The Palestinian Paradox

The Misconception of Palestinian Values and Culture:
The Palestinian Paradox

2012
PUBP 503

Introduction

The views of the American society are often influenced by media and political discourse that occur at the highest levels of U.S. Foreign policy.  Leadership plays an important role and the strength of U.S.-Israeli relations is a driver of the misconception of Palestinian values and culture.  I had the privilege of learning what it is like to be a Palestinian-American from a colleague that spent the majority of his life on the Gaza strip.
Abu Yousef, or ‘father of Yousef,’ is a respected colleague and Ph. D. Statistician who studied at American University. He was one of nine children, born to a poor family in Gaza. His father worked construction in Israel, but was banned in 1987 after the first Palestinian uprising, or Intifada.   The uprising led to economic sanctions that had a lasting effect on the ability of the landlocked country to provide basic necessities that Americans take for granted-water, electricity and food.
In America, jihad is frequently used to refer to a holy war. However, the meaning of jihad is much broader, including a crusade, principal belief, spiritual devotion, or simply achieving a personal goal (Yousef 2012).  Abu Yousef’s jihad was education and learning to further the opportunities for his family. Despite graduating at the top of his class at Alazhar University in Gaza, it was impossible to find jobs because of economic sanctions imposed by Israel.   To find work, a professor at the university persuaded him to apply to colleges in the U.S., particularly American University.  Armed with a scholarship, skills in mathematics, statistics, and very little English training, Abu Yousef crossed the Atlantic in 1998.

Background

To understand the culture of Gaza, it is important to know the political climate.  The occupied territory of Palestine includes the Gaza Strip and the West Bank.  In 1993, President Clinton gathered PLO Head Yasser Arafat and Israeli Prime Minister Yitzhak Rabin to sign the Oslo Accords (Jones n.d.).  According to the treaty, Israel agreed to give Arafat control of Gaza and the West Bank, including East Jerusalem. In return, Arafat and other factions would stop the resistance to Israeli occupation (Shah 2009).  PM Rabin was assassinated by Israeli radicals shortly after the agreement and replaced by Binyamin Netanyahu in 1995. Netanyahu tightened sanctions on Palestinian territories and refused to abide by the former PM’s agreement.  Clinton tried and failed once again to build peace at Camp David in 2000.  To this day, Israel continues to build settlements on land that was granted to Arafat by the Oslo Accords (Counsel on Foreign Relations n.d.).
Gaza and the West Bank held free elections in 2006, pitting the two major parties of Hamas and Fatah against each other.  Fatah is the party of Arafat, known for corruption and primarily concerned with receiving money and international aid.  Hamas, on the other hand, focuses on helping poorer areas get support and receives little funding (from outside sources) because of ties with military factions. Israeli support for Fatah, corruption and lost hope for peace led to their defeat in the 2006 elections.  Israel countered the outcome with increased economic sanctions, allowing few goods to enter and leave the occupied territory, with few exceptions such as some medical supplies and chocolate.  At the expense of innocent men, women and children, the goal of these restrictions is to change the political leadership of Palestine to one that is more easily influenced by international aid.
Even though Fatah was defeated in the 2006 elections, they continue to control resources and services in the West Bank and Gaza, including teachers and police officers.  Although Hamas is running the government, Fatah pays government workers to not go to work (Yousef 2012).  The failure in the transition of power to Hamas benefits politically connected constituents and creates additional problems in terms of economic sanctions, government services, and foreign aid, among others.
In 2008, the Israel-Gaza conflict became a full scale war (Derfner 2008).  Israeli strikes killed approximately 1,400 women and children as Egypt did not allow civilians to cross the border to seek refuge from the conflict (as required under U.N law).  Hosni Mubarak , President of Egypt (at the time), relied on Israeli support to remain in power and pass control to his son. The Palestinians believe the timing of the war may have been politically motivated, coinciding with Israeli elections and the last few months before President Obama took office .  Abu Yousef stated that Egypt’s support for Israel is a major motive for the uprising during the Arab Spring.  Egypt is closely connected to Gaza, both in geo-political terms as well as culture (Yousef 2012).

Collectivist Culture

Family life in Gaza is a vital aspect of the culture.  Family includes not only the immediate family members, but the entire community as well. Abu Yousef said it is not uncommon to know every person in the neighborhood and their family members (in a very large and dense neighborhood).  It is commonplace to go to a friend’s home unannounced and have tea or coffee with them for a few hours.  The opposite culture exists at Abu Yousef’s home in Sterling, Virginia. The interaction among members in the community is very limited in relative terms.  It is considered rude to show up unannounced in the states.  Knowing your neighbors and their family is considered a luxury in the suburbs of Washington.

In Gaza, the lack of privacy can be viewed as a positive in terms of building culture and interaction among members of the community.  However, the abundance of privacy in the U.S. can also be viewed as one of the biggest advantages of living in the states.  Privacy is virtually non-existent in the Gaza strip.  Abu Yousef stated that it is difficult to know the importance of private life, never having experienced the personal space and freedom in the Middle East.  The close knit community makes private life difficult - everyone knows the ups and downs of daily life. The social network among community members leads to gossip traveling quickly throughout the community.

The pros and cons of privacy in the U.S. versus Gaza create a paradox: the lack of privacy is beneficial to
building a community and culture; whereas the lack of privacy becomes a negative in terms of personal space that is often taken for granted in the U.S.  This paradox highlights an essential difference between the collectivist culture in Gaza and the individualistic culture that exists in the U.S (Hofstede and Hofstede 2005).

Raising Children

Another difference between life in Gaza and the U.S. is seen as Abu Yousef raises his four children.  Abu Yousef’s childhood in the Gaza strip (at the time) was care free.  He was able to travel the large city at a very early age- about 8 or 9 years old - having a comfort zone that extended all the way to the beach. He could go as he pleased and never had to worry about being harmed or feeling insecure.
Despite the personal and economic freedoms in the U.S., safety and security is always the primary concern for parents raising children.  He mentioned that parents in the U.S. think the worst if their child is gone only for a very short period of time, perhaps influenced by the role of the U.S. media.

Role of Media

Abu Yousef taught me that the least favorite country of Palestinians is Israel because of their occupation of Gaza, and the West Bank, including East Jerusalem.  The ironic part is that many Palestinians view the U.S. as their favorite country, despite the deep U.S.-Israeli political connection and overwhelming favoritism in the media toward Israel.  He describes the Palestinian people as very smart, educated, having a high rate of Ph.Ds, and keenly aware of the separation that exists between the American people and the politicians (Yousef 2012).
According to “Islam through Western Eyes,” Muslim values and culture represents “the Orient” or unfamiliar. The U.S. culture is known as “our world” or “the Occident” (Said 1980).  As a member of the American community, Abu Yousef feels Muslims are unfairly portrayed in the media.  He wants the U.S. to know ‘the true Islam,’ as opposed to the extremist version that grabs headlines and media attention, as seen after the attacks on September 11th. The unfortunate effect is that many Americans do not interact with Muslims on a regular basis, nor do they recognize the diversity of views that exist.  Their only knowledge of Muslims is the fact that the September 11th hijackers were Muslim, resulting in broad-based discrimination.

