Humpty Dumpty: or, Second Thoughts

I was moderately in the favor of the bailout. If I had been a member of congress yesterday, I would have voted for the bailout. I think the problem is real, and quite serious, and it seemed to me unlikely that a better plan could have been wrought in Congress, given the nature of the administration, and the nature of the Republican opposition. My sense is that most of the Democrats who voted against the bill basically agree with me, but just balance the risks and benefits of the bailout somewhat differently, deciding that it was a bad enough bill that there was no real harm in waiting a bit and see if something better could be devised. I think that is a plausible position, but I think in the end is a case of the best being the enemy of the good.

But on the other hand, leaving the question of whether we stand on the precipice of a cataclysmic depression aside, there is something heartening about the spectacle of this back benchers' revolt, the rank and file of both parties thumbing their nose at their respective leadership, the president (note to Republicans: too bad you had to wait till there was 100 days to go to demonstrate your independence from the thieves and liars who comprised the Bush administration on a vote that mattered), and at Wall Street, the Chamber of Commerce, and the punditocracy. Paulson’s maladroitness in the past few weeks is only now being fully examined, especially whether the big mistake was letting Lehman Brothers go down, and some troubling and interesting questions about whether the AIG rescue was really just a way of pulling Goldman Sachs’s chestnuts from the fire. And his bailout plan was to present something that was at best marginally acceptable to both parties, and then attempt a “cram-down” as I believe the term is, by making “my way or the highway” type threats and getting all of Wall Street’s ancestral voices to prophesy doom.

What the vote showed is there a great reluctance among legislators, and the American people as a whole, to simply patch up the status quo, and give money to Wall Street so they can go on being Wall Street. Underlying the vote was a confused, but clear cry for fundamental change. The Republicans haven’t figured this out yet; but when they realize that more of the free market simply won’t be able to solve a problem created by the excesses of the free market, it will leave only the ideologues in the free market camp. And Democrats need to realize that this is a call for fundamental sweeping transformation. Populism has been, at least from the time of Richard Hofstadter (if not since the time of William McKinley) been excoriated for anti-Wall Street rants devoid of substance, but this is a caricature, as historians have demonstrated again and again, most recently in Charles Postel’s excellent study The Populist Vision. The core populist demand was for the democratization of the American economy, a goal as elusive in the early 21st century as it was in the late 19th century, and just as pertinent. The goal is not to run against Wall Street, but to try to run Wall Street, and to try to run Wall Street differently. It is a cause that Barack Obama ignores at his own peril.

It is a sad fact of economic and political life that sometimes eggs fall. And rather than paying a king’s ransom to call out all the horses and men to try put it back together again, energies would perhaps be better spent on figuring out why it fell it fell in the first place, and, to beat the analogy to death, try either putting the egg is a less exposed position, or try putting something less fragile than an egg on the top of the wall.

Time for Obama to Lead

If Barack Obama wants to be president of the United States, he has to start acting like a president. And that means offering a specific route out of our economic turmoil.

People are confused, frightened and looking for answers. McCain doesn't have them. Obama does, or at least he has the beginning of answers.

I'm not much on economic policy, which I am happy to leave to Peter. But I do know a political moment when I see one.

If Obama starts acting like a candidate who can lead us out of this mess, he will go to the White House. I don't like to think of the consequences if he doesn't.

Requiem for a Tabloid Newsman

Steve Dunleavy's gradual retirement from the Post was noted kindly in today's Times. Pardon me, but I think Dunleavy and his boss, Rupert Murdoch, drove New York's newspaper scene over a cliff.

As Tim Arango's piece notes, Dunleavy's politics could sometimes "lead him astray." I think it was much worse than that.

Murdoch and Dunleavy rose at the Post in 1977, a pivotal year in the history of New York when the city's old New Deal liberalism was on its last legs. Murdoch and Dunleavy helped finish it off, replacing it with a nasty conservatism. The old politics of New Deal New York, best exemplified by the pre-Murdoch Post, supported an inclusive democracy that aimed to provide a decent standard of living for everyone.

Since 1977, the Post's populism has mostly been about exploiting anger and resentment, with little to say about the rising economic inequality in the city that undermines the homes of working people.

With its emphasis on right-wing populism, Arango's story might leave you thinking that there were no conservative columnists before Dunleavy. But what about Westbrook Pegler, William F. Buckley, and Dick Young? There have been plenty of conservatives in the New York City press since World War II, but only since the Seventies have they become the voices of conventional wisdom.

Dunleavy, the piece argues, "tweaked the political landscape of the city, proving that populism in New York City could come from the right and not just from the cadre of well-known left-leaning columnists of the time, men like Pete Hamill, Jimmy Breslin, Murray Kempton and Jack Newfield."

But Dunleavy's career wasn't entirely about bringing balance to a city of liberal journalism--as if balance in and of itself is always a good thing.

Dunleavy's ascent was about lowering standards. Compared to his peers of 1977, he lacks Hamill's knowledge of the city, Newfield's talent for muckraking, Kempton's humane intelligence, and Breslin's ability to write.

I hate to kick a guy when he's down, but since Dunleavy and the Post have been doing for it a long time, I will. Together, Steve Dunleavy and Rupert Murdoch debased New York City and its journalism.

House to Wall Street: Drop Dead

The best headline that is making the rounds: “House to Wall Street: Drop Dead.” Our dysfunctional political system has done in our dysfunctional economic system, which only seems appropriate. What happens next? If Pelosi and Boehner can’t twist the appropriate number of arms hard enough in the next few days, I suspect the congress will let Paulson let things go ad hoc-ing along until after the elections. Of course, it is the Republican’s fault, and Boehner evidently let members vote their “conscience” (or their likely election consequences) with predictable results. But every political and economic player in this debacle have their own responsibility for its failure. Prophylaxis is always a tough sell, Bush is the greatest wolf-crier in American history, and our faux populists are comfortable offering faux solutions to very real problems. If 25% of the workforce is selling apples next Monday, critics right and left will say that reports of the economy’s death were exaggerated. It wasn’t a good bill, in many ways. Almost nothing for homeowners, enough loopholes in the executive compensation restrictions to drive a $10 mil salary through, and perhaps most importantly, very weak provisions for government take over of failed institutions. Perhaps, as many lefty bloggers have written, now is the time for the Dems to write a good bill, and force Bush to sign it, though I doubt they will do so.

Perhaps the problems was thinking of this as a “bailout” a sop to the status quo, rather than what was really needed, a first step in the transformation of our financial system. In any event, pious and pusillanimous appeals to bipartisanship evidently aren’t going to work; and appeals to self-interest, however disguised in the usual palaver, will appear as they are; small and self-interested. If there is any good to come from this, perhaps the country needs a continuation of this crisis for a few more weeks, with a few more dramatic bank failures, to really concentrate its attention, and create a real Rooseveltian moment. Now is the time for the Democrats to educate the people on what the problem is, and what sort of pain and burden will have to be borne, and how to fix it. For a country that has been wandering about in the deserts of free markets for forty years, the entrance into the next promised land has to be carefully planned. Barack Obama you have to explain to the American people what they need to do, as if you were already president. And Barack Obama, now is the time for you to come to the aid of your party, and now is the time for you to come to the aid of your country.

