Author Archives: deanwebb

Tacos al Pastor

Tacos al Pastor

Dude. Awesome. Meat is not murder when it’s edible art like this. I have had over a dozen varieties of tacos al pastor and each blend of meat has been unique – even the same Taco Inn restaurant in Mexico City had a different flavor in the meat from day to day… always good, but always a subtle difference.

My guess is because it’s all hand-made. There’s no huge factory pumping out some name-brand carne al pastor. Instead, there’s so many cottages producing the stuff as a cottage industry that it really is being mass-produced, just without any central direction or planning. No government, no corporation… just someone who knows how to put awesome on a vertical spit and slap it between a corn tortilla with onions and cilantro when it’s ready.

I really don’t think anyone can compete with the hundreds of thousands of carne al pastor producers. Uniformity brings blandness, and carne al pastor is never, ever bland. And the tacos themselves are just a buck – or ten pesos in Mexico, which is still pretty much a buck. Forget the dollar menu at a burger joint: if you hit the taqueria, you’ll get something way more amazing than a mass-produced edible hockey puck. If you’re lucky like me and live within close range of several taquerias, the lunchtime dilemma is over which flavors to savor, not which burger to murder.

Tacos al pastor… because of them, I will seriously contemplate any offer made to move to Mexico.

The New York Times and Holocaust Denial

Holodomor... it happened...When a friend posted a link to a New York Times graphic gone all wrong – it labeled Arizona as Nevada and Minnesota as Wisconsin – my mind went back to another time when the NYT got the story all wrong… and won a Pulitzer for it.

Walter Duranty went to the USSR back in 1921 and lived there until 1934, but continued to spend several months a year in Moscow. He interviewed Stalin in 1929 and that just made everyone fawn all over him. It made his name, so to speak. Just like the New York Times has “a name.”

That’s a huge problem in humanity. We are quick to grant vast leeway and place incredible trust in those names. The worst offenders in the recent banking panic were the big “names” of Wall Street. Some of the biggest “names” among Civil War generals weren’t necessarily the best generals… but their memoirs were the most popular. We are too quick to trust in a king, a pope, or a president simply because of the position the man holds, without knowing a shred of truth about the man in that position.

What’s worse are the people that help perpetuate that cult of greatness. Walter Duranty picked up a Pulitzer in 1931 for some articles that were to journalism what t-ball is to major league baseball. You can find them linked from the Wikipedia article on Duranty. For every criticism, there are a dozen praises for Stalin’s regime. Of particular note to me was Duranty’s assertion that minority problems in the USSR were a thing of the past, thanks to the overarching bonds of Communist Party unity.

As Duranty wrote those, Stalin was already plotting the genocide of those minorities. His plan for the Jews in Russia was long-term: collect them in the Far East in a remote enclave on a spur of the Trans-Siberian Railroad, then sever the rail links when they were all there. They would all starve to death there. World War Two postponed that action, and Stalin’s death in 1953 canceled it entirely – but he was set to kick it off in 1954 or 1955. But there was another Holocaust that Stalin was gearing up for. His target was Ukraine, and like his plan to liquidate the Jews, involved starvation. The Holocaust of Ukraine is also known as The Holodomor.

When it started, Duranty denied it was happening. After it happened, Duranty denied it ever took place – in public. Privately, he admitted up to ten million may have perished in the famine. But his private confession did nothing to tarnish the reputation of the man he had built up in order to win his Pulitzer. His public lies kept up the good PR for Stalin, when Stalin had done nothing to deserve such praise.

Duranty’s reports even undermined his own paper’s editorial views on Russia. While the op-ed men wrote of Stalin’s horrors, Duranty’s ace reporting made it seem like the USSR was just a few roller coasters shy of being a true worker’s paradise. Thanks to Duranty and men that followed in his wake, we in the USA turned a blind eye to the deliberate starvation in the Ukraine and seriously contemplated becoming more like the USSR.