Poverty

Poverty in Gaza is ingrained in the culture.  In “Globalization of Postmodern Values,” Inglehart hypothesized the importance of economic development and its effect on subjective well-being (Inglehart Winter 2000). Abu Yousef recently returned to Gaza for the first time when Egypt opened the border. He said the despair among the youth is at a level that has not been seen since the Arab-Israeli War of 1948. The youth have no hope or opportunity to succeed in a modern economy.  The absence of economic achievement in Gaza has created apathy and hopelessness among the people (Yousef 2012).  Years of blockades and sanctions have taken a heavy toll.

In “Bad Samaritans: Rich Nations, Poor Policies, and the Threat to the Developing World,” Chang suggests a feedback loop exists between economic development and culture (Chang 2007).  In Gaza, the lack of economic opportunity leads to extremism and hunger strikes as disaffected youth seek an outlet for their energy (Abdalla 2012).   However, based on my interview, Chang’s generalization of uneducated Muslims does not hold when describing the people of Gaza.  

Religion and Gender

With regards to religion, one of Abu Yousef’s concerns is the inability of his children to learn the true Islamic religion while growing up in the U.S.  Although they practice and speak fluent Arabic, the religious culture that exists in Gaza is very different than the one in the U.S.  In Gaza, religion is represented in the community, the values, culture and experiences.  For example, a tradition at weddings is for the groom’s entire family to travel to the neighborhood of the bride in large buses to celebrate.  During the festivities, children sometimes get separated or lost from their parents.  Whoever finds the lost child (often someone who knows the bridal party) sees that the child finds transportation back to the neighborhood of his family, without hesitation. He said this is one example of a cultural experience that his children cannot have in the U.S.

Compared to other Muslim countries such as Saudi Arabia, Palestinians enjoy more religious freedoms and rights among women.  Abu Yousef described an environment that was tolerant and accepting of other religious views, which is unusual for a poor Muslim country.

Abu Yousef grew up with seven sisters; each attended the University and treated with the utmost respect by the family.  Education is important for females because jobs are scarce, increasing the likelihood of finding a job.  Education also provides better opportunities for marriage because they are able to support a family if the husband is not able to find work.  Expectations are different for sons and daughters.  At an early age, boys and girls are allowed freedom in terms of going to the beach and traveling without company.   As his sisters grew older, they were expected to ask permission from their husband to travel alone because of societal and cultural norms.

During Abu Yousef’s recent trip to Gaza, the traditional roles of males and females became more apparent after his cultural experiences in the U.S. In Gaza, women are expected to care for the children and prepare food for the family with little assistance from the husband.  In older generations, the trends are more exaggerated in terms of female duties and male duties.

Future of Palestine

Abu Yousef will ask me, “What do I do to become more American?” My response is generally geared toward middle America- Budweiser and Ford trucks, but this does not capture the true essence of being an American.  Abu Yousef is more American than me in many ways – described by his entrepreneurial spirit, work ethic, risk taking, and enjoyment of American television shows such as “Seinfeld.”
Unfortunately, the political landscape has changed dramatically since Abu Yousef left Gaza for the United States.  The future of Palestine is uncertain at best with limited opportunities.  Inglehart suggested that economic opportunity may have a compounding effect on emotional well-being.  Chang claimed, “No country is condemned to underdevelopment because of culture.” Moreover, the U.S.-Israeli influence in the U.N., Western Culture and media portrayal creates significant barriers to changing a culture of poverty and apathy.
 
Figure 1 (Menon 2012)

 
Works Cited

Abdalla, Jihan. "Palestinian hunger strikers appeal to Israeli court." Reuters. May 2012. http://www.reuters.com/article/2012/05/03/us-palestinians-israel-prisoners-idUSBRE8420UC20120503 (accessed May 2012).
Al-Mojahed, Mamo. "Erdogan Slams Shimon Peres For Israeli Killings And Walks Off Stage." Youtube. May 2010. http://www.youtube.com/watch?v=XYa2rqT00bM (accessed May 2012).
Chang, Ha-Joon. Bad Samaritans: Rich Nations, Poor Policies, and the Threat to the Developing World. London: Random House, 2007.
Counsel on Foreign Relations. "Crisis Guide: The Israelie-Palestinian Conflict." CFR.org. n.d. http://www.cfr.org/israel/crisis-guide-israeli-palestinian-conflict/p13850 (accessed May 2012).
Derfner, Larry. "Why the Gaza War Between Israel and Hamas Broke Out Now." US News. December 2008. http://www.usnews.com/news/world/articles/2008/12/30/why-the-gaza-war-between-israel-and-hamas-broke-out-now (accessed May 2012).
Hofstede, Gert, and Geert-Jan Hofstede. Cultures and Organizations: Software of the Mind. New York: McGraw-Hill, 2005.
Inglehart, Ronald. "Globalization and Postmodern Values." The Washington Quarterly, Winter 2000: 215-228.
Jones, Steve. "What Were the Oslo Accords." US Foreign Policy (about.com). n.d. http://usforeignpolicy.about.com/od/middleeast/a/What-Were-The-Oslo-Accords.htm (accessed April 2012).
Menon, Debbie. "Palestine Map." VeteransToday.com. April 2012. http://www.veteranstoday.com/2012/04/22/to-viola-larsen-on-her-damnation-of-jim-wall/palestine-map/ (accessed April 2012).
Said, Edward. "Islam Through Western Eyes." The Nation. April 1980. http://www.thenation.com/article/islam-through-western-eyes (accessed April 2012 ).
Shah, Anup. "Palestine and Israel." Global Issues. February 2009. http://www.globalissues.org/issue/111/palestine-and-israel (accessed May 2012).
Yousef, Abu, interview. PUBP 503 Cross-Cultural Interviewing: Immigration Assignment (April 2012).

Romney chooses to double down on Republican ideology

Let's be honest, does anybody vote for the Vice President? If the race were simply Mr. Biden versus Mr. Ryan, the outcome may be completely different. I read (Ezra Klein) today, stating that the VP pick could  swing the vote 2% in his home state. Indeed, the selection of Rep. Paul Ryan (R-WI) has sparked a debate among political analysts and talk shows. One thing is for sure, Mr. Romney made a clear indication of the ideology he will pursue if he were to win the White House. By choosing Mr. Ryan as his VP, Mr. Romney may be leaving money on the table in a place that he may need it most.

I will certainly give Mr. Romney credit if his strategy works--leaning toward the Republican base and emphasizing economy, austerity, budget, and tax cuts. Just an FYI, it is theoretically impossible to balance the budget by simply cutting taxes (assuming constant economic growth). Tax cuts can also be viewed as a government expenditure - in the sense that less revenue is being collected, which in turn implies significant cuts across government agencies and procurement programs. It is safe to say Republicans often count President Obama's tax cuts as government expenditures when citing statistics. The truth is the president has upped the ante on President Bush's tax policies, extending the Bush tax cuts with the addition of his own policies.