More on Glass-Stegall

There has a been a lot of talk recently about the Banking Act of 1933, commonly known as the Glass-Steagall Act, especially those provisions of the act that concerned the separation of commercial from investment banking, which is what most people have in mind when they use the term Glass-Stegall. I fear the significance of the act has been widely misunderstood in the press, and let me try to correct some of confusions, if I can be allowed a post which is more professorial than most of my efforts.

When the 1933 act went into effect, it was not making a new distinction, but trying to restore an old one. When modern American investment banking got underway in the late 19th century, it was almost entirely handled by private banks, that is, banks that were organized as partnerships, and not as corporations. (All commercial banks, by definition, are organized as corporations.) The reasons for this are complex, but it has to do with the excellent ties of private bankers to European capital like J.P. Morgan (to Britain) and and Kuhn, Loeb (to Germany) and the fact that membership on the NYSE was limited to partnerships. Starting in the early 20th century, there began to be some underwriting by commercial banks, and this became increasingly pronounced in the 1920s, when many of the bigger banks established security affiliates that underwrote corporate and government securities, but through 1933 the lion’s share of the underwriting remained the domain of private bankers. Glass –Steagall forced commercial banks out of underwriting, and private banks had a choice between continuing to have deposits or underwriting, and a few prominent private banks, notably J.P. Morgan, reorganized as commercial banks. But the whole point was to isolate what was thought to be the riskiest and most speculative part of the banking business, underwriting, from commercial banking.

Okay. The Glass Steagall wall worked for a while, and then became progressively eroded starting in the 1970s, and long before it vanished it was widely seen as the part of the problem. I have found myself re-reading in recent days a book by one of my old professors at NYU, Vincent Carosso’s Investment Banking in America, which appeared in 1970. Now of all the professors I had at NYU, he was probably the most conservative. (I ran into him at the opera on evening, after a performance of Kurt Weill’s masterpiece, “The Rise and Fall of the City of Mahagonny” with an great agit-propy libretto by Berthold Brech, and staged appropriately by the Met, with the chorus coming down the aisles waving protest banners. I loved it. I asked Vince what he thought and he said, shaking his head, without a hint of irony, “cultural bolshevism!”) Anyway re-reading his account of Glass-Steagall, I was surprised that how strongly he supported it, and argued that the securities affiliates of commercial banks had indeed engaged in risky behavior and imprudent speculations, and that though some of the critics of investment banking were half-baked and half-cocked, that’s what happens in a democracy, and the final act preserved the essential features of both investment and commercial banking. Twenty years later attacking his book had become a cottage industry among conservative free marketers, who argued that the Glass-Stegall distinction had become a dangerous anachronism, and that Carosso had gotten it wrong.

Rather than delve further into this controversy, what is perhaps most interesting is that by the 1990s it had indeeed became anachronistic, but not for the reason Glass-Steagall's conservative critics assumed; underwriting was no longer the bread and butter of investment banks, and they were happy to cede large portions of their underwriting business to commercial banks. Investment banks had become, more than anything else, institutions that traded heavily for their own account in anything that seemed like a plausible investment. The basic distinction between investment banks and commercial banks remained as it always had been—investment banks were less strictly regulated and far more speculative in their business ventures than commercial banks. And it is this, that in the end, has brought down so many banks on Wall Street in recent weeks.

We will not be able to revise the distinction between commercial and investment banks , and in some ways that isn’t the point. The whole point of Glass-Steagall was to control speculation and rampant speculative activities in the banking industry. And in a new environment, what some are calling the “new new deal” this is what we face again, to create a framework that allows for some market operations, curbs speculation, and keeps the lender of last resort from lending as promiscuously as it has done in recent weeks. The debate on how to really fix the financial system, beyond providing the largess of the American people to Wall Street has barely begun. And in this debate, the proper understanding of our economic history is essential.

Ex-Mayor Endorses Obama

As befits a blog run by two historians, Greater New York likes to take the long view in its posts. Nevertheless, this blogger is embarrassed to admit that he missed an endorsement of Barack Obama by a former mayor of New York City that deserves some attention.

The endorsement of Obama by Ed Koch, reported by New York One, says something about Obama's ability to win over Democrats and independents. It also suggests how Sarah Palin could turn voters away from John McCain. In his statement on behalf of Obama, Koch said:

I have concluded that the country is safer in the hands of Barack Obama, leader of the Democratic Party and protector of the philosophy of that party. Protecting and defending the U.S. means more than defending us from foreign attacks. It includes defending the public with respect to their civil rights, civil liberties and other needs, e.g., national health insurance, the right of abortion, the continuation of Social Security, gay rights, other rights of privacy, fair progressive taxation and a host of other needs and rights.

If the vice president were ever called on to lead the country, there is no question in my mind that the experience and demonstrated judgment of Joe Biden is superior to that of Sarah Palin. Sarah Palin is a plucky, exciting candidate, but when her record is examined, she fails miserably with respect to her views on the domestic issues that are so important to the people of the U.S., and to me. Frankly, it would scare me if she were to succeed John McCain in the presidency.

Koch, of course, has been wildly erratic in his endorsements. In 2004 he backed Bush, largely because he thought he would be better for the security of Israel.

Such logic helped turn my beloved Aunt Tessie, a New Deal Democrat, into a Republican. But a Koch endorsement of Obama could help the Democratic candidate with Jewish voters like my aunt. And in a tight race in Florida, every vote will count. Are you listening, Aunt Tessie?

Short-Term Draw of Long-Term Victory?

The general verdict in the New York dailies is that last night's presidential debate was something of a draw, with Obama performing best on the economy and McCain winning an advantage on foreign policy. But the long-term impact of last night's contest depends largely on the evolution of our national economic crisis. If the economy is the main issue on Election Day, then Obama's superior performance on economic matters will give him an important advantage.

Obama's best moment on foreign policy came when he pointed out how utterly mistaken McCain was on the decision to go to war in Iraq. It is that large judgment, and not the tactical decision on the surge, that is the best measure of McCain's fitness to gauge the necessity for war. At the same time, I thought Obama's tough talk on Pakistan made him sound a little trigger happy in that part of the world. But in the end, there didn't seem to be that much difference between them on Pakistan: McCain implied that he'd stage military operations there as well but wouldn't talk about them much.

McCain tried to present himself as the candidate with a firmer grounding in American history, reaching all the way back to World War II, Eisenhower and Ronald Reagan to prop up his candidacy. Obama invoked his dad's enthusiasm for coming to the US to argue that our country was once a beacon to the world.

Yet despite such discussions of history, I don't recall anyone mentioning that Ole Miss, the setting of the debate, saw vicious rioting against James Meredith's effort to integrate the school in 1962. Two died in the riots. One of them was a jukebox repairman, a visitor to the campus out of curiosity, killed by a stray bullet. The other was Paul Guihard, a reporter for Agence France Presse. His body was found in a remote part of the campus with a bullet hole in the back of his head. In all likelihood, he was executed by people who didn't want journalists reporting on resistance to integration.

