Driving to a BBQ

Here’s what happens when Congress approves a $700 billion bill with no plan and no accountability:

PorkFest 2008.

We’re not talking just any old pig roast here. This is a 50-pound pork chop stuffed with pork sausage and wrapped in bacon.

The bill began as a plan to purchase “toxic assets” – AKA crap no sane investor wants – from drowning financial firms, with the feds taking stock in the companies.

But Wednesday, U.S. Treasury Henry Paulson changed his mind and said the government wouldn’t buy these toxic assets.

Now, we’re left with a $700 billion pool of money and nothing the government is specifically directed to spend it on.

Cue the barbecue.

While Paulson considers new rounds of investment into a financial services sector he’s gradually socializing, congressional Democrats want to spend that money to bail out Ford, GM and Chrysler, AKA the world’s worst-managed corporate giants. (Congress would like to spend on other things too, but today we’ll focus on cars.)

The only way the Big Three should get anything from the feds is if there are major strings attached. We’re talking major reworks of union contracts, mandates on producing more fuel-efficient cars, and jettisoning management and the whole board.

Otherwise, forget about it. Let them die.

Chapter 11 bankruptcy wouldn’t be all bad. It could give General Motors – and GM seems more endangered than Ford – enough protection from creditors so they could revamp themselves.

And if it’s Chapter 7? I hate to say it, but so be it. Yes, there are a lot of jobs at stake, but you’re telling me Honda, Toyota and others won’t rush in to fill the gap and expand? I think they will. That’s a huge opportunity. Just like Southwest Airlines replaced unwieldy, inefficient and eventually bankrupted airlines, automobile companies will do the same.

The Big Three have shown over the last 30 years that they will not innovate unless held at gunpoint by market forces. We finally have that, thanks to Americans similarly responding to the market and rejecting gas-guzzling SUVs.

The question now is how the feds will use that gun at Detroit’s head: Will it encourage and incentivize the necessary changes, or will it blow it and hand the Big Three a blank check?

The cynic in me says it’s blank check or nothing, because Congress gave up its right to have any say in the matter by once again giving the Bush administration a $700 billion check with no strings attached.

When the bailout passed, Congress told us we were getting one thing, Paulson’s plan to buy toxic assets. But now we’re not getting that. Congress ceded the cash and control to the Treasury Department by not binding Paulson to spend the money how they said he would.

In so doing, Congress has effectively castrated itself and come very close to abdicating its constitutionally mandated role as regulator of federal spending. By dictating how federal money is spent, it gains a major role in dictating government policy. But if Congress hands over the cash with no strings attached, it becomes no more than a sugar daddy to an executive branch that can do whatever it pleases. Congress did this with Iraq, and now they’ve done it again.

So the toxic assets buy-up is out the window, replaced by round after round of direct investment into a gradually socialized financial sector. Maybe it will work. Maybe it won’t. Treasury looks rudderless, and that doesn’t inspire confidence in the marketplace. Our best hope may be that things remain static till the Obama administration takes over.

But along the way, rest assured that Congress will bust tail to slip in as many pet projects as possible. After all, it’s how they got the bailout passed in the first place.

Common cents

The Panic of 2008 is really pretty simple.

American families, businesses and government have lived beyond their means for years. Now it’s time to pay up.

People bought homes they couldn’t afford. Their lenders often didn’t care because they weren’t on the hook for repayment, having already made their money by selling those mortgages to third parties. That's the foreclosure crisis in a nutshell.

Companies cut deals they could not afford, failed to invest adequately in modernization quickly enough because they were trying to maximize short-term profits to satisfy Wall Street, and outsourced labor to stem financial bleeding and maintain higher short-term profit margins. Hence, the collapse of the automobile, steel and even the newspaper industries.

The federal government faces massive deficits because the Bush administration paid for wars we could not afford.

We see similar choices in the lives of people around us every day:

- A couple that lost their jobs job but pay for cable and Internet;
- A penniless college student sporting an IPod;
- A person who lives in poverty but has a top line entertainment center;
- A family that goes on vacation every year but racks up thousands in credit card debt.

Sound familiar?

Some have come to believe the American Dream is about having stuff, but it's not. It’s about opportunity. When you get that opportunity, however, you have to use it wisely.

The bottom line is the current financial crisis is a necessary market correction. Painful, but necessary.

The problem is that those of us who actually spend responsibly may experience the backlash, now that many of these companies have to cut back after years of sacrificing long-term sustainability for short-term profits.

Ford and GM? Sorry, you had it coming. You should have invested in more fuel-efficient vehicles years ago, and you and your unions shouldn’t have negotiated deals no one could sustain. Now we can’t afford to drive your cars because imported gas costs too much. I can’t wait to get my Prius.

Newspapers? You had it coming too. While you were sucking down 21 percent profit margins as recently as 2001, you failed to transition under new readership trends. Most newspaper web sites are still poor shadows of what they should be, and no one’s making as much money off the Internet as they might be if they’d adapted to the new market 10 years ago -- when it was still new.

AIG and Lehmann Brothers? Don’t get me started.

We have a near-Panic of 2008 largely because Wall Street overreacts to everything, good or bad. They fueled the dot-com boom and bust – Pets.com? Are you kidding me? – by overreacting to that shiny new thing called the Internet, much like they’re overreacting to the market problems today.

The reality is that growth cannot be constant, and retraction is necessary when something goes too far. People are spending less, and that’s a good thing. There’s a word for this. It’s called “responsibility.” This is an overdue market correction that, if acted upon wisely, could right an economic ship that has been slowly sinking for years.

