Islam And The West (1)

Allah only forbids you [to make friends]
respecting those who made war upon you
on account of [your] religion, and drove
you forth from your homes …
whoever makes friends with them,
these are the unjust.
The Examined One 60.9
The Koran

Allah does not love the unjust.
. The Elephant
The Koran 105.2

These are two very interesting passages from the Muslim Koran. Especially since, in the eyes of most of the Muslim world, we have made war on them on Iraq and Afghanistan—and with our air strikes in Pakistan. Not to mention our policy of backing Israel.
If we take the Koran literally—as many, many fundamentalist Muslims do—then they we see that their faith forbids them to make friends with us. If they were to make friends with us, they would be unloved by Allah himself. I should imagine that this type of passage will make life difficult for people in the American government who want to reach out to Islam.
In Muslim eyes we made war on Iraq; we drove tens of thousands out of their homes into neighboring Jordan and Syria; and we are guilty in Sunni eyes of backing Shiites, in Shiite eyes of backing Sunnis. It is still remembered by Muslims that President Bush spoke of making a “crusade”.
In their eyes we have done much of this “on account of their religion”. The passages give justification to those who train in Middle Eastern camps and dream of carrying the war to the very shores of “The Great Satan” as they did on September 11, 2001. How could Allah love them if they did not?
Like our crusading ancestors of centuries ago, we have grasped a tiger by the tail. It is a tiger with great patience—it took two centuries to dislodge the crusaders from Palestine and Syria, but they never quit trying. They made truces; they sent gifts; various factions even made temporary alliances.
But they never gave up their fundamental strategy of war to the finish against the Christian invaders. I hope quite fervently that our top diplomats all take a few hours to read a short history of those crusades.
They won’t like what they learn, but the consequences of not learning at all will be far worse. Like the crusaders who eventually had no home in Europe to go back to, we can’t just pack up and go away. The crusaders had their homes to defend; we have our oil necessities to defend.
We—the Christian West, primarily England and America—have had our hands on Middle Eastern oil resources since the first wells came in a century ago. By now Saudi and Kuwaiti oil wells are as essential to our survival as are the Great Lakes and California vegetable fields.
We’re as stuck as the crusaders were in the Twelfth and Thirteenth Centuries. We can make truces, send gifts, make temporary alliances—but we must accept the fact that the price of oil will always include blood. Ours and theirs.
The Twentieth Century hiatus that came when repeated defeats at Western hands rendered Islam quiescent, shocked into momentary acceptance of Western power, are over. They ended forever when the Shah was thrown out of Iran in 1979. We will never go back to the days when Armco was the biggest power between the Mediterranean and Indian Oceans.
The British, French and Turkish troops that once kept the peace in the region are gone. Now all that is left are American forces—facing a far more rebellious populace than those earlier occupiers ever did. The creed of religious conquest that sent desert hardened warriors out of Arabia to conquer the world for Allah in the Seventh Century has had a renewal—in Gaza, Iran, Pakistan and a dozen other nations.
Sending our armed forces into harm’s way in Muslim waters is scarcely new. Our first naval squadron was sent to the southern Mediterranean at the founding of our Republic. They stayed there until the French and British took over in the 1830s.
The Marine Hymn celebrates our conquest of Mexico AND our incursion into Muslim North Africa over two centuries ago. We’re kind of back where we started.
From time to time, I will go back in history and explain how, over the past 1,400 years we Europeans have been engaged in non-stop warfare with these same people. We should refresh ourselves in this background in order to understand what is going on now.
I hope Mrs. Clinton and Mr. Obama are doing the same. Islam, with its vows to convert or conquer us will be there long after the present financial crisis is dealt with.

Notice of Continued Administration

A friend of ours just got a notification from her brother-in-law’s lawyer. That’s the brother-in-law who’s handling her late father’s estate. All it consists of, after Medicaid and the nursing homes, is one two family house. It’s been for sale since the old gentleman died a year ago.
Three or four years ago, I’m told, people were calling him and asking to buy it. They were offering more than twice what he owed on it. As a duplex it made a nice piece of income property or a home for a family with grandparents to take care of. It was in demand.
The lawyer’s typed note was simple and stark. (She showed it to me.) It reappointed the long-suffering brother-in-law for another year as executor of an unresolved estate (one house that won’t sell) and gave as its reason: “The estate remains under administration.
The continued administration is necessary because Primary estate asset is the real estate, which has been on the market since March of 2008. No offers have been received and the property remains for sale. Estimated time necessary to sell unknown.” Unknown, indeed.
Family members told the old gentleman to sell four years ago. They ran the numbers and showed him how he could use the proceeds to buy into and maintain an assisted living unit where his meals would be just down the hall; he could go on playing with his computer and his television.
But he refused. This house is my children’s inheritance, he insisted. Such an inheritance! If you want to inherit a pain in the derriere. They’re going ‘round and ‘round. Whether to rent it out (with all the grief that comes from being a petite landlord), whether to sell it for what you can get now—even at the risk of a deficiency judgment.
Properties like it are selling, the real estate agent explained to them. But nearly everything that’s moving in the Grand Rapids area is foreclosed property at fire sale prices. Why should a buyer pay more than what he can get it from a bank for?
Just one more example of the kind of grief that’s going around this country now. Even the dead can’t sell out and move on. In my neighborhood, forty miles or so from the above duplex, there was still some movement last spring.
People weren’t getting what they wanted, but they were able to pay off remaining mortgages and move to other jobs. One couple followed her job to Mississippi, another followed his to Texas. Another retired to their riverfront cottage nearby—they had hoped to get enough from their home to pay off the retirement home. That didn’t happen.
Another chap lost his job and got out before he owed any more. They moved in with her folks. Then, in mid-summer, the sales stopped. There were lots of For Sale signs up but no movement. Not far away there’s an empty house—two years old—he found work in Florida last fall. The snowplow used their driveway this winter to dump the snow from the cul-de-sac. No prospects were using it.
I haven’t seen a sale anywhere around here since June, at the latest. My friend’s brother-in-law off in suburban Grand Rapids had no desire to watch over a house for a year! But it has a mortgage and he has family members who’d like a few bucks out of it. He’d probably like some too.
Meanwhile, he’s working his tail off—I’m told—trying to preserve the company he works for in the auto parts supplier industry. They’re laying off like crazy, but he’s still there—making sales calls and holding the hands of surviving customers.
His future doesn’t look happy. Today’s figures on General Motors’ losses raise real questions how long it (or Chrysler) is going to be around to buy parts from anybody. I have friends around here in the same boat. It doesn’t matter how clever an engineer you are, there’s got to be a company in existence for you to create parts for.
Moving to a another job—assuming you find one—gets vastly more complicated when you cannot unload the house you’re in. Double that—become an executor of a second mortgaged house—and life becomes an unbelievable joy.
No wonder people are mailing in the keys. People used to do that—pack the Conestoga and move on West. Only now, they tell us, a lot of the “west” is even worse off than we are.
A “Notice of Continued Administration” would have been so unnecessary only a few short years ago.

What Bush Never Understood In Iraq

When I heard that George Bush was going into Iraq six years ago, a story I was told long ago kept repeating itself in my head. I kept wishing I could tell it to Mssrs Bush, Cheney and whoever wanted to send troops in. It’s applicable to Afghanistan and Pakistan now—so I’ll write it.
A good Egyptian friend of mine was descended from the Pasha of Upper Egypt under the old Turkish Empire. The family had lost its position and much of its wealth—although they still lived in a 300 room house fully staffed with slaves.
When his father died, about 50 years ago, his uncle took over their remaining land, feeling there was nothing two teenage boys could do to stop him. The uncle was constantly guarded by armed slaves and body guards and always carried a gun himself. He seemed impregnable.
One family festival the uncle sat in splendor—guarded by his armed retinue, the local law enforcement officials, with his own rifle across his lap. My friend’s seventeen-year-old brother approached. “Salaam,” he bowed, saluting with his arms as he did so.
He was wearing an Arab robe with long sleeves. Out of one of the sleeves came a knife, moving so rapidly that no one saw it until it had gone deep into the uncle, bounced back out, and fallen to the floor. The uncle joined the knife, dead. No one had time to react.
The brother was arrested for murder. At the trial, all the witnesses had to admit they had never seen the knife anywhere near the brother. They had first seen it after it landed on the floor, bloody. No one could tie it to the young man.
The judge called him up before the bar. “Sir,” said the judge, “there is no witness to convict you; you are free to go.”
My friend’s brother pulled himself erect and glared at the judge. “Had anyone ELSE killed MY uncle, I should have killed him!”
He was convicted out of his own mouth and served several years in prison.
There are thousands of stories like that, over the millennia that the Lex Talionis has existed. Eye for eye, tooth for tooth, a duty and an obligation to take vengeance against anyone who harms you or yours. “I and my brother against my cousin,” goes the Arab proverb; “I and my cousin against the world.”
Ancient conquerors in that part of the world understood the mentality very well. That is why they killed so widely and so thoroughly. Every surviving brother, cousin or nephew was a likely instrument of revenge—and had to be viewed as such.
A war with Arabs is one in which there really are no civilians. Every survivor is a likely combatant. You must either stay out or go in and do a very thorough job. Suicide killings in that part of the world, whether for vengeance or policy, are a thousand years old.
We get the very name “assassin” from that part of the world—where a member of this sect would infiltrate an enemy’s court, work faithfully for years, rise in the ranks and then, at a signal, kill the enemy ruler. That’s a suicidal mole with sharp teeth.
The Crusaders would, from time to time, ally themselves with the assassins and use their good offices to eliminate Christian and Muslim competition. After a few decades the Crusaders had a fairly good idea of what they were up against—and how to play the Arab factions off against each other.
It took the Arabs two hundred years to get rid of their wily Christian adversaries—hugely outnumbered but constantly bouncing from one Arab ally to the next. The only key to survival was never to expect permanent friendship, always to be ready to jump to the next temporary alliance.
Cheney and Bush never even began to realize this. I only hope the apparently more pragmatic Obama will understand this. We are up against a mentality that says, religiously and relationally, “I may kill my uncle (or ruler or official), but if you touch him, I will avenge him.”
That’s a tough enemy to deal with. You have to think a long time before you figure out just how to fight him or negotiate with him. Above all, you have to think.
That was the part we left out of the Iraq equation—until about last year or so. (And we have to remember that this can be so transient.) Let’s see if we get it right in Afghanistan.
A discouraging note: Alexander the Great, who wasn’t afraid to try to conquer just about anybody, didn’t try in Afghanistan. He backed out of the country and built a wall of forts along the border to keep them away from him. He didn’t try to fight on their turf.
The remains of those forts still stand along the border—just as a reminder.
The British tried in the 1840s and lost a whole army. The Russians tried in 1980 and lost their entire empire. “I and my brother against my cousin; I and my cousin … .”
We’ll talk some more about this mysterious and dangerous part of the world.