Equally forgotten in the debate was Senator McCain's involvement with the Keating Five scandal, which fed into the economic disaster of the savings and loan industry in the late 1980s and early 1990s. McCain was investigated but never charged with anything, but the aura of the episode still lingers for anyone who cares to look.

I don't expect future debates to discuss the events that took place at Ole Miss in 1962, but it will be interesting to see if Obama ever brings up McCain and the Keating Five.

Creative Destruction

In the days after 9/11, my mother wisely tried to put the disaster in perspective. In the past, she observed, people died in terrible epidemics and the survivors got on with life. So we have done in New York City since 9/11. Our resilience, the historian Max Page suggests in a fine new book, is grounded in the fact that people have been imagining New York's destruction for more than two centuries.

In The City's End: Two Centuries of Fantasies, Fears and Premonitions of New York's Destruction (Yale, 2008), Page surveys every manner of imaginary apocalypse in Gotham, from fires to floods to nuclear war. He looks at every form of imagery, from films to drawings to novels. Through it all, with many pages of arresting illustrations, he finds conclusions that are surprisingly heartening.

As you might expect, he finds that depictions of disaster in New York reflect both the transformations of New York and long-standing American preoccupations: mixed feelings about cities, mistrust of immigrants, and the apocalyptic dimension of American religious thought. Still, he discerns two recurring themes.

One is the dark, minor key of alarm and warning, lessons and political arguments, fear and premonition of real disaster. The other is the key of celebration and entertainment, homage and love for the city. These two registers mark the two ends of American ideological composition: a persistent embrace of progress and modernism, utopia and ascent, but also a suspicion of failure, and the harsh truth of the jeremiad. That culture has been built on imagining our greatest city's end.

Page is wise enough to realize that the fears made real on 9/11 could make New York a more frightened and withdrawn place. They could also, he argues, make people more creative and public-spirited. We live delicately balanced between the two, but I'd bet on the latter. So does Page. "New York," he concludes, "will remain the way up for us all, the home of our ideals, and the place to which the world looks for ideas, for success, for art, and for a new start."

The Last Hundred Days

The eight years of the Bush administration have been, if nothing else, full of events of significance and import. Who would have thought that the last hundred days might qualify as the most important period in his presidency? What is the opposite of a lame duck? A healthy duck? A super duck? Bush is going out the only way he knows how to, putting congress between a rock and a hard place, and squeezing out yet more authority for the presidency and the unified executive, with the Democrats once again faced with the challenge of being seen as either partisan spoilsports or dupes. Finally after many election cycles of talking about it, we finally have an October (okay, a late September) Surprise, and both presidential candidates are, well, surprised. Who would ever have thought that a fundamental crisis in capitalism could so help the capitalists? But that is perhaps the basic problem with this $700 billion bailout; when capitalism fails, and you cannot conceive of any alternative, the only thing you can do is help the capitalists.

And Bush ends his administration being compared to the president he is probably least like, FDR. So what New Deal analogy do you want to make? Shall I liken the toxic collateralized mortgage securities bailout to, the NRA? The RFC? The HOLC? The TVA? There really doesn’t seem to anything quite like the current bailout in Roosevelt’s armamentarium of social programs. Perhaps the AAA is the closest analogy, where the government intervened with a complex series of price supports to keep farmers down on the farm; but of course now instead of supporting dirt poor farmers, we are providing financial support to filthy rich bankers. The principle is the same, I suppose. And like the NRA, the worst of the New Deal programs, its basic purpose seems to be to “stabilize” the existing structure of American industry, with all of its inequalities and inequities. This seems fundamentally misconceived; the goal of the government should be to keep lending and credit available to all who need it; it should not be keep in place the bankers and the current banking system. The basic problem seems to be that, to coin a phrase, in for a penny, in for a pound. You can’t half takeover the banking system. Banking companies should be compelled to participate in the bailout, whether they want to or not, and there should be general limits on compensation. Nationalize the banking system. Look the whole point of capitalism is that you have to pay for your failures. Socialism is nature's way of saying that capitalism has failed and visa versa.)

Or alternatively, follow the advice of some conservatives who say the crisis talk is overblown, and let the market take its own course, with a much smaller intervention for some financial institutions that really need the help. I do think that the market can largely sort this out, and the $700 billion (and a renationalized Freddy and Fannie) should be used, like the TVA, in creating a government funding alternative to the banking system that is superior to the private system. And lets spend much more on creating limited equity cooperatives and superior public housing so families would not feel compelled to spend above their heads to purchase a home.

I am increasingly skeptical of whether this plan is needed, and whether the situation is really as dire as it is being painted by Paulson. Democrats need to stand their ground, and take their time. At an absolute minimum, the stance has to be, as Krugman says “no equity stake, no deal.” The ultimate lesson of the New Deal is, I think, that massive government intervention in the economy without a concomitant massive restructuring of the economy is doomed to failure. We need to take over the banks, in whole or in part. (Oh, and by the way, if John McCain doesn’t vote for the final package, neither should any Democrat.) What is at stake is not merely the future of the economy, but our future as a democracy.

Five Banks and a Ballpark

Let me take break from the long series of posts on the financial crisis—they will return—and take note of the other big event in New York City over the weekend; the last game ever to be played in Yankee Stadium (of course, before the start playing in the new Yankee Stadium next year.) Let me tell you a story. I was at a wedding in Atlanta a few weeks ago, and I was chatting with the grandfather of the bride, a sprightly 95, and still volunteering a few days a week at the hospital in which he has worked for about sixty years. I knew he was Yankee fan, because, in what was probably my only other conversation with him about 20 years ago, we were in a car, going somewhere (for Passover, I think.) We were on the Major Deegan, drove past the stadium, and we got talking. He grew up in the Bronx and he told me about scrounging up fifty cents, getting a seat in the bleachers, and wait and watch the Babe and Lou Gehrig blast out home runs.

Anyway, we got talking in Atlanta about the imminent destruction of Yankee Stadium, and he told me that he first saw the Yankees in 1922, at the Polo Grounds, that is, the year before Yankee Stadium opened, and that he has been a Yankee fan ever since, from the era of Ruth and Gehrig, through the DiMaggio and Mantle years, the downturn in the 1960s, and the times of Reggie, Donnie, and Derek, which have come to an end this year, with the Yankees out of Octovber baseball for the first time in fifteen years. Anyway, he told me, God willing, he will be around next April, still watching the Yankees. How many people out there, have lived through and remembered the entire 86-year life of Yankee Stadium? And I asked him if he remembered to talking to old time baseball fans in those years, and he said, sure, I remember people talking about the way baseball used to be played in the 1880s and 1890s. Cool.

What is the moral? The recklessness on Wall Street in recent years has often been praised as a bout of creative destruction; the strong surviving, the weak failing and falling, to have their carcasses picked over by the vultures and jackals. And I suppose part of this is inevitable. Certainly if you go back 86 years ago, very few of the current names of Wall Street were around then; Chase National and J.P Morgan, now J.PMorganChase is about as close as you get, and I suppose First National City Bank into Citicorp; other than that, very few names remain from the early 1920s. But if we learned anything over the past two weeks, creative destruction needs to be separated from overclever destruction, when the masters of the universe get overmastered. And the death of Yankee Stadium,the grandest of grand ball parks, which had it roots in the surging property values in the early 21st century, is certainly an example of a destruction that is too clever by half.

