Barack Obama at the White House Correspondents dinner meet displayed great poise.

Prayer: Public/Private

Hilzoy on Obama's recent decision to not hold a ceremony for the National Day of Prayer, preferring instead to pray in private

I would think that people of faith, in particular, should be wary of politicians holding ceremonial observances of National Prayer Day. For one thing, one's communications with God are intensely personal. If you think of God as a person, and not as a political weapon, the idea of having a ceremony of this kind would be like observing National Have A Serious Talk With Your Spouse Day by having such a talk in front of TV cameras. 

A culture of optimism?

As Specter shifts loyalties...

From here: The broader symbolism here is that it’s another sign that Barack Obama’s first two years may not look like Bill Clinton’s. In 1993-94, Clinton’s approval ratings sagged, his party lost special elections everywhere, and conservative Democrats were switching to the GOP. Obama’s approval ratings are high and holding steady, Democrats remain far more popular than Republicans, Democrats held the first special election, and now they’ve picked up a party switch. It’s still early, but Obama is starting to build a self-sustaining psychology of success.

Happy Financial Fools day

That's right, rather than today be called April Fools day, it might be more appropriate if the day is labeled Financial Fools day. At least that is what the Treasury Secretary hopes that we all are: 'financial fools'. Economics Nobel winner Joseph Stiglitz's analysis of the bad asset bailout plan unveiled late last week by the Obama administration calls it a win-win-lose proposal: the banks win, investors win — and taxpayers lose.

From here: Consider an asset that has a 50-50 chance of being worth either zero or $200 in a year’s time. The average “value” of the asset is $100. Ignoring interest, this is what the asset would sell for in a competitive market. It is what the asset is “worth.” Under the plan by Treasury Secretary Timothy Geithner, the government would provide about 92 percent of the money to buy the asset but would stand to receive only 50 percent of any gains, and would absorb almost all of the losses. Some partnership! Assume that one of the public-private partnerships the Treasury has promised to create is willing to pay $150 for the asset. That’s 50 percent more than its true value, and the bank is more than happy to sell. So the private partner puts up $12, and the government supplies the rest — $12 in “equity” plus $126 in the form of a guaranteed loan. If, in a year’s time, it turns out that the true value of the asset is zero, the private partner loses the $12, and the government loses $138. If the true value is $200, the government and the private partner split the $74 that’s left over after paying back the $126 loan. In that rosy scenario, the private partner more than triples his $12 investment. But the taxpayer, having risked $138, gains a mere $37.

Even the Wall Street Journal, long a voluptuous cheerleader for capitalism does not like what it sees in this plan.

We have no idea if Treasury is playing favorites, but it certainly doesn't look good. All the more so given that some of these big players may have consulted informally with the Obama Administration as it was writing the plan. Not to mention that the big asset management companies that are most likely to land plum fund-management jobs are also the ones that have been most vocally praising the Treasury plan.

Recent photographs from a visit to see Barnaby Whitfield's pastel works in an exhibition titled 'Ah For A Man to Arise in Me / That the Man I Am May Cease to Be' currently on view at the Stefan Stux Gallery, Chelsea. More information here.

Note

Watching a documentary 10 trillion and counting on PBS last night, I was reminded of an essay on spiritual trusteeship by Eknath Easwaran in which the author hones in on an oft repeated but barely practiced refrain: "How will this affect our grandchildren?"

On the rich and taxes

How much should the rich pay in taxes?

An opinion: Did you know that Margaret Thatcher declared war on the wealthy, a war so extreme it makes Obama's seem meek by comparison? The top tax rate in the UK was 60% for most of her term in office, and 40% for the last year or so. At no point was it lower than what Obama proposes -- and that's without taking into account the VAT.

Likewise, Ronald Reagan was apparently a Class Warrior: for six of the eight years during which Reagan was President, the top tax bracket was 50%. It's a wonder anyone worked at all! In Reagan's defense, though, he was just carrying on a long tradition of wealth expropriation carried out by socialists like Harry Truman, Dwight D. Eisenhower and John F. Kennedy.

