Dr. Doom and our subprime financial system

Here's what NYU economist Nouriel Roubini says about the plan that was (thankfully) rejected by the Congress yesterday:

. . . the Treasury plan is a disgrace: a bailout of reckless bankers, lenders and investors that provides little direct debt relief to borrowers and financially stressed households and that will come at a very high cost to the US taxpayer. And the plan does nothing to resolve the severe stress in money markets and interbank markets that are now close to a systemic meltdown. It is pathetic that Congress did not consult any of the many professional economists that have presented - many on the RGE Monitor Finance blog forum - alternative plans that were more fair and efficient and less costly ways to resolve this crisis. This is again a case of privatizing the gains and socializing the losses; a bailout and socialism for the rich, the well-connected and Wall Street. And it is a scandal that even Congressional Democrats have fallen for this Treasury scam that does little to resolve the debt burden of millions of distressed home owners.

Why should we listen to Dr. Roubini? Because "Dr. Doom" predicted all of this chaos more than two years ago. As noted in a New York Times profile:

On Sept. 7, 2006, Nouriel Roubini, an economics professor at New York University, stood before an audience of economists at the International Monetary Fund and announced that a crisis was brewing. In the coming months and years, he warned, the United States was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence and, ultimately, a deep recession. He laid out a bleak sequence of events: homeowners defaulting on mortgages, trillions of dollars of mortgage-backed securities unraveling worldwide and the global financial system shuddering to a halt. These developments, he went on, could cripple or destroy hedge funds, investment banks and other major financial institutions like Fannie Mae and Freddie Mac.

Here's a money quote (pun intended) from the NYT piece:

But most important, in Roubini’s opinion, is to realize that the problem is deeper than the housing crisis. “Reckless people have deluded themselves that this was a subprime crisis,” he told me. “But we have problems with credit-card debt, student-loan debt, auto loans, commercial real estate loans, home-equity loans, corporate debt and loans that financed leveraged buyouts.” All of these forms of debt, he argues, suffer from some or all of the same traits that first surfaced in the housing market: shoddy underwriting, securitization, negligence on the part of the credit-rating agencies and lax government oversight. “We have a subprime financial system,” he said, “not a subprime mortgage market.”

Media Rants: A Truth Serum Debate

The piece below will appear in the October edition of The Scene. I wrote it about a week before last Friday's first debate between Obama and McCain. After watching that debate, I'm thinking that forcing the candidates to swallow some truth serum (the theme of the media rant) maybe isn't that bad of an idea.--TP

A Truth Serum Debate

Media Rants

By Tony Palmeri

By the time you read this, Barack Obama and John McCain will have completed their first debate. Since God (i.e. the Commission on Presidential Debates) decreed no third party candidate participation, expect few surprises.

For mainstream media, the debates represent exercises not in dissecting differences in policy positions, but in praying that a participant says something so bizarre, ignorant, and/or stupid that two weeks of media time can be spent begging for clarification or apologies. Consequently, candidates play it safe, hope their opponent stumbles, and prepare a clever quip for the highlight reel.

Imagine if the candidates could be compelled to speak the truth? Suppose McCain and Obama swallowed truth serum before a debate. They get asked about the financial crisis and Iraq.

Moderator: Senator McCain, isn’t it true that your closest economic advisor played a key role in creating the conditions leading to Wall Street’s financial train wreck?

McCain: Yes. In fact, when Treasury Secretary Paulson said “This is a humbling, humbling time for the United States of America,” my first thought was that it's actually a humbling time for my friend and chief economic counselor Phil Gramm. While a US Senator from Texas, Phil got the Senate to pass the Gramm-Leach-Bliley Act repealing prohibitions on banks being involved in the insurance and investments businesses.

Moderator: But Senator Obama, didn’t Democratic President Bill Clinton sign that bill?

Obama: Yes that’s true.

McCain: Excuse me, I finally start to tell the truth and you interrupt me?

Moderator: Sorry, continue!

