It was good to see the Editorial and Columnist independence of the Globe from its big sister the New York Times. The very day that Kevin Cullen (Not buying Libya's ruse, Boston Globe, January 22, 2009: B1) was excoriating the lack of courage and common sense of the Globe Op-Ed page for carrying an article by Libyan leader, Khadafy, the New York Times carried a column by the same dictator (Muammar Quaddafi, The One-State Solution, New York Times, January 22, 2009: A31) urging a one state solution for the Israelis and Palestinians.
I searched in vain in your report on the confirmation hearings for Timothy Geithner for some questioning about the appropriateness of the use Shared Appreciation Mortgages (SAMs) as a solution to the ongoing financial crisis (Obama convenes financial team minus his chief economic spokesman, New York Times, January 22, 2009: A22).
SAMs are the perfect instrument to bail out lenders, prevent foreclosures and restore confidence. In a SAM, a government agency would join with the distressed hoemowner in meeting payments on the mortgage. There is no write-down so that lenders and derivative owners are made whole again. There is no foreclosure so that the individual homeowner stays in his home. There is no foreclosure so that neighborhoods are not hollowed out by a proliferation of empty homes.
There is risk to the government. As time goes by, the homeowner and the government build up equity in the home; the share of equity based on their proportionate contributions. There is however no guarantee that the total equity will exceed the homeowner's original purchase price before the house is eventually sold. In the best case scenario, both government and homeowner would recover their investments; in the worst case they would not. The risk of government losses might be reduced if the government part of the mortgage stayed with the house after an underwater sale, though that would reduce the attractiveness of the house to the new owner and consequently reduce the funds received by the seller. But this would work -- the government has infinite patience; early payoff is not a necessity.
Why don't we intensively discuss this solution, or something similar (as suggested by Andrew Caplin of New York University), as part of the recovery efforts that are being made? Perhaps it is just too late!
I was very taken with the remark by Mr. Kenneth D. Lewis (CEO of The Bank of America) that his company was being patriotic in closing its bid for Merill Lynch despite the latter firm's staggering losses (New York Times, January 17, 2008: B1, B8.)
I wonder how else a patriotic firm might act and how government might encourage patriotism -- though of course it should not need to do so.
First, a patriotic company would not lay off employees. Rather it would achieve cost cutting through the reduction of pay and hours for all employees in the company from CEO to the assembly line or office worker.
Second, a patriotic company would use slack time to give employees further training: training to do their own jobs more effectively, or cross training to help them learn other existing jobs, or learning in preparation for the jobs that will be needed if the firm takes a new strategic direction when the crisis is past.
Third, a patriotic company would work with, talk and listen to its employees to develop new products and new processes that would contribute to the long term effectiveness of the firm.
The role of government in the current crisis is to extend the availability of short-time unemployment benefits. This allows the worker on reduced hours to pick up an unemployment insurance payment for those lost hours.
India may indeed feel friendly toward the Bush Administration (India has a Soft Spot for Bush, New York Times Week in Review, January 11, 2009: 4)
But that approbation has been bought at a terrible price: the Nuclear Treaty between the USA and India. This horrendous treaty gives India a pass on the requirements of the nuclear non-proliferation treaty. They will receive nuclear assistance from the United States without having to comply. Back in September you recognized its problems (A Bad India Deal, September 30, 2008: A30) and correctly editorialized that passage of the treaty "would make it even harder to rein in Iran's (and other's) nuclear ambitions."
Your correspondent in Sunday's paper did your readers a disservice by failing to point out that with this treaty, the United States is contributing to the fragility of the nuclear world order.
The liberal blogosphere and the New York Times is delighted with the appointment of Professor Dawn Johnsen as the head of the Justice Department's Office of Legal Counsel.
They quote with approval her attacks on the legal reasoning (weak) to be found in the Torture Memoranda. They expect that she will act on these to investigate wrongdoing in the higher echelons of the administration.
I fear that this will not be the case. In February of last year, the Boston Globe quoted Professor Johnsen as saying "People who rely on [sic] good faith on an Office of Legal Council opinion should not be prosecuted even if it turns out that the opinion was wrong" (AG won't probe CIA on torture laws, Boston Globe, February 8, 2008: A 2).
It seems to me that her position is dangerously close to the Nuremberg Defense that "I was just obeying orders." On the face of it, her statement implies that she will not be taking steps to weed out the "bad apples" that proliferated in the top echelon of the Bush administration.
It is tempting to simply comment on the rich irony that two of the architects of the Bush administration’s extra-constitutional activities are to be found in your pages defending the constitutional process of treaty ratification (John R. Bolton and John Yoo, Restore the Senate’s Treaty Power, New York Times, Monday, January 5, 2009: A19).
More important however is their attempt to wrap ideological preferences into a constitutional requirement. Each of the treaties to which they object involve international constraints that may be to the disadvantage of corporate America. They do not mention treaties like NAFTA and the South American free trade deals that have been avidly sought by corporate America
The fact is that we live in a world much different from that of the founding fathers – a world that is much more reciprocally interdependent than was 18th. Century America, In that world American exceptionalism and independence affected few other countries. Today as we have seen, America needs to work collaboratively with the whole world.
The last eight years have shown how much America would have gained had it been part of the International Criminal Court. In such a world, John Yoo would not have dared pen the infamous torture memoranda; America would not have lost its reputation for justice and integrity. Furthermore, if we had adhered to the Kyoto accords, America would not be eight years behind in adopting fuel efficient cars (and Detroit's consequent collapse) and in the development of new technologies to help prevent global warming (which might have been Detroit's lifeline).
In the present world, the treaties disdained by Bolton and Yoo are the foundation upon which we must build new relationships with the rest of the world.
Where is the Congress when we need it (In Budget crises, California and other states reluctantly halt road projects, New York Times, December 23, 2008: A16)?
Everyone agrees that the coming stimulus package will involve money for the States for infrastructure investment. Why isn't it already on the way? Delaying projects involves extra expenses in winding them down and restarting them.
States also have other expenses: aid to towns and cities, human services, education and policing. These are all in jeopardy.
Congress should reconvene immediately and pass a bill that gives each State about 20% of its fiscal 2007 budget. That will get the stimulus package off to a good start.