To this day, the New York Times still keeps Duranty’s Pulitzer in its trophy case. Its own editors have since disparaged and discredited Duranty’s work and the paper hired a historian to research the accuracy of Duranty’s work. The historian found Duranty’s reporting to be so many fluff pieces on Stalin and said the Pulitzer committee should take the prize away. The Pulitzer guys, however, decided that Duranty’s reporting wasn’t deliberately misleading and that the prize should stay with the NYT. The Times shrugged its mighty, named shoulders and kept the prize, presumably against its will.

Granted, the prize was awarded for a series of articles on Russia and not Duranty’s Holocaust denial. All the same, it was another case of the Pulitzer going to the best work of fiction to be passed off as news. The Times admits the reporting was terrible, but left it up to the prize committee to decide whether or not to revoke it. That’s unacceptable.

I mean, how hard would it be for the Times to get some bubble wrap and a box and ship the award back to where it came from? Or if the Pulitzer committee refuses to take delivery, how about shipping it to Kiev for the next Holodomor Remembrance Day? And if they don’t want it, there’s the Holodomor Memorial in DC. The Times has many more options than sitting on its hands and keeping a Pulitzer they themselves admit has no validity.

Duranty helped Stalin to tell the Big Lie time and time again – he made a name for himself in so doing. He made it possible for the Holodomor to be denied, and for those who denied it to be esteemed as plausible scholars and journalists. Worse, he showed the way for journalism to become subservient to the prevailing powers and to grow fat from the crumbs that fell off the table. Journalism needs to be about viewing the men and women in power through a critical eye and holding them to account. If the Times were to send back that prize, it would be a powerful signal that it was not willing to accept the idea of journalism as propaganda for the powers that be and that it was on the side of the powerless, who all too often wind up as pawns in the grand schemes of the rich and powerful.

Or is the Times not ready to send that signal? Sure, it can distance itself from the toady reporting of the past, but is it ready to make that break in the present?

Which then begs the question, how much of our news is actually news as opposed to being carefully-orchestrated propaganda?

Lumumba

Patrice Lumumba
I just finished watching the 2000 film, Lumumba. Devastated is the word I want to use to describe how I feel about the events depicted in it. I’ll easily concede that Lumumba made a wide range of political mistakes when he became PM of the Democratic Republic of Congo back in 1960… but there were forces trying to strangle Congo in its crib, and they were the ones that took down Lumumba.

They took down a whole host of other people, including UN Secretary-General Dag Hammarskjöld. I don’t care that nobody can prove it. It’s obvious that it happened, and it needs to be said: the people behind the Katanga secession were the ones that killed Dag Hammarskjöld just as surely as they killed Patrice Lumumba.

The problem with this situation is that it involves words like Hammarskjöld, Lumumba, and Katanga. It’s a shame, but in this age of Twitter, we’ve lost our ability to concentrate for more than three syllables. This situation won’t be helped by my mentioning Carlucci, Mobutu Sese Seko, or Union Minière du Haut Katanga. So let me start somewhere that’ll grab your attention and won’t let go:

ATOMIC BOMBS.

As in, that mining company I mentioned in the part of Congo that broke away was the company that sold the uranium to the USA that made the first atomic bombs. And now you know why the CIA was so very interested in the Congo back in 1960. The head of the CIA operation in Congo was one Frank Carlucci, as in the same Frank Carlucci that later served as Secretary of Defense under Reagan and also as chairman of the Carlyle Group and is the former head of Wackenhut. Carlucci swears he had nothing to do with the murder of Patrice Lumumba, by the way.

Investigations into Lumumba’s murder, however, link it to that mining company, the rebel government of Katanga, and the Belgian-British interests behind the mining company. The investigations also point squarely at the CIA as having aided and abetted the murder of Lumumba. Carlucci was running the CIA show in Congo, but he swears he had nothing to do with Lumumba’s murder.