McCain: Phil was the driving force behind the Commodity Futures Modernization Act, the major deregulation maneuver that led to Enron and the current travesties. Bankers never had a better friend than Phil Gramm.

Moderator: Senator Obama, you’re not exactly being advised by angels either, right?

Obama: True. I don’t care for the Clintons, but two of Bill’s former Treasury Secretaries, Bob Rubin and Larry Summers, enjoy my full confidence. They eagerly supported the Gramm-Leach-Bliley Act. They liked to call it the “Financial Services Modernization Act,” in part to make sure the Republicans didn’t get full credit. They retain credibility in the finance sector, which is one of the reasons I’ve raised more money than Senator McCain from the major Wall St. houses.

And I would be remiss if I didn’t mention that Rubin and Summers joined President Clinton in enthusiastic support of the Telecommunications Act of 1996. That legislation allowed a few media giants to control vast markets and avoid public accountability.

Moderator: Hardly sounds like a “change we can believe in” team. Thank goodness you guys drank the truth serum. Let’s move to Iraq. Senator Obama, do you honestly believe that the surge has, as you said, “succeeded beyond our wildest dreams?”

Obama: No, that statement was me engaging in the “okey doke” bamboozling I’ve accused my opponents of. Look, the truth is that the establishment press crucifies anti-war candidates, so I’ve had to “update” my views on Iraq to stay on their good side. Does that represent a sell-out of the anti-war Democratic base that got me the nomination? Sure, but realistically where else can those voters go? With all due respect to John, he’s never going to be the peacenik candidate.

Moderator: Senator McCain, what about that surge?

McCain: First, let me say that I haven’t felt this liberated since leaving the Hanoi Hilton. The truth serum seems to be interacting with the six or so other medications I’m on so that I feel like a genuine straight talk express.

So here’s some straight talk on the surge. The reason we’ve seen a reduction in violence in Iraq has nothing to do with sending additional troops there. I think my nemeses over at the New York Times actually have this one right. They say: “Although the ‘surge’ is often described as the turning point that led to lower violence, a number of American officers contend the Awakening that began well before the surge in 2006 in Anbar Province and continued in Baghdad last year was the most significant reason for the decline. In some places, American casualties plunged within weeks of the Sunnis joining with American forces.”

We pay members of the Awakening movement about $300 per month not to shoot at us. To borrow a term from the green movement, paying off the Iraqi resistance is not “sustainable.” Ultimately we will have to admit that the Iraqis do not want us there, we cannot afford to be there, and our presence there is the chief reason for the violence in the country. But tomorrow I’ll forget I ever said that, so if I get elected expect more violence. Maybe even bomb bomb bomb, bomb bomb Iran.

Moderator: We’ve got one minute of truth left. I understand you both want to read a joint statement?

Obama and McCain: We each want to be president, but we also believe that Americans should vote their conscience. We urge citizens to take closer looks at the candidacies of Cynthia McKinney, Ralph Nader, and Bob Barr. In fact if you threaten to vote for them, you’ll show us that you have an election exit strategy and you will force us to address the real needs of Americans. That’s the truth.

Leach Advisory Board Needed

Everyone knows that the Northwestern has been down on Parks Director Tom Stephany for quite some time now, but I think today's hissy fit editorial did little to contribute to a meaningful community discourse about the best way to guarantee public control and use of a venue that they (the public) are paying for.

The motivation for the paper's angst over this matter is revealed in this sentence: "A city councilor and professor of small business known for couching criticism looked startled that Stephany came to the podium Tuesday largely empty, a laughably tiny $3,000 marketing budget plan to show off Oshkosh's $6 million diamond on the Fox River. His best strategy to market the venue was to create a tri-fold brochure."

Hmmm . . . seems like that "laughably tiny $3,000 marketing budget plan" represents little coin for buying Gannett advertising.

