Caution! This is not a civic media site . . .

Even though it tried to be one. But it didn't work out. Its few readers had few comments on the site's 39 posts going back to May of '08. So the site lacked the dynamic give-and-take energy that sustains a civic media. And recently, in calling for President Obama to replace Larry Summers, it took a partisan and personal turn that - oops - disqualifies it from civic media's non-partisan and solution-oriented character. (One solves a problem not by replacing an employee but by finding the right solution, right?)

So I'll not likely be adding more posts now that I'm working to create Chicago WRKS, Chicago's first-ever problem-solving media platform. But I'll leave this blog online because it gathers together a good number of finance writers and economists from whom I've learned a great deal. They are mostly leftists and listed in the left hand column. I would welcome (and in the future will happily respond to) ideas from the center and right. But if you want to know what's going on in the world, it helps to read folks like these. So for now, thanks for reading - and see you at Chicago WRKS or our other sites.

Wake Up, Paul Krugman!

In "Boiling the Frog," New York Times Nobel prize winning economist Paul Krugman today compares America to the proverbial frog that lacks the ability to hop out of a slowly heating pot. So what's making life hot for the American frog? Krugman says it's government gridlock on two critical issues: inaction on a second stimulus plan to prevent potentially crippling unemployment and inaction on climate change. This gridlock scares Mr. Krugman, who concludes:

So if we can’t get action to head off disaster now, what would it take? I don’t know the answer. And that’s why I keep thinking about boiling frogs.

Of course, many Americans vehemently disagree with the liberal Mr. Krugman on these vexed issues. Yet the solution to polarized disagreement and government gridlock obvious: it's a national decision-making process on these issues, available to all Americans. 

You call this civic media? Yeah, I do . . . sort of.

In a one-man-talking-to-himself sort of way. So far at least. Where a true civic media is dialogic, this site, so far, is pretty monologic. Too bad. I talk, but people aren't talking back - not yet. And where civic media sites are non-partisan and non-ideological, this one, maintained by a political independent who is relieved and often glad that Obama is our president, is marked by a deepening concern that his financial team of Bernanke, Summers and Geithner are so beholden to Wall Street that Obama is being shielded from the information he needs in order to help the U.S. and the world emerge from the global financial crisis. In the April 29 Press Conference held to mark his first 100 days in office, the President unblushingly conceded his ignorance of the coming crisis:

You know, when I first started this race [in December, 2007], Iraq was a central issue. But the economy appeared on the surface to still be relatively strong. There were underlying problems that I was seeing with health care for families and our education system and college affordability and so forth, but obviously, I didn't anticipate the worst economic crisis since the Great Depression.

I find this admission galling. It's hard to accept from an editor of the Harvard Law Review and a U.S Senator, surrounded by brilliant people, who reads a lot and can actually think straight. It's as if the Ivy League, Wall Street and the D.C. beltway suddenly sealed themselves off what by December 2007 was obvious to a lot of people. In late 2007 I myself knew fellow Realtors and loan officers here in Glenview, north of Chicago - who knew something terrible was bound to hapen - we just couldn't tell when it would hit. We saw it coming in our business and in alarm signals that were being sounded loud and clear in the financial media: Yves Smith, Felix Salmon, goldbugs like Jim Willie and Martin Wolf and John Authers of the Financial Times, for Pete's sake!How on earth could Obama and advisors like Austin Goolsbie have missed what was staring us in the face?

Yves Smith is one of many finance bloggers who could have saved America and the world endless grief had the Obama team read her posts in 2007. So are Obama's people reading her today? They sure should - her website has 25,000 hits a day. Here she dissects the flaws of Obama's finance team in a painstaking analysis of the New York Times' surprisingly harsh April 26 story about Tim Geithner. Her analysis prompted one commenter to say

I cried when Obama made these appointments. Summers, Geithner and keeping Bernanke. I knew all was lost. And now I watch as the whole thing falls apart.

