Saturday, October 18, 2008

If ONLY The Federal Gov't. would do this!!!!!!!!

October 18, 2008 Latest News on Global Financial Crisis

Financial Meltdown: The Greatest Transfer of Wealth in History
How to Reverse the Tide and Democratize the US Monetary System

by Ellen Brown

Global Research, October 17, 2008

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"Admit it, mes amis, the rugged individualism and cutthroat capitalism that made America the land of unlimited opportunity has been shrink-wrapped by half a dozen short sellers in Greenwich, Conn., and FedExed to Washington, D.C., to be spoon-fed back to life by Fed Chairman Ben Bernanke and Treasury Secretary Hank Paulson. We’re now no different from any of those Western European semi-socialist welfare states that we love to deride."– Bill Saporito, "How We Became the United States of France," Time (September 21, 2008)

On October 15, the Presidential candidates had their last debate before the election. They talked of the baleful state of the economy and the stock market; but omitted from the discussion was what actually caused the credit freeze, and whether the banks should be nationalized as Treasury Secretary Hank Paulson is now proceeding to do. The omission was probably excusable, since the financial landscape has been changing so fast that it is hard to keep up. A year ago, the Dow Jones Industrial Average broke through 14,000 to make a new all-time high. Anyone predicting then that a year later the Dow would drop nearly by half and the Treasury would move to nationalize the banks would have been regarded with amused disbelief. But that is where we are today.1

Congress hastily voted to approve Treasury Secretary Hank Paulson’s $700 billion bank bailout plan on October 3, 2008, after a tumultuous week in which the Dow fell dangerously near the critical 10,000 level. The market, however, was not assuaged. The Dow proceeded to break through not only 10,000 but then 9,000 and 8,000, closing at 8,451 on Friday, October 10. The week was called the worst in U.S. stock market history.

On Monday, October 13, the market staged a comeback the likes of which had not been seen since 1933, rising a full 11% in one day. This happened after the government announced a plan to buy equity interests in key banks, partially nationalizing them; and the Federal Reserve led a push to flood the global financial system with dollars.

The reversal was dramatic but short-lived. On October 15, the day of the Presidential debate, the Dow dropped 733 points, crash landing at 8,578. The reversal is looking more like a massive pump and dump scheme – artificially inflating the market so insiders can get out – than a true economic rescue. The real problem is not in the much-discussed subprime market but is in the credit market, which has dried up. The banking scheme itself has failed. As was learned by painful experience during the Great Depression, the economy cannot be rescued by simply propping up failed banks. The banking system itself needs to be overhauled.

A Litany of Failed Rescue Plans

Credit has dried up because many banks cannot meet the 8% capital requirement that limits their ability to lend. A bank’s capital – the money it gets from the sale of stock or from profits – can be fanned into more than 10 times its value in loans; but this leverage also works the other way. While $80 in capital can produce $1,000 in loans, an $80 loss from default wipes out $80 in capital, reducing the sum that can be lent by $1,000. Since the banks have been experiencing widespread loan defaults, their capital base has shrunk proportionately.

The bank bailout plan announced on October 3 involved using taxpayer money to buy up mortgage-related securities from troubled banks. This was supposed to reduce the need for new capital by reducing the amount of risky assets on the banks’ books. But the banks’ risky assets include derivatives – speculative bets on market changes – and derivative exposure for U.S. banks is now estimated at a breathtaking $180 trillion.2 The sum represents an impossible-to-fill black hole that is three times the gross domestic product of all the countries in the world combined. As one critic said of Paulson’s roundabout bailout plan, "this seems designed to help Hank’s friends offload trash, more than to clear a market blockage."3

By Thursday, October 9, Paulson himself evidently had doubts about his ability to sell the plan. He wasn’t abandoning his old cronies, but he soft-pedaled that plan in favor of another option buried in the voluminous rescue package – using a portion of the $700 billion to buy stock in the banks directly. Plan B represented a controversial move toward nationalization, but it was an improvement over Plan A, which would have reduced capital requirements only by the value of the bad debts shifted onto the government’s books. In Plan B, the money would be spent on bank stock, increasing the banks’ capital base, which could then be leveraged into ten times that sum in loans. The plan was an improvement but the market was evidently not convinced, since the Dow proceeded to drop another thousand points from Thursday’s opening to Friday’s close.

One problem with Plan B was that it did not really mean nationalization (public ownership and control of the participating banks). Rather, it came closer to what has been called "crony capitalism" or "corporate welfare." The bank stock being bought would be non-voting preferred stock, meaning the government would have no say in how the bank was run. The Treasury would just be feeding the bank money to do with as it would. Management could continue to collect enormous salaries while investing in wildly speculative ventures with the taxpayers’ money. The banks could not be forced to use the money to make much-needed loans but could just use it to clean up their derivative-infested balance sheets. In the end, the banks were still liable to go bankrupt, wiping out the taxpayers’ investment altogether. Even if $700 billion were fanned into $7 trillion, the sum would not come close to removing the $180 trillion in derivative liabilities from the banks’ books. Shifting those liabilities onto the public purse would just empty the purse without filling the derivative black hole.

Plan C, the plan du jour, does impose some limits on management compensation. But the more significant feature of this week’s plan is the Fed’s new "Commercial Paper Funding Facility," which is slated to be operational on October 27, 2008. The facility would open the Fed’s lending window for short-term commercial paper, the money corporations need to fund their day-to-day business operations. On October 14, the Federal Reserve Bank of New York justified this extraordinary expansion of its lending powers by stating:

"The CPFF is authorized under Section 13(3) of the Federal Reserve Act, which permits the Board, in unusual and exigent circumstances, to authorize Reserve Banks to extend credit to individuals, partnerships, and corporations that are unable to obtain adequate credit accommodations. . . .

"The U.S. Treasury believes this facility is necessary to prevent substantial disruptions to the financial markets and the economy and will make a special deposit at the New York Fed in support of this facility."4

That means the government and the Fed are now committing even more public money and taking on even more public risk. The taxpayers are already tapped out, so the Treasury’s "special deposit" will no doubt come from U.S. bonds, meaning more debt on which the taxpayers have to pay interest. The federal debt could wind up running so high that the government loses its own triple-A rating. The U.S. could be reduced to Third World status, with "austerity measures" being imposed as a condition for further loans, and hyperinflation running the dollar into oblivion. Rather than solving the problem, these "rescue" plans seem destined to make it worse.

