The long-awaited and long-predicted good economic news is also good news for Obama but he doesn't deserve the credit. Yesterday was groundhog day. A good analogy for the Obama recovery might be the groundhog on a cold February day predicting an early spring AND claiming his actions cause the early spring. By May or June, he claims to have succeeded. But it is worse in Obama's case. A least the marmot doesn't create massive debt by searching for his shadow and denying he sees it or jeopardize the future. Nor does he blame previous groundhogs for persistent the cold weather.

So two years after the "Summer of Recovery" we may finally get a recovery. I guess if you predict rain long enough, eventually it comes.

The Milwaukee Journal Sentinel acknowledged that he has fulfilled his pledge of balancing the budget without new taxes and that "the sky isn't falling."

Wisconsin has always been a progressive state. Let's talk about that word - progressive. Liberals have lately taken to calling themselves "progressive," understanding that "liberal" has become pejorative, But the term belongs to no modern movement. Progressives were guys like Theodore Roosevelt and fighting Bob Lafollette. They had some characteristics in common with modern liberals, but also many things in common with modern conservatives.

In the sense that the word was used in Wisconsin, it meant well-run, efficient government that was responsive to the needs of the people. It never meant the kind of bloat that we have seen in recent years. Governor Walker has delivered a result well within the Wisconsin progressive tradition. He has made the state government leaner, more efficient, more transparent and more responsive to the taxpaying public.

If this success is allowed to stand, it might bring back a degree of real progressiveness, something today's "progressives" could not willingly abide.

The bottom line I took from these articles is that we suffered a systemic breakdown, caused by a combination of our government and private institutions and changing conditions.

Greed is always present, but greed did not provoke the collapse. Nor did lack of regulation. The crisis happened in the midst of regulations, some of which gave incentives to destructive behavior. Rather, it was more like an engine running out of gas.

This is not good news. It would be a lot better if we could identify the bad guys or the bad actions and just ban them. This is simple minded.

The ideas and institutions that served us for a longer time than most Americans have been alive, just don't work as they used to. We have yet to come up with a new workable system. There is nothing to "go back" to. We have to go forward. But how?

Revisiting the Great Depression
There is no precise definition of a depression; it's a term of art. Generally speaking, it's a broad economic collapse that produces high unemployment from which there is no easy and obvious escape. The crucial difference between recession and depression is that recoveries from run-of-the-mill recessions occur fairly rapidly in response to automatic market correctives and standard government policies ... A depression occurs when these mechanisms don't work, or don't work quickly. The pivotal question becomes: Why?

One answer is that powerful historical, social, and political changes overwhelm the normal market and policy responses.
Then, the forces suffocating economies stemmed from a jarring historical rupture: the end of the gold standard. In the late 1920s and early '30s, countries clung to the gold standard--backing paper currencies with gold reserves--as a defense against hyperinflation. ... But defending the gold standard caused country after country to suffer banking runs and currency crises. ...By 1936, more than two dozen countries had reluctantly jettisoned gold. Once this happened, expansion generally resumed.

Something similar is happening today, with the welfare state--the social safety net of wealthy democracies--playing gold's destructive role. In Europe, government spending is routinely 40 percent or more of national income. In the United States, it exceeds a third. Like the gold standard 80 years ago, these protections command broad support. They mediate between impersonal market forces and widely shared norms of fairness. The trouble is that many countries can no longer afford their costly welfare states. ... The more austerity spreads, the greater the danger it will feed on itself. What may make sense for one country is disastrous for many--just as in the 1930s.

The exhaustion of economics is another parallel between our time and the Depression. Then, as now, economists didn't predict the crisis and weren't able to engineer recovery. ... Today's orthodoxy is Keynesianism (after John Maynard Keynes), and governments responded to the 2007-09 financial crisis with its textbook remedies.
...We're still a long way from a second Great Depression, even if such an economic disaster is conceivable. Compared to what happened in the 1930s, the present distress--here and abroad--is tame.
Still, the economy's present turmoil resembles the Great Depression more than anything since. ... Europe is sinking into recession. In the United States, unemployment stayed above nine percent for 21 consecutive months, and then another seven after a short period slightly below that level.
The Depression is usually dated from late 1929 to the eve of World War II. But people didn't immediately recognize that they had entered uncharted economic waters. ... Unemployment, for example, reached nearly 12 percent in the recession year of 1921 and was 8.9 percent in 1930. The riddle is: What caused the Depression to defy history? Over the years, many theories have been floated and discredited.

Chief among the fallen is the stock market crash of 1929. True, it was terrifying ... But steep market declines, before and since, have occurred without causing a depression ... Moreover, stocks rebounded ... By March 1930, the Dow had recovered 74 percent from their December level. Stocks later fell, but that was a consequence of the Depression, not the cause.

Another familiar villain is the Smoot-Hawley tariff. ... The tariff's direct effects were modest, and its timing also argues against its significance. .... Trade did collapse in the Depression, but (again) that was consequence, not cause.

