Fighting “Fighting the Last War.”

“After Gates was confirmed as George W. Bush’s defense secretary in December 2006, he gave several speeches outlining major reforms that his successor should undertake–in weapons procurement, promotion policy, and the whole careerist culture inside the Pentagon. (With only two years in office, combined with a plateful of crises in Iraq and elsewhere, he knew he wouldn’t have time to take those steps himself.) When he stayed on at Barack Obama’s request, and thus became his own successor, many wondered whether he would turn his words into action. With this budget, he has begun to do just that.“

A holdover from the bookmarks of last week: Slate‘s Fred Kaplan offers a concise overview of the proposed Obama-Gates military spending reforms. (These are not spending cuts, by the way, despite what you may have heard — just some much-needed and long-overdue reprioritizing over at the Pentagon. I also like the idea of phasing out defense contractors in favor of presumably much more cost-conscious civil servants.) “This budget will not go down easily in the Pentagon or in Congress. The F-22, the DDG-1000, and the Future Combat Systems are the favored systems by much of the Air Force, Navy, and Army brass, respectively…The F-22 in particular is also a favorite of many legislators — the result of politically shrewd subcontracting that spread out production of the plane to key districts in 46 states.”

Paging the Populists…and Howard Beale.

“As Congress and President Obama rush to balance solidarity with a new wave of populist anger alongside the need for smart policy during a crisis, they might reflect on how well previous politicians fared at the task. History does not repeat itself. But sometimes it does hum a familiar tune.” In the wake of the furor over the AIG bonuses, and borrowing heavily from Alan Brinkley‘s Voices of Protest as well as his own work, historian Michael Kazin gives a brief historical overview of populism in Newsweek. (See also Rick Perlstein in the same magazine, who thinks that recent cries of “populist rage” might be somewhat overstated: “What makes this rage ‘populist’? This is ordinary rage, rational and focused…You might more accurately call that common sense.“)

I must confess, I find the very-recent press fascination with its latest toy, “populism,” to be more than a little irritating. This is partly because, as with the “socialism!” craze of a few weeks ago, the discussion — above articles excluded — rarely goes any more than an inch deep, and is clearly fueled more by whatever dodgy sound-bites emanated from the Limbaugh-types that morning than any sort of grounded historical thinking. It’s also because, to my mind, the endless tirade of ignorant, self-satisfied, surface-skimming blather vomited forth by the establishment media these days is as much a cause for a populist uprising as the rapacious greed of the asshats at AIG.

From the manifestly idiotic and off-topic lines of questioning of the White House press corps last night, to partisan hacks like AP’s Ron Fournier carrying water for the broken GOP by pushing dumb memes about teleprompters (see also Rick Santelli a few weeks ago), and from self-important blowhards like Howard Fineman conjuring up nonsense out of thin air about the purported dissatisfaction of his chummy club to the host of distractions and non-issues we are endlessly barraged with these days, the mainstream press is worse than failing us — it’s part of the problem.

This is nothing new, of course. From l’affaire Lewinsky to Judy Miller’s WMD to any number of other issues, the establishment media has been at best lazy, simpering, ratings-driven schlock and at worst dangerously ennabling of corrupt GOP behavior over the years. It’s aggravating at the best of times. But we really can’t afford this idiotic water-carrying for Republcans or the smug sense of entitlement that exudes from every pore of the establishment-media overclass, at the moment, as we try to extricate ourselves from the gimongous economic hole dug over the past eight years.

So, Lou Dobbs and your like, next time you endlessly prattle on about how angry the people are getting at Wall Street and/or Obama right now, just remember: Be careful what you wish for. If push comes to shove, there’s a good bet you’ll end up on the wrong end of the pitchfork as well. (AL link via Liam.)

Obama: Give Peace a Chance.

“‘I’m here tonight to say a few words about an American hero I have come to know very well and admire very much — Sen. John McCain. And then, according to the rules agreed to by both parties, John will have approximately 30 seconds to make a rebuttal.'” Now here’s a prez worth hugging…On the eve of his inauguration, Sen. Obama publicly makes nice with his former adversary, John McCain.

And, apparently it’s not just for show: According to the NYT, the president-elect has been trying to forge a bond with McCain (and his No. 2, Lindsey Graham) since soon after the election. “Mr. Obama arrived for their Chicago meeting on Nov. 16 with several well-researched proposals to collaborate on involving some of Mr. McCain’s favorite causes, including a commission to cut ‘corporate welfare,’ curbing waste in military procurement and an overhaul of immigration rules.“

Hey, rapprochement is good, bipartisanship is good. And working Senators McCain and Graham (and, I’d presume Maine’s moderates, Snowe and Collins) is simply smart politics. Still, when push inevitably comes to shove on Iraq, health care, and a host of other issues, hopefully the president-elect will remember to dance with who brung him.