The Collapse of a 300 Year Ponzi Scheme

All the king’s men cannot put the private banking system together again, for the simple reason that it is a Ponzi scheme that has reached its mathematical limits. A Ponzi scheme is a form of pyramid scheme in which new investors must continually be sucked in at the bottom to support the investors at the top. In this case, new borrowers must continually be sucked in to support the creditors at the top. The Wall Street Ponzi scheme is built on "fractional reserve" lending, which allows banks to create "credit" (or "debt") with accounting entries. Banks are now allowed to lend from 10 to 30 times their "reserves," essentially counterfeiting the money they lend. Over 97 percent of the U.S. money supply (M3) has been created by banks in this way.5 The problem is that banks create only the principal and not the interest necessary to pay back their loans. Since bank lending is essentially the only source of new money in the system, someone somewhere must continually be taking out new loans just to create enough "money" (or "credit") to service the old loans composing the money supply. This spiraling interest problem and the need to find new debtors has gone on for over 300 years -- ever since the founding of the Bank of England in 1694 – until the whole world has now become mired in debt to the bankers’ private money monopoly. As British financial analyst Chris Cook observes:

"Exponential economic growth required by the mathematics of compound interest on a money supply based on money as debt must always run up eventually against the finite nature of Earth’s resources."6

The parasite has finally run out of its food source. But the crisis is not in the economy itself, which is fundamentally sound – or would be with a proper credit system to oil the wheels of production. The crisis is in the banking system, which can no longer cover up the shell game it has played for three centuries with other people’s money. Fortunately, we don’t need the credit of private banks. A sovereign government can create its own.

The New Deal Revisited

Today’s credit crisis is very similar to that facing Franklin Roosevelt in the 1930s. In 1932, President Hoover set up the Reconstruction Finance Corporation (RFC) as a federally-owned bank that would bail out commercial banks by extending loans to them, much as the privately-owned Federal Reserve is doing today. But like today, Hoover’s plan failed. The banks did not need more loans; they were already drowning in debt. They needed customers with money to spend and to invest. President Roosevelt used Hoover’s new government-owned lending facility to extend loans where they were needed most – for housing, agriculture and industry. Many new federal agencies were set up and funded by the RFC, including the HOLC (Home Owners Loan Corporation) and Fannie Mae (the Federal National Mortgage Association, which was then a government-owned agency). In the 1940s, the RFC went into overdrive funding the infrastructure necessary for the U.S. to participate in World War II, setting the country up with the infrastructure it needed to become the world’s industrial leader after the war.

The RFC was a government-owned bank that sidestepped the privately-owned Federal Reserve; but unlike the private banks with which it was competing, the RFC had to have the money in hand before lending it. The RFC was funded by issuing government bonds (I.O.U.s or debt) and relending the proceeds. The result was to put the taxpayers further into debt. This problem could be avoided, however, by updating the RFC model. A system of public banks might be set up that had the power to create credit themselves, just as private banks do now. A public bank operating on the private bank model could fan $700 billion in capital reserves into $7 trillion in public credit that was derivative-free, liability-free, and readily available to fund all those things we think we don’t have the money for now, including the loans necessary to meet payrolls, fund mortgages, and underwrite public infrastructure.

Credit as a Public Utility

"Credit" can and should be a national utility, a public service provided by the government to the people it serves. Many people are opposed to getting the government involved in the banking system, but the fact is that the government is already involved. A modern-day RFC would actually mean less government involvement and a more efficient use of the already-earmarked $700 billion than policymakers are talking about now. The government would not need to interfere with the private banking system, which could carry on as before. The Treasury would not need to bail out the banks, which could be left to those same free market forces that have served them so well up to now. If banks went bankrupt, they could be put into FDIC receivership and nationalized. The government would then own a string of banks, which could be used to service the depository and credit needs of the community. There would be no need to change the personnel or procedures of these newly-nationalized banks. They could engage in "fractional reserve" lending just as they do now. The only difference would be that the interest on loans would return to the government, helping to defray the tax burden on the populace; and the banks would start out with a clean set of books, so their $700 billion in startup capital could be fanned into $7 trillion in new loans. This was the sort of banking scheme used in Benjamin Franklin’s colony of Pennsylvania, where it worked brilliantly well. The spiraling-interest problem was avoided by printing some extra money and spending it into the economy for public purposes. During the decades the provincial bank operated, the Pennsylvania colonists paid no taxes, there was no government debt, and inflation did not result.7

Like the Pennsylvania bank, a modern-day federal banking system would not actually need "reserves" at all. It is the sovereign right of a government to issue the currency of the realm. What backs our money today is simply "the full faith and credit of the United States," something the United States should be able to issue directly without having to draw on "reserves" of its own credit. But if Congress is not prepared to go that far, a more efficient use of the earmarked $700 billion than bailing out failing banks would be to designate the funds as the "reserves" for a newly-reconstituted RFC.

Rather than creating a separate public banking corporation called the RFC, the nation’s financial apparatus could be streamlined by simply nationalizing the privately-owned Federal Reserve; but again, Congress may not be prepared to go that far. Since there is already successful precedent for establishing an RFC in times like these, that model could serve as a non-controversial starting point for a new public credit facility. The G-7 nations’ financial planners, who met in Washington D.C. this past weekend, appear intent on supporting the banking system with enough government-debt-backed "liquidity" to produce what Jim Rogers calls "an inflationary holocaust." As the U.S. private banking system self-destructs, we need to ensure that a public credit system is in place and ready to serve the people’s needs in its stead.

Ellen Brown, J.D., developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and "the money trust." She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her eleven books include the bestselling Nature’s Pharmacy, co-authored with Dr. Lynne Walker, and Forbidden Medicine. Her websites are and

Ellen Brown is a frequent contributor to Global Research. Global Research Articles by Ellen Brown
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The tragedy of truncated Christianity

My comment to a commenter at re "Joe the Plumber's (assumed) Christianity":

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Posted by: JoshuaLudd on Oct 16, 2008 1:30 PM
Current rating: 5 [1 = poor; 5 = excellent]
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"I don't know if you guys are Christians or not, but it's like someone coming to Jesus and becoming saved. These guys have freedom. ..."

Because we all know Christians want more freedom than anybody else... unless you are gay, female, choose to live your life differently than they say, or are of another religious faith.