Larry Summers, the ringleader of the Obama economic team, strikes me as a brilliant careerist in the mold of Henry Kissinger: a first rate self-promoter and a second-rate "realpolitik" thinker. To me, he's in denial about what first-rate thinkers like Steve Waldman are saying about the need for economic models grounded in a new understanding of sustainable wealth and wealth creation - a topic I discuss here. Summers and Co. are all the kings men trying to put Humpty Dumpty (American hegemony) back together again. It just won't work. (The Times article suggests that Summers, a big man at the White House, may be lobbying to replace the unpopular Geithner with a loyal fresh face. In other words, nothing will change.)

In his recent "100 days" press conference, President Obama named the economists he follows (scroll to "Where the economists are coming from"). The central debate in his mind, he said, is between Wall Streeter Robert Rubin and realative main streeter Robert Reich, with attention to corporate globalism critic Joseph Stiglitz and inflation-breaking Paul Volcker. And he sums up his philosophy nicely: "The truth is," Obama says, "that what I’ve been constantly searching for is a ruthless pragmatism when it comes to economic policy." And: "The touchstone for economic policy is, does it allow the average American to find good employment and see their incomes rise." Sounds OK, but can Obama's "ruthless pragmatism" put America's financial system on a sound and durable footing? Pragmatists lack vision. Their ideas work short term, not long. The President needs pragmatisim and vision. Is he listening to people like these:

• Charles R. Morris, author of The Trillion Dollar Meltdown, argues in a brief but prescient column that "Merrill Makes the Case for Nationalization" (1/29).
  
• Henry Kaufman, for decades a leading Wall Street insider, argues here that "We should, therefore, fundamentally re-examine the role of the Fed and the supervision of our financial institutions." He discusses the rise of a "social milieu [of policy makers that] encouraged financial decision makers to cherry-pick the theories that supported excessive risk taking. It discouraged whistle-blowing, not just by risk-management officers in large financial institutions, but also by the economists whose scholarship provided intellectual justification for the financial institutions’ decisions. The consequence was that scholarship that warned of potential disaster was ignored. And the result was global economic calamity on a scale not seen for four generations. (Financial Times 4/28)
• Steve Waldman: "If you believe, as I do, that we need a root-and-branch reorganization of the financial system, which must necessarily involve the dismemberment and intrusive restraint of deeply entrenched institutions . . ." (4/27)
• Barry Eichengren of the U.C. Berkeley Dept. of Economics argues that "The Great Credit Crisis has cast into doubt much of what we thought we knew about economics". (National Interest 4/30)
• Charlie Munger of Berkshire Hathaway says banks will use their “enormous political power” to prevent changes to the industry that would benefit society. (Bloomberg, 5/2)Univ. of Chicago Economist Anna Schwartz, a Friedman/Volcker pure monetarist, says the Bernanke Fed has misjudged the financial crisis (City Journal, Spring '09)
• Martin Wolf of the Financial Times says "The world economy cannot go back to where it was before the crisis, because that was demonstrably unsustainable. It is at the early stages of a long and painful deleveraging and restructuring. Fortunately, policymakers have eliminated the worst possible outcomes. But there is much more yet to be done before fragile shoots become healthy plants (4/21)
• Martin Wolf says that "Those who hope for a swift return to what they thought normal two years ago are deluded" (FT 4/28).
• Joseph Stiglitz (whom Obama follows) here calls for something Wall Street does NOT want: a new global reserve currency (3/26). The findings of the UN panel that Stiglitz chaired are described here (3/26). In this article in the South China Morning Post James Dorn (Cato Institute) challenges Stiglitz. Here the Wall Street Journal is defensively on China's call for a new global reserve currency. (American financial media largely overlooked or suppressed the Stiglitz story and are covering this issue poorly if at all. Shame on us.)
• Matthew Richardson and Nouriel Roubini punch holes in the Obama administration's case for progress towards restoring banks to solvency (WSJ 5/5).
• In her post on "The Banks and Orwell," finance blogger Yves Smith isolates some of the doublespeak that Wall Street chieftains are using to resist real regulation. She says that "M. Rodgin Cohen [managing partner of Sullivan & Cromwell] is already leading the fightback [against hostile public opinion]. Yesterday, he even had the gall to say that the system as currently constituted was fundamentally sound. Yes, for him and a handful of Goldman partners, I'm sure that's true, but on planet earth, it's a bit of a different picture." (5/9)
  

Civic Media or Civil Disorder?

