Radical Avenue

President Obama understands the virtues of centrist policies. On a couple of occasions last week, the president showed that he’s open to all points of view when it comes to protecting national security. His deliberative approach stands in stark contrast to the “my way or the highway” postures of his predecessor. And Mr. Obama has had the perfect foil in Dick Cheney, a man not known for taking advice from anyone.

Despite promises of transparency and accountability in his administration, President Obama will continue to oppose the release of photographs of alleged detainee abuse during the Bush years. The pictures are the subject of a Freedom of Information lawsuit dating back to 2003, and may be released to the public later anyway. Until then, Mr. Obama will follow the advice of his generals, something else he promised to do during the campaign.

Last Saturday, President Obama appointed John Huntsman, the Republican Governor of Utah, as his ambassador to China. Appointing a popular GOP politician to such an important post indicates that Obama takes diplomacy seriously. Huntsman is no Obama crony, and won’t sugarcoat his reports to the president in order to curry political favors.

In the meantime, former Vice President Cheney seems hell bent on defending the efficacy of institutionalized torture. Of course Cheney is the also the guy who had no doubt that Saddam Hussein had weapons of mass destruction in 2002, which was the reason given for the US invasion of Iraq. Dick Cheney’s history of recklessness on issues of national security makes the current administration look prudent by comparison.

Hillary Clinton has found a comfort zone in her new line of work. Having toured the planet as first lady and senator from New York, Ms. Clinton needs no introductions on the world stage. She can get down to business straight away wherever she goes.

In less than 100 days under Secretary Clinton, the State Department has reversed course on several key foreign policy initiatives of the previous administration. Her changes include dropping use of the term “war on terror”, sending top aides to meet with Syrian President Bashar al-Assad, and now, new diplomatic contact with Iran.

Special Ambassador Richard Holbrooke held a “brief but cordial” meeting with Iranian Deputy Foreign Minister Mahdi Akhundzadeh recently at a conference on Afghanistan held in the Hague, Netherlands. Foreign Minister Akhundzadeh expressed his government’s interest in working with the US and its allies to help build a more stable and prosperous Afghanistan. “Iran is fully prepared to participate in the projects aimed at combating drug trafficking and plans in line with developing and reconstructing Afghanistan.”

In other words, the US and Iran may start openly cooperating against common enemies in the region. A sustained alignment of Iran, the US and NATO would give Afghanistan time to develop its own national security structure and isolate the Taliban even further into northern Pakistan.

Afghanistan needs foreign investment secured by the Netherlands conference to help pay for schools, hospitals and infrastructure. Investments like that take years to pay off. It’s hard to envision US troops leaving Afghanistan any time soon.

After two or three false starts, the US Treasury has finally come up with a plan for private investors to purchase toxic assets owned by troubled banks. We’re to believe that this new deal will then free up credit markets and get the economy rolling again.

How long will it take for our government to realize that throwing money at toxic assets won’t make them go away? The administration should announce more solutions that don’t cost taxpayers anything, like stringent enforcement of financial industry regulations.

No More Too Big To Fail
After the Great Depression, Congress enacted anti-trust laws to prevent the formation of monopolies because monopolies stifle fair competition. When monopolistic companies fail it can be catastrophic for the economy. But no one has been enforcing the anti-trust laws over the past thirty years or so, and unfortunately the results are predictable.

AIG has a monopoly on financial services insurance and banks around the world are completely dependent on this insurance, so now American taxpayers must keep AIG propped up indefinitely. Poorly performing companies should be allowed to fail. Capitalism in America requires it.

No More Bundled Mortgages
The risk of mortgage default depends on the creditworthiness of individual homeowners. Analyzing the viability of stock in a corporation involves an entirely different set of calculations. Bundled mortgages aren’t securities and shouldn’t be sold as that type of a commodity.

