite Iraqi army and the predominantly Sunni residents of this area. One often reads of the chaos plaguing Iraq. Yet the media accounts only infrequently seem to grasp the successes being achieved.

My combat outpost sits along the Tigris River in a section of Baghdad known as Adhamiyah. It is enclosed by a wall that separates it from the predominantly Shiite eastern section of the city, similar to the wall that separates Catholics and Protestants in Belfast. Though a few Shiites remain within the enclosure, most have moved out, leaving a Sunni enclave surrounded by Shiite neighborhoods.
[…]
The efforts being carried out by Iraqis, the coalition and nongovernmental organizations focus on essential services, economic development and reconciliation. Restoring services such as electricity, a dependable sewage system, trash collection, and access to fuels and potable water are at the top of the agenda. Initiatives to bring all of these services to a satisfactory level have met with some success. The local economy has benefited from the lull in violence. Market areas that were once desolate are teeming with life, consumers are out and shops are open. Coalition initiatives to develop local market councils and provide micro-grants and micro-loans to small-business owners are providing a much-needed economic spark to Baghdad’s neighborhoods.

The troop surge has contributed more soldiers to this small but critical area of Baghdad. But the building of the Adhamiyah wall, coupled with the sea change in the population’s attitude toward the coalition, also contributed greatly to the decline in violence. And our squadron’s ability to capitalize on these changes has been equally powerful. Building a local security force has been a slow, painful process. The people’s change in attitude toward the coalition has led to more citizens providing soldiers with information on crime suspects and potential locations of roadside explosives and weapons caches. All these things have shaped the successes we are seeing daily.

Late last year, I witnessed something inspirational in a rather unlikely setting: an ordinary neighborhood advisory council meeting. Attendance was the highest I had yet seen, with about 40 prominent locals present. The coalition was represented by our squadron commander, a few colonels from the embedded provincial reconstruction team and a political officer from the U.S. Embassy. Discussions ranged from the persistent lack of electricity to sewage problems to economic development. What struck me were the comments of some Sunni workers from the district’s power station, who came to complain that the (mostly Shiite) Iraqi army had mistreated them and accused them of distorting the distribution of electric power, something over which these workers have little control. The men said they would strike until they received better treatment and pleaded with the council chairman, a Sunni, for help. That was an unlikely outcome, given the entrenched animosity between Shiites and Sunnis and the lack of substantive political reconciliation even at the highest levels of government here. But these men did something many Americans would take for granted: They voiced grievances and sought assistance. These are the seeds of representative government, citizens coming forth and demanding change from their representatives. Much work remains to be done, but we have clearly made a start.

Cernig looks back to August of last year:

Back in August 2007, seven enlisted men wrote an op-ed for the New York Times entitled “The War as We Saw It” which was highly critical of conduct of the Iraqi occupation up until that point and of the prospects for the “Surge” to initiate real reconciliation and reconstruction in Iraq. At the time, Michael Goldfarb of the Weekly Standard wrote that, as simple enlisted men and not generals, their “perspective is too limited for their opinions to have any value regarding the progress of the war.” It was a view widely agreed to by the pro-occupation and pro-Surge right.

Yet today we have another op-ed, in the Washington Post by a sergeant – and this time conservatives want to listen because they say it is proof that the Surge is working, that “we have turned the corner and will succeed in this mission if we don’t quit on it first.”

Double standard? I think so.

And so do I. Here are a couple more responses from war supporters to that other op-ed seven months ago.

McQ:

This is a group finishing up in Iraq, so the bulk of their experience has been in pre-surge Iraq, or said a different way, they’re leaving at the end of the third month of the full implementation of the counterinsurgency doctrine (which apparently will run through at least next April) and they’re already drawing conclusions and writing it off.

That’s not to say they don’t make fair points in the article about what they have seen in their little corner of Iraq. And you should be clear about that … that’s all they’ve seen, one small bit of an AO.
[…]
… what I object to is the overall extrapolation they make based on their personal experience. … while their descriptions are probably right on for their bit of Iraq, they essentially do the same thing we’ve seen done for years … they extrapolate their experience in their area as similar for the whole of Iraq.

Uncle Jimbo at Blackfive:

The writers of this piece take a fairly pessimistic view of our ability to win a COIN fight. They have every right to do so having seen parts of that policy in action, but only for the last 6 months or so. That is hardly indicative of what we will achieve if we continue a process where many of the initial signs are positive. I also feel obligated to point out the relatively junior rank of the group, none is more senior than SSG, which makes them young and not involved in our policy or it’s implementation at more than a minor tactical level. It is always said that NCOs run the military and as a former NCO myself that is true, but not in the way it is often assumed. NCOs handle the day to day business of the military, the nuts and bolts. They do not get involved with much of the decision-making processes, more the implementation of decisions made by officers. The NCOs here have taken their tactical small unit observations and applied them to the entire strategic situation.