It's a long shot, to say the least, to speak of the inevitability of civic media in resolving the global economic crisis. Long, perhaps, to the point of whistling in the wind or tilting at windmills. Yet there are reasons, strong ones, to do so. Here are some.

First let's consider two factors, one positive, the other negative. On the positive side is President Obama's campaign promise of an era of responsible citizens: his promise to listen to and work with liberals and conservatives in order to shape a viable future for the nation. (Senator McCain made similar promises.) On the negative side are two facts, as the public sees them now: the uncertain status of Obama's promise today and also his halting early steps in managing the worsening global crisis as described here and here.

Now consider a third factor: the Federal government, under the Bush and presumably Obama administrations, is taking definite steps - military ones - to keep public impatience from mushrooming to civil disorder. "Impatience" is too soft a word to describe the public mood today. "Economic deprivation and pent-up outrage," as expressed here, here and here, more accurately describes it. As the Dow sinks to new lows, as unemployment soars past 8% and as 20% of all U.S. homes fall underwater, Americans are witnessing the draining of nation's treasury in order to prop up the insolvent "zombie" banks that caused the crisis in the first place.

If the Obama administration's bank-bailout strategy fails to turn economy around, citizen outrage could harden into civil disorder. In that case, America might well find itself asking what's best for the nation: civic media or civil disorder? Democracy or autocracy? And it might be too late to ask that question: the situation by then would be out of hand.

The obvious counter to this alarmist view is that the situation is less dire than I maintain. I'll post some credible proponents of this view, which, as I see them now, hinge on the claim that massive T.A.R.P and T.A.R.F infusions into the banking system will produce positive results in coming months. (Rumor has it that a third infusion, the Borrowed Assets Relief Program - B.A.R.F - is also in the works.)

Steve Randy Waldman on the Link between the Financial Crisis and Open Democracy

Over the weekend I came up an idea as to how civic media can help resolve the worsening global financial crisis. A format idea. I mulled it over and now it's a bud about to bloom. And today along comes Steve Randy Waldman with a post that fertilizes it:

I've just listened to NPR's recent interview of Timothy Geithner. Adam Davidson did a great job of trying to get answers from Mr. Geithner. I felt sorry, at a personal level, for our Treasury Secretary, a very smart man imprisoned in a series of talking points, desperately afraid of the consequences of holding an honest conversation.

As an aside, we've come to take it for granted that policymakers ought to be circumspect for fear of provoking traumatic moves in the markets. But isn't that dumb? Markets are supposed to be about aggregating and revealing information. In what sense is it "more responsible" to hide information or ideas so that markets do not move on them? And if markets do misbehave so wildly that public officials can no longer afford to be candid because of market consequences, does that suggest an incompatibility between the kind of financial markets we have and open democracy? [my italics]

Waldman has the respect of other finance bloggers. And my format idea addresses the incompatibility he speaks of. Here it is. It's a windfall for CNBC, if they have the wits to run with it. Just remember where you saw it first. Alternatively, it can be done on the Internet. Anyone want to make it happen?

Imagine an American Idol-type reality TV contest of from eight to as many as sixteen rival solutions, presented by small groups of from one to four individuals competing for the prize of Best Solution to the Global Financial Crisis. Imagine this contest aired over a period of weeks or months primetime evenings on CNBC. Half the contestants might come from CNBC's existing on-air team and half from elsewhere and indeed anywhere: they could be finance writers and bloggers, Bloomberg reporters, financial institutions, universities here and abroad, and Vii's (Very intelligent individuals) with few credentials but great ideas.