Finally, there's Herbert Hoover. The anti-Hoover indictment is that he passively let the Depression deepen and, by trying to balance the budget, made it worse. This argument is unfair and inaccurate. ... In three years, he nearly doubled federal public works spending and pushed the states to do likewise ... the federal budget still ran a large deficit: four percent of GDP. "It would be hard to find an economic historian to argue that fiscal [budgetary] tightness was a significant factor in worsening the Great Depression," writes Timothy Taylor, managing editor of The Journal of Economic Perspectives.

None of these familiar scapegoats solve the puzzle: Why did the economy continue getting worse? Some other force or forces must have been responsible. Scholarship on this question has proceeded in spasms.

In 1933, Irving Fisher of Yale, then one of the nation's most prominent economists, published an article titled "The Debt-Deflation Theory of Great Depressions." ... Fisher's analysis explains why modern economists dread deflation. ... didn't explain precisely what caused the 1930s' deep deflation.

In 1936, Keynes provided his answer in The General Theory of Employment, Interest, and Money. The culprit was insufficient "effective demand"-- what economists now call "aggregate demand."
But his argument, like Fisher's, was abstract. It lacked a detailed explanation of the Depression itself. Since then, scholars have scoured the historical record to obtain a fuller answer. A breakthrough occurred in 1963 with the publication of A Monetary History of the United States, 1867-1960 by Milton Friedman (a subsequent Nobel Prize winner) and Anna Jacobson Schwartz. Friedman and Schwartz argued that the Federal Reserve caused the Depression by failing to rescue the banking system. ...The irony was that Congress created the Fed in 1913 to backstop the banking system.

What would have been a normal, if severe, recession became a depression. Friedman and Schwartz blamed the Fed's passivity ... the supply of money and credit shrank.
Not so, argued the economic historian Charles Kindleberger in his 1973 book The World in Depression, 1929-1939. The collapse was international and reflected the inability of a Britain weakened by World War I to continue to stabilize the world economy. Among other things, Kindleberger wrote, Britain's leadership role had required it (a) to act as "lender of last resort" to stem banking crises, (b) to keep its markets open to sustain trade, and (c) to maintain stable exchange rates. After the war, Britain couldn't perform these tasks.
The gold standard transmitted the breakdown around the globe, argue economic historians Barry Eichengreen and Peter Temin ...Gold's straitjacket was its supposed virtue. By eliminating inflation and currency fluctuations, it reduced uncertainty and encouraged commerce. This was the theory and belief.

After World War I, countries sought to restore the gold standard, which had been widely suspended during the fighting. Because the reliance on gold had delivered prosperity, this was understandable. But there were daunting problems: Prices had exploded during the war; gold was relatively scarce; exchange rates had shifted; countries were saddled with large debts. ... Skewed exchange rates meant that two countries, the United States and France, ran large trade surpluses and accumulated disproportionately large gold stocks. By 1930, they owned nearly 60 percent of the world's gold.

The resulting gold scarcity--for most countries--created a fatal interdependence. If one country raised interest rates, it might drain gold from others.
Germany's Reichsbank, the Bank of England, the Fed, and other central state financial institutions were handcuffed in their efforts to aid their countries' banks. The Depression weakened banks by increasing their customers' loan defaults; loan losses then made the banks more vulnerable to depositor runs. But a central bank couldn't inject too much money and credit into the system without raising doubts about its country's commitment to gold.
Gold's oppressive consequences ultimately caused countries to abandon it. Austria, Germany, and Britain did so in 1931. ... By 1937, world manufacturing output was 71 percent above its 1932 level and had exceeded its 1929 level.

Why was the Depression so deep and long? ... government economic policies perversely reinforced the original slump. Banks were not rescued. Defaults and bankruptcies fed deflation. Unemployment spiraled up, production down. Prevailing economic doctrine was suicidal. The good news, it's said, is that we understand what happened and can prevent a repeat.

Unfortunately, these reassurances omit an obvious and more discouraging lesson: The Depression couldn't end until people changed their beliefs and behavior ... Just as the gold standard amplified and transmitted the effects of the Depression, so the modern welfare state is magnifying the effects of the recession.
Casting the welfare state in this role will strike many as outrageous. After all, the welfare state--what Americans blandly call "social spending"--didn't cause the 2007-09 financial crisis. This dubious distinction belongs to the huge credit bubble that formed in the United States and elsewhere, symbolized by inflated real estate prices and large losses on mortgage-related securities. But neither did the gold standard directly cause the 1929 stock market crash. ... But once the slump started, the gold standard spread and perpetuated it. Today, the weakened welfare state is perpetuating and spreading the slump.

What has brought the welfare state to grief is not an excess of compassion, but an excess of debt...Most spending represented income transfers. Even in the United States, with its sizable military budget, "payments for individuals" (which means entitlements such as Social Security and Medicare) amounted to two-thirds of federal spending in 2010, up from a quarter in 1960.

