Both the Los Angeles Times and the New York Times Editorial Board look at the potential that our current economic fixes are setting the stage for the next crisis.
Also, continuing reaction to the terrorist attacks in India and Neal Gabler looks at the "McCarthy gene" in the Republican party.
The total price tag for reviving the economy keeps growing and growing. The Los Angeles Times reports that the total bill could reach $8.5 trillion when all is said and done:
Just last week, new initiatives added $600 billion to lower mortgage rates, $200 billion to stimulate consumer loans and nearly $300 billion to steady Citigroup, the giant banking conglomerate. That pushed the total estimated potential long-term cost of the government's varied economic rescue initiatives, including direct loans and loan guarantees, to $8.5 trillion -- a figure that represents half of the entire economic output of the U.S. this year.
$8.5 trillion is still just the estimated cost - "only" about $3.2 billion has been spent thus far. Jim Puzzanghera also points out the crucial difference between the stimulus spending of today and that of the Depression-WWII era:
Much of the Depression-World War II spending was on industrial production -- building new factories and converting existing plants to produce tanks, planes and ships. Huge sums also went into developing new technologies.
Those investments, combined with pent-up consumer demand and savings from the lean war years, quickly led to budget surpluses and sharp economic growth in the late 1940s as the baby boom began.
Analysts warn not to expect that to happen again. This time the government spending is largely ethereal, with the Federal Reserve printing more money to inject liquidity into the financial system and keep banks and other institutions afloat. And savings rates are low.
The LA Times article above warns that some analysts are concerned that we are creating the conditions for the next economic crisis. The New York Times Editorial Board agrees:
Another danger is that in fighting today’s crises, the government is teeing up the next one. To finance the bailouts, the Treasury is borrowing money and the Fed is printing it. That bodes ill for a heavily indebted nation, presaging higher interest rates and higher prices — perhaps sharply higher. That is not an argument for inaction. But frank acknowledgment of the dangers would put a premium on getting the rescues right today. As it is, the reckoning is postponed.
The New York Times also urges more action on what it sees as the root of the problem - mass mortgage defaults. Obviously we will be spending billions and billions of dollars to pull ourselves out of this economic crisis. And the deficit will probably surpass $1 trillion soon enough. So are we just setting the stage for the next crisis?
The Boston Globe has an interview with Sheila Bair, the chairwoman of the Federal Deposit Insurance Corporation, who has been an advocate for direct assistance to homeowners:
You still haven't been able to persuade the Bush administration to fund $25 billion for the FDIC program. Why not?
I don't know. We've made our best case. We are supportive of all these measures. You really need to tackle the problem at the loan level. These are back- end efforts to assist the securitization markets without trying to fix the underlying problem. People are still looking for the perfect solution. It is not there. Our experts helped devise the [FDIC] program. We think it is a good program to get these loans modified. It has been a frustration for me that we haven't been able to come to grips with the underlying problem, which is the mortgages.
Bair has proposed a plan that she thinks would prevent 1.5 million foreclosures, at a cost of $24-25 billion, by providing assistance directly to struggling homeowners. So far, Paulson will not agree to use any of the $700 billion bailout money for that purpose.
One family-owned business gave its employees five-figure Christmas bonuses, along with signed thank you cards in both English and Spanish. (h/t Americablog). In this time of economic hardship, it's nice to see some companies still view their employees as assets and a part of their success.
Neal Gabler has a very interesting op-ed in today's Los Angeles Times, looking at the GOP's McCarthy gene - "something deep in the DNA of the Republican Party that determines how Republicans run for office":
Republicans continue to push the idea that this is a center-right country and that Americans have swooned for GOP anti-government posturing all these years, but the real electoral bait has been anger, recrimination and scapegoating. That's why John McCain kept describing Barack Obama as some sort of alien and why Palin, taking a page right out of the McCarthy playbook, kept pushing Obama's relationship with onetime radical William Ayers.
And that is also why the Republican Party, despite the recent failure of McCarthyism, is likely to keep moving rightward, appeasing its more extreme elements and stoking their grievances for some time to come. There may be assorted intellectuals and ideologues in the party, maybe even a few centrists, but there is no longer an intellectual or even ideological wing. The party belongs to McCarthy and his heirs -- Rush Limbaugh, Sean Hannity, Bill O'Reilly and Palin. It's in the genes.
If you took away William Ayers and "pallin' around with terrorists," what would the McCain campaign have been about in its final weeks? Their sole campaign strategy was making the public afraid of an Obama presidency. There was no positive message for why McCain should be elected, there were only negative claims about "scary" and "radical" Obama. I have to agree with Gabler, that this is too engrained in how Republicans campaign to change anytime soon.
MaryBeth Laguna, the wife of a Blackwater contractor killed in Iraq, writes an op-ed in today's Washington Post entitled My Husband was a Blackwater Hero:
Because when Art died, he wasn't working for the military. He was working for Blackwater.
Art considered his job with the private security firm that protects U.S. diplomats in Iraq a continuation of his service to this country. He told me that he believed in the job and respected the mission. But somehow, this one word -- Blackwater -- gets in the way of a lucid, reasoned discussion.
I have problems with the huge levels of contracting - in all areas - the Bush administration has instituted. But this is another viewpoint that I hadn't thought about until now.
Given the focus on terrorism in light of the Mumbai attacks, Nicholas Kristoff introduces his research on another hideous aspect of terrorism in the region - acid attacks directed against women:
Acid attacks and wife burnings are common in parts of Asia because the victims are the most voiceless in these societies: they are poor and female. The first step is simply for the world to take note, to give voice to these women.
Since 1994, Ms. Bukhari has documented 7,800 cases of women who were deliberately burned, scalded or subjected to acid attacks, just in the Islamabad area. In only 2 percent of those cases was anyone convicted.
For the last two years, Senators Joe Biden and Richard Lugar have co-sponsored an International Violence Against Women Act, which would adopt a range of measures to spotlight such brutality and nudge foreign governments to pay heed to it. Let’s hope that with Mr. Biden’s new influence the bill will pass in the next Congress.
The more I learn about Joe Biden, the more I respect him. I also hope that his new position will allow him to help get this bill through Congress.
The Sunday Mail (UK) reports on the aftermath of the Mumbai terrorist attacks, including the news that the terrorists were spotted two hours prior to the attacks:
Last night it was revealed that the terrorists - from the littleknown Deccan Mujahadin - could have been stopped two hours before the attacks began.
They arrived at the docks aboard a rigid inflatable boat, or rib.
One fisherman who saw them confirmed: "Some armed men were seen landing on the rib. The police were given a warning but it took them a long time to react."
India's Home Minister, Shivraj Patil, has resigned after the attacks in India. Deutsche Welle reports that Patil has been widely critized by the Indian media for not doing more to prevent the terrorist attacks.
So what's on your mind this morning? I hope you all had a happy Thanksgiving...