No More Credit Default Swaps
We keep hearing the line about how credit default swaps are so complicated that they can only be unraveled by the same Wall Street whiz kids that created them. Nonsense, credit default swaps are nothing more than dishonest transactions concocted by unscrupulous people in order to make a lot of money in a short period of time.

No More Bailouts
The US financial industry does not police itself well against fraud. To the contrary, it encourages malfeasance by rewarding risky behavior as long as the cash keeps flowing in. Now our government wants to pass the cost of Wall Street’s failures on to our grandchildren, with interest. No thanks.

AIG is the oversized tabby perched on an empty chair before dinner, just waiting to snatch a morsel from some unsuspecting kid’s plate. Feeding this lumbering butterball any more of anything won’t help. The cat needs to go on a diet. Let’s toss AIG outside and let it fend for itself with all the other animals.

While using phony credit default swaps to generate enormous profits from fees, AIG failed to set aside enough money to cover the “default” portion of the swap. They assumed that Lehman Brothers would never go out of business and that the housing bubble would never burst. But that it is the job of an insurance company, to anticipate and plan for the unexpected. AIG is a lousy insurance company, unworthy of more handouts from the US Treasury.

Repeated bailouts of AIG are really just back door bailouts of the financial organizations that AIG insures, like former treasury secretary Henry Paulson’s old company, Goldman Sachs. Without the AIG cash infusions, those companies would falter as well. No one on Wall Street seems willing to deal with the consequences of their failed strategies, much less admit to having done anything wrong.

Federal Reserve chairman Ben Bernanke continues to claim that AIG is too big to fail. This is the group that received $85 billion from taxpayers last September, $65 billion last November and another $30 billion last week. And the company still can’t tell us how much more they’ll need. AIG has already failed.

AIG’s problems should be dealt with by the judicial branch of our federal government, not the legislative and executive branches. Insolvent companies belong in bankruptcy court.

In the Laurel and Hardy movies of the 1930s, Oliver Hardy often attempted to blame his cohort and fellow nincompoop Stan Laurel for all of their foul ups with this classic line: “Well Stanley, this is another fine mess you’ve gotten us into.” When left to their own devices, Laurel and Hardy were good at making messes, not so good at cleaning them up.

A bunch of mortgage financiers here in the US have apparently learned something from the masters of farce. The adjustable rate mortgages and credit default swaps they’ve been foisting on their unsuspecting customers are straight out of the Laurel and Hardy playbook.

The mortgage industry doesn’t regulate itself well. Lending institutions need help from the public to identify standards which will allow them to operate successfully in good times and avoid massive government bailouts during recessionary periods. Anything goes doesn’t cut it anymore.

Exotic repayment terms won’t transform a person who can’t afford a home into a worthy credit risk. The old fashioned 10% down, excellent credit rating and proof of income requirements for home loan applicants worked much better for the health of our communities.

Fixed rate loans give homeowners terms which they can understand and plan for. Adjustable interest rates might work with credit cards and small unsecured loans, but average homeowners can’t keep up with monthly mortgage payments that increase by a third or more in less than a year.

Now that Congress has finished debating the economic stimulus package, perhaps they can decide on how to regulate the home mortgage industry more effectively going forward. That wouldn’t cost taxpayers a dime.

Who left all the No Haggling signs up on Capital Hill? I guess Senators Snowe, Collins and Specter still deal with the Democrats on economic stimulus legislation because there are no Republicans left in New England who care enough to complain about it.

Zero Sum Games
Two dimensional politics no longer suits our three dimensional world. When Democrats and Republicans can’t settle their differences, neither side has anyone else to negotiate with. Every issue becomes part of an ongoing attempt to portray the other side as dangerously out of touch with the American people.

Lately Democrats and Republicans see themselves more as political opponents in a never ending sporting event, rather than as lawmaking partners. Under these circumstances, compromise is portrayed as capitulation. Most disagreements end up in a stalemate.

