It's pretty clear to anyone paying attention that our current regulatory setup for our financial system is greatly lacking, which is why the president's new plan to rework things is a good idea. The plan will likely get worked over pretty good in Congress and come out looking nothing like what Mr. Bush intended.
While I'm not an economist, as stated on the blog a few times, I can spot one flaw immediately. That's the increased power given to the Federal Reserve, according to analysis of the proposal in the media. The Fed, after all, is the chief enabler of the wrongdoers who got us in this mess in the first place, and it's policy of lower and lower interest rates is threatening to send us into a full scale recession -- not the pretend one we have now.
You know the score by now. Lower interest rates make more capital available for investment, which stimulates economic activity. Unfortunately, reduced interest rates also make the dollar less attractive for overseas investors, so the greenback continues to lose value against other currencies. The detrimental impact of dollar devaluation, like higher oil prices, has dominated the positives of improved capital liquidity.
Take oil, for example. The price of a barrel of oil is well over $100 now because of currency exchange rates more than anything being done by speculators, OPEC or the oil companies. That's hurting the trucking and airline businesses -- Aloha Airlines, the cheapest way to get to Hawaii, announced today its suspending operations Monday -- and crimping family finances. That's hurting us far more than lower interest rates are helping us.
The dollar, in the last three months of interest rate cutting, has slipped dramatically against both the euro and the Japanese yen.
The last cut, of .75 percent, sent the stock market soaring, but in a post that night I warned that by the end of this past week, the Dow Industrials would be lower. I was right. The night I posted, March 18, the Dow closed at 12,390. The index closed Friday at 12,216. Those gains didn't last too long.
So while changing our financial markets oversight system is good, providing more power to a terribly misguided Federal Reserve is not.
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I almost posted something a week or two ago about a compromise Democratic presidential nominee Al Gore, and perhaps in the interest of displaying foresight, I should have. Everyone's talking about the idea now.
The way it works apparently is if the contest between Barack Obama and Hillary Clinton goes to Denver undecided, the superdelegates can withhold their votes in the first ballot, then offer Gore as a compromise candidate.
At first glance, I see very little downside to an Al Gore candidacy from the Democratic perspective. While blacks might still be unhappy if Obama doesn't capture the nomination, far less would boycott Gore in November than Clinton. And, by the time of the convention, the need for a compromise candidate might be obvious to all.
Gore lost in 2000, at least in the Electoral College, because he was tied much too closely to Clintonism, which the country was tired of at that point. That the voters would rather see the Clintons go away is pretty obvious, given Hillary's primary struggles against a half-term senator. However, Gore's increased popularity within the party in recent years shows that some sort of "Clinton Transference" is no long applicable in 2008.
His work to promote awareness of climate change and his early and unwavering opposition to the war in Iraq would help him keep most Democrat voters and pick up the vast majority of independents. Those who think he's overblown on global warming and wrong on Iraq are in the McCain camp already.
Three things could keep Gore out of the race. One, either Hillary or Obama falter and hand the race to their opponent. Second, as we've seen too many times with these political elites, his financial condition might be such that it would not stand up to campaign scrutiny. Nothing personal against Gore, but it's just how things are. Thirdly, he might find that he can better serve his pet cause more effectively if he remains outside electoral politics. He had eight years of hands-on experience of learning the limitations of the power of the presidency as Bill Clinton's understudy. Since leaving office, he's won an Academy Award and a Nobel Peace Prize. 'nuff said.
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The NCAA men's basketball tournament finally found perfection. For the first time, all four top regional seeds reached the Final Four, and did so without the expense of the fun of the playoffs: upsets. We get to see the four best teams in San Antonio. We also were able to enjoy the wonderful run to the Midwest Regional championship game of tiny Davidson, two wins from Western Kentucky and, closer to my heart, the University of San Diego's opening-round upset conquest of mighty UConn.
The tournament can still get better, however. In need of tweaking is the selection committee's seeding of the so-called "mid-majors," schools outside the major football-playing conferences. Obviously, Davidson was very poorly seeded as the 10th of 16 teams in its regional. A number two -- where it ended up -- would be silly, but the Wildcats through the season displayed its talent, with the nation's longest winning streak and strong performances against power non-conference teams. The Wildcats played one of the Final Four teams, Memphis I think, in a scrimmage, and the opposing coach called it a wake-up call for his own team. If he knew how good Davidson was, why not the seeding committee? This team should have been given a 4 or 5 seed.
Last year, the same could be said for Nevada-Las Vegas (UNLV), which also went deep into the tournament. Fans of Mountain West Conference teams knew how good the Rebels were (much better than this season), so why did the seeding committee fail?
Of course, the gold standard for seeding misses was George Mason two years ago, which went to the Final Four despite being seeded 11th. In fairness to the selection committee, there wasn't nearly as much to recommend the Patriots as there was for Davidson and UNLV, but there was enough to make place them a couple spots higher.
There will never be a perfectly seeded tournament, and no one expects or wants one. The upsets are what makes it fun. I actually have paid very little attention to Final Four weekend the past decade or so. Means little to me. Most of the excitement is over by then. But the seeding committee has got to loosen up from its mindset of favoring power conference schools over the Davidsons, UNLVs and George Masons of the world.
