Reckonings: a journal of justice, hope and history

A poem for Christmas

W. S. Merwin's poem "Alba" is not exactly Christmas seasonal, so clearly is it set in the literal flowering of spring time. Still, there is much of the spirit of Christmas in it - the journey afoot and on mule, the blossom of new life, the unexpected companionship, a gift of breath, of song, a repeated song of praise, a kind of prayer, a greater gift for which we haven't words.

Alba

Climbing in the mist I came to a terrace wall
and saw above it a small field of broad beans in flower
their white fragrance was flowing through the first light
of morning there a little way up the mountain
where I had made my way through the olive groves
and under the blossoming boughs of the almonds
above the old hut of the charcoal burner
where suddenly the scent of the bean flowers found me
and as I took the next step I heard
the creak of the harness and the mule's shod hooves
striking stones in the furrow and then the low voice
of the man talking softly praising the mule
as he walked behind through the cloud in his white shirt
along the row and between his own words
he was singing under his breath a few phrases
at a time of the same song singing it
to his mule it seemed as I listened
watching their breaths and not understanding a word

            - W.S. Merwin

"What happened to our money?"

A lot of people personally, and a lot of charitable and philanthropic organizations, are asking "What happened to our money?" I think Paul Krugman has nailed a pretty good answer. The task - challenge to the Obama administration - is how to remedy the corruption Krugman identifies, which starts in the financial industry but is far more pervasive. For a more detailed account in the NYTimes, see here.

New York Times

The Madoff Economy

By PAUL KRUGMAN

December 19, 2008

The revelation that Bernard Madoff — brilliant investor (or so almost everyone thought), philanthropist, pillar of the community — was a phony has shocked the world, and understandably so. The scale of his alleged $50 billion Ponzi scheme is hard to comprehend.

Paul Krugman

Yet surely I’m not the only person to ask the obvious question: How different, really, is Mr. Madoff’s tale from the story of the investment industry as a whole?

The financial services industry has claimed an ever-growing share of the nation’s income over the past generation, making the people who run the industry incredibly rich. Yet, at this point, it looks as if much of the industry has been destroying value, not creating it. And it’s not just a matter of money: the vast riches achieved by those who managed other people’s money have had a corrupting effect on our society as a whole.

Let’s start with those paychecks. Last year, the average salary of employees in “securities, commodity contracts, and investments” was more than four times the average salary in the rest of the economy. Earning a million dollars was nothing special, and even incomes of $20 million or more were fairly common. The incomes of the richest Americans have exploded over the past generation, even as wages of ordinary workers have stagnated; high pay on Wall Street was a major cause of that divergence.

But surely those financial superstars must have been earning their millions, right? No, not necessarily. The pay system on Wall Street lavishly rewards the appearance of profit, even if that appearance later turns out to have been an illusion.

Consider the hypothetical example of a money manager who leverages up his clients’ money with lots of debt, then invests the bulked-up total in high-yielding but risky assets, such as dubious mortgage-backed securities. For a while — say, as long as a housing bubble continues to inflate — he (it’s almost always a he) will make big profits and receive big bonuses. Then, when the bubble bursts and his investments turn into toxic waste, his investors will lose big — but he’ll keep those bonuses.

O.K., maybe my example wasn’t hypothetical after all.

So, how different is what Wall Street in general did from the Madoff affair? Well, Mr. Madoff allegedly skipped a few steps, simply stealing his clients’ money rather than collecting big fees while exposing investors to risks they didn’t understand. And while Mr. Madoff was apparently a self-conscious fraud, many people on Wall Street believed their own hype. Still, the end result was the same (except for the house arrest): the money managers got rich; the investors saw their money disappear.

We’re talking about a lot of money here. In recent years the finance sector accounted for 8 percent of America’s G.D.P., up from less than 5 percent a generation earlier. If that extra 3 percent was money for nothing — and it probably was — we’re talking about $400 billion a year in waste, fraud and abuse.