Obama--An Orator?

I watched Obama’s speech last night. He’s said it all before, so there wasn’t really anything to listen to—so I spent my time trying to answer a question that’s been bothering me: why do people call him an orator?
I’m at least modestly competent to ask that question. My father was a trained speaker, and he poured a lot of energy into making me a good one. When I was very young, he would read Shakespeare’s comedies to me on Sunday afternoons. I can still hear his voice.
When I was about seven he took me to the radio and said, “Now we are going to listen to a speech by the greatest speaker of this century”. That was my introduction to Winston Churchill. Since then I have listened to recordings of hours of his speeches and read nearly every one he ever made.
He would point out the acting and speaking abilities of various actors when we went to the movies. I grew up surrounded by the voices of the likes of Lawrence Olivier, David Niven, Milton Cross and a host of others. I debated, entered speech contests (won a few) and came out of college with a speech minor.
In those days we had actors and politicians who actually spoke well. Some, occasionally, came close to real oratory. Listen to some of Roosevelt’s best speeches. Even Eisenhower, at moments like D-Day could be powerful in his simplicity—“This morning at four o’clock an allied expeditionary force landed on the coast of France … .” Gary Cooper, at his most taciturn, couldn’t have done it better.
Kennedy knew how to make a line memorable. But, Obama? He is well educated. American English is obviously his native tongue, stammers, pauses, flat voice and all. It’s a competent usage of words, but it isn’t oratory.
He isn’t even a good speaker. A couple of my friends who also come from an age when English was still well spoken agree. They cannot figure out why people call Obama such an orator. Last night something finally came to mind. Very few living Americans have ever HEARD oratory.
We have passed on, as a nation and as a language, from the days when actors were expected to give their lines with emotional force, clearly, “trippingly on the tongue”. What we watch on television or at the movies is scarcely acting any more. (Politicians are even more appalling.)
Compare a Brad Pitt or a Tom Cruise to William Conrad or Lawrence Olivier. Don’t, it will ruin most modern movies for you. Listen to Elizabeth Taylor (who could do “mad” superbly) and Richard Burton going at it in “Who’s Afraid of Virginia Wolfe” or “The Taming of the Shrew”!
No wonder modern films depend so heavily on ever more spectacular computer generated special effects. It takes our minds off what is being said and HOW it is being said.
Compared to what’s on our TV and movie screens, Obama probably sounds pretty good. He can speak his lines without needing special effects or a naked co-star to hold our attention. For a Twenty-First Century speaker, that’s something to say.
We’ve long ago learned to forgive stammers, blank stares and flat inflection—all we seem to ask today is that there be some minimal sense to the words, that they seem somehow to hold together. Obama does do that. I don’t hear any, “like wow, dude”, “my bad”, or other sorts of gibberish that pass for speech in our high school halls.
We probably can’t ask for too much more. (I do question how well Obama would have done as a litigator in front of a jury, but he wisely didn’t choose that path.) His adoring hearers strike me as similar in their response to people who supposedly once heard a dog speak. They were so impressed that it could do it at all, they did not criticize any lapses.
After eight years of George Bush—who truly mangled the language—this is no doubt an improvement.
But it would be nice, someday, to hear real speech, real oratory. I’ll take it on screen and even in front of a joint session of Congress. I think I’ll recognize it when I hear it.

Nationalization--A Bugaboo Word

Apparently the word “nationalization” when applied to our collapsing banks has investors scared stiff. So say several commentators who attribute the falling stock market of the last few days to their fear of that specific word. “Nationalization”. Of the banking industry.
Do they have anything to be afraid of? Possibly so. Nationalization as a policy in Laborite Britain after the war didn’t do anything much good for Britain’s economy. Wartime rationing remained in effect all through the 1950s, and everything stagnated until Thatcher vigorously denationalized everything in sight during the 80s.
Now, we have to remember that no one in the United States is talking about permanently taking over the banks—but there certainly will be a significant degree of control as the government bails out the industry by taking huge equity positions in many of the largest banks.
For a time, those banks likely will be under the control of the Washington bureaucracy—in other words, they will be effectively “nationalized” until they can buy themselves back. There is one major problem with the governmental bureaucracies that no one is talking about.
I think you almost have to have worked in the rank and file bureaucracy to have actually seen or experienced it. Government has particularly cruel ways of punishing its midlevel and upper level employees when they become too zealous in carrying out this year’s Congressional or Presidential whim.
Remember, those people have usually been in government employ for more than fifteen years. That’s significant because after that time you are trapped in the pension system. Before fifteen years, if you leave government employ you can take your pension money with you.
After fifteen years you cannot. If you go, the money stays and all you get for a pension is an amount based on your seventeen or twenty years of service. That’s not a lot. (There is no social security for federal employees.) So you really can’t leave after fifteen years in.
They’ve got you, and they know it. What happens to a bureaucrat who gets excited about this year’s Congressional mandate and really works to carry it out? (I’ve seen this four or five times.) In two years, there’s an election and a new Congress.
Congress swings with the perceived mood of the electorate. So does the President. Last year’s program—be it civil rights or bank reform—is no longer popular. The President about faces. Congress does a one eighty. The GS 14 or 15 (high to top level) bureaucrat is left twisting in the wind.
They can’t fire him. They put him at a desk out with the secretaries. He is given no phone, no work; he attends no meetings. Almost no one talks to him. He must sit there day after day with absolutely nothing to do. Since the people prone to zeal tend to be Type A personalities this is an almost lethal penalty.
His mistake? He got excited and active in carrying out yesterday’s law of the land. So how does a wise bureaucrat handle a fancy new program? He pays a lot of lip service. “Yes sir, yes sir, we can handle that. Yes sir.” He takes as little action as possible, being very careful to be certain that someone senior, preferably elected, has signed off on it. You won’t find his fingerprints on it.
He works with absolutely no zeal or enthusiasm. (These tend incidentally to be very bright people—my experience indicates that, man for man, high level bureaucrats tend to be smarter than high level executives.) He is cautious about dangerous innovation and he certainly takes nothing Congress or the President says seriously. He’s looking down the road a couple of years.
The banking business that bureaucrats are asked to handle will correctly be perceived as a very hot third rail and they will touch it gingerly and do as little to endanger themselves as possible.
That leaves you with a valid question. Do you want men and women under that sort of constraint to be working to rescue our banking system? The wise ones—the ones you really wish were handling things—will tend to step back and let the fools rush in.
Let those foolish enough to get really involved and excited spend several years sitting at a bare desk somewhere down the road. The thought of this attitude (however sensible from the bureaucrat’s point of view) might make the average stock holder just a bit nervous.
But just remember, if bankers and investors feel they have something to fear from the bureaucracy, the bureaucrat has even more to fear from doing a good job.

Obama And The Really Bad News Day

It’s been a really, really bad news day. A Grand Rapids firm just recalled all its chocolate covered peanuts. My local grocery store refuses to let me buy Dutch licorice because it’s been recalled. The papers tell me Madoff never bought a single stock in the last ten years.
Illinois Governor Quinn is asking the spanking new Senator Burris (that he just appointed) to resign already. The Stanford scam leaves highly paid New York Yankees unable to charge a meal or a room. Stocks go down as the Stimulus bill passes.
They’re talking about nationalizing our banks, and our new Attorney General calls us a nation of chickens. Just after former President Clinton assures us things would be much better if only he’d been in office the past eight years, his pet, the former first cat, dies.
Obama’s approval rating is still slipping. (Newsweek suggests that people expected him to ring in “the kingdom of God.”) It seems as if the only thing that could be much worse is if all the animals in the National Zoo developed diarrhea.
I’m not sure this is the way all of my liberal friends who were so excited about Obama’s candidacy last summer expected his first month to go. Not surprisingly, I guess, Congressional Democrats have suggested a solution to all of our problems: take Rush Limbaugh off the air.
I’m no fan of Limbaugh—haven’t listened to him in more than fifteen years. But somehow I doubt that the stock market will rise or banks begin lending if the airways are purged of all right wing commentary.
The problem goes just a bit deeper than that. It also greatly predates the past eight years. After all, Bush came into office at the peak of the Tech bust—and only eight months later the World Trade Center attack gave the economy another negative jolt.
Somehow, after these disasters—whose inception dated back at least a decade before Bush—he managed to bring the economy back to a decent performance level. If you can blame him for not foreseeing the housing bust, blame Clinton for not foreseeing the Tech bust.
There’s nothing in Clinton’s record to suggest his economic policies (the ones that finally collapsed last year) or his foreign policy (the one that led straight as an arrow to the 9/11 catastrophe) would have left us a whit better off than Bush’s. Clinton was just luckier than Bush while he was in office.
Disaster waited until just after Clinton was out of office. Bush was unfortunate enough to win a second term. Both men should have had more foresight. Both should have shown more political guts as well as insight into what was really happening in the economy and the world.
But they didn’t. Neither did their predecessors. George H.W. Bush told the world he just didn’t get “the vision thing” after the Soviet Union threw in its hand and dissolved. We really haven’t had a “vision thing” ever since Truman and Acheson defined our Cold War goals.
We held it together for over forty years (bi-partisan foreign policy—remember?) following one basically consistent aim, with one clear enemy to face. Our compass always faced in the same direction. Then, all of a sudden one day in November, 1989, that all went away.
Bipartisan foreign policy vanished. We were aimless. Economic policies that worked to bring down the Soviet Union now showed their weak points—that were threatening us as much as our enemies. Just who was our enemy now? What were our vital interests?
In a fractured world, all the familiar boundaries were gone. This was the confusing world that Clinton and Bush—and now Obama—inherited. No one—Republican or Democrat—has articulated any kind of a clear vision or mission for us to follow.
Along the way we’ve lost our Christian verities, we’ve given up our historic moral principles. We’ve replaced both the good and the bad in our old practices and principles with: none at all. The old ways have passed—and all we seem to have left are bad news days like today.
Trivial matters; serious matters. But none of it pulls us together or suggests a policy to follow. Maybe before we concentrate on getting the banks lending again or how to draw down our troops in Iraq, we should take some important moments and figure out where we want to go.
Maybe, more than a bailout, we need a Truman, an Acheson, even a Senator Vandenberg. Perhaps it would help if we sat down and figured out who or what was the real enemy—it would make it easier to define a policy for defending ourselves.
Now, all we can do is read the headlines—make do without chocolate covered peanuts—and hope someone will find our bearings for us, someone will give us an anchor that holds.