I don't think anyone on the Council has been more critical of Mr. Stephany than me, but the very fact that the parks department will manage the Leach in 2009 means that the facility will for the first time be accessible by the general public. Now that the facility is no longer held hostage by PMI's unreasonable rates, citizen groups for the first time will be able to use the facility for very little cost. That's what I thought the Leach family had in mind when they gave us the facility as a gift. And while no one was awed by Mr. Stephany's presentation on Tuesday night, the fact is that the 2009 event agenda appears to represent more activity for one summer than PMI gave us in three. Let's hope the paper's gripe with Stephany doesn't result in downtalking the events or discouraging people from utilizing the facility. Citizens should see 2009 as an open window for the Leach that privatization forces will try to shut before we even get a chance to enjoy the breeze.

What's frightening about today's editorial is that it seems to send out a signal that the paper is willing to use Stephany as a convenient whipping boy to back up a privatization agenda: "At some point, it's time to lean on the business connections and marketing savvy of a professional promoter to leverage this jewel of a public venue and mix in top-notch, bigger-ticket acts."

Sorry, but we've just been through three years of "business connections and marketing savvy of a professional promoter." The result? Community groups had the facility stolen from them while promises of "cha ching" economic impact gave way to infrequent, sparsely attended, too expensive concerts. And community groups were told the facility was off limits unless they could come up with hundreds (in some cases thousands) of dollars.

There are real concerns about Mr. Stephany's ability to manage the facility. But even if there were no concerns, it still makes sense to create a Leach Advisory Board to work with and monitor the parks department's Leach management performance in 2009. Absent such a group, there is a very real possibility that the Northwestern and others hostile to the idea of public management of the facility will create conditions in which the Council next year will face enormous pressure to once again sign over the facility to a "professional promoter."

For obvious reasons, private management of the Leach will result in higher citizen costs to use the facility. Therefore, the debate over the next year ought not be over the benefits of public vs. private management, but over what kind of public management we want. We've already been through three years of private management, and the experience should have been a wake-up call. Perhaps a Leach Advisory Board could help give the idea of public management a fighting chance.

Last Night's Council Meeting

Some people believe the 2007-2008 Common Council is one of the best in recent memory. Others think we are one of the worst. I thought last night's city council meeting was a good example of why strong arguments could be made for either side.

"Best":
*A thorough discussion of a gentleman's claim that he was being assessed unfairly for a road construction project. Staff were prodded to explain why the policy in place makes sense. Though the gentleman did not get the resolution he was looking for, and though we could not get 4 votes to delay a decision on his assessment, the quality of the deliberation succeeded in showing strong arguments on all sides. It's much less painful to "lose" a vote when the prevailing side is well argued and coherent.
*I thought the workshop discussion with Tom Stephany regarding the Parks Department's proposal to manage the Leach Amphitheater for 2009 was informative and worthwhile. Just about every member of the council asked some important questions, and even though the hour was late we did not seem to rush through the exercise just to get done.
*Citizen Statements: A gentleman from the Near East neighborhood, who had a bad experience with staff and ended up getting fined even though he made the changes asked of him, came to speak. Just the fact that he felt empowered to come tell his story, in spite of real or imagined fears of retaliation, is in my judgment a good thing. Most councilors get confronted with lots of heresay stories about people being treated badly by this or that department. But until people actually speak out on the record, it is very difficult to do anything.

"Worst"
*We approved new ambulance rates (I was part of the 6-1 majority), but we completely dropped any discussion of how increased rates affect those least able to pay. We gave lip service to that topic at the August workshop, and it did turn out to be just that: lip service. The painful reality is that this council or city government in general does not have in place any coherent anti-poverty program, nor do we seem particularly interested in developing one. We are all responsible for that; I am not trying to blame anyone.
*By a 6-1 vote (I was the lone dissenter), we voted to dissolve the Cable Television Advisory Commission. That means we now have in place no citizen empowered committee or commission to oversee a citizen resource. Perhaps my citing of the Oshkosh Northwestern editorial actually hurt the case for maintaining the commission or rewriting its mission. Who knows. I do think this was one of our "worst" moments because I could not locate a single compelling argument for disbanding the commission. Minds appeared to be made up before we got there.
*The discussion of how to proceed with riverfront development really was one of our low points, almost shamefully so. "Public input" on what to do with the riverfront will consist of one public meeting on October 8 at the seniors center. I'm not making that up. Five years, two failed and impractical proposals, countless hours of staff time, and you get one meeting on October 8th to hash things out. Talk about backwater town values. Aren't we better than that?