Putting a price on toxicity...

One of the ideas put forth by the Obama administration is to create a bad bank that will help absorb bad assets (like toxic mortgage securities) from good banks, hold it over time and then sell the assets to recover some or most of what it had paid thus aiding the taxpayer. Freed from the drudgery of holding onto these toxic assets, the good banks would start lending again and bring our economy back to full steam.

Sounds easy - until one considers on how best to value the underlying toxic assets... as this example from the Times amply demonstrates...

The wild variations on the value of many bad bank assets can be seen by looking at one mortgage-backed bond recently analyzed by a division of Standard & Poor’s, the credit rating agency. The financial institution that owns the bond calculates the value at 97 cents on the dollar, or a mere 3 percent loss. But S.& P. estimates it is worth 87 cents, based on the current loan-default rate, and could be worth 53 cents under a bleaker situation that contemplates a doubling of defaults. But even that might be optimistic, because the bond traded recently for just 38 cents on the dollar, reflecting the even gloomier outlook of investors. The bond analyzed by S.& P. is just one of thousands that the government might buy or guarantee should it go forward with setting up a “bad bank” that would acquire $1 trillion or more of toxic assets from banks.

One hopes fervently that the Obama administration will do a fair job of valuing these assets in ways that will provide incentives for the taxpayer rather than give it all away to the banks who led us into this mess. Given the ill conceived mish-mash loaded into the current stimulus package winding its way through the Senate, one hopes that the financial bailout will contain less excreta.

A new Conciliatory Phase??

"Too often the United States starts by dictating — in the past on some of these issues — and we don't always know all the factors that are involved, what we want to do is to listen, set aside some of the preconceptions that have existed and have built up over the last several years. And I think if we do that, then there's a possibility at least of achieving some breakthroughs." - Barack Obama in an interview to Al Arabiya on Jan 26 2009

The erstwhile neo-cons who ruled us till recently will not be able to sleep tonight... or possibly for many nights henceforth...

Loved the cover image on the latest New Yorker...


Metro, a free newspaper distributed in New York City had the following insightful words:

Still, as we celebrate this watershed moment, it is important that we not become too self-satisfied, too pleased with our collective maturity. Indeed, it is one thing for a nation to finally accept that a black man can represent its interests. It is another thing entirely to question the nature of those interests. The working poor will be no happier to know that a black man is undermining their prosperity. Gays and lesbians will see no moral victory in having their civil rights stripped away by fellow minority. Continental Africans will find no solace in the fact that one of their sons is aiding and abetting its exploitation. For America to truly mature, we must not only acknowledge its bright light, we must also come to terms with its dark underside. Militarism, violence, consumerism, homophobia, patriarchy, anti-intellectualism, and countless other hallmarks of the American empire must die in order for a new, more mature America to be born. Otherwise, we have done nothing more than put a slave in charge of the plantation.

Quotable

"Nor is the question before us whether the market is a force for good or ill. Its power to generate wealth and expand freedom is unmatched, but this crisis has reminded us that without a watchful eye, the market can spin out of control - and that a nation cannot prosper long when it favors only the prosperous. The success of our economy has always depended not just on the size of our Gross Domestic Product, but on the reach of our prosperity; on our ability to extend opportunity to every willing heart - not out of charity, but because it is the surest route to our common good."

- Barack Hussein Obama, Jan 20, 2009. Full text of his inauguration address here.

I cannot seem to get this image off my mind as Barack Obama prepares to become the next POTUS.

Cartoon ripped from the Fall 2008 issue of the Virginia Quarterly Review magazine.

Maryann Reid, the founder of Marry Your Baby Daddy Day (an annual event where 10 unwed couples who already have children together elect to marry) on what the Obama win means to black consciousness...

