I wonder if a lot of people understand how the financial crisis came to be. I’m not sure I would understand it if I hadn’t gone to visit a friend who in the Sierra foothills last year.

She had inherited a house at a resort 10 years ago and had been living there ever since. It’s a big house, but the construction wasn’t finished. There were fixtures to be installed upstairs, and the driveway wasn’t paved, but for the most part it was done.

She didn’t have a job, but she had been taking out loans on the property every couple of years, and at first I didn’t understand how she could do that, until I realized that the property value had kept increasing so even though she was spending most of the money she borrowed on living expenses and improvements to the property, she always had equity she could borrow against. Every two years she’d take out another loan, max out her equity, but in a couple of years the value would go up and she’d be able to take out another loan.

Until the value stopped going up, then the party was over. She still had to make payments, but now she didn’t have the means to. She defaulted, left the house, and the bank took over. If they could sell it, it would be at a considerable loss.

I think a lot of people were doing that.

And I think that’s where the trouble started. Making those loans was a profitable business, and a lot of people wanted some of the action. At one point I even wondered how I could, but I never (thankfully) figured it out. As long as real estate kept going up, everyone kept making money. There was even a way to rationalize it. The United States is where everyone in the world wanted to live. So property would keep increasing in value as long as there was growth somewhere in the world. But it turns out that China and India, Russia and Brazil are pouring their new money into their own countries, reproducing the infrastructure we already have, building their own highways, hospitals and universities.

When real estate started going down, the value of all those mortgages went down, in some cases way way down. Then the house of cards built on the ever-increasing value of real estated collapsed. That’s the part you’ve been reading about. Banks need to have a certain dollar value of assets to back loans they get from other banks. When the value of the assets go down, their loans get called, they have to sell these assets to pay back their creditors, but no one wants to buy them. That’s when you hold up the big Fail sign and hope someone thinks you’re too big to Fail.

But really, this is probably the shit hitting the fan, it’s probably not a liquidity crisis as Paulson says. It’s our laziness, our thinking that our superior military and nukes would guarantee us a permanent position at the top of the pyramid. We don’t make enough of the things people want these days, and instead of investing in building better education, health and infrastructure, and solving the energy problem, we’ve been lying to ourselves.

We also fucked up by electing idiots to lead us, and letting the press get away with providing entertainment instead of keeping us informed on what the rest of the world was doing. This led us to elect ever more dishonest idiots to lead us, and they didn’t like what little oversight the press provided leading to the ridiculous situation where the candidates won’t even sit down for an interview, and you can hardly blame them, the reporters are such incompetent jerks.

I heard someone say that the real estate bubble isn’t the problem it’s the canary in the coalmine, the first financial crisis of a series of crises. I believe this is probably true. I thought we had time to solve these problems, what Obama was saying and certainly still is saying are the right things: education, health care, infrastructure, energy. And pull back from the short cuts. We can’t afford boondoggles like the war in Iraq, but it may already be too late.

No matter what, as a country we have to stop looking for the quick fixes, and start thinking about our future and doing the things we need to do to have one.

Of course all this comes at an opportune moment. We can change direction on November 4. That’s not actually very far away and another opportunity like that won’t come for a long time. Something to think about.

How do you prepare for a Great Depression? I was thinking of doing an extra backup. Ordering a few month supply of MREs from Amazon? What else?

Always thinking ahead, it’s possible that by this time next week our economy will lie in ruins, people will be hungry in the streets, out of work, and we’ll all be in for an incredible hardship possibly for the rest of our lives.

Last night at dinner I was musing about this subject. There still are plenty of people around who remember the last Depression. I think some people held onto their work and dignity and were able to put food on the table and stay in their homes. My house was built just before the Depression and it’s still here.

I don’t have a job now, I guess I’m basically retired, although I’m always looking for a new deal that I could make money with. I’ve basically been retired this way since I got out of grad school in 1979.

Anyway, I hope we avoid the Depression. I kind of like the way things were going there, hope we can get around this corner without electing a fascist government too.

PS: I recently saw The Dancer Upstairs, which I enjoyed, and in it there’s a character, a woman, who is always asking what she should wear to this or that. At one point she asks what she should wear to a revolution. I thought of Meg Fowler, and wondered what she would wear to a Great Depression. What’s the right kind of makeup? Shoes? I admit to not understanding women or Great Depressions, but am fascinated by both.