But this system required favorable economics and demographics--and both have moved adversely. A younger population was needed to lighten the burden of supporting the old, the largest claimants of benefits. Rapid economic growth was needed to generate the tax revenues to pay for benefits. Indeed, the great expansion of benefits started in the 1950s and '60s, when annual economic growth in Europe and the United States averaged about four percent or more, and the expectation was that this would continue indefinitely.
The means of escape from these unhappy trends was to borrow.
... welfare states became an engine of international austerity. Countries' choices were constricted. To maintain existing levels of spending, they needed to borrow. But lenders demanded higher interest rates, and to keep these down, governments had to resort to austerity, which meant cutting social programs and raising taxes. ... almost all advanced countries, including the United States, are potentially subject to it. Countries embrace austerity to keep their credit worthiness. Or they embrace it because they lose their credit worthiness.

What this means is that governments, against their will, are being forced to reconsider some basic post-World War II premises ... much as countries in the 1930s were forced to reconsider economic premises based on the gold standard. Now as then, the process is unwelcome, painful, and agonizingly slow.
The ultimate danger is that the welfare state will go into a death spiral. ... As political leaders grapple with these problems, they are constantly reacting to events--doing too little too late.
Governments are losing control over their economic fates, because high debt also undermines standard Keynesian anti-recessionary tools, a.k.a. "stimulus," spending more and taxing less in times of economic weakness. The prospect of more debt simply sends interest rates up, nullifying some or all of any "stimulus" and, for some countries, closing access to private credit markets. It's true that some major debtor countries, notably the United States and Germany, have so far escaped this squeeze. Their interest rates (at this writing) remain low, about two percent on 10-year bonds. But there's no ironclad reason why these countries should remain immune forever..

So it's not preposterous to compare the gold standard then with the welfare state now. In both cases, a framework is imposed that impedes recovery from what might otherwise be a recognizable recession. The obstacles lie in institutions and beliefs that are deeply woven into the social, political, and intellectual fabric of societies. It takes time to adjust--and sometimes adjustment doesn't happen at all ...

This does not mean we are condemned to a second Great Depression. The messy process of grappling with overcommitted government may lead to slow growth, long recessions, or stagnation--but not the dramatic collapse of the 1930s. China, India, Brazil, and other developing countries, representing about half of the world economy, don't face the dilemmas of mature welfare states. Their economic growth may provide a safety net for the "old world" of Europe, North America, and Japan. But here, too, there are cautionary comparisons. China's rise and America's problems have fragmented economic power. Cooperation is strained. The analogies with Britain's post-World War I weakness and the paralyzing rancor between Germany and France are obvious. Another parallel with the 1930s is the euro, which, as the gold standard once did, has created a straitjacket that makes recovery harder.

All of these challenges suggest that a second depression or some prolonged period of economic disappointment and hardship is no longer implausible, as it seemed for most of the past half-century. The mastery of economic activity we thought we had achieved--not in the sense that we could eliminate all business cycles or financial panics, but in the more limited way that we could avoid pervasive instability--can no longer be taken for granted. The mistake, popularized largely by economists, was to believe that regulation of the economy could be derived from theory and converted into practical precepts for policy. The reality is that economic life is not solely described or dictated by rhythms suggested by economic models. It moves in response to institutions, technologies, beliefs, and cultures that follow their own logic, sometimes with completely unexpected, mystifying, and terrifying consequences.

Great Recession or Mini-Depression?
by Robert Z. Aliber
Words may be failing economists and others who characterize the economic downturn that began in 2008 as "the Great Recession." "Mini-Depression" may be more like it.

The recession that began in January 2008 was more severe than any of the other 10 recessions the United States has endured since World War II. The decline in the nation's gross domestic product (GDP) surpassed previous records and the percentage of American workers without jobs nearly did so. And the expansion of the U.S. economy since the recession officially ended in June 2009 has been sluggish, challenging the economists' adage "The sharper the decline, the quicker the recovery."
Most recessions since World War II have come about because the Federal Reserve curbed the growth of credit to restrain inflationary pressures..

Once the Fed became convinced that the inflation threat had abated, it would reverse its credit policies: The supply of credit would expand, and developers would produce more homes, knowing that the underlying demand was still strong.

The recession of 1981-82 was especially severe because the Fed was determined to stamp out the expectations of accelerating inflation that had developed in the second half of the 1970s.
The contractive monetary policy adopted by Fed chairman Paul Volcker in October 1979 led to the highest interest rates since the Fed was created in 1913--short-term rates climbed to more than 20 percent and long-term rates to more than 10 percent. Unemployment rose above 10 percent.
The distinctive feature of the most recent recession was the massive failure of leading financial firms...
Countrywide and Washington Mutual had been extremely aggressive in extending mortgage credit after 2000 as each battled to become the nation's dominant mortgage lender. They weakened their credit standards and became inventive at developing new kinds of mortgage loans that reduced the interest payments that borrowers were required to pay in the first few years, allowing home buyers to take on debts that were large--much too large--relative to their incomes.