Now imagine an on-air selection process, open to anyone, that winnows down hundreds of aspiring contestants to a field of eight or sixteen finalists, as happens in the first phase of American Idol. Finally, imagine the finalists advancing their solutions by interviewing anyone and everyone connected with the financial crisis, including even, conceivably, Timothy Geithner. Who could judge the contest? Who would govern it? How would contestants be selected? How would the government be involved at local, state and national levels? How would winners be rewarded? I have answers for questions these and other questions.

Read the rest of Steve Waldman's post - he would be one terrific contestant for this show.

Reader, Be Not Discouraged . . .

to find the post you read yesterday revised today. I am compulsive reviser, I admit it. I can revise a 900-word piece 40 or 50 times. It's like polishing a rock. Discretely, you ask if there might be more productive ways for a civic media advocate to spend his time. Point taken. But sometimes I hold the rock up to the sunlight and see it shining and out of nowhere up pops this feeling that the polishing was all worthwhile. And besides, it's fun. Most of the time.

So Why Doesn't the U.S. Have a Civic Media?

Yeah, why not? Well my buddy Rich insists the U.S. already has a civic media. He's a deep Democrat. He says citizens used civic sites like Daily Kos, Huff Post and Moveon.org to elect Barack Obama. And Republicans used similar sites to support John McCain.

But these sites, I say, are partisan. Civic sites are non-partisan. And where Rich's sites are more about individuals then issues, civic sites focus more on the ISSUES. They get Democrats and Republicans talking with each other for the common good, much as Barack Obama says America must do in order to weather the economic storm we're in. And believe me, they can do this in hundreds of entertaining and instructive ways.

Then I bring out my big guns. I remind Rich that his sites advance the interests of a money-driven two-party system that's degraded American politics since the advent of televised political advertising in the 1960's. This system, I say, has made politics the perquisite of the rich. It's forced political incumbents to spend up to a third of their taxpayer-paid work week raising billions of dollars for the mind-numbing attack ads that keep them in office. It's kept all but a tiny number of America's best and brightest from even considering a career in politics. And it's done all this dirty work systematically, in every city and state, from coast to coast.

It's frustrating. Think about it: the great democracy that gave the world the miracle of modern electronic communications AND the Jeffersonian idea that men can be trusted to govern themselves has given itself a political communications system that most of its founding fathers, could they see it today, would condemn as subversive of democracy.

More frustrating still is that no politician, party, pundit, public interest group or university professor has, to my knowledge, ever called for a modern interactive political communications system, even though all of the technologies needed to implement one have been in place for years. Politicians and public interest groups have instead spun their wheels on campaign finance reform - a red herring of an issue if ever there was one. (Wait - Noam Chomsky endorsed civic media in 1994, telling an audience of 500 in Chicago that civic media offers "some hope for the future, in fact the only hope for the future.")

Why such silence on what is after all the most obvious solution to a political media that suppresses or minimizes citizen input? Truth be told, many and possibly most Americans today are by no means confident that men and women can be trusted to govern themselves. Asked about the prospects for a civic media in 1994, Noam Chomsky said there's no way the powers that be would ever let it happen. But Obama's election last year suggests that there's no way the powers that be can STOP a civic media from happening. (Chomsky himself sounds somewhat more optimistic today.) Still, Americans today harbor all kinds of mistrust for each other. For trust to develop, it will take time for an inclusive political media to undo 30 years of damage caused by media polarization of the American people into sometimes paranoid extremes of red and blue, and of rich and poor. (In 2004, I traced the roots of this polarization back to, of all places, Yale University, where I received my teaching degree and where my father, Richard B. Sewall, taught English for 44 years).

Ironically, America's political media have minimized citizen input despite universal user demand for interactive media experiences. Now you'd think the minds of our media moguls would light up at the thought of an untapped "market of the whole" of 300 million Americans. But no. Not yet. Not even when hardpressed network TV execs, losing market share to the Internet and cable TV, are desperate for what CBS's Leslie Moonves calls a "transformative hit".

Sure, Survivor-producer Mark Burnett and Rupert Murdoch’s News Corp were reported in 2007 to be working on Independent, a politically-themed Reality TV show targeting young adults that was to debut in 2008 on YouTube. So the minds of the moguls were slowly switching on, if dimly. But this and this and this is what comes up when I enter "Independent" at YouTube today.

