This week: To shop or not; Obama’s cabinet: small change; Bailout fever: The confidence gap, small bank complaints, and the bottom line; Obama’s donor base; News fatigue; and the costs of Daylight Savings. Media Watch: Who Americans trust and holiday movies. Plus, Drug News: Afghanistan and the US fails its own tests. Live Broadcast Friday, November 28, Noon EST, on The Howie Rose Show (WOMM), streamed on The Radiator.
TO SHOP OR NOT? Retailers often call the day after Thanksgiving Black Friday — the day many of them supposedly become profitable for the year. But despite all the talk these days about getting the economy out of the basement, some people still feel it would be better not to shop at all. Since the early 1990s they’ve called it Buy Nothing Day.
This year, the day is again being pushed by Adbusters and performance artist Bill Talen, aka Reverend Billy, who tries to convert people to his anti-consumerist "Church of Stop Shopping." Adbusters is promoting a "Credit Card Cut-Up," volunteers in a shopping mall with scissors offering to put an end to high interest rates and mounting debt with one cut. They also plan to stage "Zombie Walks," in which the "cheerful dead" wander around malls, marveling at the blank expressions of shoppers. Meanwhile, if you’re in a Toys R Us, beware the "Whirl-mart;" that’s 10 or so people silently pushing shopping carts around in a conga line without ever buying anything.
On past Buy Nothing Days, protesters have taken to malls with signs and banners, organized gatherings of anti-Santa Clauses, and encouraged shoppers to think if they really need the items they are shopping for.
The Mall of America, a repeated Buy Nothing target, was invaded by zombies for the 2007 documentary What Would Jesus Buy?, made by Reverend Billy and his Church. Since the movie’s website has links for visitors to order the DVD, maybe the Reverend doesn't want to stop all shopping.
Buy Nothing Day has been criticized as pointless, since many people who don't shop on Friday will go shopping soon. But the basic idea is to make people think about their spending habits, or maybe repair or recycle things instead of buying new stuff.
TOO MUCH INFORMATION. Young people are showing signs of news fatigue; that is, they appear debilitated by information overload and unsatisfying news experiences. That’s the conclusion of an Associated Press study of news consumption. Unfortunately, this leads to a learned helplessness response. The more overwhelmed or unsatisfied people are, the less effort they’re willing to put in.
Part of the problem may be that many people consume their news in airport lounges and taxicabs, on smart phones and PDAs, through e-mail and Internet search engines. Edward Hallowell, a Boston-area psychiatrist, says many of us are suffering from what he calls an attention-deficit trait, a culturally induced form of attention-deficit disorder.
In this environment, with people bombarded by more information than they can possibly absorb, journalism may need to reinvent itself as a source for people to assimilate, understand, and make sense of the news. In a news fatigue world, the most valuable journalism may be the kind that explains things.
DAYLIGHT – WHAT SAVINGS? It’s widely believed that daylight savings time has an agricultural basis, and is meant to save energy. If people moved up their summer schedules by an hour, Benjamin Franklin once argued, they could live by "sunshine rather than candles" in the evenings.
Today about 76 countries alternate between standard and daylight time. Energy conservation was the motivation during World Wars I and II and the oil embargo of the 1970s. It remains so today - even though there is little scientific evidence to suggest daylight time actually helps us cut back on electricity use and some to suggest that it ends up costing more.
A study was conducted recently in Indiana, where daylight time was instituted statewide only in 2006. Before that year, daylight time was in effect in just a handful of counties. The change offered a unique way to measure the overall effect on residential electricity consumption. The amount of energy used by households during the two years before they switched was compared with the amounts used during the year afterward.
Result: Daylight time caused a 1 percent increase in residential electricity use, though the effect varied from month to month. Daylight time costs Indiana households around $3.29 a year in higher electricity bills, or about $9 million for the state. Health and other costs of increased pollution emissions went from $1.7 to $5.5 million per year.
What explains this? Daylight time reduces demand for household lighting, but increases demand for heating in the early spring and late fall (in the mornings) and, more important, for cooling on summer evenings. In short, Franklin was right about candles, but didn’t consider the impact of air-conditioners.
DONOR RECAP. Barack Obama's donors may not have been quite as different as we thought. Throughout the election, we heard that he received about half of his contributions in amounts of $200 or less. After a more thorough analysis by the Federal Election Commission, however, it appears that repeaters and large donors were more important for Obama than analysts had appreciated.
"The myth is that money from small donors dominated Barack Obama's finances," notes Michael Malbin, director of the Campaign Finance Institute. "Obama's fundraising was impressive, but the reality does not match the myth." Although an unusually high 49 percent of Obama's funds came in contributions of $200 or less, only 24 percent of his funds from donors whose total contribution was $200 or less. This is similar to the 25 percent for George W. Bush in 2004, 20 percent for John Kerry in 2004, 21 percent for John McCain this year, 13 percent for Hillary Clinton, and 38 percent for Howard Deal in 2004.