No Way

The Democrats in Congress have to stop the big bailout plan as it currently being discussed. Let me repeat some of the points I have been making in posts this week. The key principles have to be:

1) No assumption of debt without assumption of control. Lets start with the unambiguous nationalizing (rather than this half fish and half fowl conservatorship) of Fannie Mae and Freddy Mac, combining them, and restoring them to their original purpose, helping to provide mortgages to the middle class. The rest of the banking system can come later, but at least, rather than just coming in as a good fairy to remove bad debt from imprudent banks, force banks to cancel dividends, and issue new stock with federal assistance, that the treasury will control. Or warrants that would have the same effect. This is no longer pie in the sky lefty talk; I heard Bill Kristol saying something similar about forcing banks to issue warrants this morning on Fox. There are very real questions whether this is the cheapest way to proceed; certainly it is hard to see where the up-side is in all of this for taxpayers. We cannot simply spend $700 billion to help bankers resume being bankers. And as Paul Krugman pointed out, the only way this will stimulate the economy is if the Treasury grossly overpays banks for their illiquid assets. The way to avoid “moral hazard” is to take over control of the banks. Or to use the Lenin quote that has been making the rounds this week, the government needs to take over the “commanding heights” of the economy.
2) But to counteract the credit crunch that will come whether or not this bailout is in place, there needs to be aggressive Keynesian type stimulus packages. Oh, and get the troops out of Iraq now. If we couldn’t afford the war before, we certainly can’t afford it now.
3) There needs to be strict limits on executive compensation on any regulated institution, draconian capital requirements imposed, and strict limits on a whole range of speculative activities, done in conjunction with securities regulators worldwide. And any plan needs to be administered by a new non-partisan agency.
4) Barack Obama, this is your moment of truth, your hundred days, your secession crisis, your Guns of August. It would have been more convenient if this occurred once you were elected president, but that’s the way it is. If Obama and the Democrats in Congress simply buy the talk of “bipartisanship” and adopt this monstrously expensive plan (which I predict will not work) the first term of an Obama administration is essentially over. Health care, serious reinvestment in our domestic economy and infrastructure are on the line now. Don’t do anything overly “bipartisan” today you will regret tomorrow and for the rest of your life. The future course of this country over the next four years will likely be decided next week. Don’t wimp out. And you know, Barack, and other Democrats in Congress, the magnitude of this problem even makes the question of who does or does not not get elected president in November pale into relative insignificance.

Forever Wild!

Over the summer in the Adirondacks, as I paddled north on the Raquette River from Long Lake under blue skies, there was only one source of concern: the private property signs on the west bank of the river. The east bank was state land, but every time I glanced at the forests to the west I wondered if the owner would someday sell out and turn it all into condos. Yesterday, good news arrived.

The owner, John S. McCormick of Vermont, has sold the property to the Nature Conservancy, which will protect the land and eventually add it to the Adirondack Forest Preserve. In the long run, that means 14,600 more acres of park land. It also means that the stretch of the Raquette between Long Lake and Tupper Lake, will remain as pristine as it is today.

Yet the newly purchased tract, as the Times points out, is more than a great stretch of forest and water.

The land bought on Thursday includes Follensby Pond, the site of a famous 1858 gathering known as the Philosophers’ Camp, where Emerson and other Boston-area intellectuals spent a month fishing, hunting, painting and writing. Among those joining Emerson were the painter William James Stillman, the poet James Russell Lowell and the scientist Louis Agassiz.

The Times quotes Bill McKibben, a great journalist who writes on nature and the environment, describing the Philosophers' Camp as

...an early moment in the development of the idea that there was something sublime about nature,” said Bill McKibben, a scholar in residence at Middlebury College in Vermont. “Nature was starting to play a less utilitarian function and a more aesthetic and intellectual one.

Mr. McKibben, who recently edited a large anthology of environmental essays, “American Earth: Environmental Writing Since Thoreau,” said the early work of people like Thoreau was one of the reasons why the State of New York began protecting the Adirondacks 100 years ago

.

Thank you, Mr. McCormick, for this wise sale. And thanks to the Nature Conservancy, for buying the land. I can't wait to return to the Raquette River, knowing that both banks will be wild for generations yet to come.

Last Resorts

Back on October 19, 1987 I was working in the New York Stock Exchange when the market crashed. Oh, I was just working in the archives, toiling away on some bit of exchange arcana, nothing really important, but I remember the excitement that started running through our corridors, as horror stories started passing by word of mouth. After the trading day was over, after 5 PM, I managed to get on to the trading floor, and watch the mounds of paper and everyone still running around in panic mode. (Usually by 5 PM the trading floor was primarily reserved for the janitors.) Well, I have been far from 11 Wall this week, but my heart belongs to Broad Street, and I want to be there so badly that I can taste it.

But of course I am not, and I can only sit back, awestruck, watching another Wall Street panic unfold, as usual, with terrifying rapidity, thudding from precipice to precipice as it plummets off one of those Wille E Coyote-type cliffs. It is not, this time, the market that has crashed, but it is the institutional framework that has governed our financial markets since the mid-1930s that has fallen apart. Investment banking, as we have known it, since the early 19th century, has suddenly and shockingly come to an end. There soon will be no more investment banking firms, just financial conglomerates. This seems to me to be good. Underwriting, the traditional function of investment banks, has become an ever smaller part of their business, as they engaged in risky speculations of all kinds, supported by a flimsy capital base. I say good riddance, they will not be missed, and anything useful they did can and will be undertaken by commercial banks, who have once again, for the first time, since the 1970s, emerged as the dominant force on Wall Street. The watchwords need to be deleveraging and reintermediation.

And existing financial institutions need to be blanketed with enough tight financial restrictions and enhanced capital requirements to make your head turn. Any institution that may at some point come crawling to the government for money needs to submit itself to the new order. All derivative markets need to closely regulated. And rather than just taking over all the bad debts of existing financial institutions, which is apparently what Secretary of the Treasury Paulson is proposing, why not just nationalize or quasi-nationalize all depository institutions? And set a strict limit, let total maximum compensation for any officer be no higher than $1 million per, for any federally regulated institution. And lets get everyone under the same regulatory framework. The end of state regulation of insurance companies surely should be at hand. There was nothing more pathetic this week than Gov. David Paterson allowing AIG to borrow $20 from its New York State regulated subsidiary, which was clearly against the interests of any New York State policy holder. What would have happened to that money, pray tell, if AIG had been allowed to declare bankruptcy?

