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Governor Deval Patrick announced today that state officials have reached an agreement with the federal government on a much sought-after Medicaid waiver. These federal payments are critical for the continuation of the Commonwealth’s landmark health care program. The Commonwealth got a number of extensions on the June 30 expiration date as all parties worked on a mutually satisfactory agreement. We are talking nearly $11 billion in federal subsidy funds over three years targeted for health care insurance for low-income residents. The entire model health care reform program stood in jeopardy over the waiver situation. Kudos to all who helped broker the agreement. Ways and Means Chair Senator Steve Panagiotakos must certainly be breathing a sigh of relief today - especially in light of all the fiscal woes besetting the citizens of the Commonwealth and the nation.

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This is an excellent video…Fox’s Bill O’Reilly with his usual Republican bias interviews John Kerry while the Massachusetts Senator fires right back at him. O’Reilly tries to place the blame for the bailout’s defeat on the Democrats, who voted 140 yes/95 no, while the Republicans voted 65 yes/133 no. I know its not logical, but O’Reilly gets away with this stuff unless he is challenged and Kerry challenges him here. In this “discussion”, Kerry more than holds his own against the Spinmeister, although some of his statements make me cringe (Kerry that is).

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We have now received incontrovertible proof that the higher-ups at the Lowell Sun are avid readers of this website.  Just yesterday I asked in a post if anyone could supply me with the Sun’s circulation figures and, like magic, the newspaper itself published that very information in today’s edition.  What should I ask for next?  Do I get three wishes?

Anyway, in the lower right-hand corner of page 4 of today’s Sun is a “Statement of Ownership, Management, and Circulation” which states the Sun’s “Paid Circulation” on or about September 29, 2008 is 42,242.

This MediaNews Group table states that the Sun’s “Paid Circulation” as of March 31, 2007 was 46,280.

So in one year, the Sun lost 4,038 subscribers.  Wow, that’s a drop of nine (9%) percent. 

Maybe that’s why their telemarketers are now offering seven-day per week home delivery of the Lowell Sun for just $1.  That’s not $1 per issue; it’s $1 per week.  That doesn’t sound like a sustainable business model to me.  But remember, the folks that have made that decision not too long ago proclaimed that I have “little or no understanding of the media business” so you’ll just have to draw your own conclusions.

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I accidentally spilled some coffee on my Lowell Sun today, so some of the paper was rendered illegible.  I did read about the decline in WCAP’s Arbitron ratings during the past year, but I couldn’t see the section containing the Sun’s own circulation figures during the same period.  Could someone please send me those statistics?

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Everybody’s talking about it, so in case you missed it you can catch it here:

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The usual suspects on the radical right are growing louder in their assertions that the root of the financial crisis was liberal do-gooders who forced otherwise prudent investment bankers to lend money to immigrants, both legal and illegal.  Anyone who argues this is trying to rewrite history to fit a particular ideology.  They point to the Community Reinvestment Act, but the CRA has been around for more than a decade.  It’s objective was to require banks to make some small percentage of their loans to inner city residents who did not fit the traditional profile of borrowers.  For years, the CRA worked just fine.  It’s continued existence had very little to do with this crisis.  Most of the banks that were subject to the CRA did not recklessly lend - it was independent mortgage companies that were not subject to the CRA that made many of the loans fated to fail.  But even the big national banks that were subject to the CRA would have made the loans anyway because they were using an economic model that ignored reality.

Here’s how it worked: Lenders could obtain money to loan out very easily.  Let’s say you’re a mortgage company.  You can borrow money at 3% interest.  A potential home owner with a really good credit record could get a mortgage at 5% interest, so if you as the lender made a loan to that guy, you’d only make a 2% profit - (it cost you 3% to get the money and you lend it out at 5%).  A loan to someone with a poor credit history could be made at a much higher rate of interest.  Let’s say a mortgage to a risky borrower would earn 10% interest.  If you made that loan, you’d earn a profit of 7%.  So why not make a lot of such loans?  Historically, it’s because you as the lender would worry that the borrower would not be able to repay. 

