The Republican Moral Eunuchs and the Magnificent 13

Yesterday the House approved a resolution of disapproval on President Trump's "national emergency" to fund his border wall by a vote of 245-182. Simply put Trump usurped the power of Congress by declaring his intention to spend $5.6 billion that was previously rejected by the Congress. 182 Republicans voted against the resolution that had President Obama done a similar thing not only would they have voted for the resolution they would have immediately started impeachment proceedings. To my mind these Republicans are moral eunuchs and deserve to be defeated in the 2020 election. They failed to uphold their oaths office to support and defend the Constitution, especially Article I which gives Congress the power of the purse.

However, standing up intense pressure from the White House and Leader  Kevin McCarthy 13 Republican Representatives voted for the resolution. I call them the magnificent 13.  They are libertarian Justin Amash (MI), Brian Fitzpatrick (PA), Mike Gallagher (WI), Jaime Herrera Beutler (WA), former CIA agent Will Hurd (TX), Dusty Johnson (SD), Thomas Massie (KY),former leadership member Cathy McMorris Rodgers (WA), Francis Rooney (FL),
veteran member Jim Sensenbrenner (WI), rising star Elise Stefanik NY), veteran member Fred Upton (MI) and former leadership member Greg Walden (OR). These magnificent 13 members ought to be complimented and financially supported in future elections.

Let's hope the Republican members of the Senate have more backbone than their House counterparts and vote to support the resolution of disapproval when they vote in a few weeks.

My Amazon Review of Adam Tooze's "Crashed: How a Decade of Financial Crises Changes the World"

The World in Crisis

Columbia history professor Adam Tooze, an authority on the inter-war years, has offered up an authoritative history of the financial crises and their aftermath that have beset the world since 2008. He integrates economics, the plumbing of the interbank financial system and the politics of the major players in how and why the financial crisis of 2008 developed and the course of the very uneven recovery that followed. I must note that Tooze has some very clear biases in that he views the history through a social democratic prism and is very critical of the congressional Republican caucus and the go slow policies of the European Central Bank under Trichet. To him the banks got bailed out while millions of people suffered as collateral damage from a crisis that was largely made by the financial system. His view may very well be correct, but many readers might differ. Simply put, to save the economy policy makers had to stop the bleeding.

He starts off with the hot topic of 2005; the need for fiscal consolidation in the United States. Aside from a few dissidents, most economists saw the need for the U.S. to close its fiscal deficit and did not see the structural crisis that was developing underneath them. Although he does mention Hyman Minsky a few times in the book, he leaves out Minsky’s most important insight that “stability leads to instability” as market participants are lulled into a false sense of security. It therefore was against the backdrop of the “great moderation” that the crisis began.  And it was the seemingly calm environment that lulled all too many regulators to sleep.

The underbelly of the financial system was and still is in many respects is the wholesale funding system where too many banks are largely funded in repo and commercial paper markets. This mismatch was exacerbated by the use of asset-backed commercial paper to fund long term mortgage securities. It was problems in that market that triggered the crisis in August 2007.

The crisis explodes when Lehman Brothers files for bankruptcy in September 2008. In Tooze’s view the decision to let Lehman fail was political, not economic. After that the gates of hell are opened causing the Bush Administration and the Federal Reserve to ask for $750 billion dollar TARP bailout of the major banks. It was in the Congressional fight over this appropriation where Tooze believes the split in the Republican Party between the business conservative and social populist wing hardens. We are living with that through this day. The TARP program passes with Democratic votes. Tooze also notes that there was great continuity between the Bush and early Obama policies with respect to the banks and auto bailout. Recall that in late 2008 and early 2009 nationalization of the banks was on the table. Tooze also correctly notes that the major beneficiary of the TARP program was Citicorp, the most exposed U.S. bank to the wholesale funding system.

Concurrent with TARP the Bernanke Fed embarks on its first quantitative easing program where it buys up not only treasuries, but mortgage backed securities as well. It was with the latter Europe’s banks were bailed out. Half of the first QE went to bail out Europe’s troubled banks. When combined the dollar swap lines with QE, Europe’s central banks essentially became branches of the Fed. Now here is a problem. Where in the Federal Reserve Act does it say that the Fed is the central bank to the world? To some it maybe a stretch.