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RE: well
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Posted by: racetoinfinity on Oct 18, 2008 6:00 AM
Current rating: Not yet rated [1 = poor; 5 = excellent]

The problem with Christianity is that it was purched of its higher mystical elements at the First Council of Nicaea in 325 CE (the Gnostic Gospels, that state Jesus's teachings that the Kingdom is WITHIN; this was a huge threat to the emerging Papacy which wanted to consolidte its power over the people). Today, the choice most people have who choose Christianity to fill their spiritual needs is to remain mired (or regress to) a pre-ratioanl mythic-membership level of consciousness, where the Bible is believed to the the literal word of God, there's a Daddy figure to pray to, who will fix all your problems, that liberation through Jesus is the ONLY true path. (Islam has a similar though not identical problem.) This has led to the disaster of an irrational Christianity with its higher development cut off, that people either have to embrace or become atheists/agnostics (unless they have the sense to investigate the Eastern religions like Vedanta, Buddhism, Integral Yoga, or the emerging Integral Spirituality exemplified by Ken Wilber an others).

Wednesday, October 15, 2008

It should be over but.....

Obama seems to be surrounded by neo-liberals (Rubin et al) and seems to be right in the toxic neoliberal line, unfortunately -

13:21 10/12/2008

Robin Hanel, economist at American University:

"80 years ago people thought (unregulated) free market finance was dead. If the funeral had a name, it was Glass Steagall (the New Deal-era legislation that made banks choose between issuing mortgages and securities). In 1999 Phil Graham, Robert Rubin and Bill Clinton killed Glass Steagall, signaling the return and triumph of free market finance. Hopefully this crisis will kill free market finance once and for all. 'Never again' is the appropriate response."


02:16 10/15/2008


The neoliberalism of Friedman, Clinton, Rubin, Greenspan, Gramm, and Bush II has proven to be a bankrupt economic ideology and system.

Sunday, October 12, 2008

Exchange at Alternet-Notes on a new green economy

The following is an exchange of comments including mine at today. I'll be following up with more on this in the coming days.


"create the greatest industrial giant the world had ever seen." -- not necessarily a good thing
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Posted by: Physiocrat on Oct 12, 2008 12:44 AM
Current rating: 4 [1 = poor; 5 = excellent]
Your rating: 3
And how is this is a good thing?

Rampant industrialism is the cause of the current crisis -- in my opinion, this is less of an economic crisis and more of a civilizational one.

Unchecked industrialism has led to rampant greed, widespread selfishness/loneliness/alienation, long-term unsustainability, widespread environmental degradation and disconnection from nature, overconsumption, overproduction, and the overall lowering of our QUALITY of life. Sure, we are more 'wealthy' as a culture and have much more stuff than we did in the pre-industrial age, but at what price have we gained all of this STUFF?

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RE: "create the greatest industrial giant the world had ever seen." -- not necessarily a good thing
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Posted by: racetoinfinity on Oct 12, 2008 12:08 PM
Current rating: 4 [1 = poor; 5 = excellent]

The answer to the very real problems you cite isn't to go backwards to a pre-industrial age (practically impossible now, anyway), but to progress (evolve) to a green (ecologically informed) that heals our dissociation with nature but at a new level (an upward turn of the spiral of social structural [and consciousness] development) - practically, that means major investment in a green economy. The meltdown and debt have made this more problematic for the next administration to provide the stimulus, but global warming makes it imperative.

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RE: "create the greatest industrial giant the world had ever seen." -- not necessarily a good thing
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Posted by: Spot on Oct 12, 2008 3:26 PM
Current rating: 4 [1 = poor; 5 = excellent]
Your rating: 4
it is already a fact of our economy that we are moving away from the mass employment of workers for industrial production.

if the goal of the economy is sustainability, we need to focus, of course, on non-destructive practices for the generation of energy and goods. recycling, solar, wind, what have you. unfortunately, green jobs are a red herring for the long-term renewal of our economy. if you don't understand that, think for a second: how many Americans still work for the Tennesee Valley Authority? It's a great goal, and an important one to accomplish, but it isn't a guarantee of return to our halcyon days.

if we want a real sustainable economy, we need to encourage citizens to supply their own needs through local agriculture. a greener economy will require less input from machinery and more from individuals. humans don't consume fossil fuels, only grains and meats and other ag products, and instead of oil spills and insecticides, we drop organic proto-compost.

the problem we face is the realization that the industrial revolution is a dead end at the scale our society has stretched it to. the obsession with mechanization must be discredited if we are to gain a truly green economy, and the value of agricultural labor must be recognized as far more important than any job in a call center or retail outlet.

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RE: Great Depression II or close to it ...
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Posted by: cellorelio on Oct 11, 2008 6:45 PM
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A lot of this makes sense to me and it's explained in terms that you don't have to have been an econ. major to get. I also see some logic in much of what the experts in this article propose. It reminds me of what I learned in high school about the FDR administration taking over after the failed Hoover era that brought us the Great Depression. I was always fascinated by that period of history.

I'm old enough to remember the 1970s' "days of malaise" and the Reagan recession of '82. So many of those factors are at play again today (paying to fight wars overseas, an "energy crisis", exporting high-paying working-class jobs overseas, devaluation of the dollar, a tight credit market, rising inflation and unemployment). Though those issues are now much more extreme. For instance, we'd already lost in Vietnam before the bill for it came due. But today, we're still fighting full-scale wars in both Afghanistan and Iraq and military spending continues to increase with no end in sight.

Though I'd like to see us use this experience to radically transform our society/economy into one that is more anarchist/community-oriented, I just don't think that the masses are open to it. I guess the next best thing is to use government to support people and communities struggling the most while we (activists, anarchists, communitarians) work to educate those who will most benefit from joining us in transforming the world into one that equitably distributes wealth and power.

We have to replicate our successes (the labor movement during the Depression, the various civil rights movements of the '60s and '70s) and learn from our failures (the excesses and complacency of the labor movement from the '60s on; allowing the Radical Right/conservative Republicans to redefine the socio-political agenda beginning in the late '70s).

The question is, how. How do we activate social progressives? How do we put aside the in-fighting and back-biting that seems so inherent to the free-thinking Left? How do we get people to wake up and stop supporting people and policies that directly screw them over? I mean, the Teamsters endorsed Ronald Freaking Reagan in 1980 and '84! In 1978, my parents voted for California's infamous Prop 13* because, as homeowners, they were afraid they could no longer afford to own property as property values ballooned. Right issue, wrong initiative.

My favorite quote of the article: "capitalism itself will come under severe questioning, and many will think that regulating or re-regulating it is not enough. I think you will find the same fundamental questioning happening throughout the world." He added, "Radical economics and Keynesian economics will regain respectability, and neoclassical or neoliberal (trickle-down) economics will be delegitimized." Boo ya!


