Dana Blankenhorn

Don't Get Killed in the Semi-Finals

I was told this a lot in 1968, by conservatives I considered knowledgeable friends.

It summed up their attitude toward Vietnam at the time, and their feeling the Vietcong would be reluctant to risk death. (They were wrong, of course.) The real fight wasn't with us, but between them, they assumed. So don't get killed in the semi-finals.

The good news from Iraq is we seem to be past the semi-finals. The current Battle of Basra is really the Bush Administration's last stand.

If Nouri al-Maliki should win, we will have chosen Iraq's new Saddam. He'll be a Shiite Saddam, he'll be a Saddam allied with Iran, but we'll have put him there. The point is this may be "victory" enough for our troops to get the heckoutofthere.

Unfortunately, right now he doesn't look like a winner. He's already had to call on Uncle Sam to hold Baghdad and we're hearing the same-old same-old about bad planning further south.

The AntiThesis Must Fall

Think of this as Volume 11, Number 13 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

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When you look at American politics from the perspective of generations, one of the most startling things you learn is how each generation's Anti-Thesis, the myths, values and assumptions which fought the previous era, must fall as the era falls.

Easy to say, hard to put into practice, but voters manage it. They do it by building a new Thesis within the rising party, then battling the old Anti-Thesis within their own party  until it's dead.

Here's how it has run, in every generational crisis, from the last crisis in the 1960s backward through the Civil War:

• 40 years ago, this meant the Eisenhower Republicans. The party faction which Dwight D. Eisenhower brought to power was moderate in tone, wanting only to lean against the assumptions of the New Deal and make them work better. By the 1960s this meant Nelson Rockefeller (right), who became a hated figure within the new New York Conservative Party starting in 1960. While Rockefeller ended up (briefly) as Gerald Ford's Vice President, he had lost his relevance by that time. Today moderate Republicanism is just about dead.
• 36 years before that, this meant Wilson Democrats, represented best by Wilson's own son-in-law, William McAdoo. Woodrow Wilson crafted a marriage of convenience between business-oriented Democrats in the northeast and the remnants of failed Bryan populism. Roosevelt's nomination was fueled by his opposition to the former and his alliance with the latter. It was McAdoo (right), who had tried for the nomination twice before, whom Roosevelt most needed to outmaneuver in order to win himself.
  
• 36 years before that, this meant the Mugwumps. The Mugwumps -- a made-up word implying Big Chiefs -- were reform-minded Democrats who allied with urban machines to elect Grover Cleveland starting in 1884. Cleveland's endorsement of bonds backed by private gold in 1895, meant to stave off U.S. bankruptcy at a time when tariffs were the main source of revenue, collapsed his coalition. Mark Twain (right) is credited with coining the term Mugwump, and represented this early progressive impulse. Theodore Roosevelt inherited the Mugwumps in his Progressive Republican coalition. 
• 36 years before that, this meant the Whigs. The party of Henry Clay (right) believed in "civic improvements" like canals and railroads, meaning they sought a more activist government than the Jacksonians. They were wiped out by the creation of the Republican Party starting in 1854, which had different priorities, namely slavery and industry.

Notice however that Nixon came out of the Eisenhower Anti-Thesis, that Franklin Roosevelt had been a cabinet member under Wilson, that Theodore Roosevelt had been a young Mugwump, and that Lincoln had run in the 1840s as a Whig. This is what fueled my November, 2007 Clue  and my identification of her as Hillary M. Nixon.

Halfway Through the Process

The first part of our national economic nightmare is over.

But only the first part. (Picture from Cashflowrollercoaster.com.)

What we've seen in stocks is a classic bear market. Prices fell roughly 20% from their highs, from over 14,000 to (briefly) under 12,000. They then re-traced about a quarter of that loss, and if they go higher still it's no all-clear signal. Most bear markets retrace half their initial loss.

What happens next is a test of the lows. This is just what happened nearly a decade ago in the dot-bomb. It's what happened in the "Asian contagion" of the late 1990s, and in nearly all previous bear markets. If the lows hold it's over.

But the lows don't always hold. That was true for Japan after 1987. It was true for Wall Street after 1930. And in this case there is real fear that the lows may not hold.

The reason is that under all this crap is the Big Shitpile, the mortgage derivatives created by unregulated markets over the last few years. Basically investment banks were creating money on their own, with no controls, by simply defining new securities based on these mortgages and selling them as though they were worth something. The ability to do this inflated home prices, because lenders didn't have to consider the risk a borrower wouldn't pay. The unregulated market was hungry for any new collateral.

Federal Reserve intervention staved off the first phase of panic, but there could easily be more to come. Millions of mortgages will re-set this year. Millions more are "underwater," more money owed than the value of the home. These are both opportunities for speculators to get-out, and since the bankruptcy law of 2005 made home debt less important than credit card debt (you have to pay the credit cards in bankruptcy now, but you can walk away from the home) there may be millions more foreclosures to deal with.

Each one of those foreclosures will have a ripple effect. Each mortgage is tied to other securities, all of which default or lose value when a homeowner walks away. How many are there? No one really knows.

So far home prices have dropped about 11%, and newspapers are saying this is a disaster, but it's really not a big deal. I think prices will fall by at least 20%, probably more, meaning lots more mortgages go underwater, as lenders tighten their standards, knowing they may have to hold the paper themselves for a while.

We have yet to see the second leg of this thing, in any market.

The Florida Problem

Democrats have a Florida problem.

It's not what you think.

We all know how Florida Republicans manipulated the system in order to select George W. Bush in 2000. But we expect that. Republicans are going to fight hard. They're going to use every trick in the book, and make up some new ones, to gain and retain power.

It's an essential element in the Nixon Thesis that Democrats are illegitimate, un-American, just waiting to give the country away to its enemies -- Communists, Islamicists. The argument among Republicans is whether this is because Democrats are truly evil or just naive.

No, the problem with Florida is the Florida Democrats.  Its latest manifestation is the announcement by Debbie Wasserman-Schultz (above), the head of the DCCC's "Red to Blue" campaign, which aims to turn Republican seats to the Democratic column, that she won't endorse three Democratic challengers in her own state.

Liberals are aghast. They want her fired. They have a petition up.

But here's what they don't know. This is not about Debbie Wasserman-Schultz.

Joy of Russell

If you could be truly happy for one year, even if it cost you the rest of your life, would you take the deal?

We buried Russell Shaw in Ft. Lauderdale Sunday, in a crypt at the Star of David Cemetery. It was a tragic day until his fiancee, Ellen Green, showed me some pictures she had taken of them last summer and fall.  (In this picture, Ellen is at the center and Russell's mom is on the right.) 

That tight line of the mouth you remember from my own tribute was gone. In its place was the most amazing, beatific grin. The clouds which seemed to surround him like his beloved Oregon sky were parted, replaced by a look of peace and content.

That's the Russell his family wants you to think about, and they've set up a special memorial page where you may add your own thoughts. They hope that, through his writing and links and connections to the cyberworld, he might be remembered, kindly, as more than magnetic ink, as a man in full. Cry for yourself, not for him. He finally found what he was looking for.