In the 2006 midterm congressional elections, exit polls confirmed voter disgust with political corruption. Soon after, my buddy Rich (my civic media sparring partner since the early 1990's) suggested that the format of voter-driven reality TV might have civic media potential. At first I thought he'd lost it, but this time he was dead right, and I will always be grateful. Within a few months, I had developed America's Choice, a nifty and comprehensive treatment for politically-themed reality TV that enables all Americans to participate INTELLIGENTLY in the great voter-driven game of democracy.

In 2007, I presented America's Choice to half a dozen network TV executives, including a genuine media mogul. No luck. Zero interest.

Why not? One exec said he'd seen similar treatments. Another said that politically-themed reality TV would make the networks look partisan in the public eye. Then there were the unspoken reasons: the fear of rocking the boat of the existing political system and of course the billions of dollars the networks rake in from political ads come election time.

America's TV networks, it seemed, were either blind or indifferent to the mounting instability of the very political system their attack ads were propping up.

Light years ago, in 1988, George Gilder had called network TV a "totalitarian" medium that "squeezes the consciousness of an entire nation through a few score channels." He did so in a wonderful little book entitled Life After Television: the Coming Transformation of Media and American Life. Here Gilder predicted the overthrow of the "alien and corrosive force" of America's top-down, analog TV networks by the grassroots political networks created by the emerging, citizen-empowering medium of the digital "teleputer" (his quaint 1988 term for the PC).

Today, twenty years later, we see not the overthrow of analog TV but the astonishing blink-of-an-eye convergence and integration of all media, print and electronic. The emerging meta-network of interactive networks bids well to dissolve the mindless red/blue polarization of American politics and replacing it with intelligent, problem-solving discourse that puts all Americans, rich and poor, red stat and blue state, on a more even footing with themselves and their elected leaders.

So my buddy Rich is right after all. Well partly . . .

In 2008, America elected a new president whose displeasure with a politics that ignores citizens comes from the same place as the displeasure voiced here. So was the old top-down system actually serving the public interest after all? It must be said that Obama had raised and spent a ton of money on televised ads, with about half of his donations being over $1,000.

Something old, it seemed, was evolving, gradually, into something new.

But this gradual evolution was violently disrupted in 2008 by the volcanic eruption of a financial crisis the likes of which America hadn't seen since the Great Depression. (Yet the crisis, and Obama's statesmanlike response it, likely turned the tide for him.)

As we begin the new year, efforts to recover from the crisis are being managed with little public input or oversight by the same financial community that created it. Americans are angry, and with reason. The old system, embodied in the somewhat credible idea of an Ivy League financial elite, seems to be reasserting itself. Billions of taxpayer dollars seem to be going mainly to failed banks. Americans of sharply differing political views are saying that the only way to prevent this crisis from worsening or recurring is for the American people, as a people, to have a voice in the creation of a new financial system.

That of course is saying an awful lot. But the idea is worth exploring. In coming posts, liberals, conservatives and libertarians are invited to talk about what this system might look like, how it might take shape and what kind of input citizens might have in its creation. (More robust sites than this will be created to advance the discussion as it grows.)

So looking ahead (looking forward if you follow Larry Kudlow), the question isn't WHY America lacks a civic media but WHEN it will get one. Let the press put this question to President Obama in the context of his stirring election-day reaffirmation of the American spirit:

America . . . This is our time - to put our people back to work and open doors of opportunity for our kids; to restore prosperity and promote the cause of peace; to reclaim the American Dream and reaffirm that fundamental truth - that out of many, we are one; that while we breathe, we hope, and where we are met with cynicism, and doubt, and those who tell us that we can't, we will respond with that timeless creed that sums up the spirit of a people: Yes We Can.

And let Americans put this question - this challenge - to their elected leaders and to the nation's public and commercial media as well in order to secure their commitment to giving free and full expression to this American spirit. And to the same end, let yourself, dear reader, feel free (or duty bound) to affirm, correct or refute the ideas advanced here.