Easy credit contributed to the surge in real estate prices, which climbed by 10 percent annually at the national level between 2002 and 2006 and by 20 percent a year in the nation's 16 most rapidly growing states, in the South and West. Two government-sponsored lenders, the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), which between them indirectly provided half of the nation's mortgage money, were aggressive buyers of mortgages from Countrywide and Washington Mutual. Fannie Mae and Freddie Mac were able to sell their bonds to investors because some foreign governments and their sovereign wealth funds were of the impression that these bonds were guaranteed by the U.S. Treasury.

Eventually, rational exuberance morphed into irrational exuberance, and Americans started buying homes and apartments simply because prices were increasing and they saw an exceptional opportunity for profit. And prices were increasing mainly because Americans were buying property.
The decline in real estate prices that started at the end of 2006 was not prompted by any Fed action but by a slackening of foreign demand for Fannie Mae and Freddie Mac bonds.
The decline in real estate prices in the first few months of 2007 was gradual. The true dimensions of the crisis became clearer in August, when Countrywide suddenly experienced a "run"; it was no longer able to roll over the maturing short-term loans it had been using to underwrite its aggressive funding of new mortgages. Other lenders stumbled, too.
The hangover from the property price bubble is one major cause of the sluggishness of the economic expansion ...

The current recovery has also been slowed by the $300 billion increase in the nation's trade deficit since 2008. Each increase of $1 billion in the trade deficit--either because Americans are spending more on foreign goods or foreigners are spending less on U.S. goods--represents a loss of 12,500 American manufacturing jobs. ...

What remains distinctive about the recession of 2008-09 and its continuing aftermath is the decline in home prices.

In both the 1920s and the mid-2000s, economic euphoria was pervasive as bubbles in asset prices led to surges in spending--and those spending increases further inflated the bubbles that had fostered them in the first place. Then asset prices imploded, household wealth shrank, and banks suffered large losses when borrowers were unable to repay their loans.

The recession of 2008-09 and its aftermath more closely resemble the Great Depression than any of the other post-World War II recessions. Indeed, this episode might aptly be called the Mini-Depression of 2008-09.
The 2008 recession did not cascade into another depression because the U.S. Treasury and the Federal Reserve provided abundant funds to recapitalize the banks and limit their distress selling of assets. This intervention--which began in September 2008--sharply reduced the likelihood that a liquidity crisis would morph into a solvency crisis.
Even this intervention would have been unnecessary had the Fed and government bank regulators recognized the emerging bubble in property prices in 2004 and 2005 and used their authority to curtail the risky and pernicious credit practices of Countrywide, Washington Mutual, Fannie Mae, Freddie Mac, and other financial institutions. ... Yet when real estate prices began to fall and the tightening of credit led to the collapse of big lenders, it became clear that neither the Federal Reserve nor the U.S. Treasury had contingency plans to deal with runs on banks and other financial firms. A few ounces of prevention would have yielded a ton of cure.

The Debt Bomb
by Louis Hyman

When wages stagnate and inequality rises, Americans try to borrow their way toward the American dream. Inevitably, the bubble bursts. But we can learn from the lessons of 1929.
In the last hundred years, economic inequality in America has peaked twice: in 1928 and in 2007. It is no coincidence that our periods of greatest inequality have coincided with excessive lending
In the decades between those two moments in our socioeconomic history lies the great era of post-World War II prosperity, and here too there are lessons to be learned. That prosperity rested to a large extent on policies the federal government put in place in response to the crash of 1929 and the Great Depression. Yet those same policies laid the foundation for today's financial crisis, as the New Deal order dissolved and some of its innovations were turned to new ends. It would be almost comforting to embrace the tales journalists and others now spin that place all culpability at the feet of bankers of vast cunning and greed, or at the other end of the spectrum, with big government, but the true causes are
Launched in 1933, the Home Owners Loan Corporation (HOLC) stopped the free fall in house prices by swapping government bonds for past due mortgages held by lenders, averting massive numbers of foreclosures and steadying the nation's housing markets. (Like several other New Deal reforms, the agency had its origins in President Herbert Hoover's 1931 White House Conference on Home Building and Home Ownership.) But the real financial innovations were the creation of the Federal Housing Administration (FHA) in 1934 and the Federal National Mortgage Association (Fannie Mae) in 1938.
The FHA also made it possible to offer Americans much longer mortgages of 20 and (later) 30 years, which reduced the size of monthly payments and allowed borrowers to pay off both interest and principal. That step made home loans more affordable and eliminated the need for constant refinancing that had made balloon mortgages so dangerous.

