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George Soros, Financial Times, January 22, 2008

The current financial crisis was precipitated by a bubble in the US housing market. In some ways it resembles other crises that have occurred since the end of the second world war at intervals ranging from four to 10 years.

However, there is a profound difference: the current crisis marks the end of an era of credit expansion based on the dollar as the international reserve currency. The periodic crises were part of a larger boom-bust process. The current crisis is the culmination of a super-boom that has lasted for more than 60 years.

Boom-bust processes usually revolve around credit and always involve a bias or misconception. This is usually a failure to recognise a reflexive, circular connection between the willingness to lend and the value of the collateral. Ease of credit generates demand that pushes up the value of property, which in turn increases the amount of credit available. A bubble starts when people buy houses in the expectation that they can refinance their mortgages at a profit. The recent US housing boom is a case in point. The 60-year super-boom is a more complicated case.

Every time the credit expansion ran into trouble the financial authorities intervened, injecting liquidity and finding other ways to stimulate the economy. That created a system of asymmetric incentives also known as moral hazard, which encouraged ever greater credit expansion. The system was so successful that people came to believe in what former US president Ronald Reagan called the magic of the marketplace and I call market fundamentalism. Fundamentalists believe that markets tend towards equilibrium and the common interest is best served by allowing participants to pursue their self-interest. It is an obvious misconception, because it was the intervention of the authorities that prevented financial markets from breaking down, not the markets themselves. Nevertheless, market fundamentalism emerged as the dominant ideology in the 1980s, when financial markets started to become globalised and the US started to run a current account deficit.

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William Rivers Pitt, TruthOut, January 23, 2008

I put a dollar in one of those change machines. Nothing changed.

                                        – George Carlin

Change, right?

That’s been the big buzzword since the middle of December or thereabouts. While the last days of 2007 bled away one by one, and as the pre-Iowa political bedlam became loud beyond endurance, “change” was the word on the lips of every candidate. One could not swing a dead cat by the tail in Ames or Des Moines without swatting campaign literature pledging “change to come,” but only if they got the votes.

Giuliani described himself as an “agent of change.” Clinton talked about needing experience in order to be able to bring change. Obama fairly waxed rhapsodic on the topic, setting the pre-caucus benchmark late in November by using the word four times in one sentence. Romney vowed to bring change to Washington, DC. Even McCain and The Artist Formerly Known As Thompson were grudgingly forced to work the word into their speeches after a while. It was everywhere, and any credulous folks in the crowd must have gotten to a point, after hearing it so often from so many candidates, where it felt safe to assume “change” was really coming no matter who wins come November.

“Change.” Let’s talk about that word, and what it involves. Certainly, making change in America’s domestic and foreign policy priorities is a necessary activity. Consider …

Iraq – A suicide bomber blew himself up in front of a school, wounding 22 teachers and students who were arriving for the beginning of the academic day. Another suicide bomber blew himself up at a funeral in the oil refinery city of Biaji, killing 15 and wounding ten others. The bodies of six family members who had been kidnapped the day before were found shot execution-style in Diyala province. Seven other bodies were found in different Baghdad districts. A bomb went off in Baghdad and wounded a policeman. Gunmen in Baghdad attacked and wounded three other policemen in Baghdad. A roadside bomb detonated on the Diyala Bridge killed an employee of the Transport Ministry and wounded six others. Two US soldiers were killed in Kirkuk, bringing the total number of American soldiers killed in Iraq to 3,931, with 27 of those deaths coming in the month of January to date.

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Robert Scheer, The Huffington Post, January 23, 2008

It was smart of the top Democrats to cut presidential candidate Rep. Dennis Kucinich out of that South Carolina debate, where they lamely attempted to deal with the dire consequences of the banking meltdown without confronting the banks. They made all the proper concerned noises about millions of folks losing their retirement savings and homes, but none was willing to say what Kucinich would have said: Bankers are crooks who will steal from the public unless the government holds them accountable.

How do I know Kucinich would have said that? Because I interviewed him for the Los Angeles Times back when he was mayor of Cleveland and the banks foreclosed on his city after he refused to sell the public power plant. Others can talk a populist line, but Kucinich lived it. He was forced out of office that time, but voters realized 10 years later that Kucinich had been right. Thanks to the public power alternative that Kucinich refused to sacrifice, Cleveland had cheap power, and he was elected to the Ohio Legislature and then to Congress as his reward.

I bring this up now not to push a Kucinich presidential candidacy, which seems quite forlorn given the power of big money and big media to set the stage for permissible political debate, but rather to hold out a yardstick for measuring the “progressivism” of the top three Democrats. Sure, they all would be preferable to their likely Republican alternatives, although Sen. John McCain has been far better than all three Democrats on both campaign-finance reform and taking on the defense contractors who have been bleeding us dry since 9/11. I got a little worried when Sen. Hillary Clinton said she could do the best job in confronting McCain on national security; she is shameless in throwing money at war profiteers, while McCain has held the line on some of the more egregiously wasteful military expenditures.

With a military budget that has more than doubled since 9/11, soaking up trillions of dollars in obligations for future generations, it is stupid to argue about whether the Democrats or Republicans would spend more on needed domestic programs, because the money for those programs will not be available. Kucinich was the one candidate on the Democratic side willing to do what Rep. Ron Paul has in the Republican debates–challenge the phony patriotism of ripping off the taxpayers for war-fighting expenditures in Iraq and elsewhere, leaving us less secure.

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Maureen Dowd, The New York Times, January 23, 2008

GREENVILLE, S.C. – If Bill Clinton has to trash his legacy to protect his legacy, so be it. If he has to put a dagger through the heart of hope to give Hillary hope, so be it.

If he has to preside in this state as the former first black president stopping the would-be first black president, so be it.

The Clintons — or “the 2-headed monster,” as the The New York Post dubbed the tag team that clawed out wins in New Hampshire and Nevada — always go where they need to go, no matter the collateral damage. Even if the damage is to themselves and their party.

Bill’s transition from elder statesman, leader of his party and bipartisan ambassador to ward heeler and hatchet man has been seamless — and seamy.

After Bill’s success trolling the casinos on the Las Vegas Strip, Hillary handed off South Carolina and flew to California and other Super Tuesday states. The Big Dog relished playing the candidate again, wearing a Technicolor orange tie and sweeping across the state with the mute Chelsea.

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