Kathleen Parker summed it up in the Washington Post with the 'BWG' demographic.  That is, Mr. Romney has doubled down on the conservative white coalition and failed to extend his base past the traditional 'Boring White Guy.'  This may improve his chances in Ohio, which is 84% white (irrespective of ethnicity status).  Florida and Virginia may be more elusive, at 79% and 71% white, respectively.

If you break down the white vote by ethnicity, the story shows a more diverse demographic. Ohio is 81% White non-Hispanic (WNH), Florida is 58%, while Virginia is 65% WNH.  It is safe to say that Mr. Ryan will not poll well among non-white voters. Mr. Ryan is also known for his radical movement on privatization - Medicare and Social Security, something Mr. Obama will certainly emphasize in Florida.

The truth will prove to be translucent in Washington, as it always has. Mr. Obama's campaign for change has come up very short on his promise of a stark contrast to Mr. Bush. The selection of Mr. Ryan will be challenged to sway on the fence seniors, Hispanic voters and minority groups. The choice also doubles down on the traditional Republican ideology.  As the country becomes more diverse over time, this may be the last time either party doubles down on the BWG vote.  If Mr. Romney wins, he can thank the economic misery of the Eurozone and low voter turnout.  Moreover, he may disappoint die hard budget hawks and tea partiers, given that change inside the Beltway is aiken to continental drift.


http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/08/11/paul-ryan-isnt-a-deficit-hawk-hes-a-conservative-reformer/
http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/08/11/paul-ryan-will-be-mitt-romneys-vice-presidential-pick-heres-seven-thoughts-on-what-that-means/
http://www.washingtonpost.com/opinions/kathleen-parker-a-boring-running-mate-could-be-good-for-romney/2012/08/10/5e6dcfc2-e31c-11e1-a25e-15067bb31849_story.html
http://quickfacts.census.gov/qfd/states/39000.html 

Virginia politics, demographics and election trends

In this election cycle, Virginia has become an intense presidential battleground state, as candidates blitzed the airwaves and crossed the state in search of undecided voters. Historically, presidential elections favored the Republican candidate, with President Obama's victory over Mr. McCain in 2008 being the recent exception.  The southern suburbs of Richmond and Hampton Roads provide a diverse base of white and African-American voters. 


Income and race play a large role in the prospects for Mr. Romney and Mr. Obama.  Henrico County, encircling Richmond is 57% white. To the south, Chesterfield County is 65% white, according to the 2010 Census. Blacks are the largest minority group in the Richmond metropolitan area. Whites are generally more educated and have higher incomes in Richmond's west end of Henrico, leading along the I-64 corridor toward Glen Allen and Short Pump. This is the district of Rep. Eric Cantor.  The same is true of the western suburbs on the south side of the James River.  To the north and east of the city, lies a demographic of predominantly African Americans, voting heavily in the favor of Obama during the 2008 election.  Henrico County went 56-44 to Obama while Chesterfield County voted 54-46 in favor of Mr. McCain.    

Driving directly east of Richmond to the peninsula, showed high density suburbs of Hampton Roads voting overwhelmingly in Obama's favor. Surprisingly, the Virginia Beach suburb of Chesapeake went to President Obama's favor 51-49.  Virginia Beach by itself was a 50-49 split to Mr. McCain.   Virginia Beach and Chesapeake are 64% and 60% white, respectively.

The affluent suburbs of Washington DC tell an interesting story regarding demographics and voting patterns. Outer suburbs of Loudon County are 54% in favor of Obama and 62% white. Prince William was 58% in favor of Obama and 49% white. Obama mopped the floor in closer in suburbs of Fairfax, Alexandria and Arlington, reaching 60%, 72% and 72% of voters, respectively. These areas are highly educated, diverse and high income. Loudon has the highest income and largest share of white voters among Northern Virginia localities.

As education increases among white voters, the probability of voting for President Obama increases.  If you are Black, you will likely vote for the President regardless of education. The farther south you go, the less educated white voters go heavily in favor of Republicans.  If the President is to win Virginia, it is vital for him to hold onto his margin of victory in Fairfax, Henrico, and Cheseapeake, while holding his own in Virginia Beach and Chesterfield County. If voters perceive the local economy to be on the upswing, the election will lean to Obama. However, if Romney approaches 60% of voters in Chesterfield County, it may indicate the state is ripe for a republican takeover. If the President loses ground in both Chesterfield and Henrico, then look for Chesapeake and Virginia Beach to follow suit.  If the southern local economies falter (or perceive to be faltering), residents may favor traditional republican ties.

http://www.cnn.com/ELECTION/2008/results/county/#VAP00map
http://projects.nytimes.com/census/2010/map

Game 1, Durant v. Lebron

1:31: Why is Mike Miller in the game?
1:16: D-Fish for 3, check that D-Money
1:00: Chalmers, when him and Battier are on, the big two need to let go, if they want to win
:48: Is Mike Miller still in the game?
:01: James Harden.
End of 1st:
Did the market go up today? What is up with commodities?

Before the game, Bryce Harper launched a 450 ft homer, hitting the upper deck in dead centerfield at the SkyDome. Wow.

The Thunder being in the Finals has put quite a bit of pressure on the Chesapeake Energy CEO. Investigations, allegations of billions of dollars in personal loans taken from the company has gotten the attention of regulators.  How else was he going to build himself the world's largest army?
2nd
11: 09: I have not noticed one single incident of whining, what has gotten into these guys? Definitely smarter over the past few games.
10:22: Battier. When he is on, he is on. He once dropped 40 at Duke if I remember correctly. Quintessential team player. Love his game.
9:48: Lebron hit number one (ft). and two.
9:33: Van Gundy said it perfectly. Good teams don't have power struggles.
9:10: Damn.
8:58: And one for Sergio.
6:50: The Fisher Monster.
Finally, the ECB guarantees bank deposits. Were they living under a cave since the 1933? I know the buildings are old in Europe, but deposit insurance is a fundamental aspect of financial stability.

5:12: A light push. What the f* kind of call was that? No blood. No foul.
4:47: This on the floor foul rule has becomes exponentially confusing. I always thought it was supposed to be very simple.
3:48: Westbrook always looks pissed off for some reason.
:31: The double techs have begun. Westbrook made a good play and then acted like an idiot.

Market calls Germany's bluff on Spanish bailout

The market essentially called Germany's bluff-- prompting heavy selling of Spanish bonds after the anticipated 'bailout' was nothing more than a few billion thrown at commercial banks.  As bond prices decreases, the yield or interest portion of the loan increases, making it more difficult for the government to meet its obligations.

It appears that 100 billion is a drop in the bucket for this risk averse market.  The 100 billion Euros thrown at Spanish banks can easily be outweighed by two or three hedge funds making leveraged bets. Never mind the billions of dollars (perhaps trillions) that are already betting against the Spanish bond prices, banks and the overall economy.