Tooze applauds Obama’s stimulus policy but rightly says it was too small. There should have been more infrastructure in it. To my view there could have been more infrastructure if only Obama was willing to deal with the Republicans by offering to waive environmental reviews and prevailing wage rules. He never tried for fear of offending his labor and environmental constituencies. Tooze also gives great credit to China with it all out monetary and fiscal policies. That triggered a revival in the energy and natural resource economies of Australia and Brazil thereby helping global recovery.

He then turns to the slow responses in Europe and the political wrangling over the tragedy that was to befall Greece. It came down to the power of Angela Merkel and her unwillingness to have the frugal German taxpayer subsidize the profligate Greeks. As they say “all politics is local”. The logjam in Europe doesn’t really break until Mario Draghi makes an off-the-cuff remark at a London speech in July 2012 by saying the ECB will do “whatever it takes” to engender European recovery.

As a byproduct of  bailing out the banks and failing to directly help the average citizen a rash of populism, mostly of the rightwing variety, breaks out all over  leading to Brexit, Orban in Hungary, a stronger rightwing in Germany and, of course, Donald Trump. But to me it wasn’t only banking policy that created this. The huge surge in immigration into Europe has a lot more to do with it. Tooze under-rates this factor. He also under-rates the risk of having a monetary policy that is too easy and too long. The same type of Minsky risk discussed earlier is now present in the global economy: witness Turkey, for example. Thus it is too early to tell whether or not the all-out monetary policy of the past decade will be judged a success from the vantage point of 2030.

Adam Tooze has written an important book and I view it as must read for a serious lay reader to get a better understanding of the economic and political policies of the past decade.

The full Amazon URL appears at: https://www.amazon.com/review/R3N14CMQU8F3OF/ref=pe_1098610_137716200_cm_rv_eml_rv0_rv

A Talk on the Middle East by Ambassador Dennis Ross

On February 15 Ambassador Dennis Ross and author of "Doomed to Succeed: U.S -Israel Relationship from Truman to Obama" gave a talk sponsored by the Santa Fe Middle East Watch. Needless to say his talk opened with a discussion of the Trump-Netanyahu meeting that took place earlier that day. Ross worked with  all of the administrations from Carter to Obama on middle eastern and European issues. 

Below you find a YouTube link to his talk and I believe you will find it most informative. I am in the process of reading his book and will post a review when I am finished.

https://www.youtube.com/watch?v=3ooG3FUmUy8&t=199s

An Open Letter to Trump and Cruz Voters in the Republican Primaries

Forgive me for saying this, but I think you are being played. Both Trump and Cruz are tapping into our visceral dislike of the very authoritarian nature of the elite liberals who control the White House and who enforce political correctness throughout the media. It is the authoritarian Obama White House that determines which laws to enforce and which laws to ignore. Indeed it is President Obama who bypasses the Congress to change immigration, environmental and gun laws and is so beholden to political correctness that he refuses to call the radical Islamic terrorists for what they are. It is more than enough to make you angry. But remember, anger is not a policy.

So why am I so down on Trump and Cruz? Plenty! They too are authoritarians who if elected would bend our laws to suit their selfish ends. All we would be doing is substituting one set of authoritarians with another. They are on the flip-side of the Obama coin. How can a Putin worshiper like Trump be trusted with the presidency?  Given the constitutional constraints on the presidency, Trump, given his authoritarian nature, would become a very frustrated bully lashing out at innocent civilians wherever he could find them. His way of insulting his opponents is only a mere foretaste of what would come.

How can a Cruz be trusted with the presidency when he has never led a team in his life and for that matter never really played on a team? He has always been out for himself and that is why he has no friends in the Senate. To him that is a badge of honor. However with that attitude all of his ideas would be dead on arrival and he would be forced to become another Obama by subverting the Constitution. He doesn’t understand what Ronald Reagan knew deep in his bones that politics is the art of the possible. Remember a leader needs followers willing to work with him. Indeed both Cruz and Trump fail the most fundamental daycare test in the book. They don’t play well with others.

So I ask you to think back to all of the great presidents of the past. We may have different ideas of which were great, but I would say does Cruz or Trump remind you of any of them. I doubt it. So you are being played. First by the candidates and second by their cheerleaders on talk radio and the internet who are lusting for power and ratings. For our country’s sake find someone else to support. Otherwise you will end up with not King Trump or King Cruz, but rather with Queen Hillary who might luxuriate with a Democratic House and Senate that a Trump or Cruz candidacy might just bring about. Although “stick it to the man” politics may feel good, trust me, it will end badly.