Fannie Mae's job was to fund these new mortgages. Whereas in the 1920s banks had to seek out investors to buy their participation certificates, under the new system they could simply sell mortgages they made to Fannie Mae, which would then resell them to insurance companies and other large institutional investors.
The new mortgage system inaugurated a long period of stability. The suburbs, where the American dream would flourish, were built on its loans. But the new system had another effect: It further legitimated borrowing of all kinds. Indeed, the suburban housing supported by the FHA all but required that Americans acquire that other great generator of debt: the automobile. New Deal-era plans for urban housing that would have produced a landscape ripe for mass transit were scrapped.
Living in mortgaged homes, driving in financed cars, postwar Americans relaxed at new shopping centers. They borrowed more but also earned more, which meant that while the habit of borrowing grew, debt as a share of income remained relatively stable.
The origins of the shift from a relatively egalitarian manufacturing economy to an unequal financial economy can be seen in the midst of this prosperity. During the 1960s, however, retailers confronted a dilemma.
All of these developments during America's flush postwar years helped breed new financial attitudes. The fullest expression of the era's optimism was the resurrection of 1920s-style mortgage finance, albeit in a new form. In 1970, Fannie Mae began bundling large numbers of mortgages into a kind of security that could be easily traded in markets around the world, and which had the implicit guarantee of the U.S. government. The mortgage-backed security was first proposed in the Fair Housing Act of 1968 as a mechanism to help low-income families buy housing. ... Since FHA lending had buoyed the fortunes of the middle class in the postwar era, surely enabling more borrowing to help less affluent people couldn't be a bad idea, policymakers reasoned.

The timing was unfortunate. Slowly, inexorably, the world that supported Americans' postwar assumptions began falling apart in the 1970s as the international economic order shifted from American-dominated recovery back to a more normal state of global competition. The economic dislocations of the 1970s--inflation and deindustrialization--stemmed fundamentally from this return to normalcy. The stable growth of the postwar period that had rewarded budgeting and borrowing disappeared.
Turning the great centers of American manufacturing into financial companies appalled many chief executive officers who prided themselves on making something. In a joint interview in 1995, Fortune magazine asked Welch and Roberto Goizueta, then the CEO of Coca-Cola, to look ahead. For Welch, the answer was obvious. Financial services would become a bigger share of GE's business. Goizueta demurred, saying, "I would never find excitement in the financial services. I would like to produce something that I could touch."
As finance gained in strength and in its importance to the American economy, bankers increasingly complained that their creativity was being hampered by those pesky regulations that had safeguarded the economy since the 1930s. Gradually many of the old strictures were shaken off, a process that culminated in the repeal in 1999 of the Glass-Steagall Banking Act of 1933, which had cordoned off banking from insurance. Like the repeal of Glass-Steagall, many financial "innovations" of the 1970s and '80s actually involved the revival of financial instruments or practices that had existed in the 1920s and earlier. But one was stunningly new.

In 1983, the Federal Home Loan Mortgage Corporation (Freddie Mac), which the federal government had created in 1970, and two private firms launched an otherworldly financial instrument called the collateralized mortgage obligation (CMO). While the mortgage-backed security and its ancestor, the participation certificate, had paid all investors in the same way, the CMO was structured to allow the creation of many different kinds of securities out of a bundle of mortgages. It did so by slicing the interest and principal payments the mortgages generated into many tranches. In CMOs there was something for every kind of buyer, from long-term investors to speculators guessing at tomorrow's interest rates.

There was a practical public motive behind the creation of the CMO. As interest rates rose in the late 1970s, American savings and loan associations were thrown into crisis because depositors began demanding higher interest on their accounts than these financial institutions could earn from making mortgage loans. As a result, the S&Ls were collapsing. In this dire situation, the CMO worked like magic. Freddie Mac bought vast numbers of mortgages from the S&Ls and repackaged them. New money flowed in. By 1985, pension funds were investing more than $1 trillion a year in American mortgage debt. Oil money from the Middle East financed housing developments in the Midwest. Global finance and American finance aligned to produce a new global economy of debt.

The CMO story underscores an important lesson about the origins of the financial crisis. Contrary to what many politicians and pundits have claimed, the upsurge of securitization was not simply a product of "deregulation." Regulations may have changed to promote a certain kind of financial system, but at no point did the state abandon the market to itself. It was the interplay of public and private purposes and mechanisms--Freddie Mac, S&Ls, mortgage-backed securities--that made these new sources of capital possible.

By the late 1990s, the volume of uncollectable credit card loans was rising. But by sequestering the greatest risk of defaults into high-risk/high-return tranches, much as Freddie Mac had disaggregated mortgages, issuers could still gain a good rating for their securities. And despite the increase in defaults, repayments were rising. ...The entire credit system leaned on the different kinds of debt, all securitized, that ultimately rested on one support: rising house prices.

Then, in the autumn of 2006, the impossible happened: Housing prices began to fall. ... The global credit market rested on the same assumption that guided American home buyers: Prices would always go up. Foreclosures would be randomly distributed, as the statistical models assumed. Yet as those models, and the companies that had created them, began to fail, a shudder ran through global capitalism. Lehman Brothers, the venerable investment bank, held a massive exposure to subprime mortgage-backed securities, a position that contributed to its demise in 2008. The insurance giant AIG watched its entire business collapse as it was required to make good on its mortgage bond guarantees. The crisis began in subprime mortgages, but it quickly spread throughout the economy, as complex financial instruments betrayed both their inventors and their investors, just as they had in 1929. The global resale of debt had enabled borrowing on a scale unimaginable to the world of 1929, but the consequences were all too familiar.