* California Ballot Proposition 13: Billed as capping property taxes for homeowners but really more of a big corporate giveaway while gutting local services, ultimately crushing the still somewhat powerful public employee unions and thereby damaging the entire labor movement.

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RE: Great Depression II or close to it ...
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Posted by: racetoinfinity on Oct 12, 2008 12:12 PM
Current rating: 4 [1 = poor; 5 = excellent]

A new green economy will be a great opportunity to promote and educate the public in communitarianism, if we don't allow the same corporatism to grab and co-opt the true green evolution underway (a big "if" - they will not surrender their power easily).

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RE: Great Depression II or close to it ...
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Posted by: Spot on Oct 12, 2008 3:34 PM
Current rating: 4 [1 = poor; 5 = excellent]
Your rating: 4
a new green economy cannot rely on industrial production. products cannot continue be shipped from continent to continent except as luxury goods. food production must follow similar lines, being grown close to the point of consumption.

these factors will undoubtedly lead to increased community interaction, though i understand your concern that corporations will try to maintain control. they inevitably will. don't worry though, there are affinity groups looking at tactics that will make education look positively conservative.

every chain store that burns opens an opportunity for local, sustainable commerce.

my big worry is: how do we kill consolidated control of media?

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Saturday, October 04, 2008


The Pattern that Connects: Holons - AQAL to Sprial Dynamics

The People's Republic of Wall Street

Guidelines Expand FBI'S Surveillance Powers

Guidelines Expand FBI's Surveillance Powers
Techniques May Be Used in U.S. Without Any Fact Linking Subject to Terrorism
By Carrie Johnson
Washington Post Staff Writer
Saturday, October 4, 2008

Justice Department officials released new guidelines yesterday that empower FBI agents to use intrusive techniques to gather intelligence within the United States, alarming civil liberties groups and Democratic lawmakers who worry that they invite privacy violations and other abuses.

The new road map allows investigators to recruit informants, employ physical surveillance and conduct interviews in which agents disguise their identities in an effort to assess national security threats. FBI agents could pursue each of those steps without any single fact indicating a person has ties to a terrorist organization
Attorney General Michael B. Mukasey said the guidelines are necessary to fulfill the FBI's core mission to predict threats and respond even before an attack takes place. The ground rules will help the bureau become "a more flexible and adept collector of intelligence," as independent commissions urged after the strikes of Sept. 11, 2001, Mukasey said in a statement yesterday.

The guidelines, which harmonize five different road maps dating back more than a generation, take effect Dec. 1. That is two months later than initially planned, and authorities said the delay was a concession to privacy advocates and Arab American groups who expressed concern that their members could be subject to racial or ethnic profiling.

Justice Department leaders rewrote a key section of the guidelines concerning agents' infiltration of groups and attendance at demonstrations. Under the new language, agents would be able to investigate the likelihood of violence stemming from a planned demonstration for as many as 30 days, with renewals subject to supervisory approval.
Congressional staff members said the revisions were superficial, and the American Civil Liberties Union immediately condemned the road map. Critics had asked Justice Department leaders to wait until a new president takes office, an approach that administration officials rejected.

Caroline Fredrickson, director of the ACLU's Washington legislative office, said: "Since, under these guidelines, a generalized 'threat' is enough to begin an investigation, the FBI will be given carte blanche to begin surveillance without factual evidence. . . . These guidelines will lead to political witch hunts and more unwarranted investigations of political enemies and peace groups."

Senate Judiciary Committee Chairman Patrick J. Leahy (D-Vt.) said the grant of new authority to FBI agents flies in the face of recent history, including overreaching and sloppy record-keeping by agents who demanded too much secret information from telephone companies and Internet service providers as part of national security investigations.
Bush administration officials assert that the overhaul is merely a common-sense change that would give FBI agents who pursue national security leads the same power as agents who investigate criminal offenses.

Civil liberties activists yesterday raised anew questions about the expanded role of the FBI in collecting an array of foreign intelligence within U.S. borders, absent evidence of a crime. For instance, the guidelines allow FBI agents to conduct interviews and monitor the movement of people who may possess useful information on subjects of general interest to American policymakers, such as a foreign government's oil exports.

Why They Chose Sarah Palin

"Mark Crispin Miller"
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Please let me know if you received this.


Strategists say that Mr. McCain can now count on a more motivated
social conservative base to help him in areas like southern Ohio, where
the 2004 race was settled.
--The New York Times, Sept. 7, 2008, A1

In investigating the 2004 election in Ohio--examining pollbooks, talking to
pollworkers and election officials, as well as reading local newspaper accounts
--we could find no data of a late surge to the polls by born-again Christians.
What we did find is certified voting totals in areas favoring Bush that didn't
match the number of voters who officially signed-in on the poll sign-in sheets.
--Email from Bob Fitrakis, Sept. 7, 1008

To understand how Team McCain intends to get away with stealing this election, we must
recall how Team Bush got away with it four years ago. (Those aren't two different teams.)

The plan for stealing this contest has everything to do with the ostensibly surprising choice
of Sarah Palin as McCain's VP.

Here's why:

1. Election Day, 2004: The Myth of Bush's Christian "Surge"

First, let's recall that, after the 2004 election, everybody said that Bush had won because the
true believers of the Christian right had come out--or, rather, poured forth--in unprecedented
numbers, often at the last minute, to support him. Of course, by "everybody," I'm referring to the entire commentariate, both mainstream and left/liberal. On TV and in print, in news analyses and op-ed articles, they all said that Bush/Cheney had been re-elected by America's "values voters."

And they said it with a certain awe--as well they should, since Bush's victory was a sort of miracle. He had disapproval ratings in the upper 40's: higher than LBJ's in 1968, higher than
Jimmy Carter's in 1980. Nor was he very popular in his own party, as many top Republicans
came out against him--including moderates like John Eisenhower, rightists like Bob Barr,
and many others such as William Crowe (chair of the Joint Chiefs under Ronald Reagan),
General Tony McPeak (former Air Force chief of staff and erstwhile Veteran for Bush),
libertarian Doug Bandow, neocon Francis Fukuyama, Lee Iacocca and Jack Matlock, Jr.
(Reagan's ambassador to the USSR); and many other, lesser figures in his party also publicly
rejected him.

And so did sixty (60) newspapers--all in "red" states--that had endorsed Bush four
years earlier: two thirds of them now going for Kerry, the others none of the above. American
Conservative, Pat Buchanan's own magazine, ran endorsements of five different candidates,
only one of them for Bush. And 169 tenured and emeritus professors from the world's top
business schools all signed a full-page ad decrying his economic policies, adducing them
as reasons not to vote for him. (The ad was written by top faculty at his own alma mater,
Harvard Business School.) The ad ran in the Financial Times, which, like The Economist,
endorsed John Kerry.