Rigged Voting Districts
The two parties currently in power do work closely together to deprive other political organizations of adequate legislative representation. At least once every ten years, voting districts are carefully drawn to maintain the status quo. We end up with an overwhelming number of uncompetitive elections, where incumbents are assured of re-election for as long as they continue to run for office.

All of these rigged elections turn citizens off. People don’t believe that their vote counts. Voter apathy then plays right into the hands of the incumbents, who dominate low turnout elections. John Dingell has represented his Michigan district since the Eisenhower administration.

Politicians who have no concerns about getting re-elected have no incentive to respond to the needs of their constituents, so they refuse to compromise on any legislation. Cronyism rules the day. The whole country loses when lawmakers get too comfortable in their seats.

Just say no. The Federal Treasury already smells like a dumping ground. Four months ago the US government gave an outrageous amount of cash to the reckless leaders of failed institutions. That investment was wasted. Throwing money at wolves won’t save the livestock.

Fools Get Fooled Again
Wall Street didn’t care for Treasury Secretary Timothy Geithner’s proposal to spend $2 trillion in public funds to fix the tanking economy. The Dow Jones industrial average immediately dropped 5 percent. Perhaps Secretary Geithner should have offered up his proposals on a golden platter.

When the legislature spends money on roads, bridges and infrastructure, at least taxpayers can see a tangible return on their investment. Money handed over to insolvent banks just disappears into thin air. Funny how that works…

Keeping the Mint Busy
Apparently, the government still has plenty of good jobs available. Foreclosures need to be processed. The bankruptcy courts are hiring. I understand that the US Mint just received an order to print up another trillion dollars or so. Better get a few extra bodies for the late shift.

The executives over at Merrill Lynch probably threw some outrageous parties to celebrate the $3.4 million in bonuses that they just received from their good friend and mentor, John Thain. Parties are great for caterers and liquor distributors. But that kind of stimulus package doesn’t help the rest of us much.

Cronyism Triumphs Again
By now US taxpayers know what happens when you give a very wealthy man a truckload of cash with no strings attached. He awards most of it to his buddies, and spends the rest on a million dollar office makeover. Imported area rug: $87,000. Golden trash can: $1,400. Squandering other people’s money in style: Priceless.

Such is the life of a Wall Street Kingpin. Gordon Gekko described the prevailing mentality of Thain’s clan succinctly. “Greed is good.”

Of course any CEO worth his salt would note that you have to reward performance in order to keep good people on your team. The only question then, is whether the gang at Merrill Lynch deserves greater recognition for their company’s $15.3 billion in fourth quarter losses or for their contributions to the current Bank of America death spiral.

Bankrupt Banks
Just as it is possible to work as a stockbroker without living on Park Avenue, it is also possible for banks to restructure their debts through federal bankruptcy court. Creditors and shareholders would take the hit for a company’s bad investments, not taxpayers. We have a process for dealing with organizations that can’t pay their bills. Merrill Lynch should be required to follow that process.

This past week’s inauguration ceremonies felt like a coronation. All that’s missing is a crown and scepter. American presidents have managed to consolidate so much authority into the Oval Office that we may as well call Barack Obama King of the United States.

The founders staged a bloody rebellion against their King and never intended to create a monarchy in America. According to the Constitution, the president doesn’t pass laws, doesn’t decide when the country goes to war and doesn’t sit in judgment of anyone.

Romance Novel Presidents
Americans are infatuated with fairy tales. We expect Mr. Obama to use his celebrity cachet and persuasive charm to “change” Washington, so that the world will never look at us the same way ever again. Good luck with that Mr. President.

Congress Takes a Holiday
Partisanship is the Tao of Congress. Every initiative plays out as us vs. them, with one side using the office of the presidency for strategic advantage. And since presidents know that the veto pen magnifies their vote, the chief executive sets the legislative agenda and Congress follows along.

None of this will change under President Obama. He is already touting his economic recovery plan on the White House website. I guess if Congress won’t lead, someone has to.