For the first time since the great depression, there is, or at least should be a sense that unregulated capitalism doesn’t work, and that in the end, capitalism will always prove the worst enemy of capitalists. The free market in the end it cannot take care of itself. This might have been more convenient a few weeks from now, after an Obama victory, rather than having to try to deal with this during the rigors of the election stretch, but there you have it. When Obama takes office next January he should declare the equivalent of FDR’s bank holiday, and use this crisis, not to lurch from one ad hoc crisis plan to another, but to put in place a comprehensive system of financial reform during his first hundred days. The illusion that the free market can somehow alleviate government the responsibility of regulating the economy has been, I hope, forever punctured. Once again, we are all Keynesians, and some of us, perhaps, are not even afraid to again call themselves socialists.

Endgame for a Gilded Age

The financial crisis that grips the United States has the potential to transform American political economy. Whether that transformation helps the many or the few, historian Steve Fraser argues, depends on how you interpret our rolling disaster.

Our national economy, he points out, has become dangerously dependendent on the industries of finance, insurance and real estate. The federal goverment has a role to play in getting us out of this mess, but the shape of that role is an entirely political matter. In a recent post on Tom Dispatch, Fraser makes a point well worth remembering:

Washington's mission may, at this late date, be an even greater one than Roosevelt's New Deal faced. The government must figure out how to deploy its power to shift the flow of investment capital out of the mine-fields of speculative paper transactions and back into productive channels that will help meet the material needs of American society. Real value must be created in place of chimeras. In the meantime, we all have ringside seats -- in fact, far too close to the action for comfort -- as another gilded age is ending. What comes after is, in part, up to us.

To read more, check out Fraser's article "The End of a Gilded Age."

Merrill Lynch

Another day, another famous Wall Street firm to eulogize. Merrill Lynch is no more, or at least no longer is an independent company, having decided to be incorporated into Bank of America before it went the route of Lehman Brothers. Merrill Lynch was probably the best-known of Wall Street’s giant investment banks, by dint of its extensive advertising campaigns over the years. Unlike the other big investment banks, Merrill Lynch got its start as a brokerage, essentially a seller of stocks on a retail basis, rather than as an underwriter. This was second-class citizenship on Wall Street, where underwriters, who arranged stock and bond financing for large corporate clients, always had the prestige, and tended to look down on brokerage firms as dull and plebian. But for Merrill, having a network of thousands of retail brokers had its compensations, and in time Merrill Lynch was able to play with the big boys, in large part through its remarkable selling job in the 1940s and 1950s, convincing skittish would-be investors in the millions, with the great depression firmly implanted in their memories, that putting their money in the stock market was a safe, long term investment.


If the market hasn’t crashed the way it did in 1929 or in 1987, though it had a terrible day today, I don’t think that even during the great depression there has ever been such a massacre of top Wall Street firms in such a short time; leaving aside the conservatorship for Fannie Mae and Freddy Mac, Bear Stearns, Lehman Brothers and Merrill Lynch have left the building at 11 Wall within six months. And I read that the vultures are beginning to circle around the two remaining investment giants, Goldman Sachs and Morgan Stanley, scrutinizing their balance sheets, and waiting for their ripe fruit to fall from their debt-laden trees (a badly mixed metaphor, that.)

Anyway, the question is why is this happening , and I don’t presume to have the answers, though I can point to the usual suspects; real estate securities investments gone bad; unregulated financial markets of utter opacity; and the night riding of Wall Street’s four horsemen of the apocalypse; fear, frenzy, illiquidity, and short selling. It seems that the age of the giant investment bank, which only emerged in the early 1970s when they became publicly traded companies, might be over. I have seen more than one pundit suggest that, like Merrill, Goldman and Morgan might need to seek protection in the form of a giant commercial bank that has FDIC protection and easier access to Fed credit. The rise of the mega-investment banks coincided with the era of under-regulated markets, and perhaps this is the final irony of the abrogation of Glass-Steagal in the 1990s, a return to the situation, that existed between the early 1930s and 1970s, when the giant commercial banks, like Chase and City, and not investment banks, dominated the financial scene. But of course the situation is vastly changed, and the underlying situation remains bleak.

Let me just say this, if this crisis can’t get Obama and Biden to get the conversation in the presidential campaign off pigs, lipstick, and how likable the Republican vice presidential candidate is, the Democrats are beyond help or hope. And with Merrill Lynch gone, let me make it official. I am very bearish on America.

Thoughts about Football

My dire post the other day on Lehman Brothers was perhaps too placid, some very thoughtful comments on the blog notwithstanding; with Merrill Lynch about to be the latest victim to be placed on the pyre of the American financial system, we are looking at what is undoubtedly the greatest calamity in American finance since 1929, and the Bush administration, in its closing months, seems to have created a mess that combines the worst of the invasion of Iraq and the response to Katrina. But because today is Sunday, let’s talk about football.

I’ve been thinking and reading a lot about football recently, ever since a few weeks ago when I was in Atlanta for a wedding, and I had the distinct misfortune to stay in the same hotel with about 1,000 crazed and incredibly obnoxious Clemson football fans, who spent the night before the game running down the corridors, drunk out of their efffing minds at about 2:30 in the morning, screaming and generally making nuisances of themselves, and then leaving the hotel around noon to start eating and drinking for a game that started at 8 PM.
I was annoyed, sure, but I was fascinated as well. What it is that gives football this unholy fascination to so many? Baseball has fans; football has--I don’t know what to call them—cultists, initiates, acolytes of the mysteries of Isis and Osiris. Like most lefty intellectuals, I have always loved baseball, and sort of tolerated football, as something to fill the time between the final out of the world series and the day in early February day when pitchers and catchers report. But it struck me in Atlanta that this bias is wrongheaded , and whatever Jacques Barzun said many decades about having to understand baseball to understand the soul of America is just out of date; football intercepted America’s soul a while ago, ran it back for a touchdown, and is still prancing around in the end zone.