So why do I mention his name? It’s because when I was watching the film, there’s a scene where the Congo government, with foreign observers sitting in, votes to have Lumumba killed. At the end of the vote, one of the ministers turns to a white guy that speaks with an American accent and asks, “Mr. BLEEEEP, do you want to cast your vote?” In the credits, there’s one actor credited with a role, but the name of the individual he portrayed is blacked out.

What Carlucci can’t bleep out is that when the PM after Lumumba met with JFK, the first thing he asked was, “Ou est Carlucci?” Kennedy had no clue who Carlucci was and why the recently-installed Prime Minister of the DRC would want to see him. Technically, I can’t accuse Carlucci of having been the agent of the US government that enabled powerful mining interests to subvert democracy in a brand-new African state and murder its elected officials. It would be improper for me to suggest that Carlucci’s actions led to bloodstains on America’s honor. I could be sued if I were to state that Carlucci did something so horrible all in the interests of securing the US uranium supply and not letting it fall into the hands of the Russkies, in spite of the fact that Lumumba had first turned to the US to help his country out.

Congo is a terrible mess, by all accounts. Yes, yes, there are good people there doing good things, et cetera, but it’s still a hellhole, thanks to the subversion of its democracy back in the 60’s, the US-sponsored dictatorship of Mobutu, and the lack of assistance to that nation when it went into freefall in the 90’s.

The film itself is outstanding. It’s not rated by the MPAA, so I’ll give a breakdown on it: very light profanity, just one bad word, really… but it’s got a big ol’ body count. The biggest likely objection to it will come from people that think it portrays the US unfairly. I’ve been a student of the history there for some time, though, and I’m sad to report that it is quite fair in its depiction of US involvement. Just because the USA is a free nation does not mean it is immune from wicked people abusing power and having it vault their successful careers.

The illegal actions of the Belgians, British, and USA all served to keep Congo’s mineral wealth from being nationalized and that meant the profits continued to flow into Belgian, British, and US hands. Dag Hammarskjöld was en route to Katanga to try and get it to settle peacefully with the rest of Congo: Harry Truman was quick to point out that Hammarskjöld had been murdered, and that his plane going down was no accident. The UN Secretary-General was getting too close to the truth, and the money men involved obviously had to have him killed.

And so the money kept flowing… when Mobutu took over in 1965, thanks to more CIA involvement, he found a way to reward his friends and punish his enemies, all the while stealing foreign aid for his own benefit. The US helped him to keep crushing his rivals at home, making our nation in no small part responsible for the political vacuum that sucked half of Africa into its maelstrom when the Cold War ended and we quit propping up Mobutu.

Of course, Mr. Carlucci insists he’s innocent of the murder of Patrice Lumumba. He’s got the censored film to back up his point. All I have to ask is this: if he was running the CIA mission in the Congo at the time, and the CIA was involved in the events surrounding the murder of Lumumba, what was Carlucci doing? Is this another case of being stupid if he didn’t know, and dishonest if he did? That’s all too common in US foreign policy. In the case of the Mossadegh coup in Iran, the CIA chief there was intimately involved and later couped Arbenz in Honduras. So why wasn’t the CIA guy behind Lumumba’s death? Who dropped the ball on that one?

Or maybe, just maybe, Mr. Carlucci might be involved in a doubleplusungood untruth.

See ya at the Memory Hole, Frank!

Time to Live in Hell and Rent Out Texas?

Texas Drought
Most of South and Central Texas is in a drought – no dispute about that. It’s hellacious and ferocious and there’s not much anyone can do about it but pray, which means Richard Dawkins would not be greeted kindly at a Hondo ranch right about now.

OK, so it’s hot and dry in Texas during the summer. So what else is new? Maybe what we need is a bit of Dawkins’ rationalism, but ixnay on the eligionray and more to do with common sense.

Y’all need to quit watering your lawns.

Water is a precious resource and there’s no need to fling it on the streets, sidewalks, and yards of the state. I haven’t watered my lawn for about 12 years now. Maybe more. It’s green and thick as ever when it rains. When it doesn’t rain, it goes dormant, like it’s supposed to. It’s survived many a drought and will continue to do so because it’s got a deep root system, thanks to my never watering it.