In most speculative bubbles, the participants choose to be involved. Speculators in Dutch tulip bulbs or tech stocks knew what they were getting into, and, in the end, they were the main people who got burned. Speculation in housing, however, affected the two-thirds of Americans who owned homes. The speculation took hold of their most important asset and played havoc with their lives. If the collapse in prices had been confined to houses, then perhaps the damage would have been more limited, but during the 1990s, as wages stagnated, Americans had borrowed against this rising equity to pay for goods and services.

That structural connection between economic inequality and the nation's financial crisis is still largely ignored. The dangerous investment choices that precipitated the crisis are but a symptom of this underlying cause. Income stagnation continues, pushing Americans toward greater borrowing and less saving. Unemployment remains extraordinarily high. And those who do find work often have to accept lower wages.

Meanwhile, as those at the bottom hang on, profits continue to concentrate at the top. Without a good alternative, capital continues to be invested in consumer debt rather than in the businesses--big and small--that provide jobs. Bankers are once again skittish about lending. If we are to find solutions to the crisis, it is more important to ask why so much money flowed into mortgage-backed securities and so little into productive businesses than to search for villains to blame for what went wrong.

During the Great Depression, New Deal policymakers figured out ways to harness the resale of debt, but they recognized that increasing the supply of credit without also increasing wages would only lead to another crash. But in the last 40 years, debt levels have climbed while wages have remained stagnant because securitization made it much easier to lend to consumers than to businesses. That continuing imbalance is a threat to the long-run stability of the American economy.

Today, as in the Great Depression, we have a choice about the policies that redirect the flow of capital. But it is much more difficult to increase wages. Americans have pulled back from the worst excesses of the past decade, but they haven't seen bigger paychecks. Without that crucial ingredient, it is hard to see how we will be able to regain our lost prosperity.

How is this like space travel? The universe is very old. Scientists estimate its age at almost 14 billion years. Not all parts became in theory "life friendly" at the same time. Intelligent life need not have developed at our pace. Other civilizations could be thousands, millions or maybe billions of years ahead of us. That is the common idea of science fiction. But think about it. If such life was developed, and it was like us in its desire to explore, these guys would have been around here already and if they were actually intelligent they would not be wasting their time kidnapping and probing people in rural Alabama or making primitive representations of jungle animals on mountains in South America.

In other words, if aliens were going to visit us, they would have done it already and stronger evidence than Inca mythology.

Of course, there are other possibilities. It could be that other civilizations have grown, flowered and gone extinct w/o every leaving their home planet. This may indeed be our fate. The nearest solar system to ours is at least nine light years away. We will never get there. Even in the unlikely case that we discovered a way to travel at nearly the speed of light, why would anybody take off on a round trip of nearly twenty years? There is nothing there anyway. Our radio signals have reached there nearly a century ago. We find nothing coming back. We know for sure that at very best the civilization there is more primitive than ours, since they have no telecommunications. Actually, we have no reason to believe there is anything there at all.

I enjoy the old Star Treks and science fiction in general. These are the heroic myths of our day. But it ain't never going to happen. Our species will live and die on this small planet. We will never leave this solar system and nobody is ever going to come to visit us. Sad. I know.

Whether we are alone in the universe in the absolute sense or not doesn't really matter. We are alone as a practical matter. Distances are too great. Time is too long.

This is probably a good thing. Any civilization that can get to us will be more advanced than we are. They are unlikely to be nice and kind like ET or wise and welcoming like the Vulcans. Our history shows that when more advanced societies meet less advanced ones, the less advanced is soon subjected and usually mostly exterminated. This is not only Western civilization that does this, BTW. It is not even only humans. It is in the nature of life for the better adapted to dominate and replace the less well adapted.

In other words, if aliens showed up on earth, sooner or later (probably sooner) they would kick our asses and break our stuff and we would do the same to them if the tables were turned. So we might be better off shutting down all those SETI computers. We would not want to attract unwanted attention.

Obama's choice is interesting. We know that he makes no decision w/o consulting his focus groups, so we know it was a well-thought-out decision. It means that Obama has either written off the traditional working class (a majority of working people and unions were for the pipeline & in 2010 Democrats lost among working class whites by 30%) or his advisors believe they can spread enough fear and disinformation to stampede them into voting Democrat in sufficient numbers despite the betrayal. They understand that union leadership will stick with Democrats no matter how the rank-and-file feels and they will field the foot soldier so important to Democratic campaigns.

This is yet another sign that President Obama thinks that a combination blacks of all income groups, generally more affluent-professional, left-leaning whites & beneficiaries of government programs (what we might call the non-or-semi-working class) will be a winning coalition for him in November. This coalition has been in the works for Democrats for a long time. "The Democratic Party in 2006 and 2008 chose the upscale white-downscale minority approach that proved highly successful twice, but failed miserably in 2010, and appears to have a 50-50 chance in 2012," wrote the "New York Times in the article linked above.