The new city manager claimed to want to "educate" the public about how the city's debt obligations in the area make certain developments more preferable than others. Then when I asked the manager to educate me as to how an office building proposal can succeed given the failure of Akcess, the city attorney said my question was outside of the meeting notice.

That's all for now.

Waterfront: Community Input and New RFP Needed

On Tuesday, during Council Member Statements, Announcements, and Discussion, I will call for community input regarding waterfront development and call for staff to prepare a new request for proposals. My preference is not to have an item like this in council member statements, but the rapid pace of events in the last week provides few alternative options.

As I understand matters, here is where we are: The Akcess group has backed out of the waterfront project and endorsed Oshkosh River Development (ORD) to take over. The Redevelopment Authority (RDA) met last Wednesday to approve the transfer from Akcess to ORD, but instead laid over the matter when councilor Esslinger claimed that another developer was interested in putting forth a proposal. Apparently that developer will make him or herself known on Tuesday.

As I've noted previously, the Akcess withdrawal provides us with an opportunity to slow down and try to get a sense of what the taxpaying public actually wants on the riverfront. Rather than move straight to another office building proposal, let's take some time (via survey, focus groups, online polls, etc.) to find out what are the most favored options for development. After receiving that feedback, let's then have staff construct a new request for proposals.

Please email all of the members of the Council to let us know what you think should be done at this point.

Great New Restaurant In Oshkosh

No, not Becket's--though they have lots of potential.

The great new restaurant is Josef's Caspian Kitchen (242 Wisconsin Ave.). From the menu: "Josef . . . owner of Gyros Kabob in Appleton WI welcomes you. Continuing the tradition started at his original Soldier's Square location . . . Josef is now serving the same delicious food at the Caspian Kitchen . . . with some new additions and some old favorites."

And delicious it is! We had an order of hummus, which was glorious in taste and texture. I was literally licking every last bit out of the cup. The dolmas (stuffed grape leaves filled with rice, ground beef, yellow peas, herbs and onion--served with a side yogurt) were so fresh and satisfying that they alone were worth the visit.

For the main entree we shared an order of chicken kabob & rice. The marinated, white chicken pieces were so tender that they seemed to melt in the mouth.

I wasn't especially cranky walking into the place, but after eating I actually felt more calm and upbeat. Great food can do that.

The prices are extrememly reasonable--the large order of hummus, two dolmas, and the chicken kabob came in at $17.50.

Caspian Kitchen is not a fast food place, so you have to wait a bit longer as the the food is prepared. That's great, because no food is just sitting under a warmer waiting to be served. The inside is small and feels somewhat like a cafeteria (they bring the food to your table but there are no waiters and waitresses per se), and I wish they would turn the lighting down a bit, but it is an intimate environment with comfortable tables and chairs. Definitely a good place to have lunch or dinner with a relationship partner, coworker, or anyone else.

So check it out. I don't think you will be disappointed.

Message to RDA: Community Input and RFP Needed

As noted in today's Northwestern, the Redevelopment Authority (RDA) meets today at 4 p.m. to consider a proposal from Oshkosh River Development LLC to take over from Akcess. Partners in the proposal are brothers Andy and Art Dumke and the managers of Discovery Properties.

My teaching responsibilities will not allow me to go to the RDA meeting. If I did attend, here's what I would say:

Now that Akcess has officially withdrawn from the redevelopment area, we have an opportunity do what should have been done years ago: find out what kinds of developments are desired and will be supported by the public at-large. If nothing else, the Akcess period showed us that proposals for office space generate neither community enthusiasm nor tenant interest. To bring forward another office space proposal--and to add to it a requirement that taxpayers foot the bill for transient docks--is a difficult proposal to sell.

