There is an excellent article by Simon Johnson, formerly of the IMF, which I would recommend to everyone, if you haven't already read it:  The Quiet Coup - The Atlantic (May 2009).  Johnson provides an excellent analysis of the need to take real action to break down the control exerted by Wall Street.  It will add to the understanding of the current issues.  It also reflects similar thoughts to those expressed by William Greider last night on Bill Moyers Journal . Home | PBS   (it is the second story).

These articles encouraged me to suggest the following as guiding principles for our measures to reestablish order to our financial community.

1.  If an enterprise is too big to fail, it is also too big to exist.  This should be treated like an anti-trust action - break the enterprise into smaller entities with new management.  The managers of the enterprise should never think they will be rescued by the public in the event of catastrophe.

2.  Reestablish the separation between commercial and investment banks.  Simply put, reenact Glass-Steagall.  We had to go through pain before to understand that this was good -- now we have to go through it again.

3.  Require that all financial products be publicly traded in an established market.  No product can be sold before appropriate regulatory mechanisms have been established.  The need for new products is not mandatory to the success or failure of the financial world therefore waiting until we get the right framework won't bring the world down.  Regulations should also require that products not bear misleading labels like calling a product "credit default swaps" in place of "default insurance."  If it's insurance, call it insurance and make it work like insurance.

4.  Reestablish limits on usurious interest.  The high combination of interest and fees on much current lending certainly is usurious and should be curbed.  Certainly 18% total return is enough.  Perhaps a less attractive return will cause more care on the part of those like credit card and payday loan companies in offering loans and accounts that get people mired in debt traps.

5.  Make sure that originators of loans always retain some portion of the risk associated with their payment.  No more escaping bad underwriting by securitization.

6.  Rewrite the consumer portions of the 2005 bankruptcy bill to restore fairness and sensibility.

7.  Restore some muscle and will to the existing regulatory bodies.  Their mission is not to enhance the profits of the plunderers but to make the markets orderly, transparent, and fair.

Finally, one of the big problems is the outsized influence of Wall Street on the Congress.  While much of this is a result of cultural influences, much is related to the financial influence gained through campaign contributions.  To combat this and related evils, I propose the following rule:  Federal candidates can only accept campaign contributions from US citizens who are eligible to vote for them in primary or general elections.  This means no contributions from businesses, PACs, unions, non-citizens, and residents out of your district.  This has three good results.  First, campaigning will not be dominated by those who can give large amounts; second, our elected officials will have to pay attention to their constituents; and third, campaigns will cost a lot less and leave fewer and smaller obligations on the part of the winners.

Of course none of these are new suggestions, but I'm convinced that the sooner we can figure out a way to force our political leaders to take the suggested actions the sooner we'll be on the road to recovery.  I do hope that our leaders will respond to public pressure for these principles.

I learned today that the Obama campaign has an office in Ridgeway, Colorado.

If they are going after a relatively isolated town with a population of 751 in July, 2007, then you can bet that the Obama ground game is saturating Colorado.  About the only thing of consequence I know of near there is a wonderful mountain ranch owned by Ralph Lauren. 

It seems to me the Democratic Party is heading for a major debacle on the issue of how to seat the Florida and Michigan delegations.  It seems like the only viable solution which may be satisfactory to everyone (even if not too acceptable to the Clinton camp) is a redo of the primary election.  I think that even the Clinton camp would come around because an extended fight over seating the delegations led by Clintonites would probably doom the Democrats to snatching defeat from the jaws of victory once again.  (Having the argument is already harmful.)

The problem with a redo hinges on money $$$$.  I see quotes of $18 million being bandied about for the cost of another primary.  I have a suggestion:  Vote by mail!  I believe that voting by mail could yield an election which would cost no more than $1 per voter.  Since there are about 3 million registered Democratic voters in Florida (turnout 1/29/2008 of 1.7 million Democrats and approximately 60% of voters), $3 million is not an unreasonable cost. It wouldn't even run more than $4 million if inactive voters are solicited as well.

