Tough Decision for the Fed

Today is the much anticipated release of the Federal Open Market Committee minutes. This is an exceptionally difficult decision for the Fed. The market has already discounted another quarter point decline in the fed funds rate, so even if they do drop the rate the market may sell off anyway. Neither the market nor the economy got much of a boost from the September rate cut, so what exactly could they hope to gain from a smaller cut a month later? On the other hand of they don't cut, the market will certainly fall out of bed. What's a Fed Governor to do?

Meanwhile the dollar has been looking more like the yen...down, down, down. The entire world is getting very nervous about the dollar and it won't take much more downside to ignite an all out dollar panic. The bond market has been rallying into this anticipated rate cut, but eventually the bond market is going to start discounting the inflationary impact of these rate cuts, which will cut the legs out from under the market and the economy.

As for today, I am betting that the Fed will not cut the fed funds rate. There is too little to gain from a small cut and big risk on the dollar front with a bigger cut. Holding firm will generate a sharp move down in the stock market, especially in financial stocks, but probably not a bear market. Holding firm will also stabilize the dollar and maybe even generate a dollar rally. Overall the Fed gains credibility by holding firm and buys time to try to work out the credit mess.

Update: Well, the Fed cut the rate by a quarter point. As expected the dollar and bonds dropped sharply. Stocks finished higher after an initial plunge and gold rallied to close just below $800. Notable: Bill Gross stated that another full point reduction will be needed to relax tightening credit conditions. The Fed may be contemplating just that, in increments. The bond market will not like that much. I don't think there is any way out of this that is not painful. Inflation here we come.

I've Been on Tilt

I have not posted anything to this blog in weeks. The reason is that I have been on tilt...in a state of disbelief, suspended from participation of any kind in public dialogue. It all began with Democrat capitulation to President Bush on the Iraq war, followed by capitulation on FISA, and then to add a different dimension to the overall surreal state of public affairs, the deafening silence from both sides regarding the Larry Craig incident. Republicans are understandably embarrassed and would like the whole matter to just go away, but you can imagine their sustained public indignation if the transgressor had been a Democrat. Democrats on the other hand seem to be afraid of offending their gay constituency. Apparently it is politically incorrect among Democrats to criticize sexual indiscretions that occur between members of the same sex, no matter how depraved. Salon even jumped into the Craig issue with a featured piece about how "hot" bathroom sex is! I found myself wondering what planet I am on.

Follow up these events with continued capitulation by Democrats on virtually every point of contention with the most unpopular, clearly deluded and dangerous President in modern history and I find myself disoriented. The American people overturned the Republican Congress to put an end to the disastrous war in Iraq and the cowardice of the Democrats elected for that purpose is extremely disappointing. I am hoping that there is some method to the madness, and at some strategic point they will start holding the line, but at this point such thoughts seem more like fantasy than legitimate hope.

Personally, I am questioning what purpose it will serve to continue to weigh in on public affairs. Is there any value in putting forth a balanced view, or is it just a waste of time? Are we headed into ever more violent foreign policy and lawless government regardless of which party is in charge? Is political correctness (both "conservative" and "liberal" versions) so dominant that honest debate is no longer possible on any issue? Are we condemned to continue to be ruled by the least among us? I remain suspended and unsure of the answers to these questions.

Alan Greenspan's "The Age of Turbulence"

Alan Greenspan has finally come forth to share his experiences with the Bush Administration and the Republican majority. This is a welcome blast of light shining on the super secret world of George Bush's Washington. Unfortunately it comes about six years too late. Tremendous damage has been done in those six years that might have been averted had he been willing to speak out while he was in office.

In his new book, "The Age of Turbulence: Adventures in a New World," to be released Monday, Greenspan "is harshly critical of President Bush, Vice-President Cheney and the Republican controlled Congress, as abandoning their party's principles on spending and deficits." For anyone who has been paying attention, these observations have been blatantly obvious from the beginning of the Bush regime. But coming from Greenspan, a man of enormous public esteem and a self described Libertarian Republican, they suddenly take on more gravitas and credibility, and will hopefully help to frame the utter corruption of the Republican Party and promote a clean sweep of the "evildoers" in '08.

New York Times front page review of "The Age of Turbulence" here.