But the costs of America’s Ponzi era surely went beyond the direct waste of dollars and cents.

At the crudest level, Wall Street’s ill-gotten gains corrupted and continue to corrupt politics, in a nicely bipartisan way. From Bush administration officials like Christopher Cox, chairman of the Securities and Exchange Commission, who looked the other way as evidence of financial fraud mounted, to Democrats who still haven’t closed the outrageous tax loophole that benefits executives at hedge funds and private equity firms (hello, Senator Schumer), politicians have walked when money talked.

Meanwhile, how much has our nation’s future been damaged by the magnetic pull of quick personal wealth, which for years has drawn many of our best and brightest young people into investment banking, at the expense of science, public service and just about everything else?

Most of all, the vast riches being earned — or maybe that should be “earned” — in our bloated financial industry undermined our sense of reality and degraded our judgment.

Think of the way almost everyone important missed the warning signs of an impending crisis. How was that possible? How, for example, could Alan Greenspan have declared, just a few years ago, that “the financial system as a whole has become more resilient” — thanks to derivatives, no less? The answer, I believe, is that there’s an innate tendency on the part of even the elite to idolize men who are making a lot of money, and assume that they know what they’re doing.

After all, that’s why so many people trusted Mr. Madoff.

Now, as we survey the wreckage and try to understand how things can have gone so wrong, so fast, the answer is actually quite simple: What we’re looking at now are the consequences of a world gone Madoff.

Contemplation

I often feel more like the dog.

"Witness," a poem by Denise Levertov

WITNESS

Sometimes the mountain
is hidden from me in veils
of cloud, sometimes
I am hidden from the mountain
in veils of inattention, apathy, fatigue,
when I forget or refuse to go
down to the shore or a few yards
up the road, on a clear day,
to reconfirm
that witnessing presence.

~ Denise Levertov ~


Note: For commentary on Levertov and three more of her poems, click here.

A walk in Norwegian woods

A Wendell Berry poem, for contemplation

No, no, there is no going back.
Less and less you are
that possibility you were.
More and more you have become
those lives and deaths
that have belonged to you.
You have become a sort of grave
containing much that was
and is no more in time, beloved
then, now, and always.
And so you have become a sort of tree
standing over a grave.
Now more than ever you can be
generous toward each day
that comes, young, to disappear
forever, and yet remain
unaging in the mind.
Every day you have less reason
not to give yourself away.

~ Wendell Berry ~

A central and daunting foreign policy challenge for the new President and his Secretary of State

From a thoughtful editorial in today's New York Times:

The idea that the road to stability in South Asia goes through Kashmir is as persuasive as the notion that the path to peace in the Middle East goes through Jerusalem. It is also equally hard to realize. Mr. Obama could act quickly to stem growing extremism in Pakistan and strengthen civilian authority by ending American missile attacks within its borders and shifting the allied strategy in Afghanistan away from military force and toward political nation-building and economic reconstruction. At the same time, he will have to find a solution in Kashmir that endows its Muslims with a measure of autonomy while pacifying extremists in both India and Pakistan.

"Why do I have this uneasy feeling?"

Bob Herbert of The New York Times offers a cautionary note to Barack Obama that seems to me well said and important. After 8 years of George Bush and his minions it's hard not to feel some strong undercurrents of worry about the depth and breadth,  of a truly new beginning:

"What I wonder," writes Herbert, "is whether the members of this team, in addition to their grasp of the issues and success at achieving power, have a real feel for the needs of the people they are supposed to be representing.

"I don’t doubt that they have the best of intentions. But the people at the pinnacle of power in Washington are encased in a bubble that makes it extremely hard to hear the voices of those who aren’t already powerful themselves."

Obama is keenly aware of that bubble, and determined not to be encased in it. He is genuinely committed to "the needs of the people [he is] supposed to be representing." Watch and listen to him talking with Barbara Walters in the splendid long and wide-ranging interview of last week (now available on UTube).