"I have no more excuses" is what I've been hearing at holiday parties from people who believed the system was designed to prevent black progress. The discussion has gone from talk of race to talk about ourselves and our families. When the president is black, it means so much more than a color; it means a new national consciousness. And I wonder whether attitudes about marriage will change among black couples.
The Obama family represents the dream of so many black men and women: the picturesque wife, husband and children. It is a fantasy that seems far away for some, but Obama's win made it a possibility. What the world, and black Americans, will see now is a model for a healthy couple, a happy union and, dare I say it, a sexy marriage. His win means that we are all expecting more, accepting less.

An Obama flip-flop?

Looks like Obama was for windfall taxes on oil companies before being against it.

From Reuters (Jun 2008): Democratic presidential candidate Barack Obama said on Monday he would impose a windfall profits tax on U.S. oil companies as he sought political gain from Americans' pain over high gasoline prices. I'll make oil companies like Exxon pay a tax on their windfall profits, and we'll use the money to help families pay for their skyrocketing energy costs and other bills," the Illinois senator said.

From the Wall Street Journal (Dec 2008): Now with the election safely over, a transition spokesman explained this week that the drop in oil prices to $50 a barrel has made the windfall tax a dead letter. Left unexplained was why the oil companies suddenly decided to stop profiteering, or manipulating commodity prices, or whatever it was they were supposedly doing. But be thankful for small mercies. It is reassuring that Mr. Obama's calls to arbitrarily soak an unpopular business were merely rooted in political expediency, not some economic philosophy.

Of course, Exxon Mobil for its part is projected to make about $46 billion in profits for 2008. Yes, $46 billion.

Exxon Mobil Corp. Chairman and Chief Executive Rex W. Tillerson will receive a 10% base salary increase of $187,000 to $2.06 million in 2009 plus 225,000 shares of restricted stock, according to a filing with regulators. The salary boost just about matches the profit increase of 11% that Wall Street analysts expect for the oil giant's 2008 profit, now pegged at just over $46 billion, according to a survey by FactSet Research.

Taxing the rich - forgotten promises?

I hope that Obama has not conveniently forgotten his campaign rhetoric of increasing taxes on the rich. I waited for some mention of this hyped up promise in the economic team rollout event this afternoon, but did not see even a passing reference. Even if the current economic climate is not the most conducive for a statement on taxing the rich, one hopes sincerely that he has not forgotten this plank that he ran on...

As mentioned previously on this blog, only 2% of all households in the US make more than $250,000 a year. That leaves 98% of all households below the $250,000 limit. The median income of US households is about $50,000. A sensible tax on the elite 2% will help pay for the stimulus/infrastructure plan that the President elect unveiled over the weekend. We cannot go on deficit financing all of our expenditures and lay the repayment responsibilities on future generations.

From here: But there were no plans to balance the tax cuts with an immediate tax increase on the wealthy. During the campaign, Obama said he would pay for increased tax relief by raising taxes on people making more than $250,000. "There won't be any tax increases in the January package," said one Obama aide, who spoke on condition of anonymity because the details of the Obama package have not been fleshed out.

The last eight years of 'trickle down from the rich to the not so rich' just has not worked. It is clear from the staggering disparities between the upper crust and the rest.

Meanwhile on the bailout front, the current administration is not even trying to act coy about raising the possibility that the bailout mania will end with Citigroup. The pledges made by the US government to ease the credit crisis now totals $7.7 trillion. It is indeed strange how the bailout czars trip over themselves to rescue the world of the virtual (a service economy that deals in cooked up financial instruments) even as it lets the nuts and bolts economy (an automotive industry employing real people and producing tangible goods) by the wayside. I do agree that the automotive industry led itself into the current mess by lobbying for policies that was more in its short term self interest than strategic, but the last great manufacturing lynchpin in this country will crumble in the blink of an eye if we ignore the $25 billion bailout requested by the automotive industry. Why is Detroit not included in the elite 'too big to fail' category when it is responsible for directly or indirectly employing nearly 3 million US residents?

Infrastructural changes ahead

If Obama can manage to deliver on the rhetoric mentioned at a weekly address earlier today, we are indeed in for some major change.