I envision a simple mailing:  outside envelope with notice of contents, return envelope with outside signature and printed voter's name (and probably voter IDNUM inserted by the voter to speed the process) for verification, and a combined mark-sense ballot and instruction sheet.  With only two choices, it should be possible make the marking almost foolproof.  The addresses are already in the state and county computers and the mailing could be sent as bulk mail.  The mailing could include the IDNUM in the address to help the voter fill in the return envelope.  There are lots of bulk mail operators who would love to compete for the responsibility for a county or two.

Let the voter pay for the return postage.  I don't think having each voter provide a 41¢ stamp is asking too much.  Or, possibly the campaigns, which appear to be awash in money, could come up with the 44¢ a business reply envelope would require.  The total cost should be less than $1 million.

The counting would involve verifying the signatures against the present voter databases with the aid of the IDNUM.  Verification would be the responsibility of some temporary hires of existing poll workers by the Supervisor of Elections in each county.  Supervision by Supervisor of Elections employees is just overhead - that's what they're there for.  I think that the process would require not more than 1000 man days per million votes cast.  That suggests that three to four thousand man-days would be required to count ballots in the whole state.  Considering that Lee County has well over 1000 election day poll workers, it should be easy to find 150 or so to work for two days to complete the task for Lee County.  This should be less than 20¢ per vote cast.

Training should be minimal.  Just read the IDNUM, look it up in the computer, compare signature, accept or reject, record result in computer and pass the envelope on for opening and counting.  Ballots received after the closing date would have the postmark checked for meeting the closing date requirement.  Rejections probably should require verification.  Candidate representatives should be able to observe the process.  I wouldn't expect many problems to arise needing their intervention.

The envelopes could be opened by machines and the ballots collected and then fed into mark-sense counters.  I don't have any data but I'll bet that the machines can count several thousand each hour - particularly with only one selection.  I think the state is on a course to acquire some counters now or we could probably rent some.  How about leasing from Oregon who is already quite successful in using such counters for mail in ballots?  Other states use them as well.  Perhaps FCAT (Florida Comprehensive Achievement Test) counters could be used?

I think the cost could be borne by the state or shared with the DNC.  I think both have some responsibility, and whether Dr. Dean wants to admit it or not, the interests of the Party are not served by just letting the issue smolder away.  Get it solved!  Mail ballots would be a simple and inexpensive solution.  Further, I believe it meets the criteria Chairman Thurman outlined in a March 5 Press Release.

Just my 2¢.

I had a good chuckle (really a belly-laugh) over the cover of the Economist at the checkout line of our neighborhood suppermarket yesterday.

There along with all the usual tabloids was the Economist with an abolutely delicious headline! The picture of George looks really hangdog (as well it should).

In addition to being an unusual selection for checkout line placement, it is especially funny in that the neighborhood served by this supermarket has 3 to 1 Republican registration.

(My, it has been a while since I posted anything but it's been a busy time and the constancy of the complaints and newly revealed failiures has grown a bit wearisome. GWB and his crew are no damn' good and not much is really being done about it. Riding the handbasket is like riding the tumbrel.)

C-Span 2 runs the Prime Minister's Questions on Wednesday at 7 am EST.  C-Span provides a rerun Sunday evening at 9 pm EST.

My wife and I find this wonderful fun to see our British friends at work.  It is really entertaining.

P.M. Tony Blair is obviously provided much advance notice of the questions and has prepared responses.  Even so, he does inject much spontaneity into the answers.

One of the keys to participation is the ability to deliver zingers.  Blair is quite good at this aspect.

The participants all seem to enjoy the activity and there are more smiles at the jabs than frowns at the questions and answers.  The opponents remain friendly while challenging the other's judgments.  The questions again remind us that all politics are local.

Imagine, if you can, George W. Bush having to participate in such an interchange.  The vision it conjures up is ludicrous.

Try it; you'll like it! 

The lead article was headlined "Disaster Assistance Available Now!"  Of course, the huricane came through on October 24 - nearly 50 days ago.  The first sentence is: "Within hours of Hurricane Wilma making landfall on October 24, President Bush issued a disaster declaration for part of Florida." 