Lawns made of hoity-toity grasses serve no good purpose that rougher, tougher prairie grass can’t step in and do. The high-maintenance grass in my yard is gone. Prairie grass came on the scene and flourished. It’s not as tightly packed as Bermuda and not as lush as St. Augustine, but it keeps the topsoil from eroding and looks real nice when it rains regular.

It also doesn’t need any fertilizer or pesticide. That means I get to host lots of birds in my yard because there’s plenty of good stuff for them to pick at. I don’t have any bad bug problems at all. Well, if fire ants show up, I grab the Amdro, but that’s it. I will also use chemical killers to get rid of poison ivy, but that’s it on the herbicides.

Turns out, I’m green environmentally by allowing for the fact that I may be brown in a drought. I don’t mind because I know it’s better to do it the way I do in the long run. Now if the rest of y’all would get on board with this, we’d do better as a state, hear?

And as for the golf greens… time to cut that out, too. Head to a rodeo or a futbol match or something more worthy of the great state of Texas. All that water could go to a much better use: our children’s future.

Burn That Mother Down

Chino Prison Riot What happens when a nation gets tough on crime in a state that hasn’t recently had its prisons run by a federal judge? Massive overcrowding. In budget-strapped California, its prisons are running close to double their designed capacity. The Chino riot last August 8th was a consequence of such overcrowding, and more such riots may be on tap in the future.

Federal judges are making a move to correct California’s prisons – the worst overcrowded in the nation. California has 45 days to figure out how they’re going to get their prisons to 137% of capacity. If someone had a time machine, maybe that could produce a fix. Back in 1976, California switched from indeterminate sentencing to determinate sentencing. The big difference there is that indeterminate sentencing allows for leeway – time off for good behavior, that sort of thing. Determinate sentencing means tossing ’em in the slammer and not fetching the key until the sentence is up, giving prisoners no incentive to change their ways. California went from having one of the lowest recidivist rates in the nation in the 70s to one of the highest recidivist rates in recent years – around 70% when the national average is 40%.

Politicians wanting to gain brownie points with voters for being tough on crime haven’t helped the situation. Longer sentences and harsher sentencing rules led to the overcrowding. California also spends $49,000 per prisoner per year, double the national average. Given the recidivist rate mentioned above, it’s clear that the prison system in California isn’t working as intended. If it’s there to deter criminals, it shouldn’t be so dang crowded with criminals that wound up back in the system.

Then the budget crisis hit. California looks set to cut $1.2 billion from its prison budget, but lawmakers don’t necessarily want to do it by releasing 27,000 inmates. So it’s got a budget cut, but no way to implement it… well, if there are more riots like the one in Chino, maybe the prisoners will solve the crisis for the state by burning down the prisons and the survivors releasing themselves on their own recognizance.

Good luck with those prisons, California.

Housing Stuff

Go to page five. There? Good. Read with me, then…

1. The market for home purchases can be divided into segments of 26% for damaged REO, 23% for move-in ready REO, 14% for short sales, and 36% for non-distressed properties. That means about 2 out of 3 homes up for sale are distressed properties. There are even more homes owned by banks that aren’t on the market right now because the market’s already glutted enough.

2. Forty-three percent of homebuyers are first-time homebuyers, 29% are current homeowners, and another 29% are investors. OK, so yay for the first time homebuyers, but look at what they’re buying:

3. First-time homebuyers account for the majority of move-in ready REO sales while investors account for the majority of damaged REO sales. In other words, those damaged REOs aren’t getting snapped up as fixer-upper bargains. Will their prices fall further?

4. Current homeowners concentrate their home purchases on non-distressed properties and buy comparatively less damaged REO. Underscores the concern from #3.

5. Real estate agents expect appraisal issues to be the No. 1 reason for cancellations of signed Purchase and Sales agreements over the coming summer months. This is a big one. People are not going to agree with prices as they’re being set. Sellers want a higher price, and the buyers are hoping for lower.