Risky Business.

“What’s interesting about the Madoff scandal, in retrospect, is how little interest anyone inside the financial system had in exposing it…OUR financial catastrophe, like Bernard Madoff’s pyramid scheme, required all sorts of important, plugged-in people to sacrifice our collective long-term interests for short-term gain. The pressure to do this in today’s financial markets is immense. Obviously the greater the market pressure to excel in the short term, the greater the need for pressure from outside the market to consider the longer term. But that’s the problem: there is no longer any serious pressure from outside the market.“

In an extended NYT editorial, authors Michael Lewis and David Einhorn survey recent economic developments with an eye to the broader problem: a financial institutional culture that fosters and legitimates idiotic amounts of risk. “The fixable problem isn’t the greed of the few but the misaligned interests of the many…The tyranny of the short term has extended itself with frightening ease into the entities that were meant to, one way or another, discipline Wall Street, and force it to consider its enlightened self-interest.“

Among the culprits in Lewis and Einhorn’s worthwhile dissection: the credit rating agencies. “In pursuit of their own short-term earnings, they did exactly the opposite of what they were meant to do: rather than expose financial risk they systematically disguised it. ” See also: the S.E.C. “Created to protect investors from financial predators, the commission has somehow evolved into a mechanism for protecting financial predators with political clout from investors…And here’s the most incredible thing of all: 18 months into the most spectacular man-made financial calamity in modern experience, nothing has been done to change that, or any of the other bad incentives that led us here in the first place.“

It’s not all doom, gloom, and (highly justified) finger-pointing. In part two of the editorial, Lewis and Einhorn offer some quick fixes to our current institutional myopia that should be relatively simple to put through…in a perfect world. “The funny thing is, there’s nothing all that radical about most of these changes. A disinterested person would probably wonder why many of them had not been made long ago. A committee of people whose financial interests are somehow bound up with Wall Street is a different matter.“

Bailout, or we all sink.

“‘Today’s the decision day. I wish it weren’t the case,’ said Rep. Barney Frank (D-Mass.).” Despite the apparent attempt by divider-not-a-uniter John McCain to kill a compromise he hadn’t even read last week, the Dubya White House and Congress hold their respective noses and come to agreement on Paulson’s $700 billion bailout plan, with debate in the House starting today. “The proposed legislation would authorize Treasury Secretary Henry M. Paulson Jr. to initiate what is likely to become the biggest government bailout in U.S. history, allowing him to spend up to $700 billion to relieve faltering banks and other firms of bad assets backed by home mortgages, which are falling into foreclosure at record rates. The plan would give Paulson broad latitude to purchase any assets from any firms at any price and to assemble a team of individuals and institutions to manage them.“

As I said here, I’m not all that happy about the nation having to subsume the risk, and ride to the rescue of, the many banks and Wall Street types that profited massively from these obviously suspect mortgage deals. But, what else is there to do? As with so much else occurring over the past eight years, it befalls us now to clean up the mess left by the free market fundies of late. I just hope we learn something from the economic consequences of this latest binge of free-market fraudulence, before they grow too dire. To wit, whatever the corporate-funded right tells you about self-regulating markets, we need, and will continue to need, real refs on the field.

Update: Uh oh. The bailout compromise dies in the House, prompting the Dow Jones to swiftly tank 700 points. “The measure needs 218 votes for passage. Democrats voted 141 to 94 in favor of the plan, while Republicans voted 65 to 133 against. That left the measure with 206 votes for and 227 against.“

As the TIME article linked above noted before the vote, “the candidate with the most riding on Monday’s vote is McCain, who backed the concerns of conservatives in the House over the initial agreement…[I]f a majority of the House Republicans don’t vote for the measure, McCain could lose political face. ‘If McCain cannot persuade them, it is hard to portray him as a leader,’ said Clyde Wilcox, a political science professor at Georgetown University.” So, that’s the silver lining, I guess. But the bad news now, alas, is considerably worse.

We are all “Socialists” now.

“Let’s be clear about why we’re facing a crisis that could pull down the global financial system. The irresponsibility of individuals who bought houses they couldn’t quite afford pales in comparison with the irresponsibility of the financial wizards who built on those shaky mortgages a towering edifice of irrational faith. Someone in the government should have looked at all those trillions of dollars’ worth of mortgage-backed securities and collateralized debt obligations and credit default swaps and demanded that Wall Street prove that all, or even most, of this purported money was real. But we’re in the eighth year of the Bush administration; adult supervision left the building long ago.” — Eugene Robinson.