Was the claimed timeliness of the declaration affected by the shoddy reponse to Katrina?  Could it also have been enhanced by the filial relation to Florida's governor?  I'm sure that having several days' warning as Wilma wandered around the Gulf also helped.  One would think that the disaster declaration would have been ready with everything filled in but the exact counties. Wilma hit at around 6 am on Monday morning.  It took Washington several hours to get started after the weekend. 

The publication date also caught my eye.  The Florida Hurricane Wilma edition of the Times was dated December 6, 2005,and distributed to us on December 11.  The timeliness sounds just like FEMA - 5 days late.

The Fort Myers News-Press distributed the copy I saw; however, there was no copy distributed with the Naples Daily News.  Naples and Collier County were nearer to the passage of Wilma's eye and had  considerably more damage.  Missing the target audience was reminiscent of FEMA's payout of $31 million to Miami-Dade residents last year when there was only minimal hurricane damage as the storms veered away from that part of the coast.  On the other hand, it may have bureaucratic skill in targeting distribution by county.

The Times had all the usual listings of hotlines to call for assistance including Operation Blue Roof at 888-ROOFBLU.

I think the item that caught my attention most was the headline on one short boxed article:  FLOOD INSURANCE MAY HELP REDUCE FUTURE DAMAGE.  Since when does flood insurance reduce damage?  It may reduce the impact of losses due to flooding but no flood insurance ever, ever reduced flood damage. 

It certainly is nice to know that FEMA is at work making sure we know that they are at the ready and doing all the right things.  Recovery in the Gulf Coast areas impacted by Katrina and Rita seems hardly started; nonetheless the Recovery Channel is up and broadcasting.

Further, there are still lots of blue roofs in Charlotte County in the aftermath of Charlie over a year ago.  Some of the counties just got a fractional reimbursement for their expenses in fronting the debris cleanup over a year ago.

Maybe by next hurricane season, FEMA will know how to be effective and timely rather than just another noise machine.

Associated Press says "Rove to Testify in CIA Leak Case."

Just heard this on CNN.  Don't yet have any details.  Not a good maneuver for either of the participants.

"FEMA City is now a socioeconomic time bomb just waiting to blow up," said Bob Hebert, director of recovery for Charlotte County, where most FEMA City residents used to live. "You throw together all these very different people under already tremendous stress, and bad things will happen. And this is the really difficult part: In our county, there's no other place for many of them to go."

<snip> 

The hurricane began that slide, destroying hundreds of modest homes and apartments along both sides of the Peace River as it enters Charlotte Harbor, and almost all of Punta Gorda's public housing. Then as the apartments were slowly restored -- a process made more costly and time-consuming because of a shortage of contractors and workers -- landlords found that they could substantially increase their rents in the very tight market.

<snip>

The unhappy consequence is that FEMA City's population has barely declined -- its trailers are occupied by 1,500 check-out clerks, nurse's aides, aluminum siding hangers, landscapers and more than a few people too old, too sick or too upset to work.

<snip>

Those fears were stoked last month when the city made clear that it plans to tear down a public housing complex on the waterfront to make way for much higher-income people.

"That land was just too valuable to have poor people on it," said community leader Isaac Thomas.[Does this sound familiar?]

<snip>

FEMA reports that one year after the four Florida storms, it is still providing 7,640 mobile homes or trailers for displaced people, 1,056 of them in Charlotte County. Both statewide and in Charlotte, that means almost half of the people who needed temporary FEMA shelter after the storms still rely on it.

It's only a year since the hurricane.  The housing can only be used for 18 months and FEMA is already pushing to get people to move out so they can move the trailers to the Central Gulf.  Construction is still slow.  Lots of houses still have blue FEMA tarps covering their roofs.

People in FEMA Village don't have places to live yet and can't find any.  These people will be permanently homeless if we can't find something for them.  Just think how much bigger the problem will be with Katrina's victims. 

Much has been made over whether Gov. Blanco used the right 'forms' in her request for aid from Bush.  The Republican noise machine has used every opportunity to discredit her actions.  Rep. Conyers got a response from the Congressional Research Service that comfirmed the adequacy of her actions.