The “relatively junior rank” of staff sergeant imparts considerably more authoritativeness when the opinion is that the surge is working:

What does a master’s degree in strategic studies and international economics from the Johns Hopkins School of Advanced International Studies get you in the US Army Reserve?

Staff sergeant’s stripes, a place on the firing line in a Baghdad based Combat Outpost and the platform from whence to cut through the BS[.] …

You know that if Sgt. Diaz had come to a different conclusion about the surge, Lex would be considerably less impressed by that master’s degree in strategic studies and international economics as it relates to an ability to accurately assess the larger meaning of conditions on the ground in Baghdad.

And that takes us back to Cernig, who does some critical evaluation of Sgt. Diaz’s conclusions:

… I linked to the op-ed by Sergeants Omar Mora, Yancy Gray and others by way of agreeing that their comments should be taken as a valuable part of the debate about Iraq and argued that their information had meaning. I can do no less for Sergeant Anthony Diaz today. He arrived in Iraq at about the time the first op-ed was being written, and so unlike those authors cannot compare current levels of violence to those of 2004-05, when similar levels were enough to cause the breakdown of Iraqi civil society. He writes that he is struck by “financial commitment we have made to reconstruction” without noting that the actual reconstruction return on those invested billions has been comparatively paltry. And he cites his own eyewitness account to show what he feels are “the inklings of representative government; and the small yet significant progress in communal relations between the mostly Shiite Iraqi army and the predominantly Sunni residents of this area.

And about Diaz’s optimistic take on the Sunni workers who told local Sunni leaders at a neighborhood meeting that they were being mistreated by the Iraqi army (mostly Shiites), and that they would go on strike until something was done about it:

I would argue that this anecdote shows precisely the opposite of Diaz’ interpretation. The local Sunni council is undoubtedly controlled by local Sunni tribal leaders – this is no seed of representative government, just the workings as usual of tribal politics and the Sunni/Shiite divide which has become the governing factor of all Iraqi affairs.

As Cernig also points out, Diaz’s positive spin on progress in Iraq is at odds with what David Petraeus is now saying. In an article published in yesterday’s Washington Post, Petraeus basically acknowledged that political reconciliation has not happened, despite the reduction in violence that war supporters attribute to the surge:

Iraqi leaders have failed to take advantage of a reduction in violence to make adequate progress toward resolving their political differences, Gen. David H. Petraeus, the top U.S. commander in Iraq, said Thursday.

Petraeus, who is preparing to testify to Congress next month on the Iraq war, said in an interview that “no one” in the U.S. and Iraqi governments “feels that there has been sufficient progress by any means in the area of national reconciliation,” or in the provision of basic public services.

My bolds above — this is exactly the area in which Sgt. Diaz thinks conditions have improved.

I get a mental image of war boosters’ heads spinning as they try to reconcile “Yes, the surge is working” with “No, the surge has not done what it was supposed to do.”

Piece of cake, really. Here we go:

He’s not serious, and he’s done this before:

Whenever Petraeus or other Higher Elements of forward command use the Washington Post like this, it’s not so much to inform you and me, it’s primarily to send a message to Maliki and company..this is at least the third time of counted them doing this.

Of course the Surge isn’t working; the Surge is irrelevant:

General David Petraeus has stated the obvious[.]
[…]
Giving the Iraqis time to cobble together a functional unity government out of a broken sectarian mess was the rationale given for the Surge. There’s no indication that it’s happening or will suddenly happen any time soon. At the same time, there is very real progress, whether directly attributable to the Surge or not. Violence has decreased markedly. Infrastructure building is taking place. And civil society seems to be springing up organically at the village-tribal level.

The question remains, as it has for too long now, what to do about a bad situation. The answer seems unchanged: muddle through and hope for the best.
[…]
Despite the sense by some in the blogosphere that this is some sort of “gotcha” moment or admission against interests, it’s nothing more than a statement of what everyone knows. So, why bother to articulate it now?

What does the Surge have to do with political reconcilation?

[…]
Many Iraqi parliament members and other officials acknowledge that the country’s political system is often paralyzed by sectarian divisions, but they also say that American expectations are driven by considerations in Washington and do not reflect the complexity of Iraq’s problems.