Reading some of the leading authors on football such as Michael Oriand it is clear that since the turn of the 20th century, the biggest difference between baseball and football is that baseball is a game, while football is a spectacle, where the event itself is an important as the game. And this is closely tied to football’s origins as a college game, born at a time when fraternities and other rituals of inclusion and exclusion were increasing defining college life. On the other hand, baseball started as a middle class leisure activity, really standing alone from other civic institutions, and basketball started as a game for the YMCAs and settlement houses, and migrated to colleges only when settlement houses started to fade. March Madness is a mere similacrum compared to the 100,000 screaming fans who can turn out for a football game.
Football has always been primarily a collegiate sport, later migrating to the high schools, and then to the pros, but it was only in the 1960s that the NFL surpassed college football in terms of fan interest. Watching Clemson fans, it was clear that what distinguished them from baseball fans was a sense of personal ownership and belonging that baseball rarely achieves; they were Clemson alums, and in a very real and personal sense, Clemson was their team, which they supported not only by their allegiance, but by their contributions as well. The reason why pro football took so long to catch on was because it was impossible, for a long time, to create the sense of spectacle that the college game enjoyed; but with the aid of props like the Super Bowl this was eventually achieved.
Baseball really only exists on one level, the major leagues. The minor leagues are great fun, and I love going to see the Rochester Red Wings, but it is hard to feel that passionate about a team that, after all, only exists as a collection of spare parts for the Minnesota Twins, with the knowledge that if anyone gets really hot, they won’t be around Rochester very long. Football exists on three separate levels, high schools, colleges, and the NFL, each with its own devoted fans. And if baseball, that is the only baseball that matters, is entirely a feature of the largest cities, football is much more decentralized, with almost every city, and certainly every state, having its own teams and fierce rivalries. The fruitless efforts to create a national championship in collegiate football is proof of its essentially decentralized nature.
And football reflects America in all of its contradictions, elitism and snobbishness against the presumption of equality. It is now in football, not baseball, that the racially complexities of American society are best glimpsed in a sporting context.(American blacks don’t play baseball, and American whites aren’t good enough to play basketball on the highest level—all exceptions to those two generalizations duly noted) it is on the football field where whites, blacks, Latinos, and others play side by side. (Buzz Bissinger's Friday Night Lights, about Texas high school football, is a classic along those lines.)
And perhaps the deepest contradiction in football, certainly in the college game, is between the amateur ideal and the reality of its quasi-professionalism, a conflict that has been going for over a century. (I was fascinated to learn that it really wasn’t until after WWII that the notion of the “athletic scholarship” was fully accepted by major colleges. Before that they paid players under the table and felt guilty about it, reflecting the basic contradiction in American life between its soaring ideals and its sordid underbelly.) It is, in the end, it is the sense of the “imagined community” that gives football its cultural potency. And it seems like this fall, as America's premier financial institutions, one by one, are tackled for big losses and forced from the game, we will need all the imagined communities we can join.

Lehman Brothers

Hearing that Lehman Brothers is likely lying at its economic death’s door is somewhat melancholy news. Like individuals, business enterprises have a natural life span; no firm lasts forever. Lehman Brothers has been around for a hundred and fifty years; one of the last and most prominent of the German-Jewish investment banking firms that have played a major role on Wall Street since the era of the Civil War. In the mid-1970s, Lehman Brothers absorbed what was the most famous and prestigious of all the German Jewish firms, Kuhn, Loeb, which, at the turn of the 20th century, led by the redoubtable Jacob Schiff, was the one firm that could go toe to toe with J.P. Morgan. For a while the firm was known as Kuhn Loeb Lehman Brothers, but this ended in the mid-1980s, when the firm became part of the American Express octopus (put together by the greatest Jewish Wall Street tycoon of our time, Sandy Weil), but when this marriage failed, it was spun off into its independence about a decade later. Now, suffering from the aftershocks of the mortgage crisis, it seems destined to be purchased by another firm, and probably join the very long list of Wall Street firms, from Jay Cooke to E.F. Hutton, that are now known only in histories.

I suppose I am a Wall Street sentimentalist. I still rue the day when the grand old Wall Street partnerships were turned into corporations, and then were allowed to be traded on the exchange. And of course now the exchange itself is a private company, traded like any other. As Marx said somewhere (or something like it), capitalism is the ultimate acid, a corrosive fluid burning through everything that dares to constrain it, until it turns on itself. It’s been a bad year for Jewish firms on Wall Street. Bear, Stearns, another Jewish firm, but a 20th century parvenu, largely the creation of “Ace” Greenberg, rather than one of the “Our Crowd” originals is no more, and AIG, whose fortunes were directed by another Greenberg (“Hank”) for many decades, also seems to be on the road to ruin. However Goldman, Sachs, an old firm, but definitely second tier until the 1950s is still around, and former Goldman Sachs chief, Henry Paulson, recently bailed out Fannie Mae and Freddy Mac. All things pass.

Also passing is the long commitment by the German Jewish firms and the families that created them, to dedicating themselves to public service and the commonweal, from Paul Warburg and Otto Kahn of Kuhn Loeb, Robert Rubin of Citicorp, Henry and Robert Morgenthau, and perhaps the greatest political scion of the German-Jewish ascendancy, governor and senator Herbert Lehman, who even more than his friends, Franklin Roosevelt and Averill Harriman, was a moneyed plutocrat dedicating to his life to the betterment of the common man and woman. They just don’t make capitalists the way the used to.

But what is perhaps even a greater reason for melancholy at the imminent demise of Lehman Brothers is a sense that New York City’s near century-long reign as the financial center of the world is coming to an end. Since the 17th century there has always been a single financial center in the world, generally the leading economic city in the country with the deepest pockets, Antwerp for a while, Amsterdam for much of the 17th and 18th centuries; London for the long 19th century, and since 1914, New York City. It is clear, reading stories about Lehman Brothers, that it is foreign countries, from the Persian Gulf or Asia that are the suitors and likely inheritors of Lehman Brothers, and the likely inheritors of the title of the country of last resort, with the deepest pockets and largest portfolios. This trend has been ongoing since at least the 1980s, but with foolish (to use a very mild rebuke) and incredibly costly overseas military adventures, and the Bush administration’s decision (or rather inaction) to let the financial markets immolate themselves at the site of the latest bubble, it is clear that the United States and New York City’s reign is probably coming to an end. Because there are doubts about the financial freedom and transparency in Hong Kong and the Gulf, London seems likely to reinherit the crown from New York City, which will in any event be shared for a while between NYC , London, and Hong Kong. But the long period in which New York City dominated the world financial markets is just about over. What impact this will have on New York City’s economy, so driven in recent decades by the financial services industry, is too soon to tell. But New York City is probably in the process losing a lot more than just Lehman Brothers.

A Cruel Scheme, A Terrible Bind

Morton Sobell's announcement that he was a spy for the Soviet Union, along with his implication of Julius Rosenberg in his schemes, says a little about communist espionage. It says a lot about a cruel prosecution strategy.

Sobell's revelation, reported in a Times piece by Sam Roberts, supports the claim that Julius was guilty of some kind of espionage--even if what he passed along was not the atomic secret that prosecutors charged. Julius deserved to go to prison for that, but he did not deserve to die.

What is deeply disturbing, though, is what Sobell's words, and other information, suggest about the case of Ethel Rosenberg. In all likelihood, she was little more than a bystander in the plot.

Roberts reports,

Government prosecutors later acknowledged that they had hoped that a conviction and the possibility of a death sentence against Ethel Rosenberg would persuade her husband to confess and implicate others, including some agents known to investigators through secretly intercepted Soviet cables.

That strategy failed, said William P. Rogers, who was the deputy attorney general at the time. “She called our bluff,” he said in “The Brother.”

Ethel Rosenberg was certainly tough and uncooperative. But she was also caught in a terrible bind.

Once she became a defendant, my wife pointed out to me, she could act as a wife or a mother.

As a wife, she could remain silent and refuse to say anything that might falsely implicate her husband--even if that meant that she and her husband might die in the electric chair, as they did. Once that happened, her children became orphans.

If she betrayed her husband, and spoke falsely against him, she might have saved her own life as a mother. But what if she did finger her husband to save her own life and raise her sons? How could they live with her after doing that? How could she live with herself?

Doubtless equally vile schemes were hatched to break prisoners in the bowels of Lubyanka Prison, but that doesn't change one fact.

The prosecutors who pressured Julius and Ethel Rosenberg were more than dishonest. They were sadists.