The ECB can go a long way by developing credible and well capitalized insurance facilities, aimed at government debt, private sector preferred shares and commercial deposits.  The longer the German's wait, the more expensive the proposition becomes, as the self-fulfilling prophecy takes hold.  For now, a TARP sized bailout should provide the needed confidence, along the lines of 700-900 billion (US dollars).  However, if further deterioration becomes a reality, the cost may escalate. Depending on the fallout, the necessary funds to keep confidence in the ECB monetary system could easily top 1 trillion (USD).

The Federal Reserve guaranteed the commercial paper markets during the 2008-2009 Financial Crisis, regardless of whether or not that debt was secured by collateral.  This was important for many institution's ability to raise capital to make the necessary weekly payrolls, without which we were all dead.  Insolvency may prove difficult to avoid if common equity continues to decline. Financing becomes more expensive, layoffs prompt layoffs and margin calls beget margin calls, compounding the effects of any runs on liquidity and deposits.  The run on confidence must be avoided at all costs to move the market back to a steady state.  The money chasers could care less if economic growth is normalized in the US and Germany if the countries around the EU are falling off a cliff. Germany must wake up and realize that they owe much of the power as an exporter to the inclusion of weak countries such as Greece and Italy. We may see Ms. Merkel get tough, but I am afraid it will only be when conditions are significantly worse.

For which he does not receive due credit -- Mr. Bush's second term in office allowed him to make the difficult decisions, granting Mr. Hank Paulson (aka 'The Godfather') the power to save the Financial System as we know it. Mr. Paulson's demeanor and the respect he commanded gave him the absolute authority to direct the banking system to do what was necessary to prevent complete catastrophe. It didn't hurt that he was worth hundreds of millions of dollars from tenure at GS, that just so happened that he had to put his money in a trust before taking position as Treasury Secretary.

Even with her authority, it appears Ms. Merkel does not have the clout and respect as Mr. Paulson commanded.  Perhaps she should try demanding, or better yet, earning respect from the markets.  Right now, the markets are wiping their ass with the ECB's pathetic attempt at a bailout. The time may be approaching for Ms. Merkel to (wo) man-up and take one for the team. After all, your days will be numbered.   

Republicans favor European style austerity during economic uncertainty

It is clear that Republican House members favor European style austerity measures during a time of economic ambiguity.  Today, they stampeded towards tighter monetary policy, a stronger dollar, after coming off a jobless recovery from the worst economic crisis since the Great Depression. Fortunately, the Fed is level-headed, taking a wait and see approach after two rounds of QE. Typically, in an election year, we can expect lower gas prices and little Fed intervention. However, this year may be different if Europe fulfills the on-going self-perpetuating prophecy of failure. If the situation does get worse, I have no doubt that Mr. Bernanke will take the lead to supply the market with the needed stimulus. China acted today to lower their benchmark rate.  If the U.S. engine follows suit, I expect we should see the Fed in action in the next 2-3 months.

It is always favorable to the challenger, Mr. Romney, to pursue office during a weak economy, given that persuading voters to favor change is much easier when people lack jobs.  My guess is Mr. Bernanke is none to happy with the harsh criticism the Fed receives from lawmakers who are not very knowledgeable of the policy blunders of the GD. Never mind that every single bank in the country was insolvent, until the Fed instilled confidence in the system and propped up institutions all over the world through secret liquidity operations. We will let history do the talking. Even Mr. Larry Kudlow acknowledged that the problem is deflation, not inflation, and we know he always hails "king dollar."

I am no fan of loser mentality, displayed by pessimistic approach during general elections. If lawmakers did their job as well as Mr. Bernanke performed his, perhaps we would not be stuck with high unemployment.  Infrastructure spending will go a long way to putting blue collar Americans back to work. This cohort is plagued by less education and hence, unemployment rates higher than the norm. It is not necessarily in their interest to support the Republicans, but it appears Mr. Romney will capture the majority of the vote from the uber rich and less educated states in the south. I anticipate those with bachelor's degrees or higher will vote favor the incumbent, although this depends on their own employment situation and standing in the current economy.   

Why does Lebron James whine after every call?

Watching the Eastern Conference Finals, or any game played by Lebron James, I notice one thing. It is not his scoring efficiency, size, athleticism and the way he so easily dominates the game. It is counter-intuitive to see him so well spoken in front of reporters, yet behave so childishly on the court. Case in point, a recent shot was blocked from behind by the Celts in the second quarter. Instead of hustling to the other end of the court, he turns to the officials holding his hands in the air "Where is the foul?" This is the playoffs. No blood. No foul. No crying.  Meanwhile, Boston has a 4 on 2 break, misses the layup, Garnett gets the rebound and makes the put back at the basket after being fouled (on a legitimate call).

Why does a grown man making hundreds of millions of dollars let his team down like this? Even worse, why does he cry to the officials after every little call does not go his way, in a game which there are easily 100 calls to make?  The trend appears to be contagious, as displayed by Wade and Bosh's equally childish demeanor. The whining hurts his team, reflects poorly on his character and leads to Mr. James receiving less benefit of the doubt in the long run. If Mr. James were to say, maybe (but lets not get too far ahead of ourselves), put his head down and run his ass to the other end instead of crying, perhaps he would receive the benefit of the doubt on the next call. I see some of this crying on television, but in person, the problem is far worse.

I don't recall Jordan, Bird or Magic crying to the officials after every little call. I only played freshmen basketball and I was far from the best on the team. However, I do know what it means to be humble. If I had ever displayed my disgust with officials as Mr. James does, my coach would have chewed my ass out--yelled for 15 minutes while spitting in my face, screamed at the top of his lungs and cussed me out so that the entire school could hear, just to make an example. He did do this on occasion for varsity baseball (thankfully not at me).

Being humble, hustling back on transition defense, not questioning every little call may go a long way to receiving the benefit of the doubt from the officials.  There is the added benefit of helping your team out, making your coach look good, and preventing the easy rebound in transition. Please, for the love of the game, stop acting like a spoiled little child on the court. And hit your free throws. 

Post article reveals heightened tensions with Iran

The espionage games going on in Azerbaijan and Iran are likely to be a result of the on-going assassination of Iranian nuclear scientists.  The article confirms that security elevations were clearly warranted following the botched bombing attempt of Saudi officials at a Washington D.C. area restaurant.  Additionally, increased mobilization of troops at U.S. Army bases also points to increased security concerns.  The mobility of large platoons can be an indicator of the world-wide security awareness from non-public information.

Sunday, as I sat on the outside patio of Sequoia's in Georgetown (btw phenomenal brunch), helicopter runs occurred approximately every 5-10 minutes during the holiday weekend.  Helicopters can be used to carry surveillance and detection equipment.