And still Bush won, despite such big defections, thanks to that enormous turnout by the
Christian right, as everybody kept on saying--even though there were good reasons to
be very skeptical about that notion.

2. Election Day, 2004: There Was No Christian "Surge"

First of all, that talking point came from the Christian right itself, whose members certainly
had every reason to exaggerate their clout. That they thus credited themselves, and that the
claim was duly amplified by their own party and its propaganda organs (Rush Limbaugh,
Fox News, et al.), should have been enough to make all non-believers doubtful.

And non-believers should have been especially suspicious of that claim because there's
not a shred of evidence to back it up. On the other hand, there's solid evidence that that
immense, last-minute vote for Bush was nothing but a propaganda fiction, cooked up by
Karl Rove to mask his party's theft of that election.

To begin with, that fiction is preposterous on its face, since there were nowhere near enough
of such right-wing believers to account for the incumbent's staggering advance, as Bush reportedly
received 11.5 million more votes than he had won four years before. And how many evangelicals
did that surge include? According to Karl Rove himself (among others), there were 4 million evangelicals who had not voted for Bush/Cheney in 2000. So, even if Rove managed to get
every single one of them to vote for Bush this time around (and it's unlikely that he did), they
could not possibly have made so big a difference--unless, of course, their numbers somehow
magically increased inside the polls, like Jesus's loaves and fishes.

In any case, Bush seems to have done worse with evangelicals than he had four years before. Consider how his "base" performed, in fact, on that Election Day, as measured by the National
Exit Poll (and scrupulously analyzed by Michael Collins, whose essay, "The Urban Legend,"
is included in Loser Take All). Close study of the numbers in 2004 reveals that there was no
big national surge of "values voters": on the contrary.

First of all, the nation's rural vote declined, dropping from 23% to just 16% of the overall national vote; and Bush's total rural vote went down from 14 million to just under 12 million. And while
the nation's small town vote increased substantially--by 88%--those voters did not favor
Bush as they had done four years before, but opted in near equal numbers for John Kerry. Of
those 9.5 million votes, Bush got 4.9 million, while Kerry got 4.7 million. (In 2000, Bush had
won 3.1 million small town votes, to Gore's 2 million.) And then there were the voters in the
suburbs, who did come out for Bush in greater numbers than four years before--but hardly
by enough to make for a decisive jump of any kind, as Bush won 28.3 million of those votes,
to Kerry's 25.6 million.

Thus was there no elevated turnout in those regions where most "values voters" live--nor
did the post-election polls suggest that "moral values" drove Bush/Cheney's startling re-election.
On Nov. 11, Pew published the results of their most precise survey of the electorate. Having
asked Americans to name the issue that most concerned them as they cast their ballots, Pew
found that Iraq was Number One, noted by 25 percent, followed by "jobs and the economy,"
noted by 12 percent, with 9 percent invoking "terrorism." Only 9 percent named "moral values"
as their main concern--with only 3 percent of them referring specifically to "gay marriage"
(and another 2 percent referring to the candidates' own private lives).

Those numbers tell a very different story from the one hyped proudly by the men atop the
Christianist machine. In particular, they said that they helped Bush prevail through their
well-managed opposition to gay marriage--which Tony Perkins, head of the Family
Research Council, called "the hood ornament on the family values wagon that carried the
president to a second term." That there was evidently no such wagon did not blunt the
impact of such theocratic propaganda, which quickly resonated all throughout "the liberal
media," so that it now stands as the truth.

Indeed, it was accepted as the truth so quickly that it went unquestioned even after the
dramatic mass reaction to the Terri Schiavo case a few months later, when Bush and the
Republicans in Congress intervened in that domestic tragedy, trying to force the very
outcome that the Christianists were calling for: "Americans broadly and strongly disapprove
of federal intervention in the Terri Schiavo case," ABC News reported. The public supported
the removal of Schiavo's feeding tube by 63% to 28%, according to the network's polls.

And so it was throughout the media. According to USA Today, 76% disapproved of
Congress's handling of the case, while only 20% approved. CBS News found that 82%
believed that Bush and Congress should have stayed out of it. And so it went, with poll
after poll confirming that the Bush Republicans' attempt to force their "moral values" on
the situation was appealing only to a small minority, a/k/a the fringe. "When nearly 70
percent of the American public disagrees with you," wrote Eric Boehlert at the time,
"you're out of step with the mainstream."

That strong reaction by (at least) two-thirds of us was far more telling than the press,
and most top Democrats, were willing to perceive, and so they couldn't, wouldn't see
the awful truth: Either We the People had abruptly given up our "moral values" since
Election Day, or our apparent vote for Bush was a deception, based on vote suppression
and election fraud committed in Ohio and elsewhere throughout the nation.

* * * *

Thus the myth of that immense, last-minute Christian turn-out was a rationale concocted
to "explain" Bush/Cheney's re-election--and the US press immediately bought it, out
of a clear eagerness to close the book on that election right away, and thereby black out
all the glaring signs of fraud throughout Ohio (and Florida, and elsewhere). Indeed, the
press at once laughed off the "theory" of widespread election fraud, dismissing all the facts
as fantasy; and in their place it offered fantasy as fact (as they had done before, and have
done since).

And so, because the media never did revisit the 2004 election, that groundless "explanation"
quickly hardened into gospel (so to speak)--which brings us to the present, and the strategy
for stealing this election, too.

3. Election Day, 2008: Another Christian "Surge"?

The choice of Sarah Palin has been widely and repeatedly assailed as evidence of John
McCain's "bad judgement." Certainly that choice was very bad. Indeed, it may prove to
be catastrophic. But to take it as a sign of John McCain's mere recklessness is probably
a big mistake. First of all, there is no reason to believe that the decision really was
McCain's, since Karl Rove's minions are in charge of his campaign, which means that
Rove himself is running it (as he evidently has been from the start). And while it surely
was a rotten choice in moral and/or civic terms, it certainly was not an instance of "bad
judgement" in Rove's moral universe, where winning is the only thing that counts; and
Sarah Palin was selected so that (she and) John McCain could "win"--and, even more
important, get away with it.

