News & Current Affairs

November 25, 2008

US Fed unveils new $800bn rescue

US Fed unveils new $800bn rescue

A US home that has been repossessed

The Fed’s aim is to prevent a deep economic slump

The Federal Reserve is to pump $800bn (£526.8bn) into the markets in another bid to deal with the financial crisis.

The US central bank said it would use $600bn to buy-up mortgage-backed securities to help encourage lending.

Separately the Fed also unveiled a $200bn plan to help unfreeze the consumer credit market.

As the credit crisis has deepened, banks and other financial institutions have been reluctant to lend, deepening the economic slowdown.

Under this new rescue plan – which is in addition to the already-announced $700bn bank bail-out – the Fed is to buy up to $100bn in debt from the troubled mortgage giants Fannie Mae and Freddie Mac.

The central bank said it would also buy another $500bn in mortgage-backed securities – pools of mortgages that are bundled together and sold to investors.

New bail-out

The $600bn effort on mortgages came as the Fed also unveiled a separate program to help unfreeze the consumer debt market.

The central bank said it would lend up to $200bn to the holders of securities backed by various types of consumer loans, such as credit cards and student loans.

The Fed said that the $600 billion effort to support the mortgage market was being taken to reduce the cost of home mortgages and increase their availability.

It said the purchases of the mortgages and mortgage-backed securities would take place over a number of months.

The severe financial crisis that is rocking global markets at the moment began more than a year ago with rising defaults on subprime mortgages, loans provided to borrowers with weak credit histories.

‘Unblocking credit’

Recently, Treasury secretary Henry Paulson had indicated that the government was working on this new program, which will be supported by $20bn of credit protection provided by the existing $700bn bank bail-out fund.

The news of this latest massive financial rescue plan was generally welcomed.

“They are getting to the heart of the problem, it’s clean, it’s quick, it’s direct. It’s a good way to bring down mortgage rates, because at the end of the day they have to stabilise the housing market,” said Todd Abraham of Federated Investors, Pittsburgh.

Robert Macintosh, chief economist with Eaton Vance, Boston, said: “If they can pull it off it’ll make some people happy, but I don’t know how effective it’ll actually be.”

Scott Brown, chief economist at Raymond James Associates, Florida, said: “Here is the Fed taking a bunch of debt out of the market, which doesn’t hurt. I think it should it should help unblock the credit markets.”

September 19, 2008

Small-town girl v big-city boy

Small-town girl v big-city boy

Virginia-based author Joe Bageant claimed Republican VP candidate Sarah Palin as a fellow “redneck”, in a recent essay for BBC Radio 4’s Today programme.He meant it as a compliment. Here Jamie Stiehm, a city-dwelling political commentator, asks whether small-town values are all they are cracked up to be.

When an American refers to someone as “small-town”, it’s seldom clear whether it’s meant as praise or scorn.

Trump Tower in Chicago
Sarah Palin declared psychological war on Barack Obama by setting up a ‘small-town girl v big-city boy’ dichotomy

It all depends on the speaker, subject, listener and ZIP code where the conversation is taking place.

For some, small towns are where virtues live: near the diner, yarn shop and swimming hole. For others, “small-town” is a synonym for smug narrow-mindedness.

Governor Sarah Palin, the political hurricane that made landfall in early September as the surprise Republican vice-presidential nominee, hit upon the deepest contradiction in the American character. It’s as old as the fierce fight between two founding fathers – urbane Alexander Hamilton of New York and Thomas Jefferson, a Virginia slave-owning gentleman of the land.

We Americans still have a romantic notion about the simple small town, which goes hand in hand with Jefferson’s idealized “yeoman farmer”. But in real life, most of us live in the busy, peopled world Hamilton envisaged.

Ms Palin declared psychological war on Barack Obama, the Democratic presidential nominee, right away by setting up a “small-town girl versus big-city boy” dichotomy.

In her hello-to-the-country speech, Palin zeroed in on Obama’s work as a community organizer in Chicago before he went to Harvard Law School. That was in another metropolis known as Cambridge, a lively academic grove in Boston.

In a rare move for a political unknown, Palin made it personal between the man running for president, Obama, and herself. They are of the same generation: she is 44 to his 47, and represent bipolar extremes.

Jamie Stiehm
Jamie Stiehm is a political journalist based in Washington DC. Her essays on the 2008 presidential campaign have appeared in the liberal, pro-Obama Huffington Post.

“I have the privilege of living most of my life in a small town,” Palin told roaring Republicans at their convention.

“I was mayor of my hometown. And since our opponents in this presidential election seem to look down on that experience, let me explain… I guess a small-town mayor is sort of like a community organiser, except you have actual responsibilities.”

Gopher Prairie

But, just a moment, what’s so great about being mayor of tiny Wasilla, Alaska? Whether Ms Palin ever made time to see the skylines and neighborhoods of Philadelphia, Boston or Baltimore is arguably more to the purpose of governing the United States.

For like it or not, we are a nation composed of mostly city dwellers.

Sarah Palin
We grow good people in our small towns, with honesty and sincerity and dignity
Sarah Palin quotes the late Hearst journalist, Westbrook Pegler

The 1920 census was the point in our social history when the population changed from living in rural and small communities to living in cities.

That shift is mirrored beautifully in the literature of the period, known as “The Revolt from the Village,” as critic Carl van Doren put it in The Nation in 1921. This revolt was accompanied by a rush to breathe in the exhilarating big city by young men and women, as told in the autobiographical novel, You Can’t Go Home Again, by Thomas Wolfe.

The most famous work in the anti-small town movement was the 1920 novel Main Street, by Sinclair Lewis, who based fictional Gopher Prairie on his own Minnesota hometown.

The Nobel laureate author opened with a world-weary, ironical note: “This story would be the same in Ohio or Montana, in Kansas or Kentucky‚Ķ Main Street is the climax of civilization.”

Biographer Richard Lingeman, also the author of Small Town America, said Lewis’ masterpiece launched “a conscious, definitive attack on the stuffiness, provincialism, smugness, conformity and cruel gossip of small town life, intended to puncture the myth once and for all.”

World citizen

Yet here the heartland myth persists, in popular culture as well as partisan politics. Rock singer John Mellencamp’s song, Small Town, tells the other side of the story told by Lewis: “No, I cannot forget where it is that I come from/I cannot forget the people who love me/Yeah, I can be myself here in this small town/And people let me be just what I want to be.”

The lyrics are in an ode to his Indiana hometown.

Barack Obama

Barack Obama would have a hard time laying claim to small-town credentials

Mellencamp is a big Obama supporter, as it happens. Maybe the Democratic nominee would be well advised to take the singer on the road to help shore up his support in small towns in battleground states like Ohio and Pennsylvania?

One of the strengths of Obama’s curriculum vitae, for some of his supporters, is its variety. Growing up, he lived in Hawaii and Indonesia. He studied in LA, New York and Boston and knows his way around Washington.

He’s a world citizen.

He’d have a hard time claiming small-town status, though Springfield, Illinois, where he served as a state legislator, is a fairly small town where another lanky lawyer who ran for President once lived. (That would be, of course, Abraham Lincoln.)

No doubt certain strengths come from living in a small town, especially for politicians.

Bill Clinton, who hails from Hope, Arkansas, embodies the easy social connectedness which a small town upbringing can produce.

Everyone tends to relate to everyone else, up and down the social scale. People know the person you were in high school.

You might even be married to someone you knew in high school, as Palin told the world she was. “My guy,” was how she introduced her husband, Todd Palin, to the cheering crowd that night.

You might even be pregnant in high school, as her daughter Bristol is – but somehow the redoubtable Palin has turned that into a small-town virtue, too.

Urban sophisticates

In her convention speech, she quoted anonymously Westbrook Pegler, the long-gone Hearst newspaper columnist and scourge of Eleanor and Franklin Roosevelt: “We grow good people in our small towns, with honesty and sincerity and dignity.”

Was the subtext that urban sophisticates like Obama are somehow suspect?

Just what we need, a new culture war at home.

As if we Americans weren’t demoralized enough already by the economy and the war in Iraq.

But there is no obvious reason why the big city guy has to lose this ideological battle.

Maybe he should engage and ask Americans: hey, whose world would you rather live in? Jefferson’s or Hamilton’s? Mine or Palin’s? Wasilla or Chicago?

He’ll have to watch out though, or the small-town girl will have him for lunch at the diner.