OBAMA’S CABINET: SMALL CHANGE. Most of the Obama cabinet has been announced. The National Security Team will include Defense Secretary Bob Gates, asked to stay on for at least one year, Hillary Clinton as Secretary of State, and Retired Marine General James Jones, former NATO chief in Europe, as National Security Adviser. Word on the street is that James Steinberg will be named deputy secretary of state, Susan Rice will become ambassador to the UN, and retired Navy Admiral Dennis Blair will be tapped as director of national intelligence. Blair formerly commanded US forces in the Pacific.
The Clinton influence is obvious. Steinberg served as deputy national security adviser under President Bill Clinton, and Rice was assistant secretary of state for African affairs. But both are also members of the Trilateral Commission’s North American Group. Other North American Trilateral members in Obama’s inner circle include Zbigniew Brzezinski, former Clinton Secretary of State Madeleine Albright, Michael Froman of Citigroup, and former Congressman Dick Gephardt, along with Dennis Ross, Middle East envoy for Clinton and the first President Bush, Warren Christopher, Clinton National Security Advisor Anthony Lake, and the Commission’s North American Honorary Chairman Paul Volcker, who has just been named to head Obama’s new advisory group on jobs.
For the Domestic Team, we’ve had announcements about Eric Holder, another Clinton official, as Attorney General, former US Senator Tom Daschle to head Health and Human Services, and Arizona Governor Janet Napolitano for Homeland Security.
Let’s look at Napolitano. As governor of Arizona, she’s been tough on immigration, especially businesses who hire undocumented people. If they violate a new state law twice, they now face what she calls a "business death penalty" – basically taking away their licenses. However, she opposes punishing immigrants who are already here and has vetoed bills that would have prevented illegal immigrants from getting state tuition assistance and require the police to arrest them. She also opposes a border fence. "You show me a 50-foot wall, and I'll show you a 51-foot ladder," she has said, and favors a "temporary worker program with no amnesty."
Obama wants Timothy Geithner, president and CEO of the Federal Reserve Bank of New York, to head his Economic Team as Secretary of the Treasury, while Lawrence Summers, former Secretary of the Treasury under President Clinton, serving as Director of the National Economic Council. Geithner and Summers are touted as crisis managers. But they didn’t do so well in East Asia, helping to bring on a regional crisis in 1997 by pressuring governments to de-regulate international financial flows. At the time they insisted that all bailout money go through the IMF, and delayed aid until most of the damage was done.
What do they have in common? Ivy League backgrounds, stints at institutions IMF and World Bank, and activity in or very near private sector banking. They’re friends, have worked together before, and, for better and worse, have been actively involved in shaping the global financial architecture we have today.
The media say Obama's cabinet is mainly non-ideological. Yet many have a record of support for the corporate-friendly NAFTA trade pact, cutting public assistance programs under the guise of "reform," and deregulatory policies in the financial sector.
Overall, the Obama Team is a group of Washington insiders, widely considered among the brightest on the scene. We’ll see.
CONFIDENCE GAP. Citigroup joined the ranks of bailed out financial institutions last week, but the decision hasn’t inspired much confidence. According to economist Thomas Freidman, it revealed instead that “some of our country’s best-paid bankers were overrated dopes who had no idea what they were selling, or greedy cynics who did know and turned a blind eye. But it wasn’t only the bankers. This financial meltdown involved a broad national breakdown in personal responsibility, government regulation and financial ethics.
“Citigroup was involved in, and made money from, almost every link in that chain. And the bank’s executives, including, sad to see, the former Treasury Secretary Robert Rubin, were clueless about the reckless financial instruments they were creating, or were so ensnared by the cronyism between the bank’s risk managers and risk takers (and so bought off by their bonuses) that they had no interest in stopping it.”
These are the people whom taxpayers bailed out to the tune of what could be more than $300 billion. And we’re told that there was no choice.
The choice of Geithner to head Treasury raises some eyebrows. Many question his role in allowing the investment bank Lehman Brothers to collapse into bankruptcy, Like Summers, Geithner served at the Treasury under Robert Rubin, helping manage the Russian credit crisis in the late 1990s. He also played a role in the bailouts of Brazil, Indonesia, Korea, Mexico and Thailand. More recently, he helped shape the Bush administration's erratic responses to the current financial meltdown, up to and including the Citigroup bailout.
The question isn’t whether Geithner and Summers are smart talent, but what they’ve learned from their mistakes. As treasury secretary in 2000, Summers pushed the law that deregulated derivatives, the financial instruments – now known as toxic assets – that spread the financial losses from reckless lending around the globe. He ignored critics who warned of dangers to come. At the New York Fed, Geithner was a ringmaster of the current bailouts. His involvement includes the flip-flop in September when a no-new-bailouts policy allowed Lehman Brothers to go under - only to be followed by the even costlier bailouts of AIG and Citigroup.
So, what do they know now that they didn’t a couple of months ago?