Boy, nothing like panic and near-catastrophe in the banking and financial sectors to turn all the stark raving free-market fundies redder than Eugene Debs on May Day, eh? In any event, once again we’re on the verge of learning the hard way that Wall Street does a really lousy job of regulating itself, and that, when push comes to shove, it’s the “don’t-tread-on-me” entrepreneurial capitalists among us who are the first to beg for Big Guvmint to come in and bail them out — at above-market prices. “The only emergency is on Wall Street, and that is entirely of Wall Street’s making. It was the banks that made the loans, the banks that bought the paper, the banks that dumbly believed the models that said that housing prices wouldn’t collapse…How touching to see executives from the likes of Lehman Brothers, not normally an institution associated with widows and orphans, squawk about cutthroat tactics.” And I don’t seem to remember the economic Big Boys, or their mostly-GOP minions in Congress, show such concern about the vagaries of risk when the plight of ordinary folks was being discussed, vis a vis the egregious bankruptcy bill of 2005.

Of course, we can’t just let many of our major financial institutions implode without consequence, and — even though delegating the Dubya administration any more “emergency powers” at this point seems like a colossally bad idea — it seems a given that something will have to be done to sort out all this out, and it will no doubt end up costing taxpayers and aggrieved homeowners a bundle. I just hope, when the dust settles, we remember this time how this all came about, and not just let the idiotic free-market fundies blather on about tax-and-spend liberals killing the entrepreneurial spirit every time some sort of regulatory apparatus is discussed in Washington. We know how that movie ends.

Bare Stearns. | We are all NOLA?

“The Wall Street titans have turned into a bunch of welfare clients. They are desperate to be bailed out by government from their own incompetence, and from the deregulatory regime for which they lobbied so hard…It’s just fine to make it harder for the average Joe to file for bankruptcy, as did that wretched bankruptcy bill passed by Congress in 2005 at the request of the credit card industry. But the big guys are ‘too big to fail’ because they could bring us all down with them.” After the Bear Stearns deal and all it would seem to portent about the condition of the Dubya economy, E.J. Dionne reads the riot act to free market fundies.

In related news, WP’s Dan Froomkin’s notes how Dubya’s handling of the economy is now being compared to the aftermath of Katrina. ‘As the storm clouds gathered, was President Bush once again asleep at the wheel? A consistent theme in today’s political and economic coverage is that Bush’s failure to recognize the severity of the ongoing financial crisis and act accordingly is reminiscent of his disastrously slow and inept response to Hurricane Katrina….’As with the war in Afghanistan, the Iraqi war aftermath, the Hurricane Katrina disaster and current efforts at Mideast peace, investors are concerned that the president is responding too late and with inadequate understanding, resources and creativity.'”

30 Years of Night.

“On another tape, Pete Kott, the former Republican speaker of the Alaska House of Representatives, crowed as he described beating back a tax bill opposed by oil companies. ‘I had to cheat, steal, beg, borrow and lie,’ Kott said. ‘Exxon’s happy. BP’s happy. I’ll sell my soul to the devil.’” The WP surveys the sinkhole of corruption engulfing Alaska state politics, and the federal probe that threatens to swallow the state’s long-serving Senator, Ted Stevens. “‘It was common knowledge that everything was corrupt,’ said Ray Metcalfe, a former Republican legislator…’It was common knowledge, but nobody wanted to talk about it.‘”

Dont give me that do goody good bulls**t.

Score another one for legalized corruption (and lament anew what passes for Democratic leadership these days): Senate Majority Leader Harry Reid tells private-equity firms they don’t need to fear a tax hike this year. “[P]rivate-equity firms — whose multibillion-dollar deals have created a class of superwealthy investors and taken some of America’s large corporations private — hired dozens of lobbyists, stepped up campaign contributions and lined up business allies to wage an unusually conspicuous lobbying blitz [against a tax hike]…Several prominent lawmakers expressed surprise to find that the managers’ profits, known as carried interest, were taxed as capital gains, for which the rate is usually 15 percent. That is less than half the 35 percent top rate paid on regular income.“

Hessians Accomplished.

Blackwater grows murkier: It seems the private security firm in Iraq has a long and sordid history of troubling incidents to its name, and that the initial State Dept. report on the firefight of a few weeks ago was originally written by a Blackwater contractor. (Indeed, the State Department tried to intervene in today’s Congressional testimony by Blackwater head Erik Prince until forced to back down as a result of public pressure.)

How deep does this rabbit hole go? Salon‘s Ben Van Heuvelen traces the financial connections between Blackwater and the Bushies, while P.W. Singer, an expert on private contractors, explains what Blackwater has cost us all: “When we evaluate the facts, the use of private military contractors appears to have harmed, rather than helped, the counterinsurgency efforts of the U.S. mission in Iraq, going against our best doctrine and undermining critical efforts of our troops…According to testimony before the House Committee on Oversight and Government Reform, the Defense Contract Audit Agency has identified more than a staggering $10 billion in unsupported or questionable costs from battlefield contractors — and investigators have barely scratched the surface.”