And as a simple matter of fairness, we owe other potential developers the opportunity to put in a proposal. To transfer the land from Akcess to ORD without allowing any other proposals will be perceived as more of the same kind of old-boy politics that gave us the 100 block, Five Rivers, and other fiascos. We will succeed only in building more cynicism and suspicion about the way economic development gets done in Oshkosh. Let's take a deep breath, find out what the community wants and will support, and after receiving that feedback put out a new request for proposals.

Come See "Toxic Sludge Is Good For You"

On Tuesday night (9/16), from 6:30 - 8:00 p.m. at the Women's Center in the lower level of the UW Oshkosh Center for Equity and Diversity (717 W. Irving Ave.) professor Bob Hinrichs of the UW Oshkosh Department of Communication and I will be co-facilitating a screening of the Media Education Foundation film "Toxic Sludge is Good For You." The screening is part of the UW Oshkosh Women's Center Election Education Series, and is cosponsored by the American Democracy Project, the College Democrats, and the College Republicans.

Narrated by Democracy Now's Amy Goodman, the film is based on John Stauber and Sheldon Rampton's book Toxic Sludge is Good For You: Lies, Damn Lies and the Public Relations Industry (Common Courage Press, 1995). Steeped in appreciation of small-d democratic values, the authors don't have a solution for the mass scale bamboozlement that has become the modern PR industry. But they do say this:

In truth, any such solution is likely itself to be part of the problem, because real democracy must be the common work and invention of all of us, acting together. The solutions we do possess are partial: first, learn to recognize the influence of PR in your life; second, seek out alternative sources of information; third become personally involved in local efforts to directly address important issues at the community level. (p. 204).

Perhaps coming to the screening and having a discussion afterwards would be a good start to that local effort. There will even be free soda and popcorn, and that's no PR pitch :-).

Plan C?

I've not been blogging much lately because my home computer is being moody.

The computer is up now and I guess I just have to say something about the latest news about riverfront development. No one should be surprised that Akcess is pulling out; any plan that would have required taxpayers to purchase the Chamber of Commerce building just to get off the ground did not have much of a chance to succeed.

What is surprising is the proposal from the Dumke Management Group to take over from Akcess. They are proposing not just one, but two office buildings for the area in addition to a restaurant and apartments or condos. I guess this is Plan C.

Early in his tenure, new city manager Mark Rohloff told the Oshkosh Northwestern that economic development "starts with getting to know what the community really wants." I intend to hold him to that premise, and will require some substantive proof that the community "really wants" office space in the riverfront development area before signing on to support it.

McCain on the Vice-Presidency

John McCain's choice of Sarah Palin as a running mate makes complete sense when we look at his actual view of the office of the vice-president. When asked in 2000 if he would serve as VP for George W. Bush, here's what McCain told Tim Russert:

"The vice president has two duties. One is to inquire daily as to the health of the president, and the other is to attend the funerals of Third World dictators. And neither of those do I find an enjoyable exercise.''

If that's McCain's view of the VP office, then using his selection to throw a bone to the religious right is what we should have expected. It's not as if he believes the veep needs to do any real governing. And at least Palin's more entertaining than Tim Pawlenty or Mitt Romney. (Although Michael Palin of Monty Python would have been even more entertaining--McCain's vetting team might not have even noticed the citizenship status problem.).

Media Assumptions and the Brett Favre Saga

In the September Media Rant I take a look at the big business, pro-management assumptions underlying the coverage of the Brett Favre saga. Here it is:

Media Assumptions and the Brett Favre Saga

Media Rants

By Tony Palmeri

from the September 2008 edition of The Scene

UW Madison Professor Jon Foley recently announced that he would be leaving the Badger State for the University of Minnesota. Foley, the founder and director of UW's Center for Sustainability and the Global Environment, was UW Madison’s Gaylord Nelson distinguished professor of environmental studies and atmospheric and oceanic sciences and recognized as a campus star. Though Foley’s leaving is a loss for Wisconsin, everyone agrees that a high performing researcher has the right to obtain employment wherever he wishes.