It should be glaringly obvious that Iran will have nuclear capabilities in the near future (if not already), altering the balance of power in the Middle East.  The acknowledgement is likely to come 6-12 months after the fact.  The ability of N. Korea to maintain complete control over society is exacerbated by their errant threats. The threat of nuclear action allows dictators to appear more competent, manipulative and erratic to gain as much attention as possible.  US policy in the Middle East should not change, although the behind the scenes operations might be altered to compensate for an additional country with nuclear capabilities.  Pakistan and N. Korea already have the a-bomb, while Iran only adds to the list of potential catastrophes.

If Iran and N. Korea continue to believe the a-bomb with stifle modernization, they are badly misinformed. Evolution is inevitable-- Parliamentary and Republic systems allow a country to manage the technological changes in an orderly way, and maintain control of society. Repressed societal change breeds resentment and militancy, often manifested through violence and increasingly desperate actions. After all, desperate times call for desperate measures.

1  See Warrick's article, "U.S. officials among the targets of Iran-linked assassination plot" at <http://www.washingtonpost.com/world/national-security/us-officials-among-the-targets-of-iran-linked-assassination-plots/2012/05/27/gJQAHlAOvU_story.html>.

Campaign dollars swirl around Virginia polls

I just did a telephone survey for Target Consulting Group paid for by the Republican party. I typically lean 55-45 to republicans. For this election cycle, I am quite turned off by the evangelical base, racist policies towards immigrants and the 'loser mentality.'  Although, I do think Romney would be a decent president. However, I just so happen to like Obama better, and the fact that he still coaches his own daughter's basketball team.

Republicans have done a very good job at alienating educated middle class voters such as myself.  For example, as a resident living in Northern Virginia, the presence of immigrants contributes to the overall health of the economy.  First off, they are consumers, soaking up excess housing supply and buying consumer goods (necessities actually, which is a different definition than most people have).  Secondly, the contribution to the labor market is a boom in the form of competition.  Not only do they have an incredible work ethic, they work for a fair price and promote honest competition. If anything, the workers I hire, I often worry that I am not paying them enough money for the job! Finally, they exemplify the spirit of America better than most Americans I know.  Moreover, they are risk takers and entrepreneurs similar to the founding fathers of the country, ultimately seeking peace of mind and a better opportunity for their families. 

Overall, immigration is a boom to local markets. It is no coincidence that the economic and population growth is correlated with a greater presence of minorities. The 'loser mentality' often leads to Republicans leaning too far right to persuade donations from the evangelical base, the same way (I resented) Democrats did during the Bush years.  It will become increasingly difficult to win national elections by alienating a significant portion of the population in women, minorities and educated voters.  Best of luck, biatches.

Downturn in Market sets up QE3

A significant downturn  in global economies will inevitably lead to a coordinated quantitative easing.  The Fed is likely to lead the efforts, followed by China and Europe. Europe may want to consider the fact that it is better monetary policy to purchase assets directly, rather than using banks to take the risk to do it. One bank may fail, but a failed government will always be bought.

Let us not forget the ECB last raised interest rates in July 2011. Bond markets eventually hold governments accountable, as seen in Greece and Italy.  The distressed Eurozone needs a flush of liquidity. The scale of liquidity needed in regional Euro economies, may be too much for Merkel's conservatives to stomach.  The effect of a Greece exit, will lead to a stronger Euro and significantly lower valued Athens pound, rather than ounce or gram. The German effect will stifle manufactured goods, making them prohibitively expensive on world markets.  All this, unless the Euro finds a way to muddle though, which they have become remarkably adept. The guaranteed backing of government debt in the form of direct asset purchases will go a long way to creating a more cohesive monetary union, if they are unable to develop regional fiscal relationships.

To keep the currency peg honest, China must match the US for every theoretical dollar of stimulus. The lower interest rates for banks is likely to feed continued stimulation of the housing bubble that has occurred based on the demand of one billion residents, inching towards more economic and individual freedom from repression.  The impact may also spillover into the search for energy assets, including higher oil prices. I am surprised the flush of liquidity has not already taken effect in energy markets, less the bounce back was more closely tied to direct government expenditures than we think.  At what point does global demand for assets exceed supply?  Last time I checked, there were only 7.011 billion people in the world.   

Dimon's loss highlights risk in proprietary trading activities

JPMorgan's $2billion dollar trading loss, although small in relative terms, highlights potential risk from commercial bank trading activities.  In this instance, the scale is only marginal. However, the fact the loss was isolated, and occurred in otherwise choppy market, with interest rates near lows, makes the potential scale for widespread losses more apparent. Take for example, if the loss was not isolated, and the market had been on a persistent upswing, as experienced in 2007.  In these extraordinary cases, the losses can become exponentially higher, given the leverage in the system.  Capital controls are vital to ensuring a healthy economy and minimizing the risk in the event of widespread panic of liquidity runs. The magnitude loss factor holds an additional constant factor, indicated by the speed in which investors move money from 'the good' institutions from 'the opaque' institutions, in the presence of asymmetric information. An example is moving money electronically from an institution, such as Wachovia, during the crisis, and moving to a credit union. The interconnected electronic accounts have a diverse impact on the banks underlying ability to manage capital, because in fact those assets could disappear over night from massive liquidity runs on assets.

The asymmetric information between commercial banks and regulatory agencies leans itself to a policy of isolating the assets and capital of investment banks from the parent company. Although, the capital markets division at JPM may not be able to take the loss without the assets of the parent company to back it. Trading divisions at major financial institutions play an important role in technological innovation, however, their ability to  cause massive panic was only recently seen in the funneling of securities throughout the world via US mortgage assets.  Moreover, as soon as a new innovation becomes widespread, leading to a economic cycle peak, the speed at which investors will be able to move money becomes an important factor in their ability to manage asset-capital ratios.  The scale in this one event was small, but the potential impact is exponentially large in the presence of a pro-longed economic cycle coupled with asymmetric information and massive runs on liquidity.

For JMU Grads in 2012:
http://jmusportsblog.com/?p=3900

National Security Archives: Iran Contra
http://www.gwu.edu/~nsarchiv/NSAEBB/NSAEBB365/index.htm

Obama Solidifies New Market with Gay-Rights

Obama's support for gay-rights issues was a strategic announcement, used to court highly educated, suburban, middle-class voters.  His progressive stance as the first African-American President makes the political cost lower, increasing his potential return on investment.  This cost can be calculated in dollars as a +/- when looking at his share among voters in the outer suburbs such as Prince William County, VA, Loudon County, VA, Henrico County, VA, and Chesterfield County VA. These areas are historically conservative, but collectively voted for Obama in 2008.  The outcome may hinge on the domestic and European economy. It should be noted, Virginia's pro-business environment is fueled by the Federal spending in Northern Virginia.  

New Securitisation Market

The future of mortgage backed securitisation lies within the technology embedded in the tba and bond markets and the institutions governing the debt markets. The interest rates are determined by the market, based on risk adjusted expected return. The pricing of the risk, is at the core of the Great Recession. During the boom, the interest investors charged was not sufficient to cover the risk they were taking-hence mispricing of all forms of credit eventually led to the collapse of the bond markets. This occurred as investors experienced defaults on home mortgages in boom markets.