Hap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . py New Year!

This blog is the beginning of something. So are the four other civic media sites listed on the sidebar (I maintain the first two). Civic media, as I see it, is a dialogic and problem-solving use of media, not a kind of media. Its ongoing, problem-solving dialogs make citizens and government responsive and accountable to each other in defining and solving the problems (and maximizing the opportunities) confronting a community of any size: local, state, national and international.

Today a single problem confronts us all: the global financial crisis. Over at the sidebar you will find a library of 40 finance writers who throw light on it. Taken together, they show very clearly how the wizards of Wall Street made the world of finance go round and round for twenty years until last summer, when the entire system finally spun out of control, corrupted by Wall Street or overstressed by investor demand for higher yields.

Most of these 40 writers saw the spinout coming AT LEAST TWO YEARS before any of the Wall Street wizards - or most anyone in the central banks that manage (and manufacture) the world's money supply.

Not surprisingly, these writers have useful insights as to how the global financial crisis can best be resolved. Among the problem solvers are Jack Bogle (article and book), Charles R. Morris (articles and book) and the amazing Steve Waldman. (Additions to the library are welcome. Kevin Phillips? Joe Stiglitz? David Korten? Doug Henwood?)

I sell residential real estate for a living. The Realtors at my office are bright and honorable. In May of 2006 I showed them Mike Hudson's "The New Road to Serfdom: an Illustrated Guide to the Coming Real Estate Collapse" from Harper's Magazine (at Hudson's site, scroll down to find the title).

My fellow agents. I love 'em. But they just laughed.

How things have changed. Today the National Association of Realtors is talking about the bursting of the housing bubble and how real estate will get back on track. And not doing a very good a job of it, either. But let's not digress.

America's recovery from its deflating housing market and its deepening financial crisis calls for an unprecedented partnership of citizens and government (arms-length will do just fine.) And also (dare I say?) a similar partnership between people with money and people without.

A civic media can mediate these partnerships. Its problem-solving dialogs can convey ideas like those advanced in this library to all Americans, including the least educated. Its ongoing dialogs can give Americans the chance to talk back, for weeks and months on end, until the nation, newly informed, gives Presidential Obama the informed citizen input he needs in order to make decisions that serve the best interests of America and its people.

Does all this - a media that brings out the best in our democracy instead of the worst - sound odd or impossible? It should not. Didn't Barack Obama win the 2008 election by promising BOTH of these partnerships, or something very close to them? Doesn't America already have in place the interactive communications technologies needed to mediate these partnerships? And isn't the need for these partnerships entirely obvious? Had they been in place ten years ago, would an informed America have allowed Wall Street or uncreditworthy borrowers to put the nation and the world at risk as they have?

So these partnerships, then, are possible. Still, questions remain. Will President Obama keep his promise? Will America's print and electronic media do their part to keep citizens and government productively in touch with each other? And finally, will all Americans, rich and poor, do their part to advance these new partnerships as well?

2009 will likely give us the answers. It will be a very interesting year. Even more interesting than 2008. Think about it. For the first time in history, 300 million people are poised to think and act intelligently, as a people and as a nation, about a single problem that threatens its future and that of the rest of the world as well. Wow. The psychologist Jung talked about the collective unconscious. Here we are talking about a collective conscious, an informed and active public mind. Thomas Jefferson, Marshall McLuhan and W. Edwards Deming would be glad to be alive. Not to mention Gandhi and Martin Luther King. And Plato, who wrote dialogs. And Socrates, who never wrote, out of a mistrust of writing's ability to make foolish men appear to be wise. But perhaps not Aristotle, who wrote monologs, as if (like the quants of Wall Street) he possessed or owned the truth, which the Platonic Socrates spoke of entirely differently: as an ongoing search for something that lies ever beyond us all.

How will all this happen? Hey, it's already happening. And let us resolve here to do what we can to advance the civic dialogs that will help us weather the storm. With that,

Hap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . py New Year!

PS - I almost forgot: what should we talk about next here?