Not so for Brett Favre. Unlike Foley, Favre operates in a workplace where management “owns the rights” to employee labor. Corporate media, not able to extricate itself from the big business and pro-management assumptions undergirding the [often crappy] content presented as news, reported and editorialized ad nausem that Packer management “held the cards” and could release Favre, trade him, or bring him back. Corporate news frames gave us pro-Favre and pro-management Packer fans united only in their belief that the decision about Favre’s future was management’s to make.

But suppose the decision wasn’t management’s to make? Suppose we challenge the assumption of management’s “ownership rights” of pro athletes? What if pro athletes (and all workers), whose labor after all produces owner profits, “held the cards” in the employee/employer relationship? If the “pursuit of happiness” is an “inalienable right,” doesn’t that at least mean the ability to determine whom one will work for?

Even if we accept the business model accepted uncritically by the mainstream press, the case for releasing Favre from his contract was strong strictly on grounds of gratitude for past accomplishments. Consider the facts: Favre is the NFL’s all-time leader in touchdowns (442), completions (5,377), attempts (8,758), and yards (61,655). He’s won more games than any other starting quarterback (160), and started a league-record 253 consecutive regular season games (over 270 including the playoffs). He’s won three MVP awards, led the Pack to 13 consecutive winning seasons from 1992-2005, and a Super Bowl victory in 1997.

If Favre’s on the field accomplishments were not enough to warrant a gratitude release, what about his impact on the financial bottom line of the Packers, the city of Green Bay, and the state of Wisconsin? A Green Bay Press Gazette story printed shortly after Favre’s March retirement announcement refers to Lambeau Field as “The House that Favre Built” and points out that the waiting list for season tickets increased from 12,000 in 1992 to about 78,000 today. Former Green Bay Mayor Paul Jadin, now President of the Green Bay Area Chamber of Commerce, told the paper that "When you consider that Brett's play translated to victories and more playoff games, that put money in the coffers. He was a significant part of the economy here." The same story quotes Sarah Klavas of the Wisconsin Department of Tourism: "Brett Favre . . . helped put Wisconsin on the national tourism map and gave us many reasons to roll out the green and gold carpet for fans from other states."

Management’s refusal to release Favre on gratitude grounds looks even worse when considering the fact that they weren’t exactly enthused about the prospect of his playing for the Packers this year. Indeed, Favre’s retirement in March was somewhat the result of his perception that GM Ted Thompson wanted to move in another direction. Favre’s agent Bus Cook told the Associated Press that "Nobody pushed Brett Favre out the door, but then nobody encouraged him not to go out that door, either."

Not comfortable with the idea of Favre openly competing with Aaron Rodgers for the starting job, Packer management offered him a $20 million deal to stay retired. Had that deal been completed, it would have assured the Packer organization continued profit from association with Favre’s name and accomplishments even as they refused to grant him the respect that those accomplishments earned.

Given the realities of the football business, it wasn’t surprising that Packer management acted as ingrates. But the image worsened when the team announced the signing of former Bush White House Press Secretary Ari Fleischer as a PR flak. Slate.com said “Ari Fleischer’s ability to repeat a lie even after it’s been shown, repeatedly, to be false is what separates him from the amateurs.” Packer statements on Favre or anything else must now be held under strict scrutiny given that such statements may first travel through the Fleischer filters of prevarication and misinformation.

The Brett Favre saga represents a textbook case of how profit driven corporate media fail to break through the haze of unstated, pro big business assumptions that color most reporting. In part because mainstream reporting took it as given that management “held the cards,” any resolution based on standards of gratitude and decency could never be seriously considered. Even millionaire athletes are “owned.” That’s why Jon Foley could freely choose Minnesota, but Brett Favre could only choose to accept or reject a trade to New York.

NY Times columnist Bill Rhoden had the best response to the business decision that forced Brett Favre out of Green Bay: “Business, for sure, though you would think that 16 years of blood, sweat and devotion might save you from the moat.”