Reaching Out To Muslims

Buried amidst all the folderol about mortgage modification plans, 787 billion dollar bailouts, and unfortunate cartoons in the “New York Post”, some of us may have missed the references to reaching out to our Muslim friends.
Supposedly our new Secretary of State is off on such a mission; the president has spoken about doing it—and somehow all of this will make for a safer, pleasanter world. I have nothing particularly against this idea—so long as the reaching out types are aware of certain realities.
It is honestly not difficult to befriend Arabs and other Muslims. Show them that you are aware that the Islamic world lies somewhere east of Ireland, that you know a few facts about the Crusades and that they are unhappy about American firepower being exercised in their world—and they are likely to give you a devastating smile and start talking quite candidly to you.
This happened to me just a few weeks ago at a Mall kiosk, where the proprietor was a native Jordanian. We talked for twenty minutes or so and, the next time I walked past, he was waving and grinning as if I were his dearest friend.
Throughout my life I have had several Islamic friends, male and female. I cannot recall one that I did not really like. As a very bright American girlfriend of mine once said, “They are totally chauvinistic, but so charming about it.” And God knows the sons of Ishmael are loaded with charm.
Their food is to die for. They also know how to throw a fantastic wedding reception. And, without moving, they can look at you with a steady, blank gaze that can put a chill up your spine like nothing I’ve ever experienced in the worst and most violent American slums.
Don’t be fooled. Symbolic to me of the chasm that lies between us is an enduring image from forty years ago. A friend of mine—a White House attorney—accompanied me to a marvelous Syrian restaurant in Washington, where almost no English was spoken.
They served beer and wine to the Americans and my friend decided he wanted a martini. They allowed him to stand at the bar and try to teach them. He, speaking no Arabic, the old woman at the bar, speaking no English, made a delightful pair to watch as he tried—eventually without avail—to show her how to make this mysterious American concoction. My wife, his date and I could not stop laughing.
At bottom, however charming, obliging or friendly, we are divided by a gulf between two religions that are intrinsically hostile to one another. If the one is true, the other cannot be—and that’s just the beginning of the dichotomy that splits us.
I hope Secretary of State Clinton and President Obama know this. One of this administration’s mantras seems to be, “We all worship the same God.” No. Christians worship Jesus Christ, a person within a divine trinity. To Islam this is all but unforgiveable blasphemy.
Nor does one get kudos in the Muslim world for being an atheist or a religious liberal. Nor, should a Christian convert to Hinduism or Islam, is his family bound by religious law to kill him. Nor do Christians affirm such Muslim rights as beheading an unfaithful wife or stoning her.
Since religion informs life in the Muslim world, we are left with a simple choice if we really want to get along in that world. Convert or defend ourselves. We are infidels. Liberals, atheists, orthodox Christians—all are an offense to Allah and his followers.
Over the past millennium and a half, Islam has already conquered about two thirds of the once Christian world. All of North Africa, the Near East and much of the Middle East, once all Christian, conquered by fire and sword. Already Muslims speak confidently of the day when Europe—with its huge immigration from Muslim countries—with be completely Islamic.
It’s not that different from the Cold War. No matter how cooperative the Soviets could be on this or that issue—or how much they might cheer American athletes and musicians—it remained the Soviet mission to make all the rest of us communists.
(Americans are pretty good at that themselves—Bush seems to have been fairly sincere about wanting to bomb the Iraqis into becoming good democrats. The urge to proselytize seems universal. Did you ever meet a Chevy salesman who was truly happy you drove a Ford?)
Do not imagine that the folks who attend the mosque down the street plan to remain a contented American minority forever. They will allow you to remain Christian if you insist (we do barely qualify as fellow monotheists) , but you will pay extra taxes and your rights will be severely circumscribed.
Reach out. Be friendly. Eat the food. Be charmed. But remain aware of how they see the world and your place in it as non-Muslims. “Peaceful co-existence”, as we used to call it during the Cold War, is only a momentary tactic.
Christians sometimes still sing, “Christ shall have dominion over land and sea; Earth’s remotest regions shall his empire be … .” Muslims see all lands and peoples as eventually belonging to Allah. Find some wiggle room in that. Reach out—just don’t lose your hand in the process.

Inflation--The Unmentioned Housing solution

President Obama explained his plans for preventing foreclosures in housing this afternoon, speaking from Phoenix, where there are lots and lots of them. He spoke, as one commentator noted, in “vague and complicated” terms, warning that he couldn’t prevent all foreclosures.
He drew loud cheers when he said that “speculators,” people who took on mortgages they knew they couldn’t repay, and people who fuzzed the small print while pushing the mortgage on buyers would not be protected. This is Goldwater country and no undeserving need apply.
Well, I couldn’t help thinking, that just about eliminates everyone who bought or sold a house during the past three years or so. Businessweek cites a couple in California—he was a federal cop; she worked for a university; these are not rich folk—who are about to lose their newly purchased home.
It seems their mortgage will soon leap from $3000 a month to $4000. They recently bought a nice subdivision house for almost $600,000. Excuse me? Only a few years ago that was the kind of money a highly paid medical specialist acquaintance of mine paid for his enviable mansion! Or that you paid for a house right on the beach at Lake Michigan.
Obama did not deal with the fact that a whole lot of American “middleclass” housing is way, way overpriced to begin with. He did not deal with what is going to happen to the American economy if and when housing drops to a sane level of cost and mortgage payments.
Talk about trillions and trillions of value going bye-bye! Or there’s an equally hideous alternative—so much inflation that a $4000 mortgage becomes as easily handled on a normal middle class income as the $105 a month my dad paid in 1954 or the $450 a month I contracted for in 1980 (for less house than my dad bought. Housing inflation isn’t new).
But when there is that kind of inflation, a lot of people get left behind. Pensions usually don’t keep up; bond interest may not; salaries and wages almost never do. But that’s what you’re going to have to have if all the banks are going to come out of this solvent, let alone the government that’s guaranteeing all this rescue.
Banks are caught in a truly nasty kind of loop. It doesn’t help anybody to say, “They made it”. Even if it’s true. They were chief among speculators, gambling that the $600,000 houses would keep right on appreciating, so they could be repossessed and resold if needed. Gambling that law enforcement officers and university non-teaching staff incomes would keep climbing. Gambling that credit for refinancing would always be available.
(That should eliminate nearly all banks from Obama’s plan.) To stay out of receivership—to survive—banks must have more money in assets than they have in debts. So should we all, but the government does not take us over the instant our worth drops below our obligations. It does with banks.
A truly terrifying reality today is that one whale of a lot of the assets that banks count on to keep them solvent and running consist of mortgage paper. Beginning in July 2007 the Bush administration began jawboning banks to get them to lower rates and even cut principal to ward off a coming housing collapse. “Banks,” said one official, “were in denial.”
No they weren’t. They understood full well that the moment they cut principal and interest on 101 Love Nest Lane, auditors would start devaluing the paper on 102, 103, 104—in effect, all of Love Nest Lane. This would do savage and potentially fatal things to the bank’s books.
They chose to trust that somehow, someway housing prices would retain their $600,000 valuations and even climb beyond that. It was like a wife’s trust in a philandering husband, but it was all they had to go on. The alternative was too frightening. Call it denial if you will, but if she has no other way of making a living, that’s what many wives do. That’s what the banks did.
Hang tough and hope, this became the mantra of American bankers. People did not get interest rates cut; there was no way principal was going to be cut! Under that Bush plan, in nearly two years, exactly 25 mortgages have been modified. In the whole United States. Obama obviously hopes for more—but how is he going to prevent receivership for banks that cooperate?
Guess how? Print lots and lots of money—787 billion here, a trillion there, 75 more billion over there—and inflation will take care of all the overpriced assets out there.
China will rescue us by buying our debt? China’s export trade is suddenly in deep, deep trouble. They are muscling out foreign competitors in their domestic market by moving their own products (that they can no longer export) into domestic outlets. General Motors which had up until recently been making much of its money in China is a significant casualty here.
Don’t wait for the cavalry, kiddies. It’s been downsized. Natural forces like massive inflation are about all we have left.

