The South

| Sun Nov. 16, 2008 1:11 AM EST

THE SOUTH....For many years, the Democratic Party controlled the agenda of American politics and Southerners controlled much of the Democratic Party. So the South had enormous political influence.

Later, most Southerners switched to the Republican Party, but by then it was Republicans who controlled the agenda of American politics. So the South still had enormous political influence.

As of January 20th, however, the Democratic Party will control the American political agenda once again. But Southerners are still Republicans, which means that their political influence will be nearly nonexistent.

In other words, for the first time since Reconstruction, the South will be almost completely shut out of national power. There are still a few liberal Southerners who belong to the Democratic Party, of course, but the reactionary, traditionalist South is, for the time being, nearly powerless. They will not control anything, their caucus is a discredited rump, and their influence will be negligible. There is no reason to fear them or to care what they think. Their power to filibuster, itself guttering and only barely alive following the 2008 election, will be all they have left.

This is the first time this will be true in well over a century. So say it again: The South will have essentially no influence over the course of American politics for the next eight years. We live in momentous times.

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The Housing Bust

| Sat Nov. 15, 2008 1:32 PM EST

THE HOUSING BUST....Matt Ygelsias says it's not really the housing bubble that's responsible for our economic woes:

Even though the deflation of a housing bubble would lead to economic problems, it's just not the case that "the economic crisis" (as folks have taken to calling it) was primarily caused by the rise and now fall of an asset bubble in the housing sector. Such bubbles and their collapse are problematic, but also somewhat banal. We had one just a few years back when the dot-com stock bubble collapsed. That provoked a recession and the loss of a lot of paper wealth in the stock market, but there was no crisis. There was no crisis because the big movers and shakers of the finance world didn't build a giant house of cards built on the assumption that tech stocks would continue to rise in value indefinitely. Some people made bad bets along those lines, of course, but nothing close to the scale of what we've seen recently.

And the essence of the crisis is right there. Not in the deflation of the bubble as such, but in what was done on top of the bubble with leverage and so forth so as to create a situation so precarious that credit markets were on the verge of total collapse a little while back.

Superficially, this seems plausible. In the U.S., the dotcom bust destroyed about $7 trillion in wealth, while the housing bust has destroyed (so far) about $5 trillion in wealth. So it seems like the difference in effect must be due to all the derivative speculation piled on top of the housing bubble.

There's a lot to that, but it's not the whole story. The housing bust really is different for several reasons:

  • Dotcom wealth was mostly held by individuals and funds. Mortgage debt is mostly held by banks, and when it disappears it causes massive capital losses in the banking system. Those losses (again, so far) appear to be about half a trillion dollars or so, but half a trillion dollars in lost bank capital reduces lending capacity by $5-10 trillion or so. The lost capital causes bank failures and a loss of trust in the system, while the reduced lending capacity causes a huge credit crunch, something that just didn't happen during the dotcom bust.

  • Dotcom wealth was fairly transitory. Most of it was built up over the space of 18 months or so and was lost just as quickly. What's more, a lot of it was in the hands of rich people and venture funds, so its loss hit a relatively narrow segment of the population and thus had a substantial but not catastrophic effect on spending.

    Conversely, housing wealth is spread very widely among ordinary consumers, many of whom were using their homes as ATM machines. When that got cut off, it hit consumer spending hard. Additionally, housing wealth for most people is psychologically far more permanent and far more important than a brief spell of prosperity caused by a stock market bubble. So even beyond the direct shutdown of the HELOC ATM, the wealth effect from the housing bust has been more damaging to consumer spending than the dotcom bust.

  • Unlike the dotcom crash, which was fairly self-contained, the housing crash has precipitated a stock market crash all its own. I'm cheating a little bit here since part of this is a result of all the side bets and financial manipulation, but at least part of it is purely a result of the housing bust. So add on another $4-5 trillion in wealth effect problems directly attributable to the housing bust.

  • The dotcom crash came at the end of a period of broadly rising wages. The housing crash came at the end of a period of broadly stagnant wages. So even if the housing crash had been just a housing crash, it still would have affected the U.S. economy more severely than the dotcom bust.

  • The dotcom bust was ameliorated by the rise of the housing bubble. This time, there's no other bubble in sight. It's just a pure crash.

That said, there's no question that all the side bets and opaque financial instruments that swirled around the housing bubble made it far worse than it would have been all by itself. But even without all that stuff, it still would have been different. Not only did it affect consumers much more directly, but within the banking system housing and mortgages simply have a far bigger and more important role than equities,

Further comments and corrections are welcome since my usual caveat applies here: I'm still trying to figure all this stuff out, and I haven't managed to do it yet. What else am I missing?