6. Only 31% of non-REO home sale listings are unforced or optional; other major reasons for listings include financial stress (including short sales), long distance relocation, and divorce or estate sales. OUCH. This is a big one. This means about 10% of the market is “unforced or optional.” The economy is still in a very tough spot, and this shows it.

7. Homeowners are choosing to not list homes primarily because of “Falling prices”, followed by “Competition with distressed properties”. That means they want to sell, but they can’t get a price to equal what they put into it. Nobody wants to lose money on a huge deal, like a home sale.

8. For first-time homebuyers, “Government incentives to buy (tax credits, mortgage deduction)” is the No.1 motivation to buy. Take that motivation away, and the market takes a huge hit. Sad but true.

9. For current homeowners buying homes, “Retirement relocation” and “job relocation” are the No.1 and No. 2 motivations to buy, respectively. They’re not trading up, anymore. They’re either downsizing the empty nest or following that all-important job.

10. “Sale of residence” is the No. 1 impediment to current homeowners seeking to buy another home. OUCH #2. I know people that are selling their home, then renting it for about 3 months after the sale while they buy a home after having confirmed the sale on their current home.

11. “Down payment for mortgage” is the No. 1 impediment to first-time homebuyers seeking to buy a home, followed by “Slow answers on short sale offers.” If you can’t get the down payment together, you ain’t buying a home. In this economy, that’s going to be a big problem.

12. Seventy-six percent of first-time homebuyers accept a mortgage recommendation of the real estate agent, 68% of current homeowners accept a recommendation, and 53% of investors accept a recommendation. Not much to say there.

13. On average, mortgage servicers take 9.5 weeks to provide a “yes” or “no” response to an offer to buy a short sale property. Wow. That’s two and a half months of the home sitting on the market, doing nothing. That can’t be good.

14. According to real estate agent respondents, “Mandated one-week response time on short sales offers” is the No. 1 rated action that the government could take to increase home sales and stabilize prices. Sure, the real estate agents want this. But I can’t help but wonder if this wouldn’t somehow mess up the mortgage servicers.

15. According to real estate agent respondents, “Provide consistent one-week ‘yes’ or ‘no’ response to offers” is the No. 1 rated action that the mortgage servicers could take to increase short sales. Again, what’s going on in the mortgage servicing biz that’s keeping them from doing this?

16. According to real estate agent respondents, “Provide consistent one-week ‘yes’ or ‘no’ response to offers” is the No. 2 rated action that the asset managers could take to sell REO properties with lower overall losses; the No. 1 rated action is “Turn on utilities for inspections.” So people don’t want to buy distressed properties in the dark? I guess when banks feel like it’s worthwhile to switch on the lights, the economy’s good enough to move that house. Until then, we’ll all be in the dark…

If you go on past page 5, there’s some interesting anecdotal information about the condition of the market starting on page 19. One set of observations that caught my eye was that banks are wanting cash or conventional loans for their properties and are not taking FHA loans. Another lament was how the properties sitting off the market are getting more and more damaged and distressed, making them more difficult to sell.

The distribution of distressed properties is not even, not by a long shot. Some areas have no surplus of homes: others are awash in distressed properties, driving the market down hard. Banks are encouraging bid wars for their properties, but the homes don’t appraise for the bid value, causing a cancellation of the sale agreement.

One thing I see mentioned over and over is how prices are being driven lower and people are holding back from making purchases as they wait for the prices to go lower. That’s asset value deflation. That’s not a good thing at all. With ARM homes set for a reset this year and next, there will be even more downward pressure on home prices.

Arab Labor

First of all, thank you to LinkTV for showing this series. Because AT&T U-Verse doesn’t carry LinkTV, I’m not switching from Dish satellite to U-Verse no matter how much they beg me and offer me free HBO to do so. But this is not about LinkTV right now. That’s for another column for me to write.