The Unthinkable Improbable

Scientists, liberal theologians, generals, detectives, liberal politicians, mainstream university professors and many judges all tend to share a similar proclivity. They are usually completely willing to engage in unproven and unprovable speculation. They will, for the sake of argument or as a preliminary thesis, think the unthinkable (and the unknown) just to cover all the “worst case scenarios”, all the possibilities, and even the improbable but remotely possible solutions.
Scientifically and in several other areas of the real world, as the term is understood in politically correct circles, this is probably a useful technique. It allows, hopefully, for thinking “outside the box”, and it may open the mind to unusual possibilities and solutions to a problem.
As A. Conan Doyle wrote in the words of Sherlock Holmes, “When you have eliminated all other possibilities the remaining one—however improbable—must be the answer.”
But there is one improbability that remains universally out of bounds to most of the above practitioners of the fine art of speculation. There is one subject in which one is either not allowed to speculate at all or is deemed unprofessional or, at best, only moderately sane if one does.
It is the subject of conservative Christianity (or of any other religion, for that matter). I saw a bumper sticker the other day that read, “God is too big to fit in any one religion”. It sounds nice, even rather profound until you think about it. If God is in all religions, then the beliefs about the characteristics and nature of God of any one faith are rendered invalid. They tend to contradict.
God becomes simply an unknowable entity. Taking into account the beliefs of all religions, we can’t know if He (or She) is even aware of us. So there’s nothing to pray for, nothing to expect, and there are no consequences for offending or ignoring Him (or Her).
But just in the interest of the kind of free ranging speculation allowed in nearly all other disciplines, let’s indulge in a bit of speculation ourselves—about God.
Speculation one: Suppose such a being exists. Two) Suppose he takes a proprietary interest in the universe and creatures he created? Suppose—in the interest of fomenting sanity and good hygiene among the creatures he made—he has set up some behavioral standards for those creatures? Suppose that if those standards are ignored, he doesn’t punish but merely allows the natural consequences of injurious behavior to run their course?
These are no more irrational suppositions than those made by natural and behavioral scientists every working day of their lives. They’re merely in a taboo area.
But having established these suppositions about a deity, one is then face to face with other questions. (I suspect that a significant reason God is not permitted in the speculative arena is the nature of the following necessary questions that must follow if he were.)
Suppose we then have a nation of people wracked with their own greed doing utterly foolish things to satisfy their covetous cravings. Huge, unsupportable homes with ridiculous mortgages, bundled securities with no proven value, rampant sexuality (that does damage participants by diseases, by regret—have you ever watched someone weep AFTER an abortion; I have more than once—or by a hardening of once innocent and natural affections), a thirst for an ever greater variety of truly appalling perversions inflicted upon children, women and each other.
Then let us suppose that the deity who established certain behavioral rules feels that it is time to call a halt to the hurtful and foolish behavior. Suppose then that he leaves the fools that indulged in the behavior to cry unto the only God they acknowledge, “Save us! Bail us out!”
A thought that will be regarded as insane in any academic or intellectual circle: Do you suppose there could be an offended God element in our present difficulties?
And, if so, is there anything we should do about that? Like that old word we never hear in “The Wall Street Journal” or “The Washington Post” or any other part of the media—repent.
All that really means is to say you are sorry for being so stupid—and promise to do better next time.
Even an atheist might agree that a degree of repentance and a few heartfelt promises to do better might not be a bad idea.
I don’t expect to see this any time soon. It’s much, much too unthinkable.

So, Show Us Something, Mr. Obama

Yesterday’s stock market gave the best evaluation of the Obama presidency so far. It hung, pending. No advance, not a big drop, only about 80 points on the DOW. Uncertain, unsure—hearing nothing new or terribly inspiring. Still waiting.
So far there has been nothing truly innovative—nothing like Roosevelt’s bank holiday, PWA or CCC or any of the rest of his alphabet soup. Those really did provide jobs, instantly. They built infrastructure I still drive over (it’s crumbling, but it’s been there since the ‘30s).
I don’t see anything new or refreshing about Obama’s cabinet picks, either. I see nothing to compare with the brilliance of FDR’s “kitchen cabinet”. That was a conglomeration of bright mavericks who were truly willing to suggest something new under the sun. Nothing like it to be seen today.
Obama has picked tried and true hacks (smart hacks, well educated hacks, experienced hacks—but hacks nonetheless) from previous administrations. A few of these hacks have already been caught with some unpaid business or income tax. Probably a sign of bad judgment or even hubris rather than actual dishonesty—but generally not an encouraging sign.
In keeping with the personnel involved, I don’t hear anything much new in Obama’s financial rescue and deliverance plans. They seem to differ from the actions of the late Bush administration only in that the pork is more of the kind favored by “liberal” Democrats as opposed to “conservative” Republicans.
The market doesn’t seem to see anything new or exciting either. Much of what is suggested for the banking industry was suggested and even tried by Paulson and company four months ago. It didn’t work then; why, asks the investing public, should it work now?
On the people side, just what are we going to do to create four million jobs? (FDR could tell you—build bridges, roads, national parks, reforest waste lands, construct new post offices and a spanking new navy.) What, exactly is Obama offering? The market still wants to know. Just a glimmer of an idea.
They are going to be “high tech” jobs, we’re told. High tech jobs are best and most effectively created when there is a goal laid out before people. We’re going to build an atomic bomb. We’re going to go to the moon. We’re going to fight AIDs. No goal has come forth from the Obama White House.
When you get past the speeches about Abraham Lincoln, what has Obama really shown us? Lincoln laid out goals—“preserve the Union”—fought and won a vicious war, played hard ball internationally (“Her Majesty’s government will be aware that if it builds one more raider [think weapon of mass destruction], it will mean war with the United States”), and left behind the most powerfully industrialized nation in the world.
Lincoln faced a crisis and he jumped right in. He forced the Confederacy to open fire first by sending ships to reprovision a federal fort. He then immediately raised the largest army ever seen on this continent. Violating all provisions of the Constitution as it was then understood he forced three border states to stay in the Union by occupying them. Immediately.
What has Mr. Obama done immediately, other than make some questionable personnel picks? The novelty of the color of Barack Obama’s skin is all the novelty he has shown us so far, either in his appointments or in his ideas. His brain trust is firmly rooted in the “ancien regime”, not the new day that is upon us.
It sounds cruel to say—even suspiciously racist. But so far it’s true.

Stimulus--The Die Is Cast

It looks as if Obama has his stimulus package pretty much the way he wants it. Fair enough—he did win the election and he should be given the chance to bail us all out the way he wants. If it works, he gets all the praise. If it fails, he takes the blame. It’s his ball; he defines the play.
WNBC reported yesterday that, in one of his speeches about the stimulus package, Obama came very close to saying that if it didn’t work within a year or so he might “be out of here”. The commentators speculated as to whether he really meant he’d resign if it failed. Everyone doubted it.
The head of our combined security forces agency is supposed to have remarked that the present banking crisis is the biggest threat to our national security today. More than Osama bin Laden, more than Iraq or Afghanistan or anything else.
He was fretting about us not being able to meet our commitments to allies in the War on Terror because of the collapsing economic infrastructure. That’s not surprising. It was obvious throughout the Cold War that the weapon the Soviets feared almost more than our thermonuclear weapons or our carriers was our dollar.
After all, they didn’t call us the “atomic bomb imperialists” or the “aircraft carrier imperialists”, they called us the “Wall Street Imperialists”. When my junior high texts referred, however obliquely, to our imperialism in Latin America, they called it “Dollar Diplomacy.”
It can even be said we won World War II with dollars, not guns. (Some of our weapons weren’t all that good.) We paid to keep Russian troops holding down over half of Hitler’s forces. We paid England to maintain armies bigger than ours in the field right through D-Day. We were only half the force that day. By and large, we spent money rather than blood.
(To give an idea of how much money we used, Churchill reports that a single Atlantic storm in 1944 wiped out so much American equipment that “had any other nation in the war lost so much material at one time, they would have been forced to sue for peace.” He reports we didn’t miss a step.)
We held on to Western Europe in the face of Communist ideology and Russian pressure by spreading dollars all over the place. The dollar has been our shield, our sword; it has bought us allies and fended off enemies for so long that we have forgotten how crucial it is to our security.
So that, too, is hanging on the stimulus package. Not just will J.C.Penney and Target survive, but will our entire society be left naked in a very cold wind? We are facing the question a lot of graying studs find themselves asking: Who will be my friend if my money is gone?
One reason I can imagine wanting to resign if this stimulus fails to do its job is that it won’t be very much fun to be president any more if everything goes to smash. For my entire life, an American President could move the entire planet with a single word.
What if our president should find himself in a situation in which he merits little more respect than is given to the leaders of Portugal, Turkey or other fallen great powers? That will be a day of truly drastic change in our lifestyle.
Let’s hope it works. He wrote the draft. If it sells he deserves the credit and the political royalties. If it doesn’t, … well, let’s not even think about that.