Sweat Shops

| Fri Nov. 14, 2008 10:40 PM EST

SWEAT SHOPS....For some reason the blogosphere is alive today with talk of teachers unions and tenure. I don't really have much of a dog in this fight, but here's an email a teacher sent to Andrew Sullivan:

I cannot stress enough that the success of our school is in large rooted in the fact that there is no teachers' union presence here.

Teachers at my public charter school, including myself, routinely put in 12 hour days. We spend the time perfecting lessons, tutoring students, grading work, and working with families. We do it because we are dedicated to our jobs and want to close the achievement gap.

I hear this kind of thing a lot, but look: this isn't a weakness of unions, it's what they're for. Whatever faults teachers unions may have — protecting incompetents, fighting accountability, and resisting merit pay among them — insisting on an 8-hour day isn't one of them. What's more, punishing hours aren't a broad-based answer to our educational problems anyway. There are some teachers, at certain stages of their careers, who may be willing to put in 12-hour days in service of the greater good, but there aren't 3 million of them. And there's no reason there should be. This isn't charity work, after all. It's a job. Maybe there are other union demands that are objectionable in one way or another, but demanding a 40-hour work week for a position that pays roughly a median salary is hardly some kind of thuggish big labor cramdown.

Striped Pants-Suit Update

| Fri Nov. 14, 2008 8:04 PM EST

STRIPED PANTS-SUIT UPDATE....Martha Raddatz of ABC News reports that Barack Obama really does want Hillary Clinton to be his Secretary of State:

A source with knowledge of the transition process describes the meeting as not a hard offer. Obama is more cautious than that....He said that he knew how much she cared about health care but said there are other challenges, and wanted to reach out to her about secretary of state.

....Obama does not want to be seen as being rejected by her, but it is "hers to turn down," one source put it.

If this is really true, I'm astonished. Since when do sitting senators give up their seats to become Secretary of State? Muskie did it at the tail end of his career, but I can't think of anyone else. It's crazy. Hillary can basically be senator for life if she wants, and we're supposed to believe that she'd give that up for a cabinet post that probably won't last more than four or five years?

And why would Obama feel like this was a great idea? I don't believe for a second this business about him being afraid that Hillary will sabotage his legislative agenda. She wouldn't. And anyway, presidents have to deal with powerful interest groups all the time, including senators with agendas of their own. The Obama-Hillary relationship wouldn't be anything new or unusual.

As for Hillary allegedly seeing this as a steppingstone toward another run in 2016, I can only say: huh? I mean, who was the last person to use Foggy Bottom as a springboard to the presidency? Thomas Jefferson? John Quincy Adams? Give me a break. No Secretary of State for over a century has used it as a way to move up the political ladder.

Plus you'd have Bill and all his globetrotting to contend with too. The whole thing is crazy. I guess that doesn't mean it's impossible, but I'll eat my hat¹ if it turns out to be true.

¹Note to the literal: I don't own a hat. However, if I turn out to be wrong, I'll eat a chocolate cake shaped like a hat. If you provide the cake.

Party Ben's Current Musical Guilty Pleasures

| Fri Nov. 14, 2008 7:36 PM EST


As readers of the Riff should know by now, your terribly-named DJ and contributing writer is a pretentious, nerdy weirdo, zoning out to noodly downtempo space-hop, jamming to 20-minute neo-metal sludge-fests, and bouncing along to Malian wedding music. Of course, part of my job here on the Riff is to, er, bring good things to light, hopefully exposing one or two (of our five or six) readers to obscure but worthwhile music. But there's some cheesy stuff out there that deserves a little critical praise, and I'm willing to be the man to do it.

Shepard Fairey Designs Gay Rights Poster (I Think)

| Fri Nov. 14, 2008 6:08 PM EST

mojo-photo-faireylove-sm.jpgVia Gawker, who rightly categorized this under "Things We Like" but couldn't help themselves from a subtle "fists up" joke, it's a poster in support of marriage equality designed by Shepard Fairey, whose red-and-blue Obama poster became such an iconic image in the presidential campaign that it inspired legions of imitators and parodies. I can't find any mention of it on Fairey's Obey Giant site, so I hope this isn't just a really well-done homage to his neo-propaganda style, but either way, it's pretty cool—as Gawker puts it, it's "butch," for once avoiding the same old triangles and rainbows we see on every gay thing ever. On the other hand, it's a bit, well, vague. Now, I recently complained to the esteemed MoJo editors about gay rights stories being ghettoized under the "Arts and Culture" section, so I'll try not to get too far into the politics of this here on the Riff, but some gay rights activists have said part of the problem with the (unforgivably disastrous and disorganized) No on 8 campaign was that their ads skirted around depicting actual gays and lesbians. The Obama "Hope" poster had, you know, an actual picture of Obama on it, but this one only reads "gay" if you, like most people I know, are already really pissed off about Prop 8. Maybe there could have been two hands, clasped? Also, maybe people could have done some of this before the election? Grumble. Deep breath. Anyway, nice work as always from Mr. Fairey. Click the "Continues" button to see it embiggened.