But it is almost a Democratic creation myth that they are the party of the "working man". Even if this is no longer true, it will be very difficult for Democrats to let go of the narrative in theory, even if the typical 21st Century Democrats disdain those yahoos who cling to their guns and religion.

It will be a fascinating election race. We should carefully watch the television adds. They will tip us off about the kinds of demographics the Obama camp is pursuing.

The easy answer is that countries where illegal logging is rampant simply lack strict laws or the ability to enforce them. The first part of this statement is often not true. Many developing countries have - on the books - much stricter preservation laws than we have in Virginia. In some places it is just plain illegal to cut down native forests on a wide range of land types. These are often the places most likely to be deforested, as illegal logging targets them first. They understand that government authorities probalby cannot protect them and that the off limits status has removed the incentives for local people to pay much attention. The second part of the statement - that they lack the ability to enforce the good laws - is true in areas of deforestation but it is not as remarkable at it seems because it is true everywhere.

Logging is almost always done in relatively out of the way places. Laws are never enough. Even the most active authorities cannot effectively police large areas of forest land. In Virginia, they really don't have to. Landowners, loggers and foresters have incentives to preserve and enhance the forests on their land because they can use and benefit from them. They also know that everyone around suffers if forests, soils, animals and water are wantonly destroyed. It is obviously true that the authorities protect my forest land in Brunswick County. But the first lines of defense are my neighbors, friends and even strangers who know that we are all in this together. Virginians protect their own land and those of others because they own the land. We have centuries old traditions of protecting property rights and we all are in the same boat. We protect each other's stuff.

We also enjoy the use of our land with fewer restrictions than in most other places. We can harvest trees and other forest products within reasonable rules. We can hunt that animals that inhabit our forests and, again within reasonable limits, we can change the way we use our lands. In the final analysis, what most protects the forests of Virginia is the effort of thousands of Virginians who have a stake in the management and use of the forests and the products they produce. In Virginia, hunters, loggers and landowners are preserving and enhacing our forests. Laws work when they are reasonable and when people see the benefits. If you want to preserve and improve forests, you have to let people cut some trees and kill some animals. You have to let them have a stake.

Places that suffer widespread deforestation because of illegal logging often find themselves in this unhappy situation not in spite of but because of strong laws, albeit misapplied. Laws and regulations meant to preserve forests often end up destroying them if they make it difficult or impossible for the people who live in or near the forests to make an honest living from them. If strict rules make it impossible to make an honest profit, some people will make dishonest ones. Even worse, as honest people leave the business and dishonest ones take their place, the whole respect for law as well as the whole idea of stewardship disappears. The field divides between preservers and destroyers. Neither is the right way to go. We need stewards.

If I can be permitted a little immodesty, in America we got it right. That is not to say challenges have disappeared. There is no perfect system and everything must always adapt. But we should never make the quest for the perfect the enemy of the good. The methods of stewardship that have grown up in the United States during the twentieth century work well. The American Tree Farm System and other independent certification systems are doing their jobs.

Most landowners want to do the right thing on their land. People I talk to not only want to take care of the land during their own lifetimes. A major motivation is to leave the land in better shape for future generations. People are willing. We need information and guidance both to do the right things and to do things right. What we don't need is strict, sometimes incomprehensible, rules that make it difficult for honest people to make honest profits. We have created a wonderful and sustainable system of forestry in Virginia. We can be proud of it and we should all work to protect it and try to spread the word as far as we can.

First, let's admit that it was Gingrich folks who lied the lies, but they are not the first liars in this case. The Kennedy folks told some of the same lies - even used some of the same people to tell them - back years ago. This is an old story.

Much of the effectiveness of the attack depends on the ignorance, fear and hate of the people who are eager to believe that anybody who makes profits must be bad. Most people don't really understand how business works. It is actually much simpler than they thing in concept. What you or I have done when we buy, fix up and sell a house or a car for more than we paid for it have done what Romney's firm did. Of course, the execution is complicated, which is why most of us limit our efforts to cars and houses.

You can read the Washington Post article, but I know that many will not, so let me give some clips.

"First of all, it is a stretch to portray Romney as some sort of corporate raider, akin to Carl Icahn (whose image is briefly seen). Bain Capital initially was in the business of providing venture capital -- seed money -- for start-ups, such as Staples. Then it moved to the more lucrative business of private equity, in which Bain won control of firms, reorganized them and then sold them for profit."

"In the film, three former employees of UniMac, which makes commercial washing machines, appear to suggest that quality went down under Bain Capital's management and that a plant in Marianna, Fla., was closed because of Romney's actions. But the chronology is all jumbled. Bain Capital bought the business from Raytheon in 1998, and Romney left Bain a year later to run the Winter Olympics in Salt Lake City."