Till Niagara Falls

One of the many fascinating (and frightening) things about the Sarah Palin furor is how she encapsulates much about the basic American contradictions about nature. To the extent Alaska is seen as the last American frontier—which like all Americans frontiers requires a heavy governmental subvention to support a lifestyle of rugged individualism—it has become the repository of all of our contradictions about the great outdoors. We love nature; and we want to subdue and ravish nature, and we want nature to remain unravished, despite our previous efforts. As the Catholics might say, we want nature to be our virgin mother, undefiled and untouched but fecund, birthing our dreams, and of course, remaining full of grace despite what we do to it.

These reflections on Palin were prompted by two books, Bill McKibben’s excellent anthology of American nature writing since Thoreau (Rob likes to be in nature; I feel more comfortable just reading about it) and Ginger Strand’s Inventing Niagara: Beauty , Power and Lies (Simon and Schuster, 2008.) It is the best book ever written on Niagara Falls; funny, clever, and sharply argued. It is based on the academic commonplace that “nature” doesn’t exist, it is an artificial human construction, and that Niagara Falls is at the same time nature at its most powerful and nature at its most artificial and manipulated. (She has some funny pages on the “turning on” of the falls in April for the tourists after much of its flow had been diverted to power generation in the winter months, and how the current view of the falls, manipulated to the hilt, has more in common with Disneyland than anything else.)

Niagara Falls is the tale of two cities; Niagara Falls Ontario, the tourist trap from hell, with every hokey and glitzy diversion imaginable, and Niagara Falls, New York, undoubtedly the most depressed of all the depressed rust belt cities in New York State, a ruin of failed industrial dreams. (And although Robert Moses and his fight with the Tuscarora is definitely one of the least defensible of his long career of many indefensible actions, she falls too easily into the Robert Moses as boogeyman-demiurge school; by her own showing, Niagara Falls, New York would have turned into the dump it is today, or something very similar, without his interventions or ministrations.)

But Strand’s book captures the Niagara Falls of the mind; I particularly liked her account of the Niagara Falls Museum in Ontario, a collection of heterogeneous bric-a-brac and paraphernalia, like no other, and her speculation that the vogue for tight-rope walkers across the falls c. 1860 was connected, at least at some subterranean level, with the flight of escaped slaves to freedom in Canada. Her affection for run down and dowdy Niagara Falls, New York is touching.

In any event, Strand’s Niagara (and the same can be said for Palin’s Alaska, filled with freshly conceived babies and freshly killed moose flesh) is closely connected to the to the varieties and vagaries of human desire. Niagara, Strand points out, is but one line-stroke away from Viagara.

What Do We Learn from 9/11?

Last night, I promised myself that I wouldn't write anything on 9/11, the day when I came close to dying and so many other people lost their lives. But I'm moved to write this morning because I see a huge hole in our public discussions of the event: how to properly make sure that something like this doesn't happen again.

Of course, the anniversary itself is given over to commemorating losses and sharing griefs. This is right and proper.

But on the days between anniversaries, the desire to commemorate overwhelms the desire to learn. We remember the heroism of the firefighters, for example, but don't learn enough about the problems with radios and deployment that led to their deaths. Unless we face these questions squarely, though, we run the risk of seeing other firefighters die unnecessarily on other days.

Moving out from the day itself, there is still work to be done to make the United States a harder target against terrorist attacks. This will require hard thinking to reconcile liberty and security. Yet the work that must be done sinks into a swamp of bombast, inertia and violence against the constitution.

The Bush Administration's exploitation of 9/11 for ruinous policies in Iraq, the deteriorating situation in Afghanistan: fixing all of these requires thinking that is smart and tough. Our president has settled for being mean and simplistic. The next president must do better.

Yet there is a big hole in this campaign season: serious debate between Obama and McCain about the place of the United States in the world. Until that debate comes, and with it constructive policies to attain peace, justice and security, we will fall short of what we might learn from 9/11.

Listening to Paul Robeson

I’ve been listening to a lot of Paul Robeson lately, mainly because of the recent release of a seven CD-set, “The Complete EMI Sessions 1928-1939.” (It includes the first recordings ever made at EMI’s Abbey Road studios, in November 1931, some forty years before the Beatles barefooted it on a zebra crossing.) And I have also been listening to a single disc “On My Journey: Paul Robeson’s Independent Recordings” released on Smithsonian Recordings in 2007, comprising most of the recordings Robeson made on his own, independent Othello Records, after he was blacklisted from the major labels and not even allowed to purchase time in their recording studios. They are among his last recordings, from the mid 1950s.

Paul Robeson of course had one of the great voices of the 20th century, a dark bass-baritone, as flexible as it was sonorous, capable of deeply affecting singing in almost any repertoire. But the repertoire he sang on his EMU recordings was somewhat odd. In all of 180 or recordings there is nary a version of Joe Hill, the Four Insurgent Generals, or much else that would indicate his left wing sympathies. (Though some of the songs he recorded for the 1936 film “Song of Freedom” and “The Black Emperor” are properly stirring.) Indeed, if one didn’t know better, one might think that Robeson was devoid of any political consciousness at all, given the large number of songs he recorded that were plantation songs, many with the obligatory reference to “darkies” ranging from the minstrel songs of Stephen Foster, through several generations of plantation songs, up to their last incarnation in 1920s era songs such as “When its Sleepy Time Down South” and even the egregious “That’s Why Darkies Were Born,” along with some of Hoagy Carmichael’s more infelicitous ditties, such as “Lazy Bones” and “Snow Ball.” (There is even a “nigger” in his 1930 version of “Old Man River.”) I am sure this was due more to EMI’s conservative recording policies than Robeson’s own inclinations, but it still somewhat disconcerting. On the other hand, it probably kept him from embarrassing himself in the other direction, as he did in the early 1940s, when he recorded the bulk of his politically oriented music, including his classic recording of the Soviet national anthem, with Robeson singing “Stalin, our leader, who trusts in the people,” above an accompanying chorus.

There are several dozen recordings of spirituals, but the bulk of his EMI recordings are light popular music, ranging from efforts at jazz such as “Solitude” and “Mood Indigo” (acceptable at best, he’s no Ivey Anderson) and scads of light classical songs, at which he is never less than very good and often superb. If there is one disappointment from his extensive EMI catalogue, it is the lack of any selections from the heart of the classical repertoire, no Lieder (he would have been a masterful singer of Schubert and Brahms) and no opera, save several selections from “Porgy and Bess” (ditto his unrecorded Verdi, Wagner, and Mozart.) As far as I know the only true opera recording he made was of the last monologue from Boris Godunov. It is magnificent. Of course, he would have been able to have an operatic career on stage in the 1930s, and that is an understandable excuse, but it didn’t prevent similarly disadvantaged African American classical singers, notably Marian Anderson and Roland Hayes, from singing opera unforgettably.