When house prices decline, borrowers can no longer sell their house in the event of an income shock.  Subprime mortgages, option arms, 2/28s and exotic products were originally created to supply credit in predominantly low income areas, operating as a low cost alternative to the FHA. These products were used as 'structured finance' for borrowers who had every intention of selling the house for a profit.  Responsible subprime lending fills a need, analogous to the way FHA operates in the market.  However, creative financing also helped stimulate demand (feedback loop), as the prices rose - a psychological melt up from the positive feedback in house price appreciation.

Globalised bond markets' growing desire for yield pushed the race further and further to the bottom -in terms of risk adjusted returns.  Competition from Wall Street fueled the securitisation machine . As supply of homes exceeded the demand, house prices naturally fell. When the bond markets recognized the risk they were holding, a swift psychological shift led to the downward spiral, exacerbated by credit default swaps and high leverage.  High leverage- margin calls beget more margin calls- forced selling on the way down.  The dramatic psychological shift in the market is also known as the liquidity run. Institutions were afraid to lend to other institutions. The market pendulum now demanded too much interest to compensate for the mark-to-market losses. Credit froze.

When a hurricane hits Florida or Louisiana, a governor calls a state of emergency to solicit Federal funding.  Citi, Bank of America, MS, Wachovia,  were all essentially insolvent. They needed 'everyone' to take fresh capital to instill confidence in the system (TBTF). The market recognized the Fed and U.S. Treasury were willing to do whatever it took to save the Financial System. Stress tests, the Fed, the Treasury, the FDIC all acted as an  insurance mechanism in the event as failure--government as lender of last resort.  The market became more about psychology and theoretical perceived capital, such as in human resources and in the political system.  The political capital, is the sum of the capital provided by the market, plus all faith and credit in the political system.

Is politics the enemy of problem solving? Evidence from the Emergency Economic Stabilization Act of 2008

Is politics the enemy of problem solving?

Evidence from the Emergency Economic Stabilization Act of 2008

  

October 24, 2011

PUBP 502

Introduction

The Emergency Economic Stabilization Act of 2008 (EESA) was a bipartisan bill signed into law on October 3, 2008, during the peak of the financial crisis. The bill was introduced by Rep. Patrick Kennedy (D-RI) and passed the Senate by a vote of 75-24. The final House vote was 263-171 (U.S. Senate 2008).  The focus of the bill was 700 billion dollars authorized to Treasury for the purchase of distressed assets, otherwise known as the Troubled Asset Relief Program (TARP) and the financial bailout bill (Library of Congress 2008).  

Politics played a significant role in the passage of the EESA in October 2008. The defeat of the bill on Monday, September 29, led to a simultaneous drop in the stock market greater than 700 points (Rosenbloom 2011).  The Bailout plan was an example of how policymakers and Congress reacted to changes in market conditions to prevent massive bank failures in a time of crisis.  Public opinion was one obstacle that was overcome to do what was best to stabilize the economy.

Political costs of the bank bailout were extremely high. Voting on a controversial issue was difficult for incumbent candidates given the upcoming elections.  Siding with President Bush was certain disaster with his approval ratings reaching 25% (Jones 2008). Systemically important institutions that were deemed ‘too big to fail’ created a moral hazard (Sorkin 2010). Positive effects of the bank bailout included restoring confidence, providing institutions access to cheap capital, preventing bank failures, and receiving a positive return on invested capital.  

The first section will discuss important events of the financial crisis leading up to EESA. The second section describes how the bill came to the floor of the house.  The third section describes the vote and breakdown by party. The fourth section goes over provisions of the plan. The fifth section discusses political consequences, followed by negative effects and positive effects of the EESA. Finally, the paper will end with a discussion of public opinion and the conclusion.

Financial Crisis Events

Events leading up to October 2008 played an important role in the passage of EESA. March 2008 saw the takeover of Bear Stearns by JP Morgan Chase.  In June of 2008, the Federal Reserve approved Bank of America’s takeover of Countrywide Financial. Indymac, F.S.B. went bankrupt in July of 2008. Also in July, President Bush signed the Housing and Economic Recovery Act of 2008, authorizing the takeover of Freddie Mac and Fannie Mae (Federal Reserve Bank of St. Louis n.d.).

In September 2008, the Federal Reserve and policymakers took dramatic action to prevent the collapse of the financial system.  The conservatorship of the Government Sponsored Enterprises (GSEs) was announced on September 7.  Shortly after, on September 15, Merrill Lynch agreed to a merger with Bank of America while Lehman Brothers filed for Chapter 11 bankruptcy.  The next day, AIG was rescued as a result of exposure to credit default swaps (CDS).  Morgan Stanly and Goldman Sachs were transformed from investment banks to bank holding companies on September 21 (Federal Reserve Bank of St. Louis n.d.). 

The external shocks throughout 2007 and 2008 took a heavy toll on regulatory capital and the health of financial institutions. Shareholder equity was depleted. Banks held illiquid asset backed securities (ABS) in off-balance sheet companies to avoid holding capital. High leverage ratios and deregulation led to vulnerabilities within the financial system. Faltering confidence and runs on liquidity plagued the banking system of what little core capital was left (Lewis 2011). The London Interbank Offer Rate (LIBOR) spiked, indicating severe credit and liquidity constraints (Kwan 2009).  The political stakes of passing a rescue plan were high. The Federal Reserve used every tool available as an independent agency.  The stock market was anxiously waiting for legislative action to restore confidence in the system.  The Bush administration and Treasury Secretary Paulson were desperate to prevent the system from collapsing further.

The Paulson Plan

The idea of financial rescue was put forth by Treasury Secretary Henry Paulson on September 19, 2008, and nicknamed the Paulson Plan.  The Paulson Plan was short in length and broad on power. The plan authorized the purchase of 700 billion dollars in illiquid mortgage-related assets. Paulson provided few details in the process for appropriating the money through lending facilities. Additionally, the plan explicitly granted the Treasury department the ability to avoid judicial review (Shah 2009).  

Before the bill was voted on, both political parties made compromises. Republicans included an insurance fund to guarantee mortgage related assets. Democrats attached an oversight panel and limitations for executive compensation.  These concessions were necessary to bring the bill out of committee for an official vote.  The concessions made by Democrat and Republican parties forced a moderate approach to policy making and allowed the EESA bill to move forward quickly.  The Bush administration argued that congressional action was a key to restoring confidence in the economy (Shah 2009).

Presidential Candidates Weigh-in

The upcoming presidential election complicated the process further.  The financial crisis provided many opportunities for the two senators to challenge one another on issues. Senator McCain questioned Obama’s leadership abilities and Obama noted McCain’s voting record was very much in favor of deregulation. Shortly after the Paulson Plan was announced, both Senators spoke out in a September 21st in a New York Times article. McCain spoke in favor of adding oversight while Obama wanted more focus geared towards homeowners (Harwood and Cooper 2008). Senator McCain and Obama voted in favor of the EESA (U.S. Senate 2008).