Bush, You, Me And War Crimes

The issue of “war crimes” committed during the Bush administration is becoming the third rail of American politics. Nobody, least of all Obama, seems to want to touch it. He seems to be backing and filling on some of the questions surrounding it. With good reason, I may add.
First of all, let’s get one thing straight: The phrase “war crimes” is in itself almost a criminal redundancy. War itself is a crime. Therefore just about ANYTHING you do waging war is likely to be a criminal act in terms of what is generally considered decent behavior in human society.
There’s the normal, like shelling or bombing a city that has civilians in it—Berlin, London, or Tokyo. There’s blockading and starving a civilian populace. There’s executing civilians for remaining loyal and helpful to their own government. All in the normal business of warfare.
Then there’s the slightly less usual aspects of the warfare business. Whether it’s a tired GI shooting some German POWs to keep from having to walk them miles back to the holding area, or Sherman burning down every civilian piece of property he could find from Atlanta to Savannah, it happens in every war.
War crimes generally tend to be things done by the losing side. Imagine if the Confederacy had won—would they have hanged Sherman? How about General Amherst sending Small Pox infected blankets to the Indians so he didn’t have to fight them in open battle? Or US cavalry burning stocks of Indian food so they’d starve over the winter?
Or Napoleon slaughtering POWs so he wouldn’t have to waste precious resources feeding them? Or Belgian atrocities in the Congo at the dawn of the Twentieth Century? Or Caesar and Joshua wiping out whole populations, man, woman and child?
I could go on and on. Every one of these had an apparent military necessity behind it. Nearly every one of these contributed materially to the perpetrators’ ultimate victory in war. I repeat, war is, by its very nature, a criminal activity. To single out individuals as criminals (usually because they lost) and punish only those is a bit on the hypocritical side.
When I entered law school (I never finished because a year taught me I didn’t want to be a lawyer), one of the deans threw out questions to incoming first year types. He picked me to ask what I thought of the Nuremburg War Crimes Trial. I replied that it was a “kangaroo court”.
Horrified, he turned to the next student with a more innocuous question. I still regret not replying that “a fool asks a question and will not stay for the answer,” but I sat down quietly. I find myself in quiet moments still repeating the answer I never got to make.
(Let’s make this clear—Nazi crimes were wicked and horrible beyond most peoples’ imagination; my quarrel is with the venue, and the failure of those involved as combatants and victims not to recues themselves. And with the dangerous precedent that was set.)
Under American rules of jurisprudence, the victim of a crime may NOT be seated as a juror in the trial of the perpetrator, let alone sit as judge and jury! The arresting officer –who may well have been wounded in the apprehension of the accused—may not sit as judge or jury either. That happened at Nuremberg.
The verdict in such a trial if it occurred in any American court would be tossed out. I doubt if appellate judges would need to deliberate for more than a few moments. The Nuremberg verdicts could NEVER have survived Constitutional scrutiny in this country. In America, every criminal—however heinous—is given the chance to be acquitted. However wicked, the Nazi leaders had none.
With Russians, French, British and Americans all trying the rustlers for “stealing their cattle” (bombing their cities, killing their POWs, violating all sorts of laws of war), you have a classic case of what is called a “kangaroo court”. That’s a court without valid jurisdiction, going into the case with a presupposition of the guilt of the defendants—grossly improper under American criminal procedure.
In fact, under American law, those who executed the Nazis would be liable for criminal prosecution themselves. There are those pesky issues like “change of venue,” “unbiased jurors” and a judge who has no personal stake on the outcome of the trial.
Admittedly you would have to find unbiased judges and jurors among some completely isolated tribes in New Guinea or the Amazon Rain Forest—but that’s just one of the things that make police work difficult and, just incidentally, protects us from genuinely unwarranted prosecution. The Constitution can be SO inconvenient at times. We justified the legal travesty of Nuremberg because it was war.
Let’s get back to the issue of Bush and his alleged crimes. We—you and I and all Americans—are involved. We were scared after 9/11. We asked our President to make us safe, to protect us. He did his best (and we initially cheered) by his lights. We all saw the attack as an act of war.
Since he was fighting a war—in which there are always criminal activities on both sides—a lot of what he did wasn’t very nice. It bordered on; it may have crossed over into, the criminal. As the French put it so well, if cynically, “C’est la guerre”.
Try Bush for trying to protect us with tactics we would not normally permit in peace time, and for what are you going to try the next President who finds it necessary to protect us? You want to dig up Roosevelt for fire bombing Axis cities? (After all, the British began bombing civilian populations in 1939—before Germany dropped a single bomb on Britain.) How about an in absentia trial of Lincoln for what he directed Sherman and Sheridan to do?
We could nail Andrew Jackson on “ethnic cleansing” that resulted in thousands of innocent deaths. Or Truman for unleashing the atom. And so forth and so forth.
Someday, God forbid, we may seriously lose a war. We have established the precedent at Nuremberg that American generals who fight ferociously to defend us may be tried and executed for war crimes.
Blame Bush for being stupid, for misreading the evidence, for not listening to those who warned against Iraq, for indulging in wishful thinking, for carrying some anti-terrorist policies to the point of cruel absurdity, if you will. Be very, very cautious about using the term “war crimes”.
The president or general you inhibit may let some truly nasty person kill you.

More On Jews And Arabs (7)

The Six Day War—that began with Nasser’s boasts—would end with his total humiliation. One part of the Israeli Defense Force slashed into the Sinai. They rolled all the way to the Suez Canal, shutting it down and leaving a trail of smoldering Egyptian armor behind them.
Another part of the IDF launched an attack at the hills around Jerusalem—where British born Pasha Glubb had stopped them in 1948. This time nothing held them back. For the first time since 60BC a Jewish flag flew over the ancient City of David. The entire West Bank, down to the Jordan, was in Israeli hands—something that hadn’t happened since 600BC.
A third prong of the IDF stormed up the Golan Heights, driving the Syrians before them. The gun positions that had bedeviled Galilee for so long now lay in Israel hands—something that really hadn’t happened since the days of Solomon (950BC).
For the first time since 1948, Jews could go to the Wailing Wall (stones believed to be from Solomon’s original temple) and worship. Two thousand years of Passover Prayer—“Next year, Jerusalem”—could change its tense to “THIS year … .”
There was no possible self-deception that could hide the magnitude of this disaster. Even Nasser did not try. In fact, within two and half years, he was dead—at fifty-two, as much of humiliation as anything else. The United Arab Republic, the union of Syria and Egypt, died with him.
The Suez stayed closed. (The Viet Cong went right on—and plotted a little surprise for us in the coming six months, at the next Tet Holiday.) The guns on the West Bank and the Golan were silent.
The French were angry that Israel had tried so much on her own, and succeeded. France cut Israel off from all military supplies (a detachment of Israeli sailors sneaked into a French harbor and sailed away with three gunboats that had been built for Israel but impounded during the war).
The Americans were angry, too. An American electronic intelligence vessel, the USS Liberty, had been sitting out in the Mediterranean just off Egyptian waters listening to all the excitement when Israeli planes attacked it. It was damaged and there were several casualties. Israeli claimed it was a mistake and the matter was accepted as closed.
In the fall of 1967, Arab representatives met in Khartoum to plan strategy and protest the Israeli victory. This time they did not call for an end to Israel or the return to pre-1948 borders. The borders gained by Israel in 1948 were tacitly accepted. The new Arab call was for a return to the 1948 borders.
In November the United Nation General Assembly passed Resolution 242 which demanded that Israel pull out of Golan, the West Bank, Jerusalem and Gaza in return for guarantees of peace. Egypt and Jordan accepted the terms of Res. 242.
Many in Israel believed that this was just a continuation of the historic Arab strategy of calling for a truce while rearming and regrouping. Negotiations went nowhere.
In 1970, Nasser died. He was replaced by his longtime confederate, Anwar Sadat, who had been his vice president and—before that—co-conspirator against British backed King Farouk.
I recall asking two Arab friends what Sadat would do. One was an upper class Egyptian, the other a former Arab guerilla fighter who had fought the French for years in Algeria. Both agreed. Sadat must first attack Israel to get his honor back—and then he will be able to negotiate some sort of deal to end the hostilities and get the canal back.
It is possible that Israel got a little over confident. While the Soviets rearmed Sadat and Syria, equipping them with a new kind of shoulder mounted anti-tank rocket (Arabs all over the world have proven they can handle anything that mounts on the shoulder very well). There were new tanks and other goodies as well.
It was now six years since the war. The UN had nattered on to no effect. The Russians used words like “aggressors” a lot. Everybody chafed at having the canal closed—so much of the world’s oil used to sail through it and now had to go around Africa. The last Americans were pulling out of Vietnam.
Jewish holidays came and went. The orthodox prayed at the Wailing Wall. Israelis got used to driving their school buses in peace. But problems were looming. For one thing, Israel now had large numbers of disaffected Arabs to deal with in the conquered territories. For another, a new kind of Arab militancy was growing.
Yasser Arafat had lost all faith in the capability of Arab nations to defeat Israel after 1967. Two years after the Six Day War he took over the Palestine Liberation Organization and began guerilla warfare against Israel. He launched it from Jordan. The Jordanians became fearful of two things.
One) that the Palestinian refugees in Jordan might try to take over the country and two) that Israeli retaliation might occur. In September of 1970 (Black September) the Jordanian Army turned on the Palestinians, specifically Yasser Arafat’s group.
Syria tried to intervene in Arafat’s behalf but the United States urged Israel to fly over Syrian troops to deter them. The Syrians withdrew from Jordan, and Arafat and his PLO moved to Lebanon—which would have lethal consequences for both Lebanon and the United States.
Another Jewish Holiday came. Yom Kippur. October, 1973. A substantial part of the Israeli army went on leave to celebrate the holiest day of the Jewish calendar. Suddenly Sadat struck. Using new Soviet equipment they built bridges over the almost undefended canal and hurtled into the Sinai.
Some Jewish tanks were mustered only to face destruction by the new Russian missiles. For a moment, it seemed as if the Egyptians were about to reverse the events of 1967. Syria also struck on the Golan with lots of new Soviet equipment. A Jordanian brigade was sent to help on the Golan—even though Jordan launched no attacks from her own soil.
Things looked bleak. But Israel had found a new arms supplier to replace France—us. President Nixon ordered American transport planes to load up on American tanks parked in Germany. (We had so many tanks in Germany that the Pentagon actually lost five thousand of them once.) We sent 500 to Israel.
The Israeli Defense Force pulled itself together. Fierce counterattacks put Israeli forces back on the Suez Canal and left an entire Egyptian army surrounded in the Sinai desert. Syrian forces were pushed back and Israel was poised to drive to Damascus. The Israelis crossed the canal and drove toward Cairo.
At the point the chagrined Soviets came to the United States. “Look,” they said, “the surrounded Egyptian army and the arsenals in Damascus hold our latest and best military secrets. If Israel gets their hands on them, they will turn them over to you. If this happens, we HAVE to go to war.” Henry Kissinger flew to the near east to stop the shooting. The Egyptian army went back home with all of its Soviet secrets.
The IDF was stopped. After Kissinger’s negotiations, the situation was pretty much “status quo ante bellum” (think American War of 1812) in terms of military success or failure. BUT, and this was so important, an Arab army had inflicted a humiliating defeat on Israel—if only for a few days.
That was enough. Anwar Sadat could now afford to go to Camp David.