A couple of things happened this time to shatter that historic prudence. First was what I call the compartmentalization of the mortgage industry.  Historically, the local bank would lend you money to buy a house in the community.  On his way to work everyday, the bank president would drive by your house and notice if it was falling into disrepair.  He’d see you in church on Sunday.  He’d know if you lost your job; what your reputation was in the community and so on.  There were some defects in this system, such as if the bank president was prejudiced and didn’t feel “comfortable” lending to people outside his social comfort zone - hence the Community Reinvestment Act.  But on the whole, it was a system designed to make the bank a decent profit with a high degree of certainty that the money would be repaid.

The mammoth change that occurred was that mortgages came to be seen not so much as a means to allow people to buy houses but as an investment vehicle for trillions of dollars of money looking for a good return.  So big national mortgage companies sprung up and big Wall Street investment banks got involved in the game.  Rather than do the paperwork on these loans themselves, they outsourced the effort to independent mortgage brokers who were in some ways substitutes for that bank president.  These brokers were local, did their own advertising and marketing by sponsoring soccer teams and running ads on cable TV or going to church suppers.  All these brokers did, however, was find the borrower and get him to sign the paperwork.  The broker made all his money up front when the loan documents were signed.  Unlike the bank president who made his profit (and kept his bank in business) by making loans with a high likelihood of repayment, the broker’s sole interest was to make as many loans as he could and to make those loans for the largest amounts of money possible.  The broker had zero incentive to worry about whether the loan would be repaid, yet he was the one deciding who qualified for these loans.

The big mortgage companies and investment banks knew these loans had an elevated risk of not being repaid, but they rationalized away the risk through the use of mathematical models that converted everything to statistics and odds.  There’s an old saying: “There are lies, damn lies and statistics” meaning you can get numbers to say pretty much anything you want.  And what was the motivation of the guys in the mortgage companies and investment banks?  To make the most, biggest loans possible because, guess what?  Their pay was all on the front end and they had no financial interest in whether the loans were repaid because they were passing along the risk to investors. 

And what of the investor?  You have $100,000 of your own money to invest.  A bank account will pay you 1.5% interest.  A broker says “I have these mortgage-backed bonds, issued by Lehman Brothers, a Wall Street firm that’s been around since the Civil War and insured by AIG, the biggest insurance company in the world and these bonds will pay you 7% with, as a practical matter, no risk at all.”  With that information, which investment would you choose?  And several trillion dollars from foreign countries, big US investors such as pension funds, city and state governments and from individual investors like you and me, went for the higher return.  

But it was a financial house built on a foundation of sand.  Anyone without a financial incentive to make the deal who looked at these loans objectively knew with a high degree of certainty that the loans would never be repaid.  Yet the loans kept being made for higher and higher amounts because the decision makers all had a personal financial incentive to make the loans.  And that’s where the lack of government regulation and oversight killed us.  You can’t blame this fiasco on greed - greed is as natural to the human condition as breathing.  Taking greed as a given, there has to be a referee, an impartial arbiter without a financial incentive to keep the playing field level for everyone.  That’s the role that government is supposed to play.  But Republicans controlled Congress from 1995 to 2007; they controlled the White House from 2000 till now.  A core Republican philosophy is to get government out of the way and let the free market do its thing.  Unfortunately, that only works in good times.  As we’ve seen, when things go bad, even the most ideologically pure Republican supports this government intervention.  If the government had been intervening all along through effective oversight, it never would have gotten to this.

One final comment: Anyone who dwells too much on subprime loans or the community reinvestment act is completely missing a much more fundamental - and more threatening - problem.  At its core, this crisis was caused by the willingness of the average American to go deeply into debt to sustain a lifestyle not supported by his income.  Because of our self-inflicted transformation to a nation of debtors, this $700 billion dollar bailout, as incredible as this may sound, is just another band aid that will only staunch the worst of the bleeding but will do little to solve the underlying disease that is plaguing our nation. 

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John F. Kennedy memorably had Robert Frost read at his inauguration. Jimmy Carter invited James Dickey to read at an event on the eve of his inauguration. Bill Clinton had Maya Angelou and Miller Williams at his inaugural ceremonies. Who would Barack Obama or John McCain have as an inauguration poet if the tradition continues?