This raises an intriguing question.  Just how did Gov. Haley Barbour request help?  I have been unable to find a request made by the former Chairman of the RNC comparable to Blanco's.  Certainly the situation in Mississippi would have justified a similar request from Gov. Barbour.

I wonder how his actions would stand up in contrast to those of Gov. Blanco?

Considering the actions of the Cheney office to get power turned on in Collins, Mississippi, to get the Colonial Pipeline back in operation, one might suspect that, if Barbour did anything, he had a better phone number than Blanco had.  Any ideas which one?

I would appreciate it if someone could point me to any history of what Barbour did and what the response was.  I would think that it would make an interesting 'compare and contrast' essay.

I think the simple answer is that the enemy in Katrina is us.

There is no them to unload on.

We're the ones who ignored the warnings - but there are hundreds of other warnings we have ignored because we prioritize.  We're the ones who failed to respond to the requests for help in evacuation.  We're the ones who permitted setting priorities for building bridges to nowhere in Alaska.  We're the ones who stood idly by while FEMA was populated with incompetence.  We're the ones who enjoyed tax cuts that weakened our government.  We're the ones who have so little confidence in our institutions that we can be manipulated by fear-mongering into supporting bad politicians.  We're the ones who didn't demand effective local disaster planning and emergency management.

How do we avoid this in the future?

The most arbitrary budget was that of the facilities department.  We started with the people and materials required to do the janitorial and maintenance work that had reasonably predictable requirements and experience.  If needed, we could mandate reductions and we would make additions to populate new facilities.

Next, we addressed the major preventive maintenance categories.  As everyone knows there are planned preventive maintenance cycles for most equipment (e.g. 12,000 miles checks in your auto manual). 

Well, there was never enough money to do all the recommended preventive maintenance so we did what everyone does:  we prioritized and deferred.  We funded what were believed to be the most important items.  We’d okay some overhaul of machines whose failure would shut down everything. 

The interesting part was when we talked about the non-scheduled items.  These were often for major (read expensive) machines or buildings that were wearing out.  The discussion was always the same.  “Well, what was the down time last year?”  “Was that more than the year before?”  “Can we move the work elsewhere if we have a failure?”  “Do you really think it’s going to fail this year?”  “Can’t you keep it running for another year?”  In the end, these items were generally rejected because no one knew just when they would fail and there was never enough money to do everything.

The secret of getting facilities money was a gross failure like having the traveling crane fall from the roof to the floor of the factory.  That always got money.  There was no argument about fixing the problem.  The facilities people never had to defend their failure to prevent the problem because they could always point out that the boss had been the one who didn’t let them do the overhaul they recommended during the budget cycle.  Another sure way of getting some maintenance money was to have a serious injury.  Fortunately, this was a rare occurrence.

This leads to the rule of facility budgets: 

It’s easier to get money to repair a major failure or to replace a dismal building than it is to get the money for proper preventive maintenance. 

(I should note that in the long run, you’ll probably get more budget and have newer facilities following this principle.)

Once you fall behind on maintenance hope the building looks like it’s going to (or does) fall down.   Also, when it is clear to everyone that it is cheaper to replace than to repair, you replace.  Then you’ll get the money.

This rule is true for any entity that has to accommodate facility expenses. Think of your town council; your county commissioners; the state government; the Corps of Engineers, and the whole darned US Government. 

To prove the point notice how quickly money is being authorized for the Katrina recovery.  And what do you want to bet that there will soon be a big levee upgrade and modernization program?  Don’t you wonder just how many other things are accidents waiting to happen? 

The problem is that there never is enough money to maintain what we have properly and to acquire all the new toys we want.  Think of the Highway Bill.  Have we committed ourselves to maintain all those toys throughout their lifetimes?  Or will we just shortchange the maintenance until everyone knows the highways are unsafe or inadequate and then rebuild anew?

This leads to some wisdom regarding such things.

Watson's Law:

Maintenance is the curse of possessions.

First Corollary to Watson's Law:

Sooner or later everything is broken and we're all broke.