While US citizens fret over worsening economic conditions, Mexicans worry about survival. Bombings, assassinations and vigilante justice are on the rise in northern Mexico, with no clear end in sight. The illicit drug trade has gotten so lucrative that drug merchants keep government officials on the payroll, and the officials that can’t be bribed are murdered. Now innocent civilians are getting caught in the crossfire.

The explosion of violence in Mexico is just another sordid chapter in America’s long running “War on Drugs”. In the 1980s President Ronald Reagan made clear his intentions to fight domestic drug abuse by attempting to stop the flow of drugs into the US, primarily from Latin America. But drug abuse is still rampant, and the violence from illegal drug sales continues to plague communities all across the continent. By any objective standard, the War on Drugs has been a dismal failure.

In the US, the government believes that it can block recreational drugs from entering the country and that this will miraculously put addicts on the path to sobriety. If public policy were based on clear headed analysis rather than cheap political slogans, our government would recognize that taking one drug away will only lead addicts to some other intoxicant. Substance abuse treatment programs are more deserving of public support than drug interdiction operations.

In America we champion individual rights and responsibilities. We should expect adults to make smart decisions when it comes to recreational drug use. Prohibition didn’t work with alcohol. It’s not working with other drugs either.

Barack Obama ran a smart, disciplined presidential campaign against formidable political opponents. He won the election by a comfortable margin because Americans believe in his values, his ideas and his leadership abilities. And his astonishing rise from humble circumstances to the highest office in the land serves as an inspiration to all generations of Americans. US voters made a course correction last week.

Jobs, Energy and Health Care
Mr. Obama will have many opportunities to improve the lives of working Americans next year. The Democratic Congress will probably seek to accelerate public works projects as a means of creating jobs. They’ll follow that up with an extension of unemployment benefits and a minimum wage increase. Since unemployment is a lagging indicator of economic downturns, the job market could be shaky for awhile despite these expenditures.

Expect more investment in industries that reduce American dependence on foreign oil. Solar and wind energy producers will benefit. Congress may either require American automakers to build more fuel efficient cars through new regulation, or demand it as part of a federal loan package.

Meaningful health care reform won’t come easily, as the insurance and pharmaceutical industries will fight any legislation that hurts their bottom line. At least Congress can now expand children’s health care without worrying about another presidential veto.

Bush Tax Cuts Set to Expire
Back in 2001, all projections indicated that George Bush’s tax cuts would lead to massive new debt by the end of the decade. That’s why the cuts were given expiration dates. Now that the national debt exceeds $10 trillion, Congress should allow those tax laws to expire on schedule.

Corporate America’s favorite new bank, the US Treasury, has some extra loan applications to process. It seems that now American Automakers need a few billion to get them through the holidays. At least taxpayers will have something to drive away with if these companies go belly up.

New Cars
Large pickup trucks are handy for towing boats and hauling supplies. Sport Utility Vehicles will easily transport three to six passengers in comfort. But stand by the side of any freeway near a US city and you’ll see that most cars are hauling nothing and carrying no passengers.

The vast majority of commuters still drive back and forth to work alone. They need fuel efficient vehicles like the ones Toyota, Honda and Volkswagen have been marketing aggressively for decades in North America.

General Motors has already seen the light. The Chevy Volt is a plug in electric vehicle with a gas engine that recharges the battery. It will compete directly with the highly successful Toyota Prius and other high mileage hybrids.

Continued production of fuel efficient vehicles should be a requirement of any government loans to American car companies. It will reduce our dependence on foreign oil, minimize pollution and help prevent global warming. Lighter vehicles mean less of a pounding on our road surfaces as well.

New Markets
GM, Ford and Chrysler also need to start cranking out more cars with steering wheels on the right. There’s no reason to continue ignoring drivers all across Europe and Asia who prefer this configuration. Competing successfully in foreign markets will help American car makers weather downturns in the US economy.

Last year Republican politicians lambasted 2008 Democratic presidential contender John Edwards for spending $400 on a haircut. Some of those who joined in on the insult fest must now wish they had remained silent. If the Democrats had nominated John Edwards for president, he would have spent the fall attempting to explain his marital infidelities.

Now Republican Vice Presidential candidate Sarah Palin and her husband are in the news for dressing extravagantly while trying to portray themselves as everyday Americans. Predictably, Governor Palin’s representatives have castigated the media for focusing on her $150,000 wardrobe when the country faces so many difficulties. But no one is suggesting that John Edwards deserves an apology as well.

Of course politicians spend ridiculous amounts of money on clothes and accessories. They appear in public regularly, give interviews on TV and meet with foreign dignitaries. We expect our public representatives to look like professionals. Dressing well is part of the job. And since there’s no apparent relationship between how much leaders spend on clothes and how well they govern, the cost of Governor Palin’s wardrobe is indeed a bogus issue.

After this election Republicans will probably be looking for ways to broaden their base. They could take a giant step in that direction by dropping their derisive attitude towards Democrats. Having a liberal point of view is not un-American. Attempting to suppress open debate through intimidation is un-American.

In the United States politicians present their plans for the country to the voters, and the voters decide which plan wins the contract. George W. Bush’s policies have dominated the political agenda over the past eight years. Republicans need a new plan for 2010.

Families used to spend years saving up enough money to purchase a home in the United States. Only buyers with a 10% down payment and an excellent credit rating qualified. But in the last decade or so, aggressive financial institutions masquerading as banks began peddling home loans like ice cream cones. And former lobbyists now serving as public regulators encouraged the risky lending practices.

0% Down, Low Introductory Rates
Apparently modern day lenders figured that with property values on the rise, they could always recoup their losses from foreclosures by reselling homes at a profit. Besides, by bundling packages of overvalued loans together and selling them to investors, these lenders were able to shift the risk to others. Borrowers played an increasingly minor role in this high stakes game.

It seems that bankers and regulators are only now coming to realize what prudent lenders have known for centuries. The borrower’s creditworthiness is a critical component of determining whether a loan will ever be repaid. Receiving a $5000 line of credit and a piece of plastic is much different than taking ownership of improved real property and a 30 year loan.

It’s Not My Default
In the days of easy credit home loans, borrowers moved in without putting any of their own capital at risk. Once the low monthly payments on their adjustable rate mortgages expired, these nominal homeowners simply allowed the bank to foreclose before moving on to the next house. New homes have turned into costly rentals. Home ownership should be a privilege, not a right.

The Titans of Wall Street? More like the Titanics of Wall Street. It takes a few nautical miles to redirect an enormous passenger vessel traveling at full speed through treacherous seas. That’s unfortunate when an iceberg suddenly appears directly off your forward bow.

Historians speculate that the Titanic would have sustained less damage by ramming that iceberg head on rather than attempting to turn away from it, which resulted in a long fatal gash down one side of the big ship’s hull. Right now the US government is attempting to steer clear of a looming catastrophe which is still mostly hidden from view. We should allow the free market to run its course.

Bloated, hulking institutions don’t respond well to the needs of individuals. Investors will now think twice about handing their money over to distant corporations that reward leadership failures with multi-million dollar retirement packages.

Community Banks Invest Locally
Depositors used to change banks. Now banks exchange depositors. It’s exasperating. You open a checking account at American Savings & Loan. Then First Federal purchases American Savings & Loan. Then WAMU, formerly known as Washington Mutual, comes along and swallows up what’s left of both banks.

Now apparently JP Morgan Chase owns WAMU. So your money goes from a little hometown Savings & Loan, through Seattle, and on to a massive banking conglomerate in New York City. And which one of these players needs a bailout?

Expect more local TV advertisements that sound something like this: “When you open a savings account at State Bank of Springdale, it stays right here in the community.”