"In fact, Mike Baxley, who was interviewed for the film, said that he and his partner had "absolutely no idea" that the interviews were for a film about Romney and Bain... After watching "King of Bain" at The Fact Checker's request, he said: ' We were pretty shocked. Our quotes were seriously taken out of context. There is a real lack of facts.'"
"The film suggests that UniMac is out of business, but Baxley noted that UniMac is still going strong at its new headquarters in Wisconsin."
Re KB Toys
"Here again, the chronology is off. Bain Capital did not buy KB Toys until late 2000, more than a year after Romney left for the Olympics.

Re DDi
"The film, while focusing on the 2,200 jobs that were lost during the technology bust, does not mention that DDi emerged from bankruptcy proceedings and is currently thriving."

Re The demise of the Ampad facility in Marion, Ind.
" Finally, the film comes to a case that directly involves Romney. As mentioned before, this transaction formed the core of Ted Kennedy's ad war against Romney, and the interviews in those ads are raw and on point. Clearly, people in Marion are still angry at Bain's role in the demise of the facility there."
"But the company floundered -- ironically because of price pressure from companies such as Staples, which was started with help from Bain. Ampad filed for bankruptcy protection in 1999 but still exists today as part of Esselte Corp."

So the attacks against Romney in the film are mostly lies, according to the fact checkers at the Washington Post.

What we see is business in action. Some businesses thrive; others do not. Over the long run, you can find good and bad times.

Romney should not have claimed that his actions created 100,000 jobs, but in this he is much like President Obama, who claimed to have created or saved millions of jobs, even as the unemployment rate went up. Politicians like Obama and Romney, unfortunately, exaggerate their effect on employment.

The record shows Romney operated in a legal & ethical way. He produced success the old fashioned way; he earned it. Those who for religious reasons think profit is sinful can complain. Others are misguided. or mistaken.

We hear a lot of talk about socialism these days. The term "socialism" has lost most of its original meaning and it is hopelessly old-fashioned and one dimensional. The Index of Economic Freedom considers a wider variety of measures. The Index covers 10 freedoms - from property rights to entrepreneurship - in 184 countries. This gives you a better picture of the places. Some are "socialist" in that government owns or controls lots of enterprises, but are not very corrupt; others allow relatively free investment but don't really protect property rights. Only a few do most of the good things or most of the bad things. You can explore the reports yourselves.

Economic freedom is related to other sorts of freedom and to prosperity. It is hard to have political freedom if the government is the only employer. It is better to have your employer and your government separate. Concentrations of power are always threats to liberty.

The economically un-free places are not always horrible and the free places are not always paradises, but if you look at the index, there is a definite trend as you move from pleasant free places like Canada, Australia and the U.S. to rotten unfree places like Venezuela, Cuba, North Korea or Zimbabwe.

Romney's firm did what Chrissy & I did - and what all successful business people do - but at a more sophisticated level. They bought firms that they thought were fundamentally sound, but poorly managed or in some other trouble. They then fixed them up and sold them for a profit. It was a risky business. Some of the firms they bought turned out to be unsalvageable. But under Romney's leadership, Bain made more good choices than poor ones. In the process, they created efficiencies and wealth - the only real way to create jobs.
In a free market, we move resources from places they are failing and being wasted to places where they can be best used. This is the basis of the great creation of wealth that has made even the poor in Western market democracies many times better off than the kings and princes of ages past. It has been so completely successful that we sometimes overlook it and think that we can somehow do better letting politicians and bureaucrats make investment decisions (can we say Solyndra or Fannie May?)

Bain in the Romney era bought lots of young and riskier companies. They probably would not have been dumb enough to buy into a firm like Solyndra, but some of the firms they bought didn't make it. This is the risky part of the business. Nobody can be certain in advance which firms will prosper.

There is a test in the market. It is whether or not you make mostly good choices so that you attract more investors. Romney's firm attracted investments from college endowments and public pension funds that wanted to get better returns and they were not disappointed. Romney delivered for them and his firm is still delivering. It was and is a sustainable creator of wealth for the people.

The Obama folks believe in what Romney did. When Obama talks about investing in the future, he is actually trying to copy the kinds of things Romney did. Obama and his people just are not very good at picking good firms or managing success.
Some ideas don't make sense until they are tried. One of the Romney era investments involved an an entrepreneur called Tom Stemberg. This guy was convinced he could get small-business owners to shop at a store instead of taking deliveries. Today, the Staples chain of business-supply stores employs 90,000 people. Bain also backed a start-up called Bright Horizons that now manages child-care centers for more than 700 corporate clients around the world. Some other ventures, but that's capitalism, which is supposed to be a profit and loss system. refereence

Chrissy & I could have lost money on that house in New Hampshire. Many people told us that we were stupid not to just rent, since we would be there only a year. They told us that it would be a lot of work finding the right house, fixing it up and then selling it and they were right. But in doing what we did, we saved money on rent, made a profit and left the neighborhood better than we found it. Some people evidently think that this kind of "capitalist" behavior is shameful. They are pinheads.

Those of us who believe in the free market really should stand up to these clowns more often. We (me included) often play their game, emphasizing the superior virtue (in form of charity etc.) of free market proponents. We really have a stronger case. We are wealth creators. We take a profit for ourselves, