Larry Summers on Face the Nation

Thomas Friedman:

We Need the Bailout

The "We" is us. Thomas Friedman, NYT columnist, says the bailout is necessary to save ourselves -- not Wall Street. I've posted some of the story below.

Obama, in Wisconsin this morning (video here), made a strong case for the bailout. He also said that once it's in place it can be changed if it's not working. He argued that the bailout will not prevent him in investing in healthcare, energy, education and tax cuts for the middle class. He said those things will not go by the wayside-- they are needed investments to grow the economy (as opposed to spending).

He said he will go through the government budget and cut waste. He'll axe no-bid contracts, no more Halliburton deals. Obama gave one of his best speeches this morning.

NYT: I’m in both — because I know an unprecedented moment when I see one. I’ve been frightened for my country only a few times in my life: In 1962, when, even as a boy of 9, I followed the tension of the Cuban missile crisis; in 1963, with the assassination of J.F.K.; on Sept. 11, 2001; and on Monday, when the House Republicans brought down the bipartisan rescue package.

But this moment is the scariest of all for me because the previous three were all driven by real or potential attacks on the U.S. system by outsiders. This time, we are doing it to ourselves. This time, it’s our own failure to regulate our own financial system and to legislate the proper remedy that is doing us in.

.....
This is dangerous. We have House members, many of whom I suspect can’t balance their own checkbooks, rejecting a complex rescue package because some voters, whom I fear also don’t understand, swamped them with phone calls. I appreciate the popular anger against Wall Street, but you can’t deal with this crisis this way.

This is a credit crisis. It’s all about confidence. What you can’t see is how bank A will no longer lend to good company B or mortgage company C. Because no one is sure the other guy’s assets and collateral are worth anything, which is why the government needs to come in and put a floor under them. Otherwise, the system will be choked of credit, like a body being choked of oxygen and turning blue.

Well, you say, “I don’t own any stocks — let those greedy monsters on Wall Street suffer.” You may not own any stocks, but your pension fund owned some Lehman Brothers commercial paper and your regional bank held subprime mortgage bonds, which is why you were able refinance your house two years ago. And your local airport was insured by A.I.G., and your local municipality sold municipal bonds on Wall Street to finance your street’s new sewer system, and your local car company depended on the credit markets to finance your auto loan — and now that the credit market has dried up, Wachovia bank went bust and your neighbor lost her secretarial job there.

A House With a Yard

Wall Street is much to blame for the current economic meltdown, as is George Bush and his lack of leadership and foresight and basic ignorance and small world view... need I go on?

The republican platform of give more to the rich so that they can trickle down wealth is also to blame. Democrats who didn't speak out loud enough are also to blame.

Under-regulated lenders who gave people money for a house they couldn't afford --blame. But the financial catastrophe also has been caused by Americans trying to keep up with the Joneses (not realizing the Joneses could barely keep up with themselves) and feeling entitled to a house. A standard has been set and too many people have tried to live up to it. Who set the standard? Wall Street and corporate America.

We fell for it.

If we didn't have easy credit, fewer people would have a house and our economy wouldn't have been a house of cards. We would've been able to see the economy for what it was -- too much wealth concentrated at the top, not being trickled down. We would've been able to see how little buying power the middle class actually had. We could've then made real change, as Obama might say.

But that fact was hidden because people were able to buy a house they couldn't afford and they could take out lines of equity on those homes and buy lots of stuff. That helped enrich the rich, which is why the Bush administration didn't care. As long as wealth was being created at the top, it didn't matter. The creation of wealth in the middle was just a charade.

Americans are in serious credit card debt and that debt is likely to grow as more people lose their houses and their jobs.

The poor and middle class need the opportunity to create REAL wealth -- not pretend -- via a vastly improved education system that values science and math, art and music, and meeting the basic need of healthcare. These are the things Obama talks about.

When a health issue puts a family at risk of bankruptcy, that's not a path to wealth. Why is it that so few of us can afford healthcare? That concludes my economic rant of the day.

Thomas Friedman, columnist for the NYT, talks about the importance ramping up a green revolution to build the economy and create REAL wealth.

In a green economy, we would rely less on credit from foreigners “and more on creativity from Americans,” argued Van Jones, president of Green for All, and author of the forthcoming “The Green Collar Economy.” “It’s time to stop borrowing and start building. America’s No. 1 resource is not oil or mortgages. Our No. 1 resource is our people. Let’s put people back to work — retrofitting and repowering America. ... You can’t base a national economy on credit cards. But you can base it on solar panels, wind turbines, smart biofuels and a massive program to weatherize every building and home in America.”

Here's more.

NYT: Yes, this bailout is necessary. This is a credit crisis, and credit crises involve a breakdown in confidence that leads to no one lending to anyone. You don’t fool around with a credit crisis. You have to overwhelm it with capital. Unfortunately, some people who don’t deserve it will be rescued. But, more importantly, those who had nothing to do with it will be spared devastation. You have to save the system.

But that is not the point of this column. The point is, we don’t just need a bailout. We need a buildup. We need to get back to making stuff, based on real engineering not just financial engineering. We need to get back to a world where people are able to realize the American Dream — a house with a yard — because they have built something with their hands, not because they got a “liar loan” from an underregulated bank with no money down and nothing to pay for two years. The American Dream is an aspiration, not an entitlement. Read the whole story.

Why the bailout is necessary:

Billionaire Warren Buffett told congressional negotiators that if they can't agree on a proposed financial bailout, the nation will face "its biggest financial meltdown in American history," two sources familiar with the talks said.


Warren Buffett told congressional negotiators that failure to act could cause a financial meltdown, sources say.
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Word of Buffett's omen came as House Speaker Nancy Pelosi announced "great progress" in reaching a deal on the White House's proposed $700 billion bailout of the financial system.

Government Matters

By THOMAS L. FRIEDMAN
Of all the points raised by different analysts about the economy last week, surely the best was Representative Barney Frank’s reminder on “Charlie Rose” that Ronald Reagan’s favorite laugh line was telling audiences that: “The nine most terrifying words in the English language are: ‘I’m from the government, and I’m here to help.’ ”

Hah, hah, hah.

Are you still laughing? If it weren’t for the government bailing out Fannie Mae, Freddie Mac and A.I.G., and rescuing people from Hurricane Ike and pumping tons of liquidity into the banking system, our economy would be a shambles. How would you like to hear the line today: “I’m from the government, and I can’t do a darn thing for you.”

In this age of globalization, government matters more than ever. Smart, fiscally strong governments are the ones best able to empower their people to compete and win. I was just in Michigan to give a talk on energy. I can’t tell you how many business cards I collected from innovators who had either started renewable-energy companies or were working for big firms, like the Dow Chemical Company, on clean energy solutions. Read the rest.

While you're at it, you may as well read Maureen Dowd's column -- it's pretty funny.

$1 Billion to Repair Georgia

The "We all are Georgians" Georgia. We haven't even repaired New Orleans.

NYT: On Wednesday, The New York Times on the Web flashed a headline that caught my eye: “U.S. to Unveil $1 Billion Aid Package to Repair Georgia.” Wow, I thought. That’s great: $1 billion to fix Georgia’s roads and schools. But as I read on, I quickly realized that I had the wrong Georgia.

We’re going to spend $1 billion to fix the Georgia between Russia and Turkey, not the one between South Carolina and Florida.

Sorry, but the thought of us spending $1 billion to repair a country whose president, though a democrat, recklessly provoked a war with a brutish Russia, which was itching to bash its neighbor, makes no sense to me. Yes, we should diplomatically squeeze Russia until it withdraws its troops; no one should be invading neighbors.

But where are our priorities? How many wars can we fight at once without finishing even one? Iraq, Iran, Afghanistan, Pakistan and now Georgia. Which is the priority? Americans are struggling to meet their mortgages, and we’re sending $1 billion to a country whose president behaved irresponsibly, just to poke Vladimir Putin in the eye. Couldn’t we poke Putin with $100 million? And shouldn’t we be fostering a dialogue with Georgia and with Putin? Otherwise, where is this going? A new cold war? Over what?

And that brings me to our election.

Friedman on Energy Technology

NYT writer and author Thomas Friedman says America needs an energy technology revolution.

McCain is Big Oil's Maverick

Thomas Friedman says McCain is more of the same, especially with Sarah Palin by his side. Do we really want a president to continue the legacy of oil, oil, oil, no matter what the cost? And we've paid big prices-- not just at the pump.

NYT: With his choice of Sarah Palin, the Alaska governor who has advocated drilling in the Arctic National Wildlife Refuge and does not believe mankind is playing any role in climate change, for vice president, John McCain has completed his makeover from the greenest Republican to run for president to just another representative of big oil.

Given the fact that Senator McCain deliberately avoided voting on all eight attempts to pass a bill extending the vital tax credits and production subsidies to expand our wind and solar industries, and given his support for lowering the gasoline tax in a reckless giveaway that would only promote more gasoline consumption and intensify our addiction to oil, and given his desire to make more oil-drilling, not innovation around renewable energy, the centerpiece of his energy policy — in an effort to mislead voters that support for drilling today would translate into lower prices at the pump today — McCain has forfeited any claim to be a green candidate.
So please, students, when McCain comes to your campus and flashes a few posters of wind turbines and solar panels, ask him why he has been AWOL when it came to Congress supporting these new technologies.

Barack Obama's New Energy Plan For America - Upload a Document to Scribd

Read this document on Scribd: Barack Obama's New Energy Plan For America

Bush and Clinton's Failed Russia Policy

Thomas Friedman weighs in on the Russia Georgia conflict. In summary: Bush and Clinton foreign policy both failed in Russian relations. But now, U.S. must support Georgia, he says.

NYT: If the conflict in Georgia were an Olympic event, the gold medal for brutish stupidity would go to the Russian prime minister, Vladimir Putin. The silver medal for bone-headed recklessness would go to Georgia’s president, Mikheil Saakashvili, and the bronze medal for rank short-sightedness would go to the Clinton and Bush foreign policy teams.

Let’s start with us. After the collapse of the Soviet Union, I was among the group — led by George Kennan, the father of “containment” theory, Senator Sam Nunn and the foreign policy expert Michael Mandelbaum — that argued against expanding NATO, at that time.

It seemed to us that since we had finally brought down Soviet communism and seen the birth of democracy in Russia the most important thing to do was to help Russian democracy take root and integrate Russia into Europe. Wasn’t that why we fought the cold war — to give young Russians the same chance at freedom and integration with the West as young Czechs, Georgians and Poles? Wasn’t consolidating a democratic Russia more important than bringing the Czech Navy into NATO?

All of this was especially true because, we argued, there was no big problem on the world stage that we could effectively address without Russia — particularly Iran or Iraq. Russia wasn’t about to reinvade Europe. And the Eastern Europeans would be integrated into the West via membership in the European Union.

No, said the Clinton foreign policy team, we’re going to cram NATO expansion down the Russians’ throats, because Moscow is weak and, by the way, they’ll get used to it. Message to Russians: We expect you to behave like Western democrats, but we’re going to treat you like you’re still the Soviet Union. The cold war is over for you, but not for us. Read More

McCain's Missed All Renewable Energy Votes

Does anyone really think that McCain cares about renewable energy? McCain's energy plan is drill here drill now.
McCain missed 8 votes last year and one in July. Obama also missed the July vote.

Thomas Friedman: Sorry, but I can’t let that one go by. McCain knows why.

It was only five days earlier, on July 30, that the Senate was voting for the eighth time in the past year on a broad, vitally important bill — S. 3335 — that would have extended the investment tax credits for installing solar energy and the production tax credits for building wind turbines and other energy-efficiency systems.

Both the wind and solar industries depend on these credits — which expire in December — to scale their businesses and become competitive with coal, oil and natural gas. Unlike offshore drilling, these credits could have an immediate impact on America’s energy profile.

Senator McCain did not show up for the crucial vote on July 30, and the renewable energy bill was defeated for the eighth time. In fact, John McCain has a perfect record on this renewable energy legislation. He has missed all eight votes over the last year — which effectively counts as a no vote each time. Once, he was even in the Senate and wouldn’t leave his office to vote.

Could America Get Back To Being America

thanks to bush's "war on terrorism" we have a whole bunch of people who think that muslims are bad people. we've all seen those west virginians say: "he's a muslim. i won't vote for a muslim," in their twangy accents.

whenever the subject comes up, everyone has to say obama is not a muslim. it's true, he is not. he's christian.

but we all have to refute it forcefully because muslim = terrorist to many americans, thanks to george and the rest of his creeps, who have exploited the stupid masses. that's the message the fox news types always want to inject into their poor, poor, ignorant viewers because they can. there are people who simply aren't worldly enough, or educated enough to know any better.

and so, i thought it interesting that thomas friedman at the nyt dare mention that muslims in other parts of the world are excited about obama because obama represents worldliness (he's lived in indonesia, a largely muslim population), and if he was elected, it would mean that america is back to being america. wouldn't that be nice, as lofty as it seems.

wouldn't it be nice if this time, the stupid people, the extremists were hushed and the voice of america, the one that was built on embracing and accepting all stripes of people became the loudest.

nyt: I just had dinner at a Nile-side restaurant with two Egyptian officials and a businessman, and one of them quoted one of his children as asking: “Could something like this ever happen in Egypt?” And the answer from everyone at the table was, of course, “no.” It couldn’t happen anywhere in this region. Could a Copt become president of Egypt? Not a chance. Could a Shiite become the leader of Saudi Arabia? Not in a hundred years. A Bahai president of Iran? In your dreams. Here, the past always buries the future, not the other way around.