The Tragedy of Mother Theresa

In her lifetime Mother Theresa attained iconic status as a handmaiden of God. Tragically, her public image and her inner reality were far from resonant. The recent publication of "Mother Theresa: Come Be My Light," a compendium of her letters, reveals the inner desolation and torment she lived with for the last fifty years of her life. How could one so dedicated to doing God's work be so desolate and so miserable for so long?

I believe the answer to that question lies in fundamental beliefs about God and human relations with God that Mother Teresa embraced as a Catholic. The notion that "God is separate from myself" is fundamental to Catholicism (and most variants of Christianity as well as the other Western religions) despite the fact that Jesus taught "the kingdom of heaven is within." Where else might one find God than in His/Her kingdom- within myself? There is also the extremely destructive emphasis in Catholicism on "myself as a sinner," hopeless, helpless and eternally damned without the intervention of God who lies outside myself.

We create our own reality with the mind, and our beliefs are primary drivers in that creative process. If I believe that God is separate from myself, then I will look outside myself to find Him/Her, especially if I also believe that I myself am an unworthy sinner. But since the reality is that I am already One with that unified wholeness that we call God, there is nothing to be found outside that wholeness. Therefore if I look outside myself for God I will find nothing, because the reality is that there is nothing outside myself to find. Religious demagogues and their misguided acolytes have been misleading seekers for centuries into rejecting themselves as unworthy sinners and looking outside themselves for salvation.

Mother Theresa reported the reality of her experience...honestly, and tragically. Her belief system, reinforced by her spiritual advisers, prevented her from seeking fulfillment outside the limitations of that belief system. This led her to persevere, heroically but futilely, in a spiritual dry hole. If she had had a framework that would have allowed her to re-characterize her experience she may have been able to find her salvation within herself, where it was patiently waiting for her.

Where are the Real Republicans?

Where are the real Republicans? You know, the ones who believe in limited, transparent government, checks and balances, fiscal responsibility, taking care of yourself, minding your own business, strong national defense.

The current crop of Republicans seem to believe in such principles only where they apply to limit the ability of anyone to challenge their power (refusal to comply with Congressional subpoenas; exempting themselves from the FOIA), or where they deny government support to individual people (the current campaign to deny health insurance to uninsured children). But these principles do not seem to apply to limits on the wielding of power as long as those in power are Republicans (waging war with borrowed money; executive secrecy), or where power over individual people is the issue (unsupervised wiretapping; abandonment of habeas corpus). There are dozens of such issues in play where the power over individuals by government and corporate interests has been expanded and where the ability of individuals to challenge that power has been diminished. Folks, this is not conservatism. This is corruption and the consolidation of power for its own sake.

Seems to me that our Founders well understood the impulse to abuse power and set up our system to minimize the damage any individual or group could do. In the past it was Republicans who were most vigilant in guarding against such abuses of power. I know there must be real Republicans out there. I implore you to take back your party. We need real Republicans, just as we need real Democrats. The fundamental impulses of these two parties are not mutually exclusive, they are complementary. Balance is the key, which requires ongoing vigilance and occasional corrective action as well as mutual respect. We'll see what the Democrats do when they get back into power, but right now it is the Republicans who have lost their way and need to get back to their roots.

The Politics of Unity

The politics of unity is the simple yet sublime process of consolidating the disparate interests of society into public policy that supports all the people. Such a process requires that our elected representatives give themselves over to that process, and it requires a political environment of tolerance, mutual respect and open and honest debate. It is not compatible with the corrupting influences of negative campaigns and nonstop fund raising that characterize our current political process. We the people can enforce such a regime by refusing to be manipulated by demagogues, by demanding an end to big money political campaigns, and by giving our support to those leaders who exhibit wisdom, emotional maturity and a genuine desire to engage in public service. The politics of unity is not necessarily something that every citizen will be able to practice, but I think that everyone should be able to recognize that in the long run it is in their best interest to give their support to leaders who can and do.

Are Democrats Really So Lame?

Kudos to Salon's Joan Walsh for her brilliant review of Matt Bai's "The Argument" entitled "Are Democrats really so lame?" This tour de force puts our current political battles in (modern) historical perspective and highlights the real issues confronting us, which are easy to forget in the midst of the shouting match/spin fest that passes for political debate these days.

I haven't read Bai's book yet, but Walsh's review is essential reading for anyone wanting to clarify for themselves what the current political war is all about.