The Vote

After one week of negotiating, H.R. 3997 was debated for three hours on the House floor before a vote took place.  The measure failed by a margin of 205-228, leading to a 778 point drop in the Dow Jones Industrial Average (Associated Press 2008).  Approximately two-thirds of Republicans voted against the bill along with forty-percent of Democrats (Associated Press 2008). 

President Bush and Secretary Paulson urged opponents to put politics aside to do what was best for the economy. Despite the desperate circumstances, House Republicans voted the bill down.  The political costs of voting in favor of the bailout bill supported by House Speaker Nancy Pelosi and President Bush were too high, with elections only five weeks away.  However, the market and investor opinion was swift and decisive. The stock market’s strong response to the defeat of H.R. 3997 was the driving force that led to the success of the EESA days later (Shah 2009).

The failed House version of the bill was taken over by the Senate. To avoid starting at ground zero, the Senate attached the Paulson Plan as an amendment to the Paul Wellstone Mental Health Parity and Addiction Equity Act of 2008 (Shah 2009).  The Senate version made minor adjustments. They added a clause raising the limit on deposit insurance from $100,000 to $250,000 to convince some House members to change their vote.  The financial bailout (H.R. 1424) passed by a vote of 75-24.  Among those opposing the Senate version of the bill, fifteen were Republicans (U.S. Senate 2008).  

The House vote to accept the Senate version of the bill was taken on October 3, 2008.  The vote passed by a measure of 268-171 (U.S. House of Representatives October). President Bush used the support of Democrats in Congress to push the bill through Congress. Among the 171 members who voted against the EESA, 60% were Republicans.  Republican incumbents who supported TARP would become a target for the political backlash.

Provisions

The Treasury Department was authorized to spend $700 billion for the purchase of asset backed securities from financial institutions in exchange for a stake in equity.  The government also raised the ceiling on deposits insured by the FDIC to $250,000; allowed an increase in interest payments on bank deposits held at the Federal Reserve; formed an oversight council to monitor activities of the TARP; Treasury activities related to EESA were subject to judicial review (over-turning one of Paulson’s original powers); restrictions were placed on executive compensation of banks accepting TARP money (Library of Congress 2008); The healthcare related portion of EESA prohibited insurance companies from denying coverage for mental health, addiction, and substance abuse prevention (Shah 2009).

Political Consequences

Congressional representatives were concerned with upcoming elections and the political consequences of voting against the opinion of their constituents. The bill failed the first time for this very reason. Two year terms for members of the House of Representatives exacerbate this effect because they are constantly raising money, running for reelection and defending their voting record.      

Politicians were well aware of the consequences of voting in favor of EESA. Eleven candidates who voted for the TARP lost in 2008 elections. In 2010 elections, twenty-five candidates who voted for TARP lost reelection or the primary bid (Holeywell 2010). 

The economic circumstances of the crisis forced a very unpopular political decision five weeks before the election.  On one hand, the economy and stock market would have deteriorated significantly if the EESA did not pass the second time around. This was evident from the market reaction after the first vote.  On the other hand, a vote in favor of the TARP gave ammunition to political opponents and resulted in the loss of support from their constituents. 

Negative Effects

One major negative effect of EESA was the creation of banks that were deemed ‘too big to fail’. Too big to fail refers to a moral hazard where systemically important financial institutions were not allowed to fail during the economic crisis. Bank of America and Citigroup were two examples of banks that were dangerously close to failing based on the price of common equity shares.  Generally, these institutions held deposits, commercial loans, mortgage loans and other forms of credit necessary for businesses and consumers to function. The moral hazard was created by offering a government backstop in the event that the institution took on too much risk, thus encouraging more risk taking. ‘Too big to fail’ is a policy concern today for lawmakers when referring to systemically important financial institutions (Sorkin 2010).

The government taking equity stakes in commercial banks was viewed as a form of socialism (Bigg 2008). According to a September 30, 2008 Reuters article, conservative talk radio hosts viewed the stock market crash as a price worth paying to avoid endangering the capitalist system with a “socialist bill”. The public did not recognize the effect that the stock market had on the broader economy and job creation.

Another negative effect of TARP was the interdependence of government and financial institutions. The government took an enormous amount of risk by receiving equity warrants in the banking sector. If the banks had failed, the taxpayer was on the hook for the losses.  This form of political capitalism caused a backlash against ‘the establishment’.

Positive effects

Positive effects of the EESA include lower borrowing costs for banks, restored confidence in the market, and a positive return on capital for the money invested by the Treasury.  According to a March 30, 2011 New York Times article, the Treasury estimated profits from the bailout at $24 billion (Dash 2011). 

Raising private capital during the peak of the financial crisis was not an option.    Government money came with a lower borrowing cost because the capital markets viewed the Treasury as the risk free rate. Other positive effects of EESA were not obvious and difficult to measure. Confidence and capital ratios were restored at the largest financial institutions.  The stock market gradually gained confidence, but did not bottom out until March of 2009.

Public Opinion

According to a Gallup survey, President Bush’s approval rating during the October crisis was 25% (Jones 2008).  Because of Bush’s lack of popularity, Republicans tried to distant themselves from his policies in the 2008 election cycle.  This made the EESA very difficult to pass.

A study conducted by Pew Research showed a shift in Republican views after the EESA was passed. On the September 27-29 version of the survey, Republicans supported the measure 49% versus 38%.  The October 3-5 survey, just after the EESA was passed, the Republicans voted not in favor, 45% to 41% (Pew Reserach Center Publications 2008).

Even with the success of the EESA, the public viewed the political action as a failure for government and banks. Backlash against ‘the establishment’ has helped spark political movements such as the Tea Party and recently, ‘Occupy Wall Street’.

Conclusion

Politics affected the EESA in positive and negative ways.  Term limits enabled President Bush to make a tough political decision without the added distraction of an upcoming election.  House Republicans were (justifiably) concerned with the broad reach of government into the capital markets along with backlash from their constituency.  The majority of Democrats supported the EESA to help stabilize the economy.  The initial vote in the House on September 29, 2008 led to the largest decline in the stock market on a single day.  The immediate decline in stock prices forced Congress to pass the EESA just days after it failed.

The long run effects of EESA were mostly positive, despite public perception.  The banking system is much healthier today than it was in October of 2008.  Moreover, the rescue plan helped restore confidence and stabilize the U.S. economy with the use of political capitalism.  The EESA reinforced broad measures taken by the Federal Reserve during the financial crisis. It is difficult to measure the effects on the economy had the EESA not passed.  The primary negative consequence of the EESA was identifying financial institutions that were ‘too big to fail’.  The EESA was viewed as a form of socialism by the conservative right-wing establishment. Ultimately, the EESA provided proof that the government will step in during a time of crisis as ‘lender of last resort’ (Ferguson 2008).  

