Thursday, February 12, 2009

Lincoln, Darwin & Obama

Three great spirits coalesced today. If we listen to the angels of our better nature, we will follow them to a better future.

Darwin gave us this idea that things change, organisms adapt and survive.

Lincoln gave us the solidarity of preserving a union. He built colleges, railroads and expanded our country beyond the Great Plains so that we might grow -- without human bondage anywhere.

Obama is the next link in this historical trio. While many have come before him, he comes to Washington in the midst of a cultural civil war. Will the profiteers of the feudal economy prevail? Not if he succeeds.

We all need to evolve to form a new economy. Here are some basic principles courtesy of David Korten and his seminal new book "Agenda for a New Economy." If you don't know David's work, you should.

* Value human services and local economies over speculation and financial engineering. Wall Street got us into an incredible pickle over one of the oldest of vices: Greed. Should we continue to bail out the banks and get sucked into more bubbles?

* Tax the things that hurt us. Start with short-term speculation in stocks, real estate and credit markets. Channel the money into national health care.

* Return democracy back to the people and take it from the corporate interests. Stop allowing K Street to run domestic and foreign policy. We shouldn't be starting wars because they are in the best interests of Halliburton or throwing trillions at financial services (which actually produce nothing). Our political dynamic needs to evolve.

Our president in on the right track, but he's up against the corporatocracy. He needs our help. Here's what he said today at an event commemorating Lincoln's 200th birthday:

"It is only by rebuilding our economy and fostering the conditions of growth that willing workers can find a job, companies can find capital, and the entrepreneurial spirit that is the key to our competitiveness can flourish. It is only by unleashing the potential of alternative fuels that we will lower our energy bills and raise our industries' sights, make our nation safer and our planet cleaner. It is only by remaking our schools for the 21st century that our children will get those good jobs so they can make of their lives what they will. It is only by coming together to do what people need done that we will, in Lincoln's words, "lift artificial weights from all shoulders [and give] all an unfettered start, and a fair chance, in the race of life."

"That is what is required of us - now and in the years ahead. We will be remembered for what we choose to make of this moment. And when posterity looks back on our time, as we are looking back on Lincoln's, I do not want it said that we saw an economic crisis, but did not stem it. That we saw our schools decline and our bridges crumble, but did not rebuild them. That the world changed in the 21st century, but America did not lead it. That we were consumed with small things when we were called to do great things. Instead, let them say that this generation - our generation - of Americans rose to the moment and gave America a new birth of freedom and opportunity in our time.

"These are trying days and they will grow tougher in the months to come. There will be moments when our doubts rise and our hopes recede. But let's always remember that we, as a people, have been here before. There were times when our revolution itself seemed altogether improbable, when the union was all but lost, and fascism seemed set to prevail. And yet, what earlier generations discovered - what we must rediscover right now - is that it is precisely when we are in the deepest valley, precisely when the climb is steepest, that Americans relearn how to take the mountaintop. Together. As one nation. As one people. That is how we will beat back our present dangers. That is how we will surpass what trials may come. And that is how we will do what Lincoln called on us to do, and "nobly save...the last best hope of earth." Thank you, God Bless you, and may God Bless America.'

Sunday, February 8, 2009

Stimulate This!

I'm just back from Florida, more specifically the foreclosure capital of the U.S. in Lee County. It's like someone dropped an economic neutron bomb. Plenty of homes are standing, but there's nobody living in them.

As President Obama battles to win approval for his economic stimulus plan and readies to launch his version of the financial system rescue, here are a few, tough questions we as a nation should be asking:

* Is it wiser to let banks fail rather than try to prop them up? Isn't failure more instructive? To date, only a handful have failed and the biggest banks got a huge handout already.

* If those who couldn't afford a home were lured into subprime loans, shouldn't we be helping them get back on their feet? Shouldn't somebody be counseling them as to the best course of action?

* Shouldn't we really be asking ourselves "is homeownership really for everyone?" If the answer is no, then let's build our policy around there being no shame in renting. If the answer is yes, then we should guarantee as much as we can in the secondary mortgage market.

* What if the reality came to light that not everyone can afford a home, nor should we make everyone struggle to attain homeownership? After all, there are taxes, maintenance costs and financing expenses that really never go away and only rise with inflation. If we're in an age in which salaries are not going to keep up with the cost of living, then that will change the equation.

* By saying, homeownership is not for everyone, we can re-orient our public policy toward more important things. As you know, real estate ownership is the most subsidized activity in our economy. You can deduct mortgage interest on first and second homes and home-equity loans, so there's one subsidy. Then we waive capital gains taxes on homes sold within five years (provided you've owned the property as your primary residence for at least two of those years). Then we allow property-tax deductions and subsidize everything connected with development" New roads, sewers, utilities, etc. What if those tax breaks were eliminated and the additional revenue flowed into a national health care program for everyone?

* The limited ownership policy would then call for a protracted bailout: Those who qualify with sufficient income and credit ratings could be given loan modifications into 30-year fixed-rate mortgages. Those who didn't quality would be given the option to rent.

* The most perplexing question is how do we forgive debts? After all, millions bought in during the bubble at unrealistic prices. Do they get to write down their mortgage principal? What about those of us who have managed to pay down our mortgages for years, even decades? Should we get a chance to write down part of our principal? How would we support the banks after these writedowns occurred?

The fairness question underlies all of the nettlesome realities of the housing bailout. Nobody wants to see people thrown out of their homes without a good reason.

If people were truly deceived, let's see some prosecutions and make amends to those who didn't know what they were getting into. However, if everyone getting in over their head knew it, then let's move on.

The sad truth is that many will have to liquidate their dreams for a while. The government should stand behind them in some way. They can't stand alone.