I have already directed my economic team to come up with an Economic Recovery Plan that will mean 2.5 million more jobs by January of 2011 – a plan big enough to meet the challenges we face that I intend to sign soon after taking office. We’ll be working out the details in the weeks ahead, but it will be a two-year, nationwide effort to jumpstart job creation in America and lay the foundation for a strong and growing economy. We’ll put people back to work rebuilding our crumbling roads and bridges, modernizing schools that are failing our children, and building wind farms and solar panels; fuel-efficient cars and the alternative energy technologies that can free us from our dependence on foreign oil and keep our economy competitive in the years ahead.

I liked the fact that he mentioned crumbling roads and bridges, modernizing schools and alternative energy technologies. The only way to get us out of our current morass is infrastructural improvements. Similar to what was enacted after the Great Depression in the 30's.
One must always bear in mind that these are tall promises, very tall. Not easy at all. My fingers are crossed.

Rhythmic review

From Michiko Kakutani's review of a book about the 2008 presidential race written in rhyme by Calvin Trillin. The review itself was written in rhyme by the Japanese American Times reviewer Michiko Kakutani. Her rhyme is a keeper.

There once was a poet named Bud Trillin,
Who cast George Bush as his villain.
He sounded like a new Ogden Nash,
Writing doggerel with real panache,
Chronicling the reign of Bush Two,
And Rove’s quest to wipe out the blue.
The prez was famous for gaffes,
Which Trillin played for some laughs.
He painted Bush as a shrub,
With a strong impulse to flub,
While taking on the Pentagon
And Cheney and the neo-cons.
In our nation’s hard times,
Trillin sought funny lines.
Some said he made mere frivolity
Out of real issues of polity.
But others toasted his wicked wit,
And gave him lots of Amazon hits.

From Katrina to Enron to the war in Iraq,
Bush’s missteps weren’t hard to attack.
W.M.D.’s that didn’t exist led to a desert fiasco,
While greed and a hurricane created domestic disasters.
In the Gulf, we were caught in a quagmire,
While at home, things looked increasingly dire.
This mess helped spawn two earlier books
By providing some embarrassing hooks.
Now the poet’s turned to the ’08 election,
Skewering the candidates for our delectation.
There was Rudy, McCain, Huckabee and Romney,
Obama, Edwards, Dodd and, of course, Hillary.
All of them tracked from Iowa to New Hampshire,
In caucuses and primaries from Des Moines to Manchester.

The former first lady versus Senator Obama
Made for lots of gripping political drama.
Bud noted Barack’s “eloquence at his command”
And how he got Dems to eat from his hand.
As for McCain, Bud saw flip-flops at a cost
From the straight-talking man who in 2000 lost,
He’d become someone fond of the tactics of Rove,
Especially as all his poll ratings dove.
While critics said the poet was partisan,
Fans hailed him as a talented artisan.

McCain’s pick of Palin was more grist for the mill,
Caribou Barbie saw herself as a tool of God’s will,
At least that’s how Trillin saw the lass from Alaska,
Whom Republicans hoped would play in Nebraska.
Both McCain and Palin tried to act mavericky,
But many thought of her selection as gimmicky.
The right was glad she was instantly famous,
But foes just saw a complete ignoramus.

Everything changed when the Dow took a dive.
Bankers on Wall Street questioned how they’d survive,
And folks turned from talk about lipstick and pigs
To worrying how they’d stay in their digs.
More bad fallout from the reign of 43,
Which hit the poor, the rich and the bourgeoisie.
Republicans suffered from this new twist of fate,
And McCainiacs wondered if it was too late.
Mac touted a guy known as Joe the Plumber,
But his populist gambit became a bummer.
Trillin recounted this all with verve and élan,
Charting the candidates’ every slogan and plan.

Trillin followed the race to the end,
Seeing what message the voters would send.
This deadline poet began his last lines
As anxious Democrats looked for a sign.
The networks announced that Obama had won,
A momentous end to a historic run.
Obama’s mantra of change helped win the election,
And promised America a brand-new direction.
Trillin praised the country’s choice to reboot
In verse that was witty, quick and acute.
What had begun two books back as a wry chronicle of woe
Became a tribute to the nation’s ability to grow.