They picked Palin not because she is a woman, and might therefore appeal to diehard Hillary
supporters. They picked Palin because she is a theocratic true believer, who has the Christianists
all swooning at the prospect of her reign (which will commence as soon as Jesus answers
all their prayers for John McCain's quick death). To get some sense of their millennial
excitement, read this excerpt from an email recently sent out by one of them, to others of
her kind:

I believe you are aware that Dutch Sheets [] was used by the
Lord to call prayer before the 2000 election that was so close. He said this morning that this
election is perhaps even more critical than 2000 because of the Supreme Court. If the right
political posture is not elected, we stand to lose decades of progress and the results could be enormous. Last year Chuck Pierce and Greg Hood prophesied that in 2008 we would not be
electing a president but a vice president. Dutch said he could get no release in his heart to
back Huckab[ee] even though he was pressured by many in the body of Christ. Huckab[ee] is a
good man and a strong believer, but he was not God's choice. Dutch also told us that he knows
a man who gave McCain a prophetic word that McCain had made a vow to God when he was
at the bottom during his POW days and now God was calling in that vow. McCain was visibly
moved by this word.

Dutch was traveling to Texas on Friday and when he landed in the airport his wife called and
told him to get to the TV asap. He watched McCain introduce Governor Palin and he said he
began to weep, even though he knew nothing about her. He asked God, "What is the significance
of this 44-year-old woman?" And he saw the clock said 4:44. He asked the Lord what that was
all about and the Lord said, "Ezekiel 44:4." "He brought me by way of the north gate to the front
of the temple; so I looked, and behold, the glory of the LORD filled the house of the LORD; and
I fell on my face. NKJV ..... North gate representing Alaska [sic].

And so on.

Such fervor, which now unifies the Christianist community, was not stoked merely by the
sight of Palin's glowing kisser on TV. More importantly, the governor became the instant
darling of the Christianist far right once all the top dogs of the theocratic movement looked
at her, and pronounced her good. To some extent, she was their choice--and so it's wrong
to claim, as some indignant pundits have, that Sarah Palin "was not vetted." The governor
was vetted by the Council for National Policy, the secretive and highly influential steering
committee of the Christianist far right, which seeks to junk the Constitution and replace it
with Leviticus and other flights of Holy Writ.

They approved this choice, because Sarah Palin is quite willing to promote the Christianists' apocalyptic program with a brazenness, and comprehensiveness, unprecedented in the history
of American political campaigning. Her disparate crackpot policies are all expressions of the
same extremist creed. There are, of course, all her Levitical sexual proscriptions: no abortions
even for those women who've been raped (or raped by their own fathers); no sex education;
no condoms. There are her incremental steps to Christianize the public schools: her moves
against their secular librarians; her readiness to get Creationism into the curriculum. And then
there is her mad anti-environmentalism: her tacit eagerness for further global warming, and,
therefore, her passion for oil-drilling everywhere; her opposition to clean water legislation;
her willingness to see the polar bears die off; her letting hunters gun down wolves and bears
from low-flying planes, etc. All such reckless policies derive from an apocalyptic wish to see
the planet die, so that Lord Jesus will come back here, and start kicking ass and taking names.
(Palin's pastor holds that He will set up his command post in Alaska.)

None of this insanity appeals to anyone outside the Christianist community, which is no larger
than it was when Bush tried to "save" Teri Schiavo from "judicial murder"--or when he
was anomalously "re-elected" by those legions of fictitious "values voters." The choice of
Sarah Palin, therefore, surely was not based on any rational calculation of some real electoral advantage; for that ferocious bloc is far too small to pull that off, no matter how firm their
conviction that God wants them to.

In fact, the only way that Palin and her doddering partner can prevail in this election is by
stealing it, as Bush and Cheney did (both times). Certainly the ground has been prepared
for yet another stolen race, Bush/Cheney's party having made enormous strides in sabotaging
our election system (while the Democrats just sat there, whistling). Now, from coast to coast,
it's far more difficult (for Democrats) to register to vote, and far more difficult (for Democrats)
to cast their votes, while countless (Democratic) voters have been stricken from the rolls,
through purges carried out by the Department of Justice.

Thus Bush's government has legally diminished the electorate (the Roberts Court approving
every step). Meanwhile, the regime also continues to suppress the (Democratic) vote illegally,
either through voter "caging" prior to Election Day--or, far more effectively, by fiddling
with the numbers electronically at every level, and/or simply dumping countless names (of Democrats) from the electronic voter rolls, and/or putting far too few machines in (Democratic) polling places, and/or disinforming (Democratic) voters as to when and where to cast their
votes, and/or simply scaring (Democratic) voters into staying home.

That is what it takes to steal elections in America--all of that, and also something else:
a quick-'n-easy explanation for the outcome. For if those final numbers are surprising, there
must be some rationale that can (apparently) account for them. And that is why the Bush
machine put Sarah Palin next to John McCain. By arousing the hard core of vocal Christianists,
they prepared the ground for the eventual redeployment of the same canard with which they
justified their last unlikely "win": that millions of believers did the trick.

Indeed, it was not just the choice of Sarah Palin, but the whole convention, that was clearly
calculated not to pull in undecided and/or independent voters, but to get the fringe alone to
stomp and holler for the ticket. The party platform--crafted under the command of
Christianist election-rigger J. Kenneth Blackwell--is a (literally) scorched-earth
"faith-based" document, calling even for a ban on stem cell research in the private sector.
And the convention spectacle itself was basically one long display of cultural resentment,
with lots of loud, self-righteous jeering from the stage and on the floor (with an epic
show of ridicule by that fine Christian, Rudy Giuliani).

It was strongly reminiscent of the GOP's 1992 convention--a show that very clearly turned
the nation off, and helped defeat Bush Sr.'s bid to stay in office. Team McCain decided to
revive that model, not because the nation has turned Christianist since then, but as a way to
motivate the fringe, and thereby make it possible to tell the pundits, on Nov. 5, that it was
those Americans who turned the tide for John McCain.

4. A Word to the Wise

In fact, that claim will be the secondary "explanation" for McCain and Palin's "win." The
first, of course, will be Obama's race, and the sad "fact" that "America's just not ready to
vote for a black man." We will hear endlessly (as we have already) about "the Bradley
effect," and how it struck again, with millions of white folks who had openly approved
Obama suddenly deciding, in the sanctum of the voting booth, to vote like Klansmen,
thereby electing John McCain.

And, if Obama "loses," we will also hear a lot of other "explanations," each of which
will suit the interests--the politics and/or pet theory--of the person(s) offering it.
We'll hear from Clinton people that he lost because he didn't put her on the ticket. We'll
hear from Michael Moore, Ralph Nader and The Nation that he lost because he ran too
corporate-friendly a campaign. We'll also hear from Mark Penn and the Wall Street Journal
that he lost because his campaign was too "populist."

George Lakoff will tell us that Obama lost because he failed to frame the issues properly,
Thomas Frank will note that all those Kansas-types are still too dim to know what's good
for them, and Thomas Friedman (among others) will point out that Obama lost because he
never made that crucial "gut" connection with "Joe Six-Pack" (whom Friedman and those
others know so well). Meanwhile, many others will ascribe Obama's loss to all the lies
and slanders heaped upon him by McCain's campaign and its confederates, who, we'll
hear repeatedly, "Swift-boated" him to death, just as they did to Kerry (as if Kerry really
lost the last election).

Some of those assertions will be partly true--and all of them are sure to be irrelevant.
For if McCain and Palin "win," that victory will either be a miracle (which is, of course,
how some of their supporters will explain it) or just another massive rip-off, perpetrated
right before our eyes. And no such miracle is likely; for there is still no reason to believe
that that old man and his demented running mate have any broad appeal. The polls now
putting them ahead are highly dubious, based on a ten-point over-sampling of Republicans,
and crafted without any calls to cell phone users (who comprise a large part of Obama's

Otherwise there is no evidence of any large-scale movement toward McCain and
Palin--who have to trek to theocratic enclaves, like Colorado Springs, in order
to draw cheering multitudes, while Obama/Biden draw them everywhere they go.
With Democrats all in a panic, let's recall how few Americans turned out to vote in
the Republican primaries, and how few new voters the Republicans have registered
to date. Compare that feeble record with the vastly larger numbers who came out for
Obama (and for Clinton), and all those whom the Democrats have registered to vote.
Since then, the prospects for McCain have not improved, regardless of the spin on
Sarah Palin--for this economy is in the crapper, and he has said repeatedly that
he just doesn't know about such things. That issue, and his wild commitment to a war
that most Americans oppose, make his victory in November quite improbable, to
say the least.

And there you have the reason why the GOP must, once again, deploy its giant
criminal machine: to cut the Democrats' vast popular advantage. And it is happening
right now, as you sit reading this, as each day brings in new reports of voters purged,
machines "malfunctioning," ballots slyly misdesigned, and other measures meant to
benefit McBush's party. (The fraud is not occurring "on both sides.") Such evidence
is far more solid than the nervous speculation that Americans might vote on racial
grounds--or the fantasy that Sarah Palin's co-religionists could really win it for

The theft of this next race is only possible because the Democratic Party and the media,
and principled Republicans, have shut their eyes to this regime's crusade against American democracy. And now the only way to stop it--or, if it does happen yet again, resist it--
is to face it at long last, and talk about it openly. It's therefore not enough to raise more
money for the Democrats, and not enough to get more voters registered, and get them
to the polls; and not enough to spread the word about McCain and Palin, or to try to get
the media to do a decent job; and not enough to fight the smears and lies about Obama,
and to demand that he and/or the Democrats get tougher.

While all of those activities are crucial, they'll amount to nothing if the race is finally
rigged, and most Americans don't know a thing about it. And so, whatever else we're
doing, we must also speak out loud and clear about that possibility. Otherwise, if that
disaster should befall us, we will be as much to blame for it as those Republicans who
pulled it off, and all those Democrats who let them get away with it.

Friday, October 03, 2008

Out of Touch

William Greider on the current economic "crisis"

Our country is at a rare and dangerous juncture. The old order is crumbling, and virtually all the centers of power that govern us have been discredited by events. The president is irrelevant, weak and unbelievable, even to his own party. The Democratic majority controlling Congress is stalled by its own shortcomings. The treasury secretary, given his arrogant approach to the financial crisis, is not to be trusted as a steward of the public interest. Nor are the conservative Federal Reserve and its chairman. The private power of Wall Street is utterly disgraced and desperate.

This condition of vulnerability is sure to prevail for at least the next three months, until a new president and new Congress take office. In the meantime, the governing elites are clinging to the old order, trying to salvage it by delivering massive amounts of relief from taxpayers to the failing financial institutions. The American people correctly see this approach as a historic swindle that rewards the villains at the expense of the victims. A Nevada real estate broker asked the Washington Post, "Instead of having a bailout, why don't we have indictments?"

Indictments can wait, along with fundamental reforms. Right now the country needs to confront the fire raging through the financial system and engulfing people and productive assets in the real economy. Aroused and angry, the public, for a change, can play a decisive role in the political arena, as it did when the House rejected the bailout package. That shock to the system was valuable therapy. People can drive politicians to begin facing reality and to develop a more forceful strategy for national recovery, an approach that serves the country as a whole and has a far better chance of succeeding. The sooner our leaders recognize that the old order is gone, the sooner Americans can begin reconstructing a more viable and equitable economy.

The calamitous unwinding of financial institutions in recent months has an ominous resemblance to events that unfolded after the stock market crash of 1929, when three years of recurring waves of bank failures and economic contraction led to massive suffering. The government, led by the Federal Reserve, was scandalously derelict during that crisis. This time Washington has reacted more aggressively but still hasn't found a strategy to stabilize finance or reverse the gathering recession.

Another total collapse like the one in the 1930s may still be avoided if politics changes direction. We do have some factors in our favor. First, our living standard is abundant by comparison, despite our indebtedness to foreign nations. Second, the New Deal created economic mechanisms that remain in place as automatic stabilizers, like federal deposit insurance to prevent disastrous runs on banks like the ones that wiped out more than 10,000 back then.

Given the political paralysis, people have to find their own way. Corny as it sounds, the necessary first step is honesty--getting a clear understanding of what we are facing and what can be done, then forcing our views and ideas on the governing circles in both parties. The bitter tragedy of our era is that the hard lessons Americans learned during the crisis of the New Deal years have been tossed aside--either repealed or systematically subverted--by the present generation of governing elites. Democratic partisans who claim an aura of innocence are falsifying the past. For the last generation, Democrats have colluded with conservatives in the destruction of New Deal law and principle. And Democrats do not yet have a clear idea of how to restore those lost lessons and update them for our present predicament.

Understanding the situation begins by recognizing the real crisis--the great wound to the nation that Treasury Secretary Paulson and his supporters have obscured with their alarm-bell rhetoric. The United States has collectively suffered a massive loss of wealth--capital in the financial system as well as savings in the real economy of families and producers. With the collapse of Wall Street's phony valuations, financial capital disappeared like air from a deflating balloon. Banks are endangered because they have lost $1 trillion or maybe twice that. Therefore the banking industry will shrink considerably. We are witnessing that bloody spectacle right now--failing firms and forced mergers, either propped up by government or taken over by private investors like Warren Buffett.