While their point is true, it is also irrelevant, considering Washington is going to make the decisions as to whether or not to continue to support the American effort in Iraq after November’s election, so whether they like it or not, politically the future of that effort there does indeed lie in Washington – for good or bad.

I think Petraeus is warning them that they stand the chance of seeing all the good they’ve accomplished in the last year threatened if some further progress on a national level isn’t forthcoming. Of course, depending on who wins, even further progress may be just as irrelevant. …
[…]
As we’ve said repeatedly here, the key to success in Iraq is the Iraqis stepping up and taking charge of their own destiny. At a local and provincial level, that has been happening. It is a pity that the sectarian divides still seem to cripple the national effort. However, given the much improved status of the ISF, that’s something they’ll eventually have to work out for themselves – without the US being involved in the principle security effort – whether they think they’ve had adequate time to do so or not.

Eric Martin called it:

… Now that Petraeus is saying it, those that were previously bashing war critics for making this exact point (ahem, some on this very site) will now act as if this was the case all along, that it was obvious, and only those naive war crtics – who just don’t “understand war” – have ignored this reality.  …

Derivatives & Bear Stearns

The lead graf here says

Bear Stearns sought and received emergency funding from the Fed and J.P. Morgan for an initial period of 28 days amid a liquidity crunch. Despite the bailout, the firm’s shares tumbled 47%. Bear and its advisers hope to find a potential buyer within the next few days, but the firm’s value is hard to assess.

Hmm-m-m-m. Why is the firm’s value hard to assess? At the Wall Street Journal we find this

Of course, the Fed has sponsored bailouts of entities outside its purview before, as when it herded banks to unwind Long-Term Capital Management a decade ago. Then, too, it was concerned about banks’ counterparty exposure to the hedge fund.

That kind of exposure has increased a lot since then through the ballooning derivatives markets. Credit derivatives, which barely existed when LTCM ran aground, now constitute a $50 trillion market, though much of that consists of offsetting contracts. Other derivatives markets have also grown.

The connection of Bear Stearns to derivatives and hedge funds is here

Now, much of the trading in derivative contracts tied to stocks and bonds takes place in unregulated transactions between financial institutions.Policy makers have been wrestling with questions about when and how they should provide assistance since the last major bailout of a tottering bank, Continental Illinois, in 1984. At the time, Continental was considered too big to fail without sending waves of losses through the financial system.

Regulators are facing an unprecedented and widespread deterioration in many markets. Last summer, the value of risky and exotic securities plummeted in value. Now, even top-rated securities once deemed as safe as Treasuries have hit the skids. Financial firms have written down more than $150 billion of their assets. Some analysts are predicting that losses in various credit markets will reach $600 billion.

Bear Stearns was one of the first firms to experience a direct blow from the subprime mortgage crisis when two of its hedge funds collapsed because of the declining value of mortgage-backed securities.

It is also among the biggest firms in the prime brokerage business, or the financing of hedge funds.

So, Bear Stearns was trading in “hedge funds” which according to Wikipedia are

A hedge fund is a private investment fund that charges a performance fee and is typically open to only a limited range of qualified investors. Hedge fund activity in the public securities markets has grown substantially as it constitutes approximately 30% of all U.S. fixed-income security transactions, 55% of U.S. activity in derivatives with investment-grade ratings, 55% of the trading volume for emerging-market bonds, as well as 30% of equity trades. Hedge Funds dominate certain specialty markets such as trading in derivatives with high-yield ratings, and distressed debt.

In the United States, in order for an investment fund to be exempt from direct regulation, it must be open to accredited investors only and only a limited number of investors can belong to it.

This is an unregulated market, where apparently there is no due-diligence and no penalty for failure. Except for the taxpayers who are bailing out these fat-cats. And they are trading contracts on which no one can put a value. There are absolutely too many layers between the underlying security (your home, for example) and the hedge fund/derivative that Bear Stearns is holding. If you and half a million of your closest friends decide to walk away from your home and not make another mortgage payment, eventually, that loss in value will work its way up to the derivative in which it is included.

So, that is why it is so difficult to put a value on Bear Stearns when it comes to putting a price tag on it.

POST SCRIPT: What really pisses me off about this whole Bush Administration fiasco is that I have a friend who feels this way and included it in an email, ” I don’t have enough money on hand to take care of creditors, either. Does the Fed have any bail-out funds left for me?”

The people on East Main Street are hurting and I wonder how big the bonuses will be for the executives at Bear Stearns this year.

Thought of the Day

Regret for the things we did can be tempered by time;

It is regret for the things we did not do that is inconsolable.

Sidney J. Harris