These Egyptian officials were particularly excited about Obama’s nomination because it might mean that being labeled a “pro-American” reformer is no longer an insult here, as it has been in recent years. As one U.S. diplomat put it to me: Obama’s demeanor suggests to foreigners that he would not only listen to what they have to say but might even take it into account. They anticipate that a U.S. president who spent part of his life looking at America from the outside in — as John McCain did while a P.O.W. in Vietnam — will be much more attuned to global trends.

My colleague Michael Slackman, The Times’s bureau chief in Cairo, told me about a recent encounter he had with a worker at Cairo’s famed Blue Mosque: “Gamal Abdul Halem was sitting on a green carpet. When he saw we were Americans, he said: ‘Hillary-Obama tied?’ in thick, broken English. He told me that he lived in the Nile Delta, traveling two hours one way everyday to get to work, and still he found time to keep up with the race. He didn’t have anything to say bad about Hillary but felt that Obama would be much better because he is dark-skinned, like him, and because he has Muslim heritage. ‘For me and my family and friends, we want Obama,’ he said. ‘We all like what he is saying.’ ”

Inspiration is Not Trivial

an awakening.
economics and world reporter at the nyt, thomas friedman, hit the nail on the head. people are ready to be enlisted, which is exactly why obama is so powerful. only obama, with his grassroots organization, will be able to organize and put people to work:

We are not as powerful as we used to be because over the past three decades, the Asian values of our parents’ generation — work hard, study, save, invest, live within your means — have given way to subprime values: “You can have the American dream — a house — with no money down and no payments for two years.”

That’s why Donald Rumsfeld’s infamous defense of why he did not originally send more troops to Iraq is the mantra of our times: “You go to war with the army you have.” Hey, you march into the future with the country you have — not the one that you need, not the one you want, not the best you could have.

A few weeks ago, my wife and I flew from New York’s Kennedy Airport to Singapore. In J.F.K.’s waiting lounge we could barely find a place to sit. Eighteen hours later, we landed at Singapore’s ultramodern airport, with free Internet portals and children’s play zones throughout. We felt, as we have before, like we had just flown from the Flintstones to the Jetsons. If all Americans could compare Berlin’s luxurious central train station today with the grimy, decrepit Penn Station in New York City, they would swear we were the ones who lost World War II.

How could this be? We are a great power. How could we be borrowing money from Singapore? Maybe it’s because Singapore is investing billions of dollars, from its own savings, into infrastructure and scientific research to attract the world’s best talent — including Americans.

And us? Harvard’s president, Drew Faust, just told a Senate hearing that cutbacks in government research funds were resulting in “downsized labs, layoffs of post docs, slipping morale and more conservative science that shies away from the big research questions.” Today, she added, “China, India, Singapore ... have adopted biomedical research and the building of biotechnology clusters as national goals. Suddenly, those who train in America have significant options elsewhere.”


Much nonsense has been written about how Hillary Clinton is “toughening up” Barack Obama so he’ll be tough enough to withstand Republican attacks. Sorry, we don’t need a president who is tough enough to withstand the lies of his opponents. We need a president who is tough enough to tell the truth to the American people. Any one of the candidates can answer the Red Phone at 3 a.m. in the White House bedroom. I’m voting for the one who can talk straight to the American people on national TV — at 8 p.m. — from the White House East Room.

Who will tell the people? We are not who we think we are. We are living on borrowed time and borrowed dimes. We still have all the potential for greatness, but only if we get back to work on our country.

I don’t know if Barack Obama can lead that, but the notion that the idealism he has inspired in so many young people doesn’t matter is dead wrong. “Of course, hope alone is not enough,” says Tim Shriver, chairman of Special Olympics, “but it’s not trivial. It’s not trivial to inspire people to want to get up and do something with someone else.”

It is especially not trivial now, because millions of Americans are dying to be enlisted — enlisted to fix education, enlisted to research renewable energy, enlisted to repair our infrastructure, enlisted to help others. Look at the kids lining up to join Teach for America. They want our country to matter again. They want it to be about building wealth and dignity — big profits and big purposes. When we just do one, we are less than the sum of our parts. When we do both, said Shriver, “no one can touch us.”

this reminds me of a new book, "the post american world," i heard about that says that the u.s. can no longer get along on its super power status. for one, other countries are rising. for two, that's not what the u.s. should be in the world.

rather, the u.s. should be the chairman, leading by example and acting within the world not on the world. the interview with the author is here.