More On Jews And Arabs (6)

By 1962, Britain had given up all pretense of keeping order in any part of the Arab world. She withdrew her last forces from the area around Aden and along the Trucial Coast. I remember seeing a picture of British Tommies withdrawing from positions overlooking the Persian Gulf and thinking, “Oh, oh, we’ll have to take their place.” And we have.
The French continued to supply Israel with top drawer war planes and ships. Almost as a way of saying “Merci” for 1956. UNEF went on keeping Egypt and Israel away from each other on the Sinai. The Soviets kept supplying Syria and Egypt with advanced weaponry, futilely trying to turn Arabs into European soldiery.
The Soviets were unsuccessful for a reason I spotted one afternoon while having coffee in Beirut. I watched as two Bedouin tried to operate a jack hammer in the street. They weren’t stupid, but their hands just were not used to holding a machine—just as Charlemagne could never learn to write. He had held a sword too long, a pen too late. Arabs, on their part, had simply not gotten used to machinery.
A Soviet advisor in Cairo told the following story. He was teaching a class of Egyptians how to run a tank in desert warfare. When he got to the part where you tell them what to do if the tank breaks down in battle (“You get out of the tank … .”) they burst into laughter.
The Egyptians weren’t cowards, but it was inconceivable to them that any one in his right mind would get out of an all metal tank in the midst of a battlefield. The problem with Arab soldiers was very similar to the problem Germany had with her drivers in World War II.
If a German truck broke down, the driver knew nothing better to do but sit until a mechanic came up from the rear. If an American truck broke down, somebody in the column had spent his summers tearing down an old Model T and making it run. He just instinctively starting applying tape and chewing gum until the truck started. The German, raised with horses, didn’t know how to do that. Ditto the Arab.
Then, suddenly, what an Egyptian tanker might or might not know maneuvering a tank in battle became vital. It was Spring, 1967, and rumors were flying. Some blame the Russians, others blame the Americans. Nasser became convinced that Israel was about to attack Syria.
He demanded that the United Nations remove its peace force on the Sinai so that he could get at Israel. Some say the Russians spread false intelligence for whatever reason. I have personally been told while in Washington that Lyndon Johnson engineered the blowup in hope of shortening the Vietnam War.
That story was that LBJ became convinced that the Viet Cong could not fight on without Russian supplies and munitions. These were flowing through the Suez Canal. If, the reasoning went, an Arab Israeli war shut down the canal, the North Vietnamese would be left without supplies for up to four months while the Russian ships had to sail around the Cape of Good Hope. In this time, we could defeat them.
Whatever. U Thant of the UN ordered his remaining 3500 troops out of Sinai, and everybody braced for action. Nasser was doing his usual boasting and bragging about how he would utterly destroy Israel’s armed forces with his large army and new Russian toys.
Suddenly word came that war had begun. Nasser crowed loudly that he had wiped out the Israeli air force. I stood in my office and watched the AP ticker repeat the story. Israel was crippled. Syria and Jordan believed Nasser and attacked Israel. It was time for the kill.
As I and my friends watched the ticker in concern, my phone rang. It was a good friend of mine who was very well connected (whenever I needed to contact any Jewish agencies, he called first and told them to talk to me) was on the line. “Don’t worry,” he said, “we creamed them.”
Three hours later the AP caught on to the real story. The French-made Israeli Mirage fighter planes had flown west across the Mediterranean at wave height, below the radar. They had turned around and attacked Egypt from the rear, wiping out nearly the entire Egyptian air force on the ground. They then took out the Jordanian and Syrian airforces.
Now the ill-trained armies of Syria, Jordan and Egypt were left to face a very peevish Israeli Defense Force which still had its full air support. What happened in the nest six days is best summed up in a joke current in Jewish circles at the time.
An Egyptian division was moving through the Sinai. Suddenly a lone Jewish soldier appeared on top of a hill, shouting, “Go back, go back!” Annoyed, the Egyptian commander sent a company to get him. When no one returned, he sent a battalion. When still no one came back, he sent a regiment.
This time one Egyptian soldier crawled back over the hill, the badly wounded sole survivor. “Go back,” he gasped to his comrades, “it’s a trap. There are two of them.”
This was to be a humiliation that still grates at the Arab soul. We’ll talk about a few specifics later. Incidentally, if closing the Suez was to win America’s war in Vietnam, it didn’t work.

More On Jews And Arabs (5)

It was both a misfortune and, possibly, an opportunity for the new Nation of Israel that it came into existence just as the European colonial system was dissolving into chaos. As the Europeans and the Americans pulled back from or were thrown out of the vast territories they had controlled, bloody civil wars and revolutionary wars broke out all over Africa, Asia and even Latin America.
In the decades after World War II, just in the Near and Middle East, the following (often violent) changes occurred. 1943: the French pulled out of Lebanon and Syria, 1948: Britain pulled out of Jordan and Palestine, 1952: King Farouk of Egypt (seen as a British puppet) overthrown by a coalition of former Axis allies, Egyptian colonels Naguib, Nasser and Sadat.
While Naguib and Nasser wrestled for ultimate control, the new revolutionary Egyptian government forced Britain out of its Suez Canal holdings in 1954. In 1955, the Egyptians signed an arms deal with Communist Czechoslovakia. Aghast, the United States withdrew her offer to build the Aswan High Dam.
( US Secretary of State John Foster Dulles admitted later that he ordered the offer withdrawn while he was under the influence of the then not well understood condition called “jet lag”. In other words, he wasn’t doing his best thinking at the moment.)
In charge, finally, Nasser asked for Soviet help with the dam—thus orienting Egypt toward the Soviet block for the next couple of decades. The French secretly approached both England and Israel with the suggestion that they take out this new Soviet ally—and, just incidentally, get the Suez Canal back and reopen it to Israeli shipping—by launching a military assault on Egypt. On October 29, 1956 Israel struck across the Sinai and two days later France and Britain came by sea.
A brilliant Jewish veteran of the Jewish Brigade swept across the Sinai as if Egypt did not exist. French and British troops took the canal. Their victory was extremely short lived. The whole world went up in the air. Nasser was saved by the Russians and the Americans.
Eisenhower was enraged that the French and British had acted behind his back. He dressed down the French and British governments as if they were a couple of errant corporals. (He had a temper.) His rage came because the French/British/Israeli allowed Russian gunboats to move through the Dardanelles into the Mediterranean—something western foreign policy had prevented since 1815.
Also the move on Suez allowed the Russians to send masses of troops to reoccupy Poland and Hungary, which were in the throes of an apparently successful anti-Soviet revolt that fall. As the Russians crushed the pro-Western revolts, all we could now do was look on and try not to sound too hypocritical.
Ike ordered everybody out of Egypt—the Soviets filled the air with bellicose threats and got a lot of the credit for the withdrawal. Hungary and Poland would not be free for 35 more years, France and Britain had made their last attempt at governing the planet (as they had for 200 years or more) for all time. A one-eyed Israeli general named Moshe Dayan became a national hero and symbol.
The United Nations created an emergency force (UNEF) to occupy the Sinai and keep the Egyptians and Israeli away from each other. This was a partial victory for Israel—while Egypt remained its most powerful and dangerous enemy—the line between them was now reasonably peaceful. No more grenades through the windows at night on this front.
Nasser began a new Arab tactic. You get your backside kicked by Israel, and then you proclaim to the world loudly and often enough that you won—and you come out looking like a hero. (Nasser would do this one more time, leading up to 1967, and really alter power realities between Arabs and Israel!) Sadat would do it to great and good effect in 1973.
In fact Nasser looked like such a hero that the Syrians that they came to him in 1958 and asked if they could unite Syria and Egypt under Nasser. Thus was formed the briefly lived United Arab Republic, the UAR. That same year, Nasser and his allies turned their full fury on Britain’s remaining Arab friends.
A series of uprisings arose intended to destabilize every pro Western Arab state in the region. In some cases it worked. The Hashemite (a British appointment in 1922) king of Iraq was killed; his body was dragged through the streets of Baghdad behind a jeep. The Hashemite king of Jordan survived with the help of British troops flown in to prop him up. A political group that included young Saddam Hussein took over Iraq—with an undying hatred for both Jews and America.
(The Hashemites came from a kingdom in western Arabia that the Saudi’s overthrew in 1924. This left the former princes free to assume roles in kingdoms created by the British after the fall of the Turkish Empire in World War I. Both were quite dependent on their relationship to the West—the King of Jordan remains so to this day.)
But the Jordanian king Hussein was forced to relieve the British soldier who commanded his best troops—Pasha Glubb. Without Glubb, Jordan’s troops would fight as miserably as every other Arab army. This would cost Jordan terribly in 1967.
American marines landed in Lebanon to prop up the Marionite Christian government created by the French (to give this small, surviving remnant of pre-Muslim Christianity a homeland) in 1943. Somehow the nation would hold together until it destabilized completely in the 1970s, becoming a permanent home for some dangerously anti-Israeli radicals with lots of rockets.
For Israel life went on pretty much as before. Only now the nations surrounding them were even more hostile. It wasn’t just that the Jews were non-Muslims, they were now seen as friends of the increasingly hated United States—as much of the near East allied with Russia.
In 1967, the Arab world would turn upside down once again.

More On Jews and Arabs (4)

No event since the Crusades did more to alter relations between the Christian West and the Muslim East than World War II. We went into the war with a European nation ruling or influencing every single Muslim state except for Afghanistan, Turkey and Saudi Arabia, from the Atlantic shore of Africa far into the Pacific. (Only after the war did Christian hegemony begin to collapse.)
Moreover, with what seemed to be Christian connivance a non-Muslim Jewish state was being planted in the British protectorate of Palestine. By the late 1930s the Arabs saw themselves as having only one friend in the world—Adolph Hitler. Their one hope was that Nazi Germany might defeat the hated British and French.
There was an attempted Nazi Putsch in Baghdad—led by the colonel who eventually raised Saddam Hussein. There was unrest in Egypt. The Grand Mufti (the religious leader of Palestinian Arabs) of Jerusalem became an outspoken Hitler partisan until the British exiled him.
As war loomed, the British and French found themselves playing a desperate balancing act to keep Muslim protectorates and client states from going over to Hitler’s side. (Had, for example, Turkey gone with Germany as it did in 1915, there might have been no Russian front to absorb such a huge percentage of the German war effort.
All of this in no way redounded to the benefit of Palestinian Jews! What slight door there might have been open to Jewish refugees from Nazi territories was slammed shut. (The door to Depression stricken America was also shut tight—there was nowhere left for Jews to escape to.)
The Palestinian Jews volunteered to fight Hitler. They were permitted to form a single brigade of Jewish soldiers, which became to core of the Israeli Army. This was the first time Jewish military units were permitted to form since Medieval Spain (on the Muslim side, explaining some of the Spanish Inquisition). They were a bit out of practice—but they learned well.
The Mufti escaped to Berlin where he formed two divisions of Bosnian Waffen SS to hunt down anti-Nazi Serbs and Jews. (There would finally be terrible vengeance fifty years later in Bosnia.) DeGaulle’s free French pulled out of Syria and Lebanon after the fall of France—setting up the competing Muslim and Christian states of today.
Britain was left by herself to her near eastern balancing act, desperately trying to save her oil interests as well as block Hitler. By the end of the war, Hitler was no longer Britain’s deadliest near eastern enemy. On his way back from Yalta, Franklin Roosevelt stopped in Saudi Arabia to begin negotiations for oil rights that once had been almost exclusively British.
When Hitler was finally defeated, the Americans stopped Lend Lease and the British Empire collapsed into bankruptcy. By 1948, having kept the door shut to Jewish immigration for as long as they could, the British abandoned Palestine. Arabs may have been briefly hopeful that this new western power, the United States, seemingly bent on the destruction of British power and publicly anti-Semitic, would benefit them.
After all, the United States had sent shiploads full of Jewish children back to the gas ovens rather than take them in. Our anti-Semitism was overt and rampant. Jews were all but unemployable during the Depression, the best universities took only a limited number (thus creating the Jewish “ivy” league).
But when the British pulled out and the United Nations made a feeble effort at creating a partition in Palestine that left Jews in a totally indefensible position, the Arabs were disappointed in America. The Arabs fought even the wretched terms of the 1948 partition only to see the Americans back it. A Jewish State was born—for the first time since 60BC.
President Truman was way down in the polls and he NEEDED the Jewish vote in New York to win re-election. New York was then the state with the biggest block of electoral votes. Enraged, Arabs sent five western equipped armies to invade the tiny Jewish enclaves of Palestine and began their love/hate relationship with America.
The veterans of the Jewish brigade, not more than 5,000 men, an international Jewish community that scoured the world for weapons the British had denied Palestinian Jews, and Jewish civilians that learned war fast, beat back all five armies.
The only one that held—thus saving old Jerusalem for the Arabs—was the British trained and led Arab Legion from Jordan. It blocked the Jewish advance into their ancient capital. The armies of Arabia, Egypt, Lebanon and Syria were humiliatingly defeated.
Jews kept the new borders their arms had gained them. It wasn’t good, but it was better. Even though every square inch of Jewish territory remained in range of Arab artillery—which periodically used Jewish school buses and tractors for target practice from sites on the West Bank, Gaza and the Golan—at least the new Israeli army had a few more acres to operate from.
The Arabs at once began their “land for peace” game. The 1948 partition line (that they had violated now became the Arab Holy Grail). “Oh,” they said, “if only these warlike Jews would go back to the 1948 partition line, all would be peace and joy.” They hoped the rest of us would forget how passionately they had opposed that position in 1947-8.
As Arab shells rained down on their farms and Arab grenades sailed through bedroom windows, the Jews gained a striking reputation for uncooperativeness by saying NO.
It remained a nasty situation until the Egyptians threw Britain out of the Suez Canal. The British (and the French) wanted revenge. Who could be more helpful than the Jews who were already in a perpetual state of war with Egypt?
Nobody really knew what the new Israeli Army could do—we were going to find out.

Thinking--The Subversive Art

Watching Congress, the President and all the king’s horses flail about trying to rescue the economy somehow brings to mind the wonderfully misogynistic question that Lerner and Lowe (and probably George Bernard Shaw) put in the mouth of “My Fair Lady’s” Henry Higgins.
“Why,” he asks, “is thinking something women never try?” It’s only a fair question, of course, if you change it to include both sexes. For good measure you can throw in Congress, most Presidents and other governmental entities. Include the entire human race. We all so rarely try it. Why?
For one thing it’s hard work. For another it can bring up embarrassing questions. It can also derail historic assumptions. If you do it publicly, it can get you labeled weird (or worse) very quickly. Your friends will start to avoid you. Your boss will find you tiresome.
I remember an exchange I had the first year I taught school. It was a parochial private school where I was assigned to teach Eighth and Ninth Grade English literature and grammar. My four classes contained a substantial number of kids with genius I.Q.s (considerably above Obama’s 135).
We somehow had a real problem understanding each other. I was baffled; I’m not really a dummy myself. What was the matter? One day a quiet little kid raised his hand. “Mr. W---------,” he asked, “do you know what the problem is?” I admitted I did not.
“You want us to think.”
They were bright kids whose parents paid good tuition to send them there—and on to college. They had been prescriptively taught for years by educated teachers who did no thinking, asked for none and would have been unforgiving had any hint of it popped up. Smart, the kids quickly sensed that what was wanted was memorization and repetition with no alterations.
How hard was it for those intelligent kids to put their thinking mechanism back into gear in later years? Do you believe they ever did? How about the ladies and gentlemen, mostly with enough brains, who run Washington? Did they ever turn theirs back on again?
Look at our educated elite. On global warming, they let Al Gore and his crew of bright film makers do their thinking for them. They are still very good at memorization and repetition. The “New York Times” tells them what to think about books, movies and the arts. .
The “Wall Street Journal”, “Forbes” and “Barrons” tell us what to think about the markets; we allow “Newsweek”, “The Washington Post” and “Time” (with a few asides from “The Atlantic Monthly” and “The New Yorker”) to tell us what to believe about Iraq and Afghanistan—whether we are in or out of Washington. These are the opinion makers read by the Elite.
They enable the elite to stay in lockstep, with much of the rest of us tailing behind, careful not to say anything that might sound strange, either to one’s neighbors or one’s colleagues. (Strangeness—uniqueness?—is to be avoided at all costs. It carries too great a social, political and economic risk.)
This is true on Wall Street and Main Street, in the Capital and at the barber shop; it is equally true among the faculties of Harvard and Stanford. The penalties inflicted on a professor who falls out of step with his fellow academicians can be brutal indeed. (You think theologians are bad, watch professors!)
The expression “I think…” should be banned from most human speech. “I read”, “I was told”, or “I heard ought always to be substituted. Most people who say “I think” are bald faced liars.
At the end of his life, Albert Einstein—one of the few original minds of the past century—said that he had finally achieved the ability to think for about fifteen minutes a day. (And everyone DID regard him as weird—he sort of got away with it by looking kind of cute.)
When I first heard that story, I did some soul searching. I concluded that I, myself, was probably capable of two minutes or less thought per day. Half a century later, I may have worked myself up to an occasional five minute day. It is hard to do. I ask questions no one wants to hear. My neighbor, much more affluent than I (but who likes me, most of the time) says, “You’re readin’ too many of them damn’ books again, W………..”.
I was at lunch with a Wall Street lawyer (himself a very bright man) years ago when I asked him if I could make money working on the Street. “You couldn’t make a dime,” he replied, “you think too much.
“Look at the guys on the Street. They’re not smart. They’re fast; they have quick reflexes because they never think before they act. They buy; they sell—all on reflex. Instinct. By the time you had thought it through, the stock would have risen a half-point and fallen back again.”
Maybe, heretical suggestion, someone at Citicorp or Bank of America or Lehman Brothers should have taken a second or two to think it through.
But if they had, they would have missed the instant when the stock jumped half a point. That would have been bad—wouldn’t it?

A Hundred Days Is Too Long

Surprise! President Obama’s approval rating has dropped 19 points in his first week. That has to be some kind of record. Were it to continue dropping at this rate, his rating would be way below zero in approximately five more weeks. It won’t, but the first drop should sober him.
On January 20 it seems there were a lot of people out there who expected Obama to walk across the Mall Reflecting Pond on his way to the White House. Seriously, it was almost as if they expected job offers in the mail by weekend, that on the 21st their banks would notify them that their mortgages were forgiven, their credit card debt vaporized, gasoline would be back to a dollar a gallon or less, and all those nasty little wars would have gone away.
Oh, and of course, Congress—Republicans and Democrats—would be locked in a permanent love fest with their new Leader.
Well, it’s already February and it hasn’t all happened. In fact, none of it has. People are still getting laid off, banks still tottering, Congress is still nattering away, and GIs still get blown up in foreign parts. People who really believed they were creating a whole new world with a whole new set of rules by simply pulling a lever on November 4 are becoming disillusioned.
After all, young and old, these are the generations that grew up wanting it all now. Mom and dad took twenty-five years to get all the things that made for a good life. Their kids wanted it all the day they were married—that’s the generation that’s fifty now. So they went out and charged it.
Master Card assures us on television that everything that isn’t “priceless” is available to us with a flick of the plastic. That’s “everything else”. So why should it startle us that this generation finally put itself under mortgages and loans they cannot hope to repay? It worked before; why isn’t it working now?
They expected Obama to put things back the way they used to be. Right now, with merely a flick of some governmental plastic. Overnight—just like you could buy what you wanted and have it delivered the next day. And Obama has begun to fail them.
His plastic isn’t working. It’s like the sinking feeling you get when your card comes up “ReJected”.
Oh he’s been able to make some symbolic moves. He’s overturned all those executive orders from the bad old Bush days that kept federal money out of the abortion business and other fun stuff. He’s announced that any bank that takes bailout money has to limit its senior executives to a half-million dollars a year salary.
This won’t hurt them. Just like Iacocca in the Chrysler bailout thirty years ago. He worked for a dollar a year—until he paid the government back. Then he took his millions in stocks and IOUs and went home.
Our bankers are gamblers today. In fact many of them are addicted to gambling. In effect we made them addicts when we changed laws and invented new commercial instruments that allowed them to gamble with their assets (thereby turning many of them completely toxic).
As any student of addiction will tell you, addition to gambling is actually an addiction to the adrenalin rush you get when you do high stakes gambling. The gambler becomes dependent on that rush—he must take bigger (and more foolish) risks to keep that rush coming.
The dependency becomes as great as that of a Heroin addict, and alcoholic, a sex addict or a workaholic. (These are all essentially the same kind of reaction.) Many of our bankers and handlers of commercial paper are as much junkies as any poor soul you see on the streets.
Obama keeps telling us the bailout is urgent (he’s not having all the luck he hoped he would in getting it). He doesn’t seem to realize that giving an addict another fix or another drink will not cure the dependency. Speed is necessary; he’s got to put these guys on a cold turkey regimen.
That will require new regulations and some new laws—guaranteeing that the addicted bankers are never permitted to gamble with other people’s money again. Cold turkey. No more bundles, no more risky mortgage or loan papers.
He’s got to face the fact that some of the people in his administration may be as addicted as anyone left on Wall Street. They won’t take happily to the notion that their favorite “casinos” are going to be placed off limits. He’s got a major, major problem on his hands—one he may never have dreamt of.
If he doesn’t deal with it BEFORE handing them bailout money, that problem is only going to get much, much worse. In the meantime, his approval rating is liable to drop much further.
Can you imagine how low Lincoln’s approval ratings (they didn’t take polls when he was in office, lucky fellow) would have registered after a dozen Confederate victories in a row? Obama may have to walk through the same shadowy valley of perceived failure. His job will be no easier than Lincoln’s.
That, more than merely coming from Illinois, will make him a worthy follower in the Great Emancipator’s steps.

More On Making Assets Toxic

Yesterday we talked about the joys of bundling, the fun we had with that old fuddy-duddy Glass-Seagall off our backs, and all the good that using Banks as charities has done us. (We also pointed out that if we don’t get rid of bank charity and bundling and bring back something like Roosevelt’s old law, we’ll be right back in this mess very soon.) Let’s continue and see what other problems banks have that need to be corrected BEFORE we waste any more bailout money on them.
A “waste” you ask? Wells Fargo took a good, deep draught at the Bailout fountain a few months ago. Just yesterday word came that they were taking their most successful mortgage lenders on a nice vacation to Vegas—at what will essentially be your and my expense. Yes, waste.
Our bankers seem to be so intoxicated on speculation and what we used to call in the game of Hearts, “shooting the moon”, their judgment is not to be trusted without close supervision while they detoxify. (The process may have begun at Wells Fargo, which just cancelled the Vegas trip in the light of public scrutiny.)
They need, as they sober up from their long speculative binge, to get back to the fourth issue I mentioned yesterday. They have to start acting like bankers, sober bankers, and get back to something called “due diligence”.
Due diligence is a legal term that simply means “using your head” or “looking at all the available facts”. It is often defined in court as meaning that you should have done what any sane man would have done in the same circumstance. (Applying what they call in Torts Law the “reasonable man” standard.)
For a bank this means that before you hand someone three or four hundred thousand dollars of your (and your depositors’ and shareholders’) money, you check the borrower out. You ask reasonable questions like, does he have a job? Does his wife work? How long have they had these jobs?
What did they do before? How much do they make? Do they work someplace that is likely to be around awhile? Do they have prison records? Have they defrauded anyone else, gone bankrupt recently or been foreclosed on before? How much debt do they have? Etc. etc. You get the picture.
Much of this is part of the public record. It may involve a couple of phone calls double checking what appears on the application form. Last year’s tax return, and so forth. In other words it will take a bit of time, a few man hours. But, hey guys, you’re talking about putting a few hundred thousand dollars at risk. (With a bit of it being MY money, if I bank with you.)
This is precisely what banks stopped doing. When your sole interest is puffing up the books with what look like valuable “assets”—and then bundling them so you can sell them for even more profit as quickly as you underwrote them, little things like checking facts go by the board.
What’s worse, not only don’t you check the facts like a sane man, you start fudging the facts. If the application shows an income that can’t repay three hundred thousand in debt, you alter the income statement. You drop a few inconvenient items off the app. like a notice that the borrower is presently unemployed or has defaulted on five credit cards and so on—to make him appear like a decent risk.
Remember, this was all done with unsuspecting depositors’ money—and now we’re paying for it with that same depositors’ tax dollars. That’s what allowing banks to bundle, dropping the requirement that banks not speculate mindlessly has gotten us.
Before we bail them out, let’s take away the bottle. Make them sober up. Enforce it. Have the regulators in place (think of federal regulators’ visits as Congress ordered AA visits) before giving them one dime of tax money as a bailout. Or, as Wells Fargo showed us, they’ll sneak out to the Speculators’ Bar anyway they can.
A final thought on housing for the poor, the low income people who live in areas that used to be red lined. Admit that creating housing for them—that they can hope to afford to stay in—really is a work of governmental charity and act on it accordingly.
Expand Habit for Humanity housing; put government money behind it. Not banks. Let us see it as a line item in the Federal budget—not something hidden in a bundle sold by Citicorp. If we don’t want to house them, then let’s be honest enough to admit it.
To those who protest, “but we’re just giving housing to them” if we take it out of private hands, I answer, “We give food stamps and assistance payments without any return. Maybe we have to take the same view of housing. “I remind fellow Christians that Christ himself said, “The poor you will always have with you.” Nowhere does he make a distinction about the “deserving poor”.
Judeo-Christian tradition has long held that it is sinful to lend to a poor man at interest—no matter what fecklessness or moral failing may have caused his poverty. Let’s get banks out of it.
Whatever we do, let’s take banks off the sauce and put curfews (regulations, if you will) on them before handing them another trillion dollar support payment! I hope you’d do the same for your own child.

How To Turn An Asset Toxic

Yesterday I asked, How did banks and their assets get so toxic? I didn’t answer it then or that blog might have gone on forever. Today is the time to try to answer that question and to try to figure out how to prevent the current banking collapse from happening again.
“Greed did it!” Everyone including President Obama repeats over and over again, “Greed!” As a real answer to our problem that’s about as useful as calling someone a “communist”. It sounds horrid, but it doesn’t mean anything. We’re all greedy, after all—starting with the day we punched a kid for taking too big a piece of the birthday cake.
What really caused this big banking mess?
Four major factors come to mind immediately. All of them rather technical. One, we forced banks into the charity business. Two, we repealed Glass-Steagall. Three, some clever chap invented the art of bundling and let banks get in on the speculation. Four, bundling eliminated the ancient bank duty of acting with “due diligence”.
Before we gave any more banks a cent more in bailout money, we should reverse and/or outlaw all of these four causes. There should be the kind of nasty legal penalties for doing (or not doing) these things that send high level individuals to prison. Or any bailout will do nothing to cure the actual problem.
We cannot change the altered investment realities of a global economy or what other nations may do on their own exchange floors, but we can make our own banks go back to sound banking. Let’s go through these four causes point by point.
One, decades ago, banks redlined. This means they refused to loan to anyone who lived in a section of a city deemed too unsafe, too poor or occupied by classes and races of persons who were believed to be universally unreliable. This, justifiably, was outlawed.
But then we got a tad too proactive. From saying, Hey, you have to look at each applicant as an individual and evaluate his potential to repay on a case by case basis, we jumped an imprudent step further. We decreed that, REGARDLESS OF INDIVIDUAL MERIT, banks make loans in poor and undesirable sections. They were essentially put on a quota basis.
They were threatened with legal action—for discrimination—if they didn’t come up with lots of loans in those neighborhoods. Equal opportunity lending is a very bad idea if, by that, you mean that the irresponsible citizen with a horrible credit record must be given equal opportunity for a mortgage with someone with a sterling credit record and high income.
The question of, Can this guy ever repay—or will he even try to repay—gets totally lost. And that is the only rational basis for sound banking. Anything else produces very, very toxic mortgage paper—by which I mean paper that is essentially worthless because nobody is ever going to pay it back.
Once we start doing that, banks reasoned, why not give $400,000 mortgages to people who show they can reliably handle a $200,000 mortgage, but have only a fantasy chance of repaying the bigger one. There are lots of ways to do this—many of them learned in the old red line districts.
You fudge on the applicant’s income (which in some cases may not even exist). You give him zero down to get him in the door. You give him ludicrously low interest for the first few years (so that he’s not even lowering his mortgage each year, but actually increasing what he owes), and then zap him with an enormous increase in his monthly payment so you can start collecting on what he actually owes. Profits on this were, initially, huge.
That’s as toxic as Love Canal ever got. And, on the way to this La La Land, you get the fusty old law that Roosevelt put in place—Glass-Steagall—repealed. When FDR took office, banks were failing by the thousand, often because of foolish investments. So Glass-Steagall was passed to keep banks from speculating on air. They had to stick to taking deposits and lending money for things like homes and cars. Nothing speculative.
After 1999 and the repeal, banks were free to get back into speculation with a vengeance. Only they weren’t speculating with their own money, they were speculating with yours. One of the really fun ways to make money speculatively was bundling (Two).
Bundling for banks wasn’t all that different than Bundling in Puritan New England. (You crawled into bed with someone you didn’t know and took your chances with VD and paternity.) A bank out in Missouri or Iowa bundled all kinds of mortgages—from those on executive homes actually bought by high income executives, to mortgages made to middle class owners who could never hope to pay them off at real rates, to mortgages on homes occupied by the poor, the feckless and the addicted.
Then you took these bundles and sold them to big banks in New York—who put them on their books as sound investments, as assets. The big banks often made bigger bundles and sold them to other big banks all over the world. All listed as on the sheet as sound investments.
Very quickly much of the wealth of the planet, like an inverted pyramid, was based on the entirely speculative assumption that somebody making $30,000 a year could be expected to repay a $300,000 mortgage—PLUS the debt on the fourteen credit cards he had been offered. And, of course, plus payments on two new cars.
From the little bank in Missouri to the big bank in New York or London, the little guy with the little income was carrying a massive load. At some point, very like a Ponzi scheme, too many of those little guys at once couldn’t go on. The music stopped and there were nowhere near enough chairs.
Change this way of doing business BEFORE you bail them out, or we’ll be right back here in a few more years—or months. Tomorrow we’ll look at “due diligence” and a few other things that need changing before any bailout goes through.