FAIRNESS ALERT. Wall Street may be a little happier in recent days, but many small community banks feel that the government is ignoring them in favor of the big boys. Describing her reaction to the Citigroup bailout, Cindy Blankenship, who founded the Bank of the West with her husband in 1986, says “appalled is not too strong a word." Her bank has since grown to eight locations in Northern Texas and has about $280 million in assets.
Blankenship and other small bank owners are upset that the executives leading Citi and other banks are getting help but not being held personally responsible. In small banks, she notes, all the key decision makers have a large financial stake in the bank. If it goes broke, they lose their own investment.
"We haven't committed these sins but yet, our reputation is tarnished and yet, we still aren't too big to fail," she says. "If I had gone out and done what the big banks did, I would have been shut down."
THE BOTTOM LINE. How much have all our bailouts cost so far? Up to $4.6 trillion, the largest outlay in US history. In fact, crunching the inflation adjusted numbers it turns out to have cost more than all of the biggest budget government expenditures of the past combined:
The Marshall Plan (which cost $12.7 billion, or $115.3 billion adjusted for inflation);The Louisiana Purchase ($15 million, or $217 billion in today’s dollars);The Race to the Moon ($36.4 billion, adjusted $237 billion); The S&L Crisis: Cost ($153 billion, adjusted $256 billion); The Korean War: Cost ($54 billion, adjusted $454 billion); The New Deal: Cost ($32 billion, adjusted $500 billion); The Invasion of Iraq: ($551 billion, adjusted $597 billion); The Vietnam War: Cost ($111 billion, adjusted $698 billion); and NASA ($416.7 billion, adjusted $851.2 billion). The total cost of all of these: $3.92 trillion.
THE PEOPLE SPEAK. Who do Americans trust most to deliver the news? According a new Zogby poll commissioned by the Independent Film Channel, it’s the web – over TV and print combined. But among TV news sources, Fox News tops the list with 39.3 percent of those polled, beating out CNN at 16 percent and MSNBC at 15 percent. The results are great news for Fox in defending its claims of being "Fair and Balanced." Oddly enough, more people in the poll described themselves as Democrats than Republicans. Not so oddly, most have little faith in the media at all.
The online survey, taken two days after the recent elections, found that three out of four people think that the media influenced the outcome, and about the same number think that the media in general is biased. The New York Times was the most trusted newspaper and Rush Limbaugh (with 12.5 percent) came out on top among news personalities, closely followed by Fox's Bill O'Reilly (10.1 percent). Elizabeth Hasselbeck, Stephen Colbert and Chris Matthews were the least trusted personalities, all scoring under 2 percent.
AFGHANISTAN TAKES THE LEAD. Opium production in Afghanistan has increased by 150 percent since NATO arrived in 2001. According to Russia's Federal Drug Control Service, "Afghanistan has become the absolute leader in narcotics production, producing 93 percent of the world's entire opiates. Afghan drug dealers have in two years set up the successful production of cannabis with over 70,000 hectares of land being cultivated, taking Afghanistan into second place in the world behind Morocco in terms of the cultivation of such drugs." Since the Taliban regime was overthrown in the 2001 US-led campaign, the country has remained the world's leading producer of heroin. According to the UN, Afghanistan's opium production increased from 6,100 tons in 2006 to 8,200 tons in 2007.
US FAILING DRUG TESTS. Two recent reports show that the arrest and incarceration of hundreds of thousands of nonviolent drug users in the US have done little to reduce the use and trafficking of non-legal drugs. A recent study by Jon Gettman of the George Mason University School of Public Policy finds that the "Bush Administration anti-drug policies have been unsuccessful in reducing the demand for and use of marijuana and other illegal drugs." Gettman also reports that the government's Office of National Drug Control Policy didn’t come close to reaching its recent goal: reduction in the use of non-legal drugs among adults by 25 percent between 2002 and 2007. After five years, use among adults declined by less than one percent.
Of the six programs designed by the Office to reach its goal, the Bush Administration's Office of Management and Budget found that only one program rated an "adequate" grade. The other five were rated "ineffective" or "results-not-demonstrated."
In another new report, Families Against Mandatory Minimums finds that "No conclusive studies demonstrate any positive impact of federal mandatory minimum sentences on the rate at which drugs are being manufactured, imported, and trafficked throughout the country." Congress first enacted mandatory sentences for drug offenses in 1951, but repealed the law in 1970 because it wasn’t reducing drug use. Then, in 1986, Congress set new mandatory sentences aimed at big-time drug traffickers. In 1988, the law was expanded to apply to simple possession of crack cocaine.
By 2008, more than half of all federal prisoners were serving time for drug offenses. But instead of filling federal prisons with drug kingpins, 66 percent of crack cocaine offenders in 2005 were low-level dealers, lookouts and couriers. Only 33 percent were higher-level suppliers. Instead of ending the drug war, mandatory sentences keep prisons full of nonviolent offenders.