Walt Whitman may be the closest America has come to having a national poet–not a poet laureate, which we have, but a poet who consistently explores the national soul and times. Here is what he wrote about presidents and poets in the nineteeth century:

“Of all the nations the United States with veins full of poetical stuff most needs poets and will doubtless have the greatest and use them the greatest. Their Presidents shall not be their common referee so much as their poets shall. Of all mankind the great poet is the equable man…He bestows on every object or quality its fit proportions neither more nor less. He is the arbiter of the diverse and he is the key. He the equalizer of his age and land…he supplies what wants supplying and checks what wants checking. If peace is the routine out of him speaks the spirit of peace….If the time becomes slothful and heavy he knows how to arouse it… he can make every word he speaks draw blood.”

(Thanks to the American Poetry Review for the quote–and we must note that for every he there is a she, and for every his there is a her.)

And this from Whitman’s “Song of Myself”–published in 1855:

“I celebrate myself, and sing myself,

And what I assume you shall assume,

For every atom belonging to me as good belongs to you”

 And, finally, this from a former Poet Laureate of the USA, Charles Simic of New Hampshire:

“Poetry says more about the psychic life of an age than any other art. Poetry is the place where all the fundamental questions are asked about the human condition.”

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As someone who traverses the Plain-Chelmsford-Powell Streets intersection daily, my first impressions of the crossroad’s redesign are favorable.  As the 13^th most dangerous intersection in the state, something had to be done.  The big change was making Powell Street (which runs from the intersection northward to Liberty Street) one-way running away from the intersection.  This also eliminated the right turn arrow on Plain Street coming from the Connector (and from the looks of it, by ticketing drivers who ignore the “No Turn on Red Light” sign, the state might be able to wipe out this year’s budget deficit).  As a recent Sun story reported, some residents are concerned that this modification will increase the number of cars weaving their way through the “lettered” streets (i.e., B, D, E, etc) and that’s probably true.  Also true is the unannounced suddenness of the switch.  Months ago state officials clearly announced the concept of the redesign, but the immediate cutover took many by surprise.  As someone who’s been involved in accidents or near accidents after the transitions from one way to two way of Middlesex Street (just recently), Appleton (about a decade ago) and even Dutton (when Bobby Orr still played for the Bruins), I can state with certainty that there’s always someone who doesn’t get the word, so everyone has to drive defensively for a year or two.  But that said, in the big picture, easing the congestion and the crisscrossing of vehicles will be a net positive for all who use the intersection. 

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The millions of viewers watching last night’s Presidential debate were not expecting constant “eye to eye” contact between Barack Obama and John McCain over the ninety minute exchange. No “look me in the eye” was asked, anticipated nor appropriate. But there was little acknowledgement by McCain that Obama was actually sharing the same stage. McCain could have stayed in Washington and phoned-in or tele-communicated his part of the “event” as it wasn’t really debate but rather rather diatribe on his part. Since many responses came out of the campaign playbook and stump speeches, stage presence and body language became an important part of the debate. Time and again Jim Leher tried to get some actual interaction between the candidates - alas only Obama got that message. While Barack Obama certainly has an aloofness about him - it played well last night in establishing a Presidential demeanor that’s been sadly lacking lately. He didn’t go “hardball” on McCain when the opportunities came - in fact he acknowledged areas of agreement. He had command of the issues, the options, the past, the future, the realities and of himself. John McCain who has a story to tell and positions many applaud made his case by trotting out cliches, campaign spin, memorized snipes, cloudy “facts” and emotional tugs. His derisive attitude was prickly and hardly Presidential. He reminded me of the lead character in one of my favorite daily cartoons - Crankshaft. McCain drove the “straight talk” bus over Obama’s mailbox last night. Others may have a different take. Like my colleague I turned-off the pundits and spinners in favor of a much-needed good night’s sleep. What’s your take?

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I just finished watching the debate.  As soon as they shook hands at the end I turned off the TV so I wouldn’t be infected by the spinning of all the talking heads on TV.  I’d call it a draw.  There were no major flubs; nothing like Reagan’s babbling in the first debate in 1984 or Ford’s assertion that Poland was a free country in 1976 or Dukakis’s non-response to Bernie Shaw’s rape/murder question in 1988.  McCain hammered away at the experience issue while Obama succeeded in highlighting the conflict between the John McCain running for president and the John McCain who spent 28 years in Congress. 

The reaction of the various organs of the media will be interesting in the coming days.  What did you think of the debate?

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