Have we reason to be concerned about the depth of such commitment on the part of his appointees? Sure.  Reason to be thankful there are such good souls as Bob Hebert to reiterate and keep us - and the new administration - alert to those needs.

---

December 2, 2008

Op-Ed Columnist

A Team of Whizzes

By BOB HERBERT

Barack Obama appears to have put together an extraordinarily competent team to cope with the crises abroad and at home — and to begin cleaning up the mess of the past eight years.

So why do I have this uneasy feeling?

Hillary Clinton, Robert Gates, Eric Holder, Rahm Emanuel, Larry Summers ...

Competence is clearly trumping ideology in the next administration, and lord knows after two terms of Bush & Co. it’s time to get back to the idea of smart, capable people advising the president and executing his policies.

What I wonder is whether the members of this team, in addition to their grasp of the issues and success at achieving power, have a real feel for the needs of the people they are supposed to be representing.

I don’t doubt that they have the best of intentions. But the people at the pinnacle of power in Washington are encased in a bubble that makes it extremely hard to hear the voices of those who aren’t already powerful themselves.

On Monday, the president-elect introduced a national security team that will face a nightmarish array of challenges: the promised drawdown in Iraq; a worsening situation in Afghanistan; the crisis unfolding in India and Pakistan; and so on.

But it also has a responsibility to look out for the members of the military who are exhausted from years of valiant service. Many have served three and four (or more) tours in combat, and many thousands have been wounded in mind and body and are having a difficult time putting their lives back together.

So a challenge as important as the challenges in Iraq and Afghanistan is to send the message — and make it stick — that more Americans need to share in the sacrifices required to keep the nation and its interests secure.

President-elect Obama campaigned on the mantra of change. For years the federal government catered increasingly to the interests of the wealthy and the powerful. This reached a destructive crescendo when the ideologues and incompetents of the Bush administration came to power.

That is what needs to change.

Will this new Obama team, as brilliant as it appears to be, begin addressing on day one the interests of those who are not rich and who have not had the ear of those in power?

I think about the cops and firefighters and factory workers and schoolteachers and hospital aides and bank tellers and truck drivers who are having trouble making ends meet, hanging onto their homes, sending their children to college.

Will this new administration really be looking out for them?

One of the reasons the economy is so deeply in the tank is that ordinary Americans have not received a fair share of the economic advances of the past several years. You don’t hear much about this. Americans have been working harder and harder, and more and more efficiently (we are now the hardest working people on the planet, having passed the Japanese in this category), but ordinary workers have not been paid for this enhanced productivity.

As my colleague at The Times, Steven Greenhouse, pointed out in his book “The Big Squeeze: Tough Times for the American Worker,” published earlier this year:

“Even though corporate profits have doubled since recession gave way to economic expansion in November 2001, and even though employee productivity has risen more than 15 percent since then, the average wage for the typical American worker has inched up just 1 percent (after inflation).”

That was part of a pattern of gross unfairness that has been unfolding for some three decades. No wonder people have depleted their savings and maxed out their credit cards.

The crisis now, of course, is not that wages are stagnant but that the jobs themselves are disappearing. It’s not just change that the nation needs, but big change.

President-elect Obama has talked of a “new dawn of American leadership.” Three-quarters of a century ago, Franklin Roosevelt promised a New Deal and said his biggest task was “to put people to work.”

That’s as appropriate a cue as any for the next president. I hope Mr. Obama’s “new dawn” portends more than just a few nibbles around the edges of change. We need change that brings about more shared sacrifice in wartime and tough times, and a more equitable distribution of the nation’s resources all the time.

I want to know who in the Obama administration will be listening to the young girl on the South Side of Chicago whose future is constrained by a lousy public school, and the factory worker in Toledo whose family’s future has been trampled by unrestrained corporate greed and unfair trade policies.

All the evidence is that the next administration will be competent and smart as hell. Now I’d like to know for whom they plan to deliver.