Well, there’s nothing to do done about that now. What Robeson sang wonderfully, and probably better than anyone else before or since was the Negro spiritual. It is a hybrid genre, born of the uplift of the talented tenth in the decades after Reconstruction, a wedding of the sorrow songs of slavery with the cadences and timbre of the classical art song. It is America’s greatest contribution to the classical song literature in the late 19th and early 20th century, and Robeson made it all his own, from his deep empathy with the people who first sang these songs, knowing their suffering, and knowing their need for release in their singing.

A Coney Island Farewell

Coney Island is so old that I sometimes forget that it is a great pleasure ground for the young. Sunday, on what may have been the last day of Astroland, one of the revellers was my daughter Allison, 12. Like most kids she's thoroughly at home in the online world. But she's also equally comfortable in the hurly burly of a seaside amusmement park.

This wasn't Allison's first trip to Coney, and she noticed that Sunday's atmosphere was different from usual. "It was very, very crowded," she said. "People were happy and joyful, but also sad." Some adults looked sorrowful and nostalgic. Kids,on the other hand, seemed intent on enjoying themselves.

"I liked how it brought everyone together," Allison said. "It felt like everyone was having a good time. For every single kid, it was a big treat to be in Coney Island."

Alllson rode the Cyclone, the pirate ship ride, the log flume and more.

Tuesday's Daily News suggests that Astroland may have a future.

Allison hopes that, whatever the future brings, Coney Island will remain welcoming to all sorts of New Yorkers. Hotels would be okay, she said, but not luxury hotels.

"The whole reason it was built was to be for everyone," she said. "Now it'll just be for people in glass houses."

Heart and Head

So far, the McCain campaign rests on three props: his experiences in the Vietnam war, vows to throw the bums out of Washington (even though the Republicans have run the place since 2000), and Sarah Palin's howling attacks on the Democrats as a bunch of condescending elitists. There are few solutions to real problems in all of this, but there is symbolic politics with a vengeance.

The promises to clean up Washington are nothing more than old Republican rants against "big government," cynically deployed by a nominee who is as much a Washington insider as anyone on Capitol Hill.

McCain's Vietnam narrative is a testament to his courage. It also makes Democrats nervous because it reminds them of the oft-repeated canard that they lost the Vietnam War for the United States. Moreover, it bucks up McCain's military credentials while shielding him against questions about the flaws in his thinking on Iraq and the war against terrorism.

And Palin's attacks on liberals and the press are Nixon-era charges dressed up for the 21st century.

When it comes to the enormous problems that face our country, Obama has vastly better solutions than McCain. But the Democrats can't confine themselves to policy points alone, as important as they are.

To beat McCain and Palin, Obama and Biden also have to find the right sensations and symbols. The winning formula for Obama in this race is the right combination of heart and head.

Another take on Palin

Okay, I'll grant Palin gave a good speech, rousing the Republican rabble, and showed that she could read effectively from a teleprompter, and seemed comfortable on the big stage. A star is born, etc. But I think the Democrats should take a deep breath, and try not to overestimate her debut. (A sorry liberal history of underestimating conservatives has led to a tendency to overcompensate in the other direction, and assume that Americans en masse are stupid enough to fall for any conservative song and dance that comes along. Let’s remember that the last two Republican presidential victories, if you want to call them that, were very, very close. )

I think that Palin’s speech showed her limitations as much as her strengths. It was an appeal simply and purely to the Republican base. McCain’s initial strength as a candidate was his potential appeal to moderates and swing voters. This has been sacrificed in recent months, crowned by the pick of Palin. She came across as an incarnation of Ann Coulter or Laura Ingraham, oosing snideness and condescension—I think her appeal to moderate voters will be quite limited. (BTW, Palin’s performance should put Democrats at ease that Joe Biden will somehow come on too strong in the vice presidential debate and shatter the little china doll from Alaska. She is a gun-slinger, and the debate should be a partisan snark-fest.)
And in many ways Palin’s speech plays into the Democrats strengths. Obama’s whole campaign has been organized around his post-partisan appeal. This has not been one of the aspects of Obama’s campaign that has resonated with me, but its wisdom is now apparent. Obama has the far easier path to the hearts and minds of disaffected swing voters, who will see in Palin the old brand of Republican partisanship. And if Palin has “energized her base” she has done Obama the same favor. There are many people, and millions of Hillary supporters, heretofore lukewarm about Obama, who will now see keeping Palin out of the white house as important as getting Obama in. Palin gives the Dems something that they have lacked, a visceral symbol of hate. And given the utter incoherence of the Republican appeal—how can you throw the rascals out when you are the rascals?—it’s hard to see how Palin’s screed will appeal to moderates genuinely upset by this country’s course this past eight years. What can I say? Anybody who believed that Obama’s path to the presidency would be a trouble free coronation was fooling themselves. The battle is joined. Go Obama.

Palin

Judging from her speech before the Republican convention, Sarah Palin is likely to prove an asset to the McCain campaign. She brings to it a strong television style, complete comfort with herself, grit, and an ability to make Republican policies sound like the best possible medicine for ordinary folks.

Her nasty jibes about Obama will free up McCain to look like a statesman. At the same time, she has a "regular folks" demeanor that will doubtless be put to use lampooning Democrats as effete elitists. She'll clearly make a play for disaffected Clinton voters.

Her qualifications to be vice president are still scant, but as a political performer she brings strengths to the campaign.

Republican Flip Floppery

Last night's Republican convention had so many twists and turns between past and present that my head was spinning. Speakers invoked the old McCain to applaud the new McCain. They vowed to thrown the bums out of Washington (even though Republicans have dominated it since 2000). And they reached back to Vietnam to validate their candidate. All of this is very confusing, but it gives a good glimpse of how they will run for the presidency in 2008.

The maverick McCain dared to disagree with President Bush and the socially conservative elements of his own party. To win the nomination, however, McCain backtracked on his maverick tendencies. That endears him to conservatives, but alienates swing voters and independents.

At the same time, speaker after speaker at the convention praises him as a maverick--thereby putting some distance between McCain and the highly unpopular President Bush. If this works, the GOP can have its cake and eat it: a more conservative McCain who appeals to party diehards, with a "maverick" image that wins over independents, swing voters and disaffected Democrats.

Convention speakers also praised McCain as a fighter against Washington interests. (Never mind that McCain is a Washington insider himself and the member of a party that has dominated Washington since 2000.) In this way, he might co opt Obama's call for change.

Finally, speakers applauded McCain's courage as a prisoner of war and encouraged voters to remember Vietnam. McCain was indeed brave, but I fear that there is a hidden message here.

To many Americans, Vietnam was the war that the USA could have won and didn't. For those who follow this line of reasoning, Iraq is the new Vietnam. For these folks the effort to begin a "responsible end" to the war in Iraq, as Obama argues, is to snatch defeat from the jaws of victory. I think this is a very flawed reading of Vietnam, but it has an appeal to Vietnam hawks and their ideological descendants.

All of these claims suggest that the Republicans will try to capitalize on the good name McCain enjoyed in 2000, selectively deny their own record under the Bush administration, and present themselves as the party that can win the war in Iraq. There is much that is evasive, illogical and downright dishonest in this strategy. Depending on how the Democrats respond, it might be an effective strategy. You could call it flip flopping your way to the White House.