No more Gitmo

Day before yesterday on the television program 60 minutes, the President elect Barack Hussein Obama came forward and made a fairly bold statement in public:

I have said repeatedly that I intend to close Guantanamo, and I will follow through on that. I have said repeatedly that America doesn’t torture, and I’m going to make sure that we don’t torture.

After being a helpless observer for the last eight years and in particular, after watching the systematic excision of liberties as depicted in the movie ‘Torturing Democracy’, I must say that it is a sign of change when the only person who has the power to close Guantanamo actually makes a statement that he is going to do so.

Depiction of Strappado by Bessonov Nicolay titled ‘Interrogation’, Oil on canvas, 1992.

Strappado is a form of torture that began with the Medieval Inquisition. In one version, the hands of the accused were tied behind his back and the rope looped over a brace in the ceiling of the chamber or attached to a pulley. Then the subject was raised until he was hanging from his arms. This might cause the shoulders to pull out of their sockets. Sometimes, the torturers added a series of drops, jerking the subject up and down. Weights could be added to the ankles and feet to make the hanging even more painful. It is alleged that this form of torture was also routinely used at Gitmo.

Asian psyche

Chinese reactions to the US election...

"I think the main reason Chinese have liked Obama so much is he's a black person and we Chinese have sympathy for the weak side," said Li Bingxin, an official with the China Journalists Association "They have fought so many years for equality. If the black side can win it will be a breakthrough."

One good Chinese friend had asked me days earlier if Mr. Obama would be the first black president and was surprised by the answer. "Wasn't Abraham Lincoln black?" he asked.
Um, no.
"But he did something really good for the black people, right?"

Another friend asked to know more about Mr. Obama. I played her a video clip of a speech and she was shocked when he expressed a litany of economic problems, including people struggling to pay for health care and send their children to school.

"Is this all true?" she asked, and was shocked by my affirmative answer. "We thought everyone in America was rich."

Comment on Obama considering Summers for Treasury

The Times is agog with the news that Mr. Lawrence Summers is in the short list to be the next Treasury Secretary. It is commendable that President elect Obama is looking to allay jittery markets and appoint someone as quickly as possible at the Treasury who can project an image of stability, values and infuse continuity at the Treasury.

The only problem is that Mr. Lawrence Summers is not that man.

From his speech to the National Bureau of Economic Research:

Women often don’t want to work the hours needed to get to the top and that girls are socialized toward nursing while boys are socialized toward building bridges. In the special case of science and engineering, there are issues of intrinsic aptitude, and particularly of the variability of aptitude, and that those considerations are reinforced by what are, in fact, lesser factors involving socialization and continuing iscrimination.

In other words, this man was telling us that women were intrinsically inferior to men when it came to math and sciences.

That he was the President of Harvard University when he made that comment was another thing... Now he is being considered by President elect Obama to be the Treasury Secretary. No way. Now how. Not ever.

Obama can do better than that. Geithner is the right individual for this job.

Growing up in Bangalore, India I used to catch glimpses of the covers of the local newspaper 'The Deccan Herald' as my father sat on his chair drinking his morning cup. The effects of the Obama win echo and reverberate far and wide and this is what the Deccan Herald from Bangalore had to say this morning:

History often produces the man it requires for its need and purpose and Obama perhaps knew it was his moment and seized it. But opportunity is responsibility too. That casts on the 44th President the task of creating a new, more humane America, responsive to the myriad problems it confronts within and creatively engaging with the world of which it is still the leader. There is much cleaning up and reconstruction that awaits him in the economy, society and elsewhere, and Obama has indicated that he is seized of the enormity of the challenge. It would be the hope of the world that America’s howl for change does not go waste.

Update: Other reports from around the world here. A great photograph compilation of people's reactions from around the world. Some of them are indeed touching.