Financial sustainability is really pretty simple:

Live within your means, and produce something of value.



(Good reading for today: This poignant story. Make sure to read it to the end.)

Savoring the echoes

A day later, things have begun to shake out. Euphoria lingers as but a slowly dulling echo.

The reality is settling in as the rationalists throw cold water upon jubilant celebrations. Yes, we know: President Barack Obama has a rough road ahead. Nothing reveals a man’s character like his actions in times of crisis. Obama will get his chance.

But step back a moment and reflect. Don’t move on to tomorrow so swiftly that you miss the hugely important moment that is today.

In the eyes of the world, the dream of America has been renewed.

"Given Obama's name, his background, the doubts about his religion, Americans still voted for him, and this proved that America is a democracy," Saudi journalist Samir Saadi told The Washington Post. "People here are starting to believe in the U.S. again."

"It's the beginning of a different era," Rio de Janeiro police officer Emmanuel Miranda told The Associated Press. "The United States is a country to dream about, and for us black Brazilians, it is even easier to do so now."

Many Americans view the last eight years as a period in which the Bush-Cheney administration desecrated the name of the U.S., evaporating good will and political capital with their actions.

But one cannot overlook the preceding half century that laid the groundwork for their overreaching power grabs. While few Americans noticed, the U.S. supported military dictatorships in Brazil and Chile, laid the groundwork for strict Islamic control in Iran by supporting its corrupt leaders, and empowered with pro-oil policies Saudi leaders who control their people and indirectly create terrorists through careful distribution of wealth and Wahhabism. We fought and failed in futile wars in Korea and Vietnam and watched Bush’s predecessor disgrace his office long before Cheney ever took to his bunker.

This was no mere eight-year detour.

Rather, it was a culmination of a New Gilded Age of American politics that spanned 45 years. It began the day Kennedy was shot, and it ended Tuesday with John McCain’s poignant concession.

Obama comes into office with a very different mandate from Teddy Roosevelt, who ended the last gilded age upon succeeding to the presidency after William McKinley’s death. Roosevelt broke up powerful monopolies, empowered workers to gain greater protections and essentially launched the conservation movement, but he ascended to the presidency after an assassination, not on a popular wave like Obama’s.

Obama faces similar problems. He faces a runaway corporate power structure that has enriched itself at the expense of its workers, increasing class divisions that have led to populist outcry and a government grown drunk on military power.

But Obama has a very different mandate, and it is no ordinary call for change.

This country made a statement Tuesday, and that statement is no less than a peaceful revolution in the way we look at the world and the world looks at us. We defined to our leaders and the world just who it is we are as a nation: We are a people who will accept no less than our ideals. Every action the U.S. now takes occurs in an environment in which we have affirmed our identity as a people that truly believes in freedom and equality and doesn’t merely use those terms to further our ambitions of power.

Yes, Obama still has to prove himself as president. But he will do it with a type of political capital we have not seen in a long time.

The people have demanded greatness and given their blessing not to the lesser of two evils, but to a man whose very existence symbolizes all that the Declaration of Independence envisioned our country to be.

Obama steps forth on the wings of a call for renewal so dramatic that it has echoed around the world. Celebrate that call, and savor the echo.

The world has changed

The world has changed.

Not just the nation.

The world.

Everything has changed. Everything.

In the grand scope of history, George W. Bush and Dick Cheney may one day be no more than a blip in the timeline that created the groundwork necessary for peaceful revolution. They challenged America’s greatness, which had for decades taken a slow, inexorable path toward power, selfishness and manipulation over truth, justice and legitimate freedom. The beacon of freedom and land of opportunity had become a shallow shell living comfortably on the backs of corruption.

Today, all that has changed. They challenged our greatness, and we answered firmly that we will not accept any less than an America that lives true to our ideals.

I dream of a place where truth, justice and greatness exist not merely as abstract concepts but as defining traits of a people. Today, I can no longer be dismissed as a deluded idealist.

Today, I live in that place. It’s called America. And we have taken it back.

My home has proved to the world in so many ways that we are not a country of bullies and warlords, that there is no place for a government that controls the rest of the world by diligently distributing guns, money and favors to warlords, industrialists and weak politicians.

We were the world’s first nation founded on ideals, and in the last 24 hours, we have shown the world that our ideals are not merely historical myth. We have overcome history and righted wrongs. We believe that every person is entitled to be free and equal at conception. We have shown that humans can be as great as we wish to be, that we are not slave to history, that we determine our path and no one else.

This is the Camelot they told us about 48 years ago. Kennedy called, and our parents answered.

On Tuesday, we answered an even greater call.

Barack Obama’s election is not so much about a single person.

It’s about every person.

It’s about millions of students who ignored the cynics and did what no one said they would: Vote.

It’s about the old widow who once crossed the street to fearfully avoid the approaching black man, only to put old prejudices aside Tuesday to give one her trust.

It’s about a family in Nigeria or Brazil that can look at America and not only believe they can find a better life here but also trust we can be the benevolent and just leader the world has so often needed.

It truly is about hope. It’s about hopes coming true.

Obama’s election shows that ideals need not be dismissed as fairy tales told to children. It shows that every child on earth can grow up believing their dreams are possible.

I have never been as proud of my country as I am today.

Today, we can be anything.

It's time

It's time to start this blog. Yes, today is the day.