Matthew Yglesias: my hero

I've long been frustrated by the instinctive way the Generals respond to the inadequacy of the resources that they've been assigned, by projecting a very, very long time-frame to complete their "mission".

I can't help, but notice how it plays into a stab-in-the-back narrative: the Democrats, who want to withdraw are accused of wanting to set a "surrender date", as if we can't fail until we admit failure, and the admission of failure is the cause of failure.

Matthew Yglesias, bless his little heart, steps by this narrative blockade, to re-frame the General's view.

Matthew Yglesias: "General Petraeus thinks he's making so much progress that the war will need to continue twice as long again as it's already gone on. More to the point, once you're looking at that kind of time frame, all forecasts are nonsensical. We could leave tomorrow and ten years might be plenty of time for Iraq to descend deeper into civil war, for the civil war to end, and then for stability to emerge."

And, here's the money shot: "To say that our current policy is working and needs just ten more years to stabilize Iraq is lunacy -- just leaving stands a perfectly good chance of working just as quickly at radically lower cost."

I fully expect General Petraeus will be back to projecting no more than a Friedman Unit at a time, in his testimony before Congress in September. But, if not, these projections of 10 years in Iraq are a code the Democrats can work with. And, Yglesias shows how: doing nothing is a good "long-shot" strategy for a ten-year time period, and less costly than Bush's "long-shot" strategy.

Good-bye, permanent bases.

Grasping Reality with Both Hands: Brad DeLong's Semi-Daily Journal

Brad DeLong brings us an important message from Jonathan Chait:

It's important to understand that the Republican Party is mostly an organized conspiracy to redistribute wealth upwards, that deceit is an essential element of their M.O., that the conservative movement is fundamentally radical and dangerous, that the national media have done an abysmal job of covering politics and policy, and that the Bush administration has overturned the basic norms of governance that have prevailed for decades...

Why Mr. Chait cannot bring himself to do a better job in the pages of the execrable The New Republic than he does in e-mail is left as an exercise for the reader.

Hullabaloo

Digby at Hullabaloo takes note that the mainstream media is"catapulting the propaganda" for the Bush Administration, while ignoring the very powerful op-ed, The War as We Saw It - New York Times, which appeared in Sunday's New York Times, by seven non-coms, who know whereof they speak.

Many bloggers noted this extremely powerful op-ed. It isn't just that the non-coms are questioning the War and the Surge and the whole Bush "strategy" -- it is that the non-coms are speaking sense.

The mainstream media have failed as a filter and a discriminator, in ways that have had profound consequences for the U.S. and the world. They (meaning the likes of Jim Lehrer, Wolf Blitzer and Tim Russert, among others) simply do not seem capable of correctly and sensibly sorting out, who is rational, truthful, benign, well-informed from those who are hacks and fools.

By and large, the mainstream media broadcast and write what they are told, no matter how deceptive or foolish. There are exceptions, but they simply serve to highlight the extensive dysfunction in place.

But, people are noticing. People read a great piece, and the great piece doesn't make news. And, people notice the Media is broken.

Maybe, there's a bit of progress underway.

A Minsky Moment!

Brad DeLong: "This is indeed a significant liquidity event..."

The always cheerful Nouriel Roubini explains all: "the vicious circle of a weakening US economy – with a housing recession getting worse and a fatigued consumer being at the tipping point - and a generalized credit crunch sharply increased the probability that the US economy will experience a hard landing. We are indeed at a 'Minsky Moment' and this recent financial turmoil is the beginning of a much more serious and protracted US and global credit crunch. The risks of a systemic crisis are rising: liquidity injections and lender of last resort bail out of insolvent borrowers - however necessary and unavoidable during a liquidity panic- will not work; it will only pospone and exacerbate the eventual and unavoidable insolvencies."

Economist's View: Joseph Stiglitz: Greenspan, Bush Errors Finally Come Home to Roost

A political storm is a theatrical with a moral lesson about policy errors.

Joseph Stiglitz (via Mark Thoma):

"The story goes back to the recession of 2001. With the support of US Federal Reserve Chairman Alan Greenspan, US President George W. Bush pushed through a tax cut designed to benefit the richest Americans but not to lift the economy out of the recession that followed the collapse of the Internet bubble."

"Given that mistake, the Fed had little choice if it was to fulfill its mandate to maintain growth and employment: it had to lower interest rates. ... But, given that overinvestment in the 1990s was part of the problem underpinning the recession, lower interest rates did not stimulate much investment.

"The economy grew, but mainly because American families were persuaded to take on more debt, refinancing their mortgages and spending some of the proceeds. And, as long as housing prices rose as a result of lower interest rates, Americans could ignore their growing indebtedness.

"In fact, even this did not stimulate the economy enough. To get more people to borrow more money, credit standards were lowered, fueling growth in so-called "subprime" mortgages. Moreover, new products were invented ... making it easier for individuals to take bigger mortgages. ...

"Alan Greenspan egged them to pile on the risk by encouraging these variable-rate mortgages. But did Greenspan really expect interest rates to remain permanently at one percent - a negative real interest rate? Did he not think about what would happen to poor Americans with variable-rate mortgages if interest rates rose, as they almost surely would? ...

"Fortunately, most Americans did not follow Greenspan's advice to switch to variable-rate mortgages. Even as short-term interest rates began to rise, the day of reckoning was postponed... [But the] housing price bubble eventually broke, and, with prices declining, some have discovered that their mortgages are larger than the value of their house.

"Too many Americans built no cushion into their budgets, and mortgage companies, focusing on the fees generated by new mortgages, did not encourage them to do so.

"Just as the collapse of the real estate bubble was predictable, so are its consequences... By some reckonings, more than two-thirds of the increase in output and employment over the past six years has been real estate-related, reflecting both new housing and households borrowing against their homes to support a consumption binge.

"The housing bubble induced Americans to live beyond their means - net savings has been negative for the past couple of years. With this engine of growth turned off, it is hard to see how the American economy will not suffer from a slowdown.

"There is an old adage about how people's mistakes continue to live long after they are gone. That is certainly true of Greenspan.

"In Bush's case, we are beginning to bear the consequences even before he has departed."

The economic downturn will intensify the political storm building around Bush, and he will well deserve it, because it is all of his own making. But, what of those, who made Bush?

Progress in Iraq

Phil Carter takes note: "When states fail, there is rarely a single incident you can point to as the moment of collapse. However, in Iraq, we may now be witnessing the slow-motion disintegration of the Iraqi state"

Wyle E. Coyote just looked down

One element of a "perfect" political storm is an economic down-turn. Although economic anxiety has been an element of the national discomfort with Bush, the economy has been humming along nicely for some time. That may be changing.

As Mark Kleiman, from whom I steal my headline, puts it, "To those of who have been wondering when the insanity of the Bush Administration's fiscal management was going to catch up with us, the answer may well be: just about now."

The first sign of big trouble was the Bear Stearns hedge funds zeroing out, on July 18.

On Friday, American Home Mortgage closed its doors.

Bloomberg.com columnist Mark Gilbert, after toting up signs of credit instability worldwide, notes: "At least 70 U.S. mortgage companies have shut, gone bust or sold themselves since the start of last year, according to Bloomberg data. As Dennis Gartman, economist and editor of the Suffolk, Virginia-based Gartman Letter, is fond of saying in his research reports, there's never only one cockroach."