Update: Fairey has posted the graphic to his website, saying that "anyone who believes in equality and human dignity should be appalled that Prop. 8 passed." Right on, although Dave Gilson caught that the fist image was just recycled from an earlier "Obey" poster, with, er, its orientation changed.

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What Do You Do With Your Newspaper Sleeves?

| Fri Nov. 14, 2008 4:50 PM EST

newspaper150.jpgEarly next year, the NY Times plans to ditch its old plastic newspaper sleeves in favor of this one, a "biodegradable polybag." Here's the scoop:

With this new technology an additive is mixed with the plastic that causes the finished product to degrade over time, as it is exposed to oxygen in the open environment or in a landfill. In addition to being "oxo-biodegradable" the bag can be recycled along with any other plastic bags. The Times will be the first national newspaper to commit to using this environmentally friendly bag. While this new bag is more expensive, we believe it is an important change to make.

If the paper on your doorstep isn't the Gray Lady, though, your plastic sleeves are most likely still bound for landfill purgatory. Blogger Kate Galbraith recommends reusing them for storing food in the fridge—if you're ambitious, knock yourself out with bag crafts like these.

But after the jump, here's another idea, inspired by a post from Danny Seo. (He's kind of the green Martha Stewart):

Dennis Kucinich Investigates Treasury's Blank Check

| Fri Nov. 14, 2008 4:35 PM EST

It looks like the Bush administration can create its own reality after all. Just this week Treasury Secretary Henry Paulson turned the $700 billion bailout from a program to purchase toxic assets from troubled financial institutions to one that will invest in banks. Understandably, this abrupt change of course angered members of Congress, who were now left to wonder if they'd been led astray in supporting the stimulus package. At a hearing on Friday, convened to examine the Treasury Department's use of the bailout funds, lawmakers on both sides of the aisle vented their outrage. The question if whether their displeasure will make a dime's worth of difference.

Displaying the range of congressional discontent, both Rep. Dennis Kucinich (D-Ohio), the chair of domestic policy oversight subcommittee, and Rep. Darrell Issa (R-Calif.), its ranking member, accused the Treasury of a "bait-and-switch" and questioned Neel Kashkari, the 35-year-old former Goldman Sachs banker selected by Paulson to supervise the bailout, about the sudden reversal.

In response, Kashkari explained that Treasury had "worked very hard with Congress" to negotiate the bailout bill, but as the financial crisis worsened in the weeks following the bailout's passage, Paulson felt he "had to take very aggressive action." And Kashkari assured the committee that his boss had only decided "late last week, earlier this week," that the plan had to change. Issa, who voted against the bailout, suggested that the agency had planned all along to ignore the specific provisions of the bailout and instead wield the broad authority Paulson had originally demanded. "Congress is feeling you played a bait and switch game," Issa said.

Friday Cat Blogging - 14 November 2008

| Fri Nov. 14, 2008 4:19 PM EST

FRIDAY CATBLOGGING....A couple of weeks ago I mentioned that my mother had procured a new kitten from a local shelter. She named her Lily, and keeps her inside the house. A couple of days ago, though, she looked outside and Lily was under the car in the driveway. But how did she get there? Cat teleportation?

No. My mother opened the door and the cat under the car zipped into the house, ran into her arms, and started purring. But it wasn't Lily at all. It was a clone.

Then, a couple of hours later, there was some meowing at the front door. So my mother opened the door and discovered an orange kitten, who zipped inside and started purring.

Perhaps you can guess the rest of this story? There's no telling where they came from, but these two are obviously littermates, obviously friendly and accustomed to living with people, and took over my mother's house within minutes. Right now they show no signs of going away, so Mom has bowed to the inevitable. The black-and-white one is named Ditto, and the orange one is named Tillamook. On Thursday night all four of her cats slept in the bed with her. "I woke up kind of sleepy," she told me. Today, the new kittens are tearing around the house, knocking things over, and fighting my mother for every scrap of food she tries to eat. Things are getting lively in Garden Grove these days.

This Will Not Help Saxby Chambliss in the GA Run-Off

| Fri Nov. 14, 2008 4:13 PM EST

chambliss.jpg In an interview with WGAU Athens this morning, incumbent Republican Senator Saxby Chambliss, currently locked in a run-off with Democrat Jim Martin, said that we can "trust" the "folks in the financial community" with the $700 billion being spent on the bailout. Chambliss added:

"If the smart people in the financial community think this is the best way to go, I think we have to respect that."

Could a statement be more tone-deaf? The smart people in the financial community? You mean the ones who managed to sink the global economy? Those smart people? Chambliss voted for the bailout — his opponent is calling it "disastrous" — and it's one of the main reasons why Chambliss is vulnerable in deep red Georgia. I suspect we'll see and hear Saxby's comments in an attack ad, oh, tomorrow morning.