When Japan went through a low-grade depression during the 1990s after its financial bubble burst, something like twenty-one major banks were reduced to four. The US system is shrinking in similar fashion, but much faster. This inspires recurring panic among investors, creditors and shareholders, but a smaller financial system will eventually be good for the country--more focused on the real purpose of banking, which is to channel capital investment into the economy. In recent years financiers have instead amassed speculative fortunes by peddling exotic debt instruments.

Paulson's solution was to relieve bankers of their rotten assets--primarily mortgage securities--and then replenish their lost capital. He did not explain this clearly, because he knows even $700 billion is not enough to save them all. So his extraordinary powers would put him or his successor in the role of savior and Grim Reaper, the titan who picks and chooses which banks will survive and which must die. But even if he chose wisely, it would not solve the basic problem. The financial system is going to shrink no matter what; under Paulson's plan, the public would be stuck with all its costly mistakes.

The other half of the nation's great loss of wealth belongs to the people--ordinary working people, mostly, who have borrowed heavily in order to sustain their faltering standard of living under pressure from flat or falling incomes. Given the bubble of inflated housing prices, people borrowed most easily from their own savings--the equity they had accumulated in their homes. When housing prices collapsed, economist Dean Baker estimates, their loss of wealth was $4 trillion to $5 trillion. Three decades ago, American homeowners held 70 percent equity in their homes. Today it has fallen below 50 percent. Many families have spent their retirement savings and are still working.

Just as the financial system is doomed to become smaller, so must millions undergo a painful fall in their standard of living. Many already have. There is no obvious way around this, but if they face the facts, people can begin to focus on what is possible and then pressure government to undertake remedies to mitigate the pain and avoid the worst. Right now, everyone is scared, hunkering down.

Only government has the leverage to "get the money moving again," as New Dealers used to say. No other sector or interest is equipped to raise the financing. Government can borrow money from people afraid to spend and wealth-holding institutions afraid to lend, then pump it into real economic activity. It can issue cheap loans if the banking system won't. It can forgive debts or relax the terms if that puts people back to work and keeps them in their homes. As economist James Galbraith suggests, it can hand off the money to state and local governments and make sure they spend it. All this is elementary Keynesian economics, the doctrine taught by the New Deal era. I restate it in plain English because even the Democratic Party seems to have forgotten the basics, having become obsessively fearful of large budget deficits (except when powerful interests want the money). Average Americans need to start saving again, and business and banking will not begin to reinvest in the economy until they see that government is leading the way.

Washington must assert its full emergency powers and tackle two things at once: manage the gradual downsizing of the financial system in an orderly fashion that sustains lending, and revive production and employment by force-feeding activities of many kinds. This cannot be a voluntary program that simply invites bankers to participate on their terms. The government must impose emergency regulatory controls to keep finance in step with the nation's overall goals. If bankers resist these terms, they should be cut off, isolated from the public's lifesaving assistance.

These are not idle suggestions. The nation is now in the grip of dynamic political change, and this will not stop with the decision on Paulson's grandiose bailout. Presuming the bailout prevails in Congress, Paulson will be handing out public billions to Wall Street players in the next few months. The political counterforce for genuine public-spirited solutions should be pushing back right away. Activists and intellectuals, public citizens and heavyweight financial players, even some members of Congress, are already at work on the details. If Congress reconvenes for a lame-duck session, you will see some of these measures surface for public debate and popular agitation.

The essence of this action will borrow ideas and models from the New Deal and update them to fit our present circumstances. This not simple nostalgia. It is a clearheaded recognition that the public interest has not been served and the crisis will not recede until it is. Here are five concepts for recovery and reconstruction that are in circulation. If we are lucky, these proposals will redefine the next presidency, whoever wins.

1. Stop the easy-money bailout. Instead of buying rotten assets from Wall Street firms with no strings attached, the government should examine their books and decide which banks can be saved with direct infusions of capital in exchange for public ownership--roughly on the terms Warren Buffett got when he aided Goldman Sachs (preferred shares and guaranteed dividends). The failing institutions should get regulatory euthanasia. This approach gives the government direct control over the survivors and ensures that the public is protected from egregious loss. The model is the Reconstruction Finance Corporation of the 1930s, which recapitalized banks and corporations under stern supervision.

2. Help the folks who are hurting--directly. A homeownership corporation patterned after the New Deal original would have the money and the flexible authority to supervise "workouts" for millions of failing families. This is what bankers do for corporations when they get in over their head. Government can do the same for indebted households: stop the liquidation, stretch out default dates and arrange manageable terms. This is not a bleeding-heart gesture--keeping families in their homes is economic stimulus, and it halts the decay of neighborhoods.

3. Get serious about economic stimulus. We need a recovery program five or six times larger than the pitiful $60 billion proposed by Democratic leaders. These billions should go for the familiar list of neglected priorities--fixing bridges and schools--but should also jump-start the green agenda for alternative fuels and restoration of ruined ecosystems. The government should subsidize the new industries of our age, just as New Deal spending financed the modern development of aircraft, petrochemicals, steelmaking and other key industries in the 1930s.

4. Re-regulate the bad actors and indict the criminals. Start by restoring the law against usury--the predatory lending practices that ruin weak and defenseless borrowers. Government cannot wait for a relaxed debate about restoring regulations. We need newly designed controls over the financiers and well-defined public obligations imposed not only on banking but also on hedge funds and private equity firms. These cannot be discretionary rules. If the money guys don't like them, they should get out of the business. Paulson's Wall Street colleagues are already mobilizing lobbyists for this fight, but they may discover that Washington has been changed by events. The easygoing deference to Big Money seems suddenly out of fashion.

5. Create a new brain for government management of the economy. The crisis and the halting decision-making by the Treasury and the Federal Reserve--not to mention the secrecy and special deal-making on behalf of financial interests--make it clear that deep reform is required. I would start with a special reconstruction and recovery agency, empowered to lead policy and oversee banking regulators and the economic stimulus. The Federal Reserve's so-called independence is an antique concession to the big banks and doesn't make any sense. Monetary policy and fiscal policy must be balanced and decided in the same process. That rational approach might have stopped the Fed from the biases and dereliction that led to this crisis.

These ideas and many others are in gestation. They will reach fruition when politicians and other leaders swallow their bruised egos and rethink their supine posture, arm in arm with Wall Street. That looks improbable at the moment. But voters can help them change their minds.