Nashville debate

I’m just not seeing the change to believe in.

Yes, during the debate, it became more clear that there is a difference between Obama and McCain. But the differences are in things which hardly matter: domestic policies. Let’s look at:

Tax policy. Yes, it’s true that McCain wants to lower taxes even further for the rich. With a slumping economy, even more people would get caught in the Alternative Minimum Tax and end up paying more. But I can’t worry about that; such plans would never survive in Congress. And for the same reason, Obama’s promises on taxes (cuts for the people making under $200,000; more taxes on people making over $250,000) simply can’t be kept. Obama could campaign on a promise to give every new baby a chocolate éclair, and why not? Congress would end up crafting some compromise with a far less progressive profile, and Obama will shrug, say it’s out of his hands, and it’s the best that could be come up with. So, don’t vote for the guy who promises to lower your taxes – he’s not a dictator, he can’t deliver.

The same goes for health care. Clearly, Obama has a more sane set of suggestions than McCain, even as his proposal falls far short of H.R. 676, which establishes a single-payer health care system in the US and effectively puts health insurers out of business. It doesn’t matter; anyone who lived through the Clinton “plan” in the 1990s can tell you that. On top of that difficulty, Obama and McCain just voted for a massive transfer of wealth to Wall Street, which will constrain what help they can provide to ordinary citizens; expect to see Obama’s proposed expansion of eligibility for federal health insurance go away first.

On issues where the President actually has a lot of latitude, they differ far less. Both would rush troops to Israel were it attacked. Both want to add the Ukraine and Georgia to NATO, effectively forcing our troops there as well in case of a conflict with Russia. Both would violate the sovereignty of any country which may be rumoured to house “terrorists”, including Osama bin Laden. And both speak of “killing” bin Laden, instead of bringing him and his ilk to justice. Such bloodthirsty rhetoric from the two men who would lead a nation built on the concept of laws and justice, where civilized people are glad the Wild West no longer exists.

So, where’s the change we can believe in? In areas where he can’t unilaterally deliver. Don’t be fooled.

Should third party supporters vote for Obama?

Democratic operatives and apologists, asking Nader voters to support Obama in swing states, need to understand that this is a two way street; you can’t ask supporters of third party candidates for their votes while participating in activities which are inimical to third party politics.

It’s pretty simple: if Democratic candidates want our votes, they will need to pledge some things in return:

1. You must allow third party candidates to participate in Presidential debates. A reasonable threshold (such as appearing on ballots in states which total over 269 electoral votes) is acceptable.
2. You must pledge never to work against the enfranchisement of third party candidates in their quest to access a spot on the ballot of any state. The track record of the Democratic party is particularly bad on this issue.
3. You should pledge to implement instant runoff voting or another approval voting system for Presidential candidates. This will allow third party supporters to express their approval of the policies of a third party candidate, while allowing them also to avoid the potential of hurting their second choice candidate (who might be the Democrat!).

If you, as a member of one of the parties in power, can’t pledge to make the playing field more available to third party candidates, then there’s really no reason why we should give you our votes.

Barack Obama has lost my vote

Look, I know that a McCain presidency would be a disaster for the country. So don’t bother writing that in the comments.

What I can’t do is vote for Barack Obama. On FISA, he voted the same way John McCain did. On the disastrous Wall Street Bailout, same as McCain. He wants to now “reduce” the troops in Iraq – not withdraw. He’s all for invading Pakistan, for supporting Israel against the Palestinians and Iranians, and for admitting Russia’s border states into NATO. The rationale may or may not be different; no matter, the policies are the same.

His speeches expose underlying philosophical differences with McCain. I can respect that. But I don’t see those principles being reflected where it matters – in the conduct of the Executive Branch. Many of Obama’s progressive proposals (funding renewable energy research, altering the health care landscape) will live and die in the legislature, with or without him; at best, he’d not be a threat to veto as McCain would. And his support for the current bailout package means he’s admitting that in the next four years, there will be less money to spend on investment at home: infrastructure building and repair, education, supporting small businesses. There’s no change – never mind change to believe in.

I’ve been leaning toward voting for Ralph Nader but had not yet made up my mind. I think a Ralph Nader presidency would be interesting; his irascible nature may make it difficult for him to work well with Congress to get things done. That would be a shame, but shame on Congress in that case. Would we really want to repeat the Carter presidency all over again? Why would a potentially sympathetic Congress not work with someone who has good intentions and great ideas?

Still – I can’t give my vote to Obama and endorse his policies. I have to make the statement that this candidate (Ralph Nader) embodies my vision for how the country should be run. He won’t win, but at least it will be clear that these ideas have a significant constituency; and maybe in 2012, more of these policies will make it into the debate, and hopefully into the campaign of one of the candidates.

Can it get worse?

Okay, here’s yet another reason why letting Paulson buy unrestricted derivatives in secret is a bad idea.

First: I know what credit default swaps (CDSs) are, and I know how they got used to amplify this current crisis. I also am quite aware that they can be used “legitimately” to hedge against risk, even including against non-asset based problems like changes in weather (screwing up airline flights, cancelling outdoor shows, etc). So yes, CDSs are valid tools for risk management; they shouldn’t be removed from the economy, but for heaven’s sake they should be more transparent and better regulated.

Then I listened to this episode of This American Life (you can download it this week for free). What I didn’t know (should I have?) is that people were writing CDSs against assets which they didn’t even hold. They’d bet against the drop of value of, for example, some debt Lehman entered; the insuring counterparty would bet (of course) that the value wouldn’t drop, and they’d collect the “premiums” for a promise to pay later. The insured counterparty would be betting they’d be able to gain the value of the underlying asset (or, more properly, the amount of the underlying loss) if it went down in value, and they were willing to pay for that privilege. This is like the “dead man’s” insurance WalMart was trying to get written against their (non-key) employees. It’s even worse than naked shorts, which of course have to be covered with a real asset at some point. This is trying to make something out of nothing.

There is no economic theory I can think of that can justify this behavior as enhancing the allocation of capital; this is gambling, pure and simple. The legislation enabling the bailout should have very explicitly prohibited the governmental purchase of such swaps; instead, the swaps should be invalidated immediately. Whether the insuring counterparty gets to keep or must refund the premium(s) is none of my concern; although the disposition should probably have been legislated as well, to avoid unnecessary judicial entanglement. Removing the uncertainty of whether insuring counterparties were on the hook for vast amounts of money on absurd gambles would probably go a long way to restoring short-term confidence in counterparty solvency. Long term, these things should be banned outright; a CDS against property (not an act of nature, etc) should require one of the counterparties to actually own the property; and when the property is disposed, the contract expires or goes with it.

We don’t insure office gambling pools; we don’t allow you to write gambling losses off your taxes (except against your winnings); why should we bail out these crooks at all?