Appendix

Figure 1: Stock market collapses on September 29, 2008.

Source: <http://www.tradingauthority.com/article/debt-ceiling-and-market-crash-2008>.

Figure 2: Gallup survey.

Source: <http://pewresearch.org/pubs/985/economic-bailout>

Bibliography

Associated Press. "House to meet Thursday after rejecting bailout ." MSNBC. September 29, 2008. http://www.msnbc.msn.com/id/26884523/ns/business-stocks_and_economy/t/house-meet-thursday-after-rejecting-bailout/#.TqRUAt4Uqso (accessed October 2011).

Bigg, Matthew. "US talk radio holds firm over 'socialist' bailout." Reuters. September 30, 2008. http://www.reuters.com/article/2008/09/30/financial-bailout-conservatives-idUSN3045352020080930 (accessed October 2011).

CNN Money. "Special Report: The Rescue: Bailed out banks." CNN Money. n.d. http://money.cnn.com/news/specials/storysupplement/bankbailout/ (accessed October 2011).

Dash, Eric. "Treasury Now Sees Profit From Bailouts." New York Times. March 30, 2011. http://www.nytimes.com/2011/03/31/business/31tarp.html (accessed October 2011).

Federal Reserve Bank of St. Louis. Financial Crisis A Timeline of Events and Policy Actions. n.d. http://timeline.stlouisfed.org/index.cfm?p=home (accessed October 2011 ).

Fritze, John. "Tight House races feel financial bailout fallout." USA Today. October 1, 2008. http://www.usatoday.com/news/politics/election2008/2008-09-30-houseraces_N.htm.

Harwood, John, and Michael Cooper. "2 Candidates Urge Greater Oversight in Bailout Plan." New York Times. September 21, 2008. http://www.nytimes.com/2008/09/22/us/politics/22campaign.html (accessed October 2011).

Holeywell, Rick. "20 TARP supporters lose in Congressional election." Bailoutsleuth. November 3, 2010. http://bailoutsleuth.com/news/2010/11/election-21-tarp-supporters-lose-tuesday/ (accessed October 2011).

Isidore, Chris. "Bailout plan rejected - supporters scramble." CNN Money. September 29, 2008. http://money.cnn.com/2008/09/29/news/economy/bailout/index.htm (accessed October 2011).

Jones, Jeffrey. "Bush Approval Rating Doldrums Continue." Gallup. October 20, 2008. http://www.gallup.com/poll/111280/bush-approval-rating-doldrums-continue.aspx (accessed october 2011).

Kouwe, Zachery. "As Banks Repay Bailout Money, U.S. Sees a Profit." New York Times. August 30, 2009. http://www.nytimes.com/2009/08/31/business/economy/31taxpayer.html (accessed October 2011).

Kwan, Simon. "Behavior of Libor in the Current Financial Crisis ." Federal Reserve Bank of San Francisco. January 23, 2009. http://www.frbsf.org/publications/economics/letter/2009/el2009-04.html (accessed October 2011 ).

Lewis, Michael. The Big Short: Inside the Doomsday Machine. W.W. Norton & Company, Inc.: New York, 2011.

Library of Congress. "H.R. 1424--110th Congress: Emergency Economic Stabilization Act of 2008." govtrack.us. 2008. http://www.govtrack.us/congress/bill.xpd?bill=h110-1424 (accessed October 2011).

Orzag, Peter. Congressional Budget Office. October 1, 2008. http://www.cbo.gov/ftpdocs/98xx/doc9852/hr1424Dodd.htm (accessed October 2011).

Pew Reserach Center Publications. Economic Bailout: Public Remains Closely Divided Overall, but Partisan Support Shifts. October 2008. http://pewresearch.org/pubs/985/economic-bailout (accessed October 2011).

Rosenbloom, Corey. Trading Authority. July 27, 2011. http://www.tradingauthority.com/article/debt-ceiling-and-market-crash-2008 (accessed October 2011).

Shah, Archit. "RECENT DEVELOPMENTS: EMERGENCY ECONOMIC STABILIZATION ACT OF 2008." Harvard Journal on Legislation, 2009: 564-584.

Sorkin, Andrew Ross. Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the FinancialSystem--and Themselves. Penguin Group, 2010.

U.S. House of Representatives. "H.R. 1424 IN THE SENATE OF THE UNITED STATES—110th Cong., 2d Sess." house.gov. 2008 October. http://www.house.gov/apps/list/press/financialsvcs_dem/essabill.pdf (accessed October 2011).

U.S. Senate. "United States Senate Roll Call Votes H.R. 1424." senate.gov. October 2008. http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=110&session=2&vote=00213 (accessed October 2011).

Webe, Baird, Eric Weiss, and Marc Labonte. "The Cost of Government Financial Interventions, Past and Present." CRS Reports for Congress, October 15, 2008.

Ron Paul's End the Fed Slogan Not Respected Inside Beltway

Ron Paul was born August 20, 1935.  Mr. Paul's economic policy to end the Federal Reserve is analogous to religious fighters killing innocent people claiming their deeds were done in god's name.  His strict interpretation of the Constitution is not taken seriously Inside the Beltway.  The end the Fed nonsense is nothing more than an empty promise, aimed at convincing misguided consumers who search for anti-government solutions to their economic problems.

Supporters of Mr. Paul need to acknowledge the limitations of a gold standard, the inability of gold to adequately ease the Great Depression and its place in history.  With a gold standard, the total economic output is finite, measured by the amount of gold circulating through the economy. As the world population increases, economic output increases accordingly. It is not reasonable to assume that the rate of change of gold production can keep pace with economic output.  Furthermore, interest rates under the gold standard are tied to a commodity in fixed supply, not tied to economic cycle and unable to expand and contract based on supply and demand. The premise of the Gold standard is the belief that there is one side of the economy- artificial demand-created by production mines that have little correlation with the market.

This blog represents a mixture of libertarian, conservative and liberal economic philosophies aimed at increasing economic wealth for the greatest number of people.  The Federal Reserve System was created by the Federal Reserve Act of 1911, under Woodrow Wilson and the Progressive Movement.  The Federal Reserve System is largely free to act within its legal powers outside the purview of Congressional Oversight. However, the Chairman does have to be confirmed by 51 votes in the Senate. Mr. Bernanke was appointed by President Bush, a Republican, and reappointed by President Obama, a Democrat. His creative policies and quick action helped soften the Financial Crisis and lead the U.S. to a path of recovery that would not be feasible under a gold standard.

Mr. Paul's rhetoric is good for publicity, short on political feasibility.  Libertarians have many economic causes worth fighting. The Federal Reserve is not one of them.  Those who buy Mr. Paul's 'End the Fed' rhetoric would be better served with a more educated and healthy reading list--

http://www.amazon.com/Lords-Finance-Bankers-Broke-World/dp/159420182X
http://www.amazon.com/Ascent-Money-Financial-History-World/dp/0143116177/ref=sr_1_1?s=books&ie=UTF8&qid=1325482811&sr=1-1