August 25, 2008

Obama sets out to sell his vision

Obama sets out to sell his vision

Barack Obama has a hard act to follow at this convention: himself.

Barack Obama speaks in Wisconsin

Barack Obama faces a career-defining moment

Four years ago, when Democrats gathered for their national convention in Boston to nominate John Kerry, the then-US Senate candidate made a much-lauded, career-defining speech. His message of a unified America, coming from the mouth of a young, mixed-race politician, marked the effective launch of the history-making Obama phenomenon.

It also brings a level of expectation ahead of his speech on Thursday, which the last Democratic candidate, who went on to become president, did not have to face.

When nominee Bill Clinton spoke at the 1992 Convention in New York, it was four years after he had made a convention speech that was widely seen (including by Clinton, himself) as rather long-winded and boring.

He did not repeat his mistake. With his “I still believe in a place called Hope” speech, the Arkansas governor defined himself in a way that resonated with the country at large.

Weight of history

Barack Obama needs to do something similar. With opinion polls placing him in a tight race with Republican John McCain and suggesting that sections of the public still do not have a clear impression of who he is, his goal is to come out of the week having defined himself as someone whom Americans can feel comfortable about as a leader.

He needs to sell his vision, his experience and his unconventional background.

Pepsi Center, Denver

Mr Obama must unite the Democrats behind his campaign

He will be selling that vision of himself on an auspicious date: the 45th anniversary of Martin Luther King Jr’s “I have a dream” speech.

But, while that may add to the weight of history on his shoulders, the location of his speech represents a break with history.

Obama will not accept the nomination in the Convention Hall, but at the 70,000-seater Invesco Field, home of the Denver Broncos Football team. This will provide a unique spectacle, but it also presents a certain danger of perception for a candidate who – since securing the Democratic nomination in June – has faced accusations of being too presumptuous about his chances of winning the November election.

Clinton tensions

And while the 1992 Clinton experience offers him a something of a blueprint for success, the 2008 Clinton presence, on the other hand, presents him with potential pitfalls.

Both Hillary and Bill Clinton will be speaking at the Convention. Their performances – on Tuesday and Wednesday respectively – will be watched closely for signs of party disunity, that could harm not only Barack Obama’s chances, but those of Democrats running for Congress in November.

Despite a joint appearance with Senator Obama in Unity, New Hampshire earlier this summer, Hillary Clinton is still dogged by questions about her level of support for the man who narrowly beat her to the nomination. Many of her supporters are still unhappy about the manner of her defeat. There is also concern that she was not seriously considered for the position of running mate, which Senator Joe Biden has secured.

Bill Clinton, file picture

Observers will be closely watching Bill Clinton’s mood

By allowing Senator Clinton’s delegates to participate in a formal nominating roll call vote – recognising the historical nature of her campaign – the Obama team hopes to defuse some of the remaining tensions and shore up the support of the millions who voted for the former First Lady. Neither outcome is a foregone conclusion.

John McCain’s campaign is doing its mischievous best to stir things up: releasing an advert, showing Hillary Clinton asking some of the same questions about Barack Obama’s experience and judgment during the primary campaign which they are asking now.

But, perhaps, it is Bill Clinton’s speech that will be the most closely dissected; both for its words and for the body language of the man delivering it. By his silence, the former president has given the impression that he is still sulking about Obama’s victory over his wife.

Many Convention-goers will be looking for him to swallow his pride and give the sort of full-throated endorsement of the party’s nominee, that will sway Democrats flirting with John McCain, and help to repair some of the damage done to President Clinton’s own reputation during the primaries.

As he effectively hands over the role of party leader to a younger man, he can still play the role of party healer.

How to measure the success of this? The time-honoured tradition has been to look at the “convention bounce” – the boost in the opinion polls which a candidate gains from his moment engulfed in balloons and ticker tape. Bill Clinton, for example, got one in 1992 and never relinquished his lead over George H W Bush.

Time is not Barack Obama’s side, though. No sooner has the Democratic Convention finished, than the Republicans meet in St Paul, Minnesota.

So the onus is on Senator Obama to make the most of his time in the spotlight, before the spotlight quickly turns to his Republican rival, John McCain.

Create a free website or blog at WordPress.com.