This one’s about Arab Labor. This is, by far, one of the best sitcoms I’ve ever seen. It’s right up there with Yes Minister, Fawlty Towers, and Seinfeld. I just ordered season one on DVD. I plan to watch it repeatedly and to find a way to use it in class.

Some people complain about having to read subtitles, but I say it’s worth the effort when something’s really really good. Arab Labor is in Hebrew and Arabic with only smatterings of Russian and English, but it’s really really good, so it’s worth reading. It takes elements from classic comedies and reworks them in original plots set in Israel. The center of the series is Amjad, an Arab journalist who’s very loyal to Israel, even though he often gets hassled for being a minority. Like Seinfeld, Arab Labor doesn’t have the characters learning big lessons or hugging each other at the end of the episodes. They carry on being who they are, flaws and all, but they all work at accommodating each other.

To a point. I mean, there’s the episode where Amjad turns over his meddling mother-in-law to the police as a suspected terrorist. Or when Amjad’s Jewish friend tries to hide the fact that he’s dating an Arab from his not-too-liberal parents. Then there’s where Amjad’s father sells the Chametz on eBay. OK, so you may have to Google up a few terms in order to get the jokes, but it’s worth it. After all, one theme in the comedy is the difficulty of coming to an understanding between cultures, so why not participate and do a little research. There’s one gag in the season finale that involves knowing the history of Zionism, but if you read up on Theodore Herzl before you watch it, you’ll hit the comedy jackpot when you hear that punchline.

Even if you’re not up on your history, you can still enjoy the sheer joy of the comic apocalypses that Amjad and his family find themselves in. Amjad’s father is my favorite character, a sort of Archie Bunker/Fred G. Sanford type of unstoppable patriarch who never lets ethics get in the way of a business deal. Amjad himself is an Arab Woody Allen, totally uncomfortable in his own skin. Amjad’s wife is his opposite: well-grounded and someone who can accept herself for who she is. She’s Amjad’s link to reality. Their daughter is not the usual precocious TV brat: she’s very well behaved, but takes after her foxy grandpa in subtly getting her way when her father goes nuts. Amjad’s Israeli friend is a schlemiel trying to do good that doesn’t care if he’s barking up the wrong tree, so long as there’s love in the branches. His on-again, off-again girlfriend is an Arab lawyer that manages to carry on a verbally violent relationship with him. Even when they’re at peace with each other, there’s never a relaxation in the tension in the relationship, which means the comedy won’t stop with that pair. If they got married, the series would not jump the shark.

Heck, the writing’s so good, they even took on another possible bad turn: the birth of a baby. In the finale, Amjad’s wife has a son. In most sitcoms, that’s the kiss of death. In Arab Labor, it’s a gateway for more comic possibilities.

Watch this show, people. It’s totally worth it.

Robert Fisk on Tea

Robert Fisk is a great journalist. He won’t last forever, so I’ll enjoy him while I can. While most of his stuff is pretty grim due to the fact his beat is the Middle East and he pulls no punches, this article is a jolly nice bit of history with a rather low body count to it. It’s all about how tea helped sober up England and the rest of Europe so it could go on to have an industrial revolution.

As a historian, I like the fact that it’s an example of how China helped civilize Europe. Too often, people that teach world history fail to look much beyond Europe and North America, except when Europeans and North Americans showed up to colonize or otherwise muscle in on the locals. The fact is that, for much of its history, Europe was an uncivilized backwater with little to offer the rest of the world. All the swingin’ civilizations were around the Mediterranean, in India, and in China. The civilizations in Central and South America seem to have come along much later, but archaeology there is so difficult that we’re only beginning to realize that there’s a big possibility there was much more going on there much earlier than we ever expected.

Global contacts have existed for centuries. They have gotten more frequent and faster, especially in the last few years, but we’d all do well to recognize that no civilization is an island. No civilization is better or worse, just different. When we appreciate the differences, we prosper in so many ways.

“Ponyo” Hits a Home Run

Ponyo Went to see Ponyo today and had all my expectations met.

When I go to see a Miyazaki film, I expect nothing short of excellence. I’ve seen all his films except Howl’s Moving Castle, but I’ve ordered that just now on DVD. Although Ponyo does not share the same complex characters and situations as other Miyazaki works, it is a masterpiece, instantly accessible to children from pre-K on up to adulthood. It is the most accessible movie for little children, I think, surpassing Totoro in that category. The dividing line is simple: In Totoro, the mom is sick. In Ponyo, there’s nothing bad going on in the background. Not really. The grownups do seem to be involved in some serious matters, but those matters pale to what the children in the movie see.

What’s important to the kids in the movie is love. Nothing romantic: just a pure attachment of affection, innocent and free. I love that. As usual, Miyazaki and the rest of Studio Ghibli chose the right colors for the film. What I enjoyed especially is that instead of using his typical ligne claire style with flat colors (pardon my French, there…), he opted for more impressionistic backgrounds, adding a lovely storybook feel to the whole film.

The schools of fish and other water animals have to be considered as part of the cast of stars in the film. I loved watching them. While Pixar had a clever little aquarium and some nice fish scenes in Finding Nemo, Miyazaki’s underwater images will make me dream about living in an octopus’ garden tonight.

As I said, this is a storybook movie. The conflict is gentle; the resolution firm and joyous. The colors resound and the illustrations capture your breath and refuse to let go until the closing credits fade from view. I wept with joy as I watched the film, much as I do when I listen to Beethoven’s Pastoral symphony. Yes, the comparison to Beethoven is valid. Miyazaki is a genius and we are fortunate that he’s been given a forum to share his visions with a worldwide audience. Although the film is a beautiful storybook, it is not for everyone. I’m sorry, but it’s a sensitive film and there isn’t a crass joke anywhere in it. Kids looking for bathroom humor or crazy send-ups are not going to be happy with Ponyo. This film is for sensitive moods and open minds. For a child, it’s a wonderful, beautiful story. For an adult, there are subtleties that will pop up later on when discussing it with other adults. It is universal and it is wonderful. I don’t care if you see it: I’ve seen it and I found another reason to keep on keepin’ on today.

Moral Hazard and Financial Collapses

Government bailouts are supposed to be last-ditch resorts. Instead, they’re built into financial risk assessment as guaranteeing no negative returns for major players. Corporations bank on them – pun only slightly intended – to be there to prevent a sticky end for them at the expense of the taxpayers and all those businesses that weren’t too big to fail.

Worse, when the government tried to act like it wasn’t going to bail out the guys that gambled with everyone’s retirement money and let Lehman Brothers fail, the consequences were so horrendous that the government couldn’t show that tough love ever again. It had to keep the oligarchy of major financial institutions going, even if it meant abandoning the small businesses of America that were struggling just as much.

Moral of the story? First off, if you want to succeed, your corporation needs to be so huge that it can’t be ignored. Second, you have to gamble with other people’s money with guarantees from those people – or their government – to make good on your losses. Third, you need better political connections than Lehman had, so the government won’t let you fail… and so you can also get a preferred bid on the contract to buy up the remains of your competitor. Moral hazard all the way.

The market doesn’t always know best, particularly when it’s able to buy or otherwise demand government influence. Had there been no guarantees, those financial institutions would have had to been more careful, right?

Nope. There were no such guarantees in 1907, and the same thing that happened in 2008 happened then. That’s when we learned there was such a thing as “too big to fail.” The government then worked to keep financial institutions from getting that big again.

In the last 25 years, those century-old regulations were stripped away, and the financial sector became more and more reckless as it became bigger and less failworthy. The government promises to keep disaster from happening actually made the banks act as if disaster could never happen, and that’s the very definition of moral hazard.

Right now, Obama’s solution to the financial sector problems does not deal with the moral hazard that currently exists. Nothing’s on the table to get the industry back where it needs to be to keep another major collapse from happening.