plus 4, FACT CHECK: Unprovable claims stoke health debate - NewOrleans.Com

FACT CHECK: Unprovable claims stoke health debate - NewOrleans.Com
Helping Mexico Help Itself - City Journal
Betty Holtschulte-Holt - Newark Advocate
Dungeons of Debt - American Reporter
The Banking Crisis - American Reporter

FACT CHECK: Unprovable claims stoke health debate - NewOrleans.Com

Posted: 05 Dec 2009 06:34 AM PST

FACT CHECK: Unprovable claims stoke health debate

Written by Associated Press | Saturday, 05 December 2009 02:31 Business News AP

Blanche Lambert Lincoln, Robert Menendez, Frank Lautenberg

WASHINGTON (AP) - When Republican Sen. Tom Coburn warned seniors, "you're going to die sooner" if Democrats pass health care legislation, it stood out as an memorable, unprovable moment in an opening-week debate over President Barack Obama's top domestic initiative.

But not the only one.

Across hours of rhetoric, poll-tested charges and countercharges proliferated. Partial truths vied with inflated claims.

Senatorial speech leaned to the earthy.

"It is 2,074 pages long. It is enough to make you barf," Republican Sen. Orrin Hatch of Utah said of the bill that rested - unsullied - on his desk.

And the discourse approached the level of a schoolyard standoff.

"Her amendment is flawed, mine is terrific," summed up Sen. Barbara Mikulski, D-Md., speaking of her rival-for-the-moment, Sen. Lisa Murkowski, R-Alaska.

The two sides even disagreed whether private Medicare plans are part of the popular federal health care program for older people. Republicans said they are. Democrats said not.

At least until Sen. Max Baucus, D-Mont., stepped in. "This is a semantic question," he said. Meaning, evidently, that they are.

"Someone watching this must think we're on two different planets sometimes," opined Sen. Lamar Alexander, a Tennessee Republican.

On that, no objection was heard, a rarity in a week in which much was said, little settled.

Philosophical consistency yielded to political maneuvering.

Sen. David Vitter, R-La., supported a requirement for insurance companies to cover numerous preventive services without additional out-of-pocket expenses, including mammograms for women age 40 and older. Then, a few minutes later, he voted to strip the government of any authority over the issue and let insurance companies decide what to cover after consulting with medical groups.

The two votes were consistent, he said in a brief interview, adding that he wanted in both cases "to negate any impact" of a recent controversial task force recommendation for routine mammograms beginning at age 50, rather than 40.

One of the Senate's most conservative members, Vitter faces a difficult re-election next year, and polling over the summer suggests lagging support among women. Two years ago, he admitted having committed a serious, unspecified sin after his telephone number appeared in the records of a Washington-area escort service that authorities said was a front for prostitution.

Other moments were more classic political thrust and parry.

The bill "is a government takeover of the health care system," said GOP Sen. John Barrasso of Wyoming, a physician.

"That is a scare tactic," retorted Baucus a few moments later.

Republicans said the legislation, with $460 billion in Medicare savings over a decade, would cut benefits for older people and siphon off huge sums from the program to subsidize expanded health care for millions of younger Americans. Seeking political gain, Republicans proposed erasing the cuts, thereby forcing Democrats to vote in favor of retaining them.

"If anyone had any question about the Democrat plan to use Medicare as a piggy bank to fund their new government programs, those doubts are now gone," said Sen. Mitch McConnell of Kentucky, the Republican leader.

Democrats said no guaranteed benefits would be touched and prescription drug coverage would be improved under the bill.

Besides, said Sen. Tom Harkin, D-Iowa, "As we all know, if it were up to our friends on the other side of the aisle, there would be no Medicare. They fought its very creation." The record shows as much.

But that left much unsaid on each side of the debate.

As the GOP critics presumably knew, but wished to avoid conceding, the bill includes no cuts for doctor care, hospital services or other traditional Medicare benefits.

And as Democrats understood, but preferred not to say, private insurers that provide an alternative to traditional Medicare will almost certainly cut add-on benefits such as gym memberships or vision care.

"There is nothing in the legislation that forces plans to reduce benefits at all, rather than reducing profits," said Sen. Christopher Dodd, D-Conn., in a sort of a backdoor concession.

Democrats spoke at length about women's health. More shadowboxing ensued.

Mikulski proposed a change to the legislation that she said repeatedly would insure better preventive health care for women without additional out-of-pocket charges. Perhaps, but precisely which ones aren't known. That's because it authorized the government to establish a list of preventive services that insurance companies would have to cover in the future.

Republicans came up with an alternative, after an internal struggle. An early draft would have expanded on a list of preventive services and tests for men and women already in the legislation, at an additional cost of $30 billion over 10 years.

Conservatives within the Republican rank and file rebelled in private discussions, and Murkowski's final proposal was far different. It dropped a requirement for coverage of screening tests by insurance companies, instead directing them to consult with professional groups such as the American College of Surgeons.

The list of tests that no longer would be automatically covered ran to 45 items, including colorectal screening for people between 50 and 75; HIV screening for pregnant women as well as others; blood pressure screening for people 18 and over; and a hearing check for newborns.

The point, Murkowski said, "is to ensure that we do not have government entities that are making those decisions we as individuals working with our doctors feel is best."

That was Coburn's point, jarringly.

"When you restrict the ability of the primary caregivers in this country to do what is best for their senior patients, what you are doing is limiting their life expectancy," said the Oklahoma lawmaker. "So, for 20 percent of our seniors, this bill is going to be a disaster, but it's going to save money because you're not going to be around for us to spend any money on you."

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Helping Mexico Help Itself - City Journal

Posted: 05 Dec 2009 06:48 AM PST

Two crises have deepened America's anxieties over immigration since Congress tried to reform the law two years ago: the global recession and an outburst of murder and mayhem in northern Mexico. The recession has aroused antipathy for foreigners who compete for jobs. The violence along the border, which stems from a high-stakes campaign by Mexican president Felipe Calderón to bust apart several large drug cartels, has inflamed fears that our borders aren't secure.

Americans differ on what to do about illegal immigration, but most agree that the root of the problem is Mexico's failure to provide adequately for its own people. Mexicans differ on how to create a more prosperous, democratic nation, but most are eager to improve the status of their countrymen living illegally in the United States. These attitudes suggest the contours of a grand bargain that both peoples might be persuaded to accept: immigration reforms that help Mexicans in the United States, conditioned on economic and political reforms that help more Mexicans get ahead and stay back home.

Mexico's problems have not changed much in 500 years. The country has never managed to organize itself into a liberal democracy founded on the habit of inquiry, an engaged citizenry, and the rule of law. Its people endured centuries of domination as a colony of Spain, decades of war and tyranny after independence, and a decade-long revolution, begun in 1910, that killed 2 million people and replaced one autocracy with another. For the rest of the century, power was concentrated in an immense political corporation—the Institutional Revolutionary Party (PRI)—and in a succession of presidents who ruled like kings. Even the PRI's defeat in 2000 by Vicente Fox and the conservative National Action Party (PAN) has not brought much democracy: its main effect has been to weaken the presidency and to set off a free-for-all among political parties, state governments, and the big unions, bureaucracies, and businesses that control them. Unchecked by executive power, these institutions are authoritarian, averse to change, and corrupt; Mexicans joke that theirs is the first country in history to move from monarchy backward to feudalism.

Political institutions remain antiquated. The Mexican constitution prohibits elected officials from standing for reelection. It is a chicken-and-egg dilemma: the people don't trust their elected officials to represent their interests, so they bar them from serving consecutive terms, thereby making them less likely to represent their interests. Two-fifths of the members of the lower house of Congress aren't elected at all, but appointed by the parties in proportion to their share of the vote.

Citizens' efforts to challenge the system are stymied by laws that prohibit anyone outside a party from running for office and also make it hard to form new national parties. Political discourse is stifled by laws restricting private funding of campaigns and prohibiting all but the parties from buying campaign ads on radio or television. Rules forbidding campaigns from criticizing one another infantilize the political debate. The people are not happy with the system. A survey last year by the Mexican newspaper Reforma found that just 36 percent of Mexicans were satisfied with their new multiparty democracy and that only 25 percent felt that their congressional delegates represented their interests.

Political weakness has produced economic weakness. The privatization in the 1980s and 1990s of hundreds of state-owned enterprises—everything from banks and mines to airlines and the phone company—strengthened public finances; but, in most cases, the sales were poorly designed and created private monopolies that have impeded productivity growth. NAFTA, sold to Mexicans as their ticket into the First World, has disappointed expectations: trade and foreign investment have created jobs, but because of government restrictions, there hasn't been enough of either to solidify a consensus against protectionism. Government revenues depend too much on petroleum: nearly 40 percent of the federal budget comes from the sale of oil to the United States. Annual per-capita growth over the last decade has averaged just 1.9 percent, 40 percent of the population lives below the official poverty line, and 60 percent of the nation's households earn less than 25 percent of the nation's income.

The lack of consensus on how to achieve healthier growth was vivid in the 2006 presidential election, when PAN candidate Calderón defeated a left-wing coalition's candidate, former Mexico City mayor Andrés Manuel López Obrador, by fewer than 250,000 votes out of more than 41 million cast. The results set off months of protests and laid bare a long-standing demographic wound. The more prosperous North, blessed by its proximity to the United States, voted by healthy margins for Calderón, the standard-bearer for free markets. The South—more isolated, more Indian, and with four times the poverty rate of the North—voted for López Obrador, who campaigned for social justice for the poor through more government control of the economy.

Ill-conceived laws and regulations impede economic growth. The World Bank Group estimates that it takes nearly two months to open a business in Mexico, compared with five days in the U.S. and three in Canada. Labor laws make it hard to fire workers, land-tenure laws make it hard to transfer farmland, and inadequate property-rights laws make it hard to secure title and get a mortgage. Many Mexicans resort to bribery to skirt these rules. A study by the Private Sector Center for Economic Studies in Mexico City found that one in three businesses made "extra-official" payments, totaling $11.2 billion, to legislators and other public officials in 2004. Tax evasion is widespread, with total tax collection from all levels of government in 2007 estimated at 19.8 percent of GDP, the lowest among 40 countries studied by Eurostat and the Organisation for Economic Co-operation and Development (OECD). Economists estimate the size of the informal economy—businesses not registered with the government—at 40 percent of GDP.

The country remains organized into large corporatist powers, toxic to free enterprise. Another OECD report this year cites telecommunications, electricity, railroads, and the media as "areas where competition is weak." Nor is there great clamor for change: in a lawless society, it pays to be big. Few Mexicans want the government to sell its giant oil monopoly, PEMEX, even though the state runs it dismally and the people hate the state: the industry was expropriated from foreign companies in 1938, and Mexicans are taught in grade school that though the U.S. stole half their nation's territory, the oil at least remains theirs.

Schools are another enormous problem in Mexico. Student knowledge of reading, math, and science, as gauged by the Programme for International Student Assessment, is the lowest of the 29 OECD nations. Graduation rates are low, too. Mexico's 2,400-plus municipalities receive half the federal budget, but they spend it poorly because most municipal presidents have only a seventh-grade education. Reports are common of teachers extorting parents, abusing children, skipping class, teaching subjects they don't know, drawing salaries for no-show jobs, and shutting down schools for months at a time when they don't get their way. The head of the National Educational Workers Union—the largest trade union in Latin America, with 1.4 million members, and the single most powerful institution in Mexico—agreed last year to permit some competitive hiring based on independent evaluation of teacher competence; her members, accustomed to selling or bequeathing their posts to offspring and friends, protested with strikes.

But the most notorious challenge to Mexico today is the drug cartels and the related surge in crime. According to the U.S. Drug Enforcement Agency, Mexico produces about eight tonnes of heroin and 10,000 tonnes of marijuana per year, mostly for U.S. consumption. It is also the main source of methamphetamine production and the transshipment point for 90 percent of the cocaine that enters the United States. A report by Barry McCaffrey, former director of the White House Office of National Drug Control Policy, estimates that drug cartels earn over $25 billion a year from U.S. sales and repatriate over $10 billion a year in cash to Mexico. Tens of thousands of Mexicans—from shanty dwellers to state governors—benefit directly from the drug trade.

Drug abuse has increased in Mexico as well, seeded by the cartels, which began dumping and bartering surplus product as U.S. markets shrank several years ago. An estimated 5 percent of the Mexican population consumes illegal drugs, the government says, and chronic use has doubled in the last six years, to half a million addicts.

Murders involving the drug cartels more than doubled last year, as the mafias fought one another and the Calderón government; more than 730 troops and police have been killed since January 2008. In 2008, the U.S. Department of Defense caused a stir when it issued a report noting that Mexico's government, in a worst-case scenario, might suffer "a rapid and sudden collapse . . . under sustained assault and pressure by criminal gangs and drug cartels." Cocaine traffickers spend as much as $500 million on bribery in Mexico, more than double the budget of the Mexican attorney general's office. Credible analysts say that the cartels have a significant presence in 20 of the country's 32 states and arrangements of various kinds with at least eight governors. The finance ministry estimates that organized crime costs Mexico 1 percent of GDP growth per year.

Mexico's kidnapping rate, which spiked in the 1990s as drug traffickers diversified or were driven out of business, remains among the highest in the world—more than 500 kidnappings per month, according to a 2008 study by the Citizens' Institute for Crime Studies. Protection rackets have also grown; the government says that it received 50,000 extortion complaints last year. In the border state of Chihuahua, where fighting against and among the cartels has been fierce, even Wal-Mart was approached to pay protection money.

The country's prison population has doubled, to 219,000 in the last eight years, but people still don't feel secure. Four out of five respondents to a national survey last year by the polling firm Ipsos-Bimsa said that they felt very or somewhat unsafe. In a Reforma poll of Mexico City residents this year, 65 percent called security the city's biggest problem; 20 percent said that they had been the victim of a crime within the prior 12 months—most often, personal assault. When I visited earlier this year, one friend I met witnessed an armed robbery; another had his car stolen at gunpoint; and another, an accountant, was held up on his way to meet me (he hadn't brought his bodyguard).

Law enforcement is terrible. A study by researchers at Mexico's National Autonomous University estimates that for every 1,000 crimes committed in Mexico, just 16 get prosecuted. The offenses that are prosecuted are not the most serious ones: 75 percent of state spending on public safety and criminal justice goes to fight minor, nonviolent crimes, the Center of Research for Development reports. A Reforma poll found that 36 percent of Mexicans consider police corruption an urgent national problem, the highest percentage of 65 countries surveyed. Calderón, who has staked his presidency on beating back the cartels and improving public safety, had to deploy the army instead of the state and local police because the military is the only security apparatus in Mexico that works comparatively well.

Millions of Mexicans have fled the country's woes. Between 1970 and 2008, the percentage of the Mexican-born population living in the U.S. grew from 1.5 percent to 11 percent—from about 760,000 to 11.8 million people, roughly 15 percent of the country's potential male workforce. About 7 million are here illegally, making up 61 percent of the total illegal immigrant population, the Department of Homeland Security estimates. Most Mexicans have relatives living in the U.S., and as many as one in four households has at least one member here, surveys by Mexican polling firms show. The migration is self-perpetuating because the most likely to emigrate are those with relatives already here. Though the exodus has slowed a bit since the recession, Mexico's National Population Council projects that it will last another 30 years or longer. The desire for a better life trumps even national pride: polls find that most Mexicans would be willing to join the two countries into one if doing so would raise their standard of living.

The most powerful engine of migration is jobs. The income gap between Mexico and the U.S. is the largest of any two contiguous countries in the world: in 2005, $7,750 per capita in Mexico versus $35,878 per capita in the United States. An American manufacturing job pays four times as much as a Mexican manufacturing job and up to 30 times as much as a Mexican farming job. The gap in per-capita GDP between the two countries has barely narrowed in 20 years.

Americans, of course, can't decide what to do about immigration. Most business, labor, and nonprofit organizations support pro-immigration policies, such as qualified amnesty for illegal aliens, increases in legal immigration, and new or expanded guest-worker programs. President Barack Obama, who supported the comprehensive reform bill that failed in 2007, has said that he intends to promote a similar plan that would increase the number of legal immigrants and allow undocumented immigrants to stay in the country, "pay a fine, learn English, and go to the back of the line for the opportunity to become citizens."

Most voters, however, believe that offering amnesty to illegal immigrants would harm American workers and put a strain on the nation's resources. There is evidence to support their view. A 1997 National Academy of Sciences study found that the typical U.S. household pays between $166 and $226 in extra taxes to cover the cost of schools, health care, and other services used by immigrants. And a 2004 study by Harvard labor economist George Borjas concluded that competition from immigrants depressed wages by 7.4 percent for U.S.-born men without a high school education. If these studies are correct, it's hard to imagine a policy that protects America's low-skilled workers, eases the burden of immigrants on public services, and satisfies the demands of large U.S. employers and Hispanic-rights groups.

The grim fact is that Mexico must help solve America's immigration dilemma by becoming a better country for its people. But the United States has two big cards to play to encourage Mexico to reform: its legal power to resolve the status of 7 million Mexicans living here in limbo, and its more pervasive economic power as Mexico's dominant trading partner and source of foreign investment.

Polls by the magazine Este País show that the Mexican people would be willing to abandon one of their most cherished convictions and open PEMEX to private investors in exchange for measures that benefit their relatives in the U.S. Privatizing the oil company would require amending Mexico's constitution. But energy-sector productivity would improve dramatically even if the Mexican Congress simply passed laws to eliminate restrictions on the import, export, and domestic sale of crude, gasoline, basic petrochemicals, electricity, gas, and oil derivatives. If opening the energy sector to foreign competition proved too controversial, lawmakers could begin with other industries that the OECD identifies as sheltered and inefficient, such as telecommunications and the media. In return, the U.S. could offer Mexican immigrants various benefits—higher quotas for work visas or green cards, for example. Like Mexico, it could avoid the more controversial concessions at first, such as guest-worker programs.

Beyond the virtues of any one deal, establishing the principle of linkage—immigration liberalization in the U.S., conditioned on economic liberalization in Mexico—would change the political conversations in both countries. Mexicans in the U.S. have influence back home, and surveys show that they are more likely than the vested interests there to support policies that lead to growth. Americans likewise might be more willing to accept as truly "comprehensive" an immigration reform that took into account the key variable affecting migrant flows into the U.S.: Mexico's own behavior.

More broadly, the best way to strengthen Mexico and ease the pressure of illegal immigration is to stimulate free trade and investment to promote the continent's competitiveness. The goal should be to create regional mechanisms like NAFTA that are accountable to each country's people but that strengthen Mexico's institutions in a range of areas, including economic regulation, competition, and monetary policy.

America should also continue to help Mexico fight the drug cartels. Calderón has won support from the U.S. Congress, which last year approved $1.4 billion in security aid for Mexico, and from President Obama, who has stepped up efforts to interdict illegal weapons and cash flowing into Mexico from the U.S.

We could increase support, too, for Calderón's effort to build a competent national police force. The U.S. Agency for International Development, which has given grants that are stimulating judicial reforms in Chihuahua and other states, might fund efforts to improve how states and municipalities screen, train, deploy, monitor, and reward their security forces. We might also consider funding border cities or states to work with their neighbors in the U.S. to prevent smuggling, illegal immigration, and crime.

The U.S. and Mexico grow more intertwined every year. Mexico supplies a third of our imported oil and is our second-largest export market. Half of Mexico's imports come from the U.S., and more than 80 percent of its exports—20 percent of its GDP—go to the United States. Four of five tourists in Mexico come from the U.S.; 18,000 Mexican companies have U.S. investment. More than 1 million Americans have established Mexican residency, the largest U.S. expatriate group in the world.

Despite these ties, there is no taking Mexico's stability for granted. The country mistrusts itself. A survey by Reforma found that only one in four Mexicans agreed that most other Mexicans were honest. Every year brings fresh challenges. In 2008, drug violence soared and the global recession slowed growth. This year, the economy contracted 8 percent through June, and the PRI, corrupt as ever, made a strong comeback in July's congressional elections, hurting prospects for reform. Next year is the bicentennial of Mexico's independence and the centennial of the Revolution. U.S. policies should give both countries something to celebrate.

Shepard Barbash is former bureau chief in Mexico City for the Houston Chronicle and author of three books about Mexico, including Changing Dreams.

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Betty Holtschulte-Holt - Newark Advocate

Posted: 05 Dec 2009 05:01 AM PST

CENTERVILLE: Betty Holtschulte-Holt, age 79, formerly of Upper Sandusky, Ohio died, Thursday, December 03, 2009 at 2:30 a.m. at Avalon by Otterbein in Centerville, Ohio.

She was born on November 2, 1930 in Newark, Ohio to George and Margaret (Morningstar) Marple, both of whom are deceased. She married Rev. A. Martin Holtschulte on January 3, 1948 and he died March 2, 1979. She then married Noland E. Holt on July 3, 1984 and he died November 4, 2004.

Betty is survived by a daughter, Cindy (Norman) Elser of Tipp City, Ohio; and two sons, Jeff (Jane) Holtschulte of Richwood, Ohio, and Joe (Michelle) Holtschulte of Hillsboro, Illinois; she is also survived by one stepson, Stacey Holt of Ada, Ohio; and two step daughters, Rhonda Knuckles of Fredricktown, Ohio, and Cristi Wilson of Marion; and their children; grandchildren; and 11 great grandchildren also survive.

Betty retired after 25 years as a receptionist with Commercial Savings Bank in Upper Sandusky. Before that, she worked as a secretary with Yokefellow House, a retreat center near Defiance, Ohio.

She was a member of Harpster United Methodist Church where at one time she sang in choir and was involved in various women's groups. For hobbies she enjoyed reading and traveling.

Funeral services for Betty Holtschulte-Holt will be held at 11:00 a.m. Monday, December 7, 2009 at the Harpster United Methodist Church in Harpster, Ohio.

Burial will follow at Old Mission Cemetery in Upper Sandusky.

Visitations will be held on Sunday, December 6, 2009 from 4:00 p.m. to 7:00 p.m. at the Lucas-Batton Funeral Home in Upper Sandusky. There will also be 1 hour of visitation before the funeral service at the church on Monday.

Memorial contributions may be made to the Harpster U.M.C. and can be sent to Lucas-Batton Funeral Home, 476 S. Sandusky Ave. Upper Sandusky, Ohio, 43351.

Online condolences may be sent to www.lucasbatton.com.

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Dungeons of Debt - American Reporter

Posted: 05 Dec 2009 06:41 AM PST

Momentum
LIPSTICK ON WHICH PIG?
by Joyce Marcel
American Reporter Correspondent
Dummerston, Vt.

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DUMMERSTON, Vt. -- This is for all of you who are truly frightened by Alaskan Governor Sarah Palin: give it a rest.

The corruption scandals, Troopergate, her musings on how to ban library books, the moose slaughter, the drill-baby-drill, the creationist stupidity, the pregnant underage daughter and the acceptance of statutory rape as a marriage-brokering tool, the bridge to nowhere and all the rest of it - including the story on the front page of the New York Times on Sunday about how she hired most of her junior high school yearbook to run her government - well, yes, Sarah Palin reeks.

Meanwhile, the real danger of her candidacy has been ignored. It took Frank Rich, on the Times' op-ed page on Sunday, to point out that McCain, in his desperation to be president, has so compromised himself that he allowed the party to pick a running mate who is younger, stronger, more vital and more forceful. With McCain so weak, Palin and the men who pull her strings will take over the office of the Imperial Vice-Presidency, Dick Cheney's operation, which is already up and running the country. The Republicans are proposing another weak, lame presidential figurehead, with the real power concentrated behind closed doors.

I'm not arguing that Palin wouldn't be a real danger to what's left of our democracy, but the reality of the 24-hour news cycle is that for every lash, there's an immediate and equal backlash. The Palin bounce? It lasted exactly two weeks. The news media, like so many young children stricken with an advanced case of attention deficit disorder, is easily attracted by bright and shiny objects.

This week it moved to another narrative: is the second great depression coming? And if so, when?

Every time a large financial institution founders, the press is on it like a pack of wolves. But they move on once they've stripped the story to the bone. Our crumbling financial infrastructure has been crumbling for quite some time, yet after Bear Stearns fell and Countrywide was bought out, all we heard about was Palin, pigs and lipstick. Now these names have returned to the news, and the names of Fannie Mae, Freddie Mac, AIG, Merrill Lynch, Washington Mutual and Lehman Brothers are being added to the Wall of Shame.

The crumbling of the American economy raises many critical questions. The first, of course, is whether our banks - and our savings - are safe. Eleven federally insured banks and thrifts have failed this year. The Federal Deposit Insurance Corp., which insures bank accounts and CDs up to $100,000, is reporting that its funds have dropped below the minimum target level set by Congress. A Treasury Dept. loan might be needed to shore the fund up if Washington Mutual or another struggling financial institution fails.

The Feds - using taxpayer dollars - helped Bear Stearns in its sale to J.P, Morgan Chase & Co. They just bailed out Fannie Mae and Freddie Mac. Now they're shoring up AIG. America's capital market is going up in smoke. We're still fighting two foreign wars. Where will the money come from to bail out the FDIC, or will the government even care? Is anyone asking these questions?

Still, FDIC officials have said that 98 percent of U.S. banks are still sound and well funded. So don't panic. For now.

Given the financial turmoil, we return once again to the political reality that it's the economy, stupid.

So how fit is McCain to be president? This is a man who has admitted that he doesn't know much about economics. A man whose chief economic advisor (until he was forced to fire him) was former Senator Phil Gramm, Mr. Enron-Loophole, Mr. "Nation of Whiners," Mr. Reduce-Government-Oversight-on-Banking-Insurance-and-Brokerage-Activities or, in other words, the architect of what's happening right now.

On Monday, McCain said, "The fundamentals of the American economy are strong." On Tuesday, forced to backtrack, he said he meant that "American workers, the backbone of the economy, were productive and resilient." Still backtracking, he then called the economic situation "a total crisis" and decried the "greed" in Wall Street and Washington. He sounded like a babbling fool.

McCain's solution? A commission to study what went wrong.

This isn't 9/11. We know what went wrong. The moneychangers wrecked the temple. We don't need a commission. We need a new government.

According to James Kunstler, who writes a well-respected if slightly profane financial blog whose title I cannot repeat here, "The Republicans must be clearly identified as the party that wrecked America... it's hard to imagine the American people giving the clean-up task to the very group that created the mess - no matter how many cute little faces Sarah Palin can make on TV."

Obama's strength in this campaign has always been issues, particularly economic ones. Right now he's vague about solutions, but he's a bright man who listens to bright advisors.

The country is looking ito the abyss. Suddenly the bleats about lipstick on pigs, sexism, elitism and all the other Republican tricks don't seem to mean a thing. The campaign is back on Obama's ground - are you really better off than you are eight years ago? And if not, who do you blame? "The party that wrecked America," that's who. Do you really want four more years?

Economically, legally, morally, politically, scientifically - wherever you look, the Republicans have failed. They've even failed with FEMA again. Supposedly, the damage from Hurricane Ike in Texas is as bad as it was in New Orleans, so FEMA has instituted a 2,000-foot no-fly zone to prohibit the press from taking pictures. Brownie's successors aren't doing a heck of a job, either.

Sarah who?

A collection of Joyce Marcel's columns, "A Thousand Words or Less," is available through joycemarcel.com. And write her at joycemarcel@yahoo.com.

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The Banking Crisis - American Reporter

Posted: 05 Dec 2009 06:41 AM PST

On Native Ground
UNCHARTED TERRITORY FOR THE U.S. ECONOMY
by Randolph T. Holhut
American Reporter Correspondent
Dummerston, Vt.

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DUMMERSTON, Vt. -- Those who thought that last week's government bailout of Fannie Mae and Freddie Mac would stabilize the financial markets got a wakeup call this week.

Lehman Brothers, the fourth-largest U.S. investment bank, succumbed to the subprime mortgage crisis it helped create with the biggest bankruptcy filing in history. The collapse of the 158-year-old firm, which listed more than $613 billion of debt, dwarfs the previous record-setting bankruptcies of WorldCom in 2002 and Drexel Burnham Lambert in 1990.

Merrill Lynch, the world's largest and most widely recognized brokerage, tried to avoid a similar fate with a $50 billion transaction to become part of Bank of America Corp. The deal creates a financial giant rivaling Citigroup, the biggest U.S. bank in terms of assets. But Bank of America is still trying to digest another troubled company - Countrywide Financial, the leading subprime mortgage lender that was about to go belly-up before BofA took it over earlier this year.

And on Wednesday morning, Americans woke up to the news that they were new owners of the world's largest insurance company. The Federal Reserve on Tuesday night employed powers granted during the Great Depression to extend an emergency loan worth up to $85 billion that effectively gives taxpayers an 80 percent stake in the company.

The one thread in these companies' fates is that all were heavily exposed in the new world of finance that helped spawn the subprime crisis.

Once upon a time, a bank accepted deposits and lent the money out to stable long-term clients. The deposits were federally-insured and if the bank found itself in a cash crunch, the Federal Reserve stood by to offer a line of credit. Now, most of the business of finance is carried out by "nondepository" institutions - investment banks such as the late Bear Stearns and Lehman Brothers, which shuffle money through hedge funds, structured investment vehicles and credit default swaps.

These high risk, high leverage activities aren't sustainable when no one knows what anything is worth. That's because many of these investments are backed by assets that no longer have value, such as the hundreds of thousands of foreclosed houses across America.

This is completely uncharted territory for the U.S. economy. It's not just what's become known as the "shadow banking sector" that's in trouble. It's the regular banks and insurers that are looking more and more precarious.

Between $200 billion to rescue mortgage finance firms Fannie Fae and Freddie Mac, the $29 billion loan to broker the forced sale of Bear Stearns to J.P. Morgan Chase last March, the $300 billion for the Federal Housing Administration and the billions of dollars the Fed has pumped into commercial banks, investment banks and AIG to keep them afloat, taxpayers are now potentially on the hook for morethan $900 billion of dubious investments.

If no one else comes knocking at the Fed's door, that $900 billion is daunting enough. Auto makers, airlines and other struggling businesses will be looking for the same treatment as AIG. We are seeing the federal government expand an economic system where profits are privatized and losses are socialized.

It's been six months since the Fed stepped in to broker the sale of Bear Stearns. There still is no plan for an orderly liquidation of assets of the failing financial institutions. There has been no real effort to crack down on the shadow banking sector and to re-regulate financial markets.

What happens next? We could be in a situation where everyone tries to sell off their assets only to find there are few or no buyers. The result is that the value of these assets fall, and you have a situation where everything is for sale but no one has the money to buy.

That's what happened in the Great Depression, and only the massive mobilization of the American economy to fight World War II pulled this country out of the ditch. Those were the days when the United States had lots of oil and was the world's mightiest industrial power. Now we import 80 percent of our oil, have outsourced our industry and are watching mind-boggling amounts of capital vanish.

This is truly a frightening time. Neither Barack Obama nor John McCain seem to understand the enormity of what is facing the country, and neither have been honest about what it will mean for every American. Neither have come up with plausible solutions. And regardless of who wins in November, they will get clobbered by the ugly reality of an economic crisis without precedent.

Many are calling for the creation of a new version of the Resolution Trust Corp., the largely-taxpayer financed company that was created in 1989 to deal with the aftermath of the failure of hundreds of savings and loans. The RTC seized and liquidated the failed institutions and then went out of business.

A new RTC could perform a similar role in the current crisis by buying and selling the now-toxic, mortgage-backed assets that are dragging down banks and Wall Street firms. It would work a lot better than arbitrarily picking out the winners and losers.

Other reforms are needed, starting with restoring the Glass-Steagall Act of 1933. After wild speculation brought on the Great Depression, the Roosevelt Administration pushed for restraints on Wall Street. Glass-Steagall separated government-insured commercial banks and the non-federally backed investment banks. By keeping consumer and speculative capital separate, it made it possible to understand the activities of all financial organizations.

In 1999, Congress repealed Glass-Steagall and replaced it with the Gramm-Leach-Bliley Act. It allowed the stockbrokers, insurance companies and banks to merge for the first time since the 1930s, and ushered in this era of financial irresponsibility.

It's not the Fed's responsibility, or the government's, to back investment bank speculation and bail out the losers. That's why sweeping, decisive regulation is needed before things get worse.

Randolph T. Holhut has been a journalist in New England for nearly 30 years. He edited "The George Seldes Reader" (Barricade Books). He can be reached at randyholhut@yahoo.com.

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