There’s this great Who song that you should play before reading this post. One of the greatest rock and roll bands of all time. They sang about their generation and the magic bus, told Tommy to go to the mirror, but today’s song is about not getting fooled again.

Flash back to the United Nations on 2/5/03. An impressive almost Presidential Secretary of State, Colin Powell, delivering some chilling news, not coming right out and saying it, but definitely leading you to believe that Saddam has nukes and chemical weapons and stuff even more horrible and is getting ready to use all of it in some unspecified horrible way. It’s the lack of specificity that makes it so chilling.

Consider the whole scenario. Powell can’t tell us what the danger is because that would violate some security that he can’t violate. Well, I did what a lot of Americans did that day, I sucked it up and got behind my government. And they suckered me. And I’ll never forget it. I got fooled, and used, and a lot of people died, in the name of freedom, and it was all a lie.

We all paid a huge price that day, and the bill may be coming due today, because they’re presenting us with the same scenario, this time about the economy. And we’re not going for it. You can see it in the way things flipped around overnight. A lot of people woke up this morning, like I did, and realized — wait I’ve seen this movie before.

Now we have another impressive Almost Presidential secretary, Henry Paulson, who says there’s impending doom, but he can’t say exactly what it is, it’s not security this time, but fear of starting another level of bank runs. Senators and Representatives come out of a Thursday night meeting with the secretary (would they have believed the President) won’t say exactly what he said, but they are stunned. The next day buried in a sea of press about this event is an almost innocuous paragraph in a NYT piece that talks about a flight to safety from the US Treasury money market. OMG. A point made by the secretary to the Congresspeople, a lot of your constituents have their savings in money markets. The Senators think to themselves, Fuck the constituents, that’s where my retirement savings are! (And by the way, mine.)

An aside, I never realized this until recently, but Congress was very easily whipped by fear of terrorism. The fourth plane on Sept 11 was likely headed for them. We were all so busy thinking about ourselves we forgot to notice that they had a huge conflict of interest, they were targets on Sept 11, and probably many of them suffering from post-traumatic stress from it.

Anyway, back to our story…

Having been fooled once, sure there are some among us who will be fooled again, but we will not all be fooled again, as evidenced by the posts on all kinds of blogs. This is one of those amazing days that except for stylistic elements the extreme right and the extreme left are in agreement. We can’t trust Paulson the way he’s asking to be trusted. It wouldn’t be prudent.

On the other hand, what if they’re right, and don’t want to speak the unspeakable for fear of provoking a run on the credit markets that would wipe out your savings and mine? If you’ve been conservative, as I have and many other have, do you want to be poor? Want to lose your house? Want to live on the street? No health care. No job. How long do you think you’d last? Think it might be worth $1 trillion to prevent that? I do. I bet you do too. But we can’t do it on the terms that Paulson asks for. There has to be some pain and there has to be oversight and checks and balances. There’s no such thing as a law passed by Congress that can’t be judged by the courts. Not in the USA, not under our form of government. And no way is Bush going to get that by us.

So here’s what I propose. The Republican slogan today is Country First. So let’s see the Republicans do a little of that famous Country First stuff.

Bush and Cheney must resign immediately. No immunity, no pardons. Nancy Pelosi will become President, promising not to run for re-election on November 4. Her term will be one of the shortest in US history, just long enough to enact the provisions of the bill being proposed by the Republican administration. If it really is the best thing for the country and not a trick, then the Republicans, being impressed by the seriousness of it, would have to insist that Bush step aside and let the Democrats execute the plan. The entire Bush cabinet stays in office through January 20, but reports, of course to Pelosi. And that includes Paulson.

It’s pretty simple. If they won’t do it, we know they’re bluffing.

If they will, I will give my support to the plan, even though I still don’t know what will happen if I don’t.

Updated: An abbreviated to-the-point version of this piece on Huff.

ORLANDO, Fla. — As September’s designation as “National Preparedness Month” comes to close, recovery officials remind Floridians that disaster readiness is a year-round job. Taking precautions long before storm clouds start to form is the best answer for minimizing damage from foul or extreme weather such as windstorms, hurricanes and tornadoes.

Washington - U.S. Customs and Border Protection recruiters are sending a message to inform the community about career opportunities for agriculture specialists in locations throughout the country.Agriculture specialists work to prevent potential agro-terrorism and harmful plant and animal diseases, pests and biological threats, and dangerous and contaminated goods from entering the American food and agriculture supply. (more)

Tomorrow our nation will mark the seventh anniversary of the terrorist attacks on the World Trade Center and Pentagon. Since that time, there have been no successful attacks on our homeland. Common sense suggests that the terrorists did not suddenly and inexplicably lose interest in striking us again. Indeed, our government has helped disrupt a number of plots including the one uncovered two summers ago to hijack transatlantic airliners in London.

Yet in a just-released report on our progress since 9/11, the House’s Homeland Security and Foreign Affairs Committees paint an unrecognizable portrait of where we stand today. Contrary to the report’s assertions, the Department’s employees have worked tirelessly to implement over 250 distinct requirements in the ‘9/11 Recommendations Act,’ as well as hundreds of requirements in other laws.

Just over a year after enactment, the Department has made substantial progress implementing the legislative requirements, and often in the face of inconsistent or unclear congressional priorities. The report is littered with a host of egregious and embarrassing errors. To cite but a few examples:

• The report states that the Department has made “no progress” with respect to section 1701, which mandates scanning in foreign ports for U.S.-bound cargo. In fact, DHS has deployed scanning systems in multiple foreign ports and thus far has met every obligation and deadline in section 1701. The numerous businesses, foreign governments, and departmental components involved in and affected by the deployed scanning systems strongly rebut the claim of “no progress.”
• The report states that there has been “little progress” with respect to Section 1101, which requires an operational National Biosurveillance Integration Center (NBIC) by September 30, 2008. In fact, NBIC is now operational, fully satisfies the statutory requirements, and recently disseminated a report on a salmonella outbreak.
• The report states that regarding Section 711, which modernizes the Visa Waiver Program, “initial steps have been taken but significant implementation challenges remain.” In fact, virtually all of the major implementation challenges have been addressed, and DHS has not missed any statutory deadlines. Moreover, DHS already has realized substantial security gains – in particular, increased information-sharing with foreign partners – as a result of efforts undertaken in accordance with section 711. (More on the work of our Department and its people.)

In addition to the numerous errors in the report, of which the examples above are merely illustrative, many of the statements in the report actually rebut the report’s assertion that the “Administration has ignored the law.”

With respect to Section 1001, which requires the establishment and use of a prioritized list of critical infrastructure, the report acknowledges that “…DHS provided Congress with the list of prioritized critical infrastructure and, thus, fulfilled that requirement of Section 1001.” The report goes on to assert, illogically and incorrectly, that DHS does not use this list.

Finally, it is unfortunate that the report ignores Congress’s failure to implement one of the most important recommendations of the 9/11 Commission. That bipartisan body recommended that Congress “create a single, principal point of oversight and review for homeland security.” With more than 80 committees and subcommittees often imposing inconsistent obligations on DHS, Congress has made it exceedingly difficult to prioritize tasks in a manner that best reduces overall risk to the country. While the Department’s employees work to implement the 250+ requirements of the 9/11 Recommendations Act, on top of the hundreds of pre-existing legal obligations, Congress would do well to heed the one recommendation directed toward reducing the fragmented congressional oversight.

On this solemn anniversary, the Committee has squandered a genuine opportunity to commend the brave men and women of this Department, the intelligence community, first responders, and law enforcement nationwide, for their outstanding job in protecting the homeland. In sum, the 218,000 dedicated members of this Department will continue to serve this nation with honor and distinction, and we who are privileged to lead them will continue our efforts to work with Congress on behalf of our homeland and its people.

Paul A. Schneider
Deputy Secretary

A number of :London legal staff at fallen investment bank Lehman Brothers have been granted a temporary reprieve following Nomuras purchase of the banks investment banking and equity divisions. As many as 14 members of staff from the banks Canary

City firm Finers Stephens Innocent has joined a rapidly growing number of firms making job cuts, with up to six fee earners likely to be laid off as the firm kicks off a redundancy consultation.: The consultation process began this earlier this week and

LG has become the latest firm to kick off a redundancy round after launching a consultation with 21 support staff.: The top 50 firm is in talks with nine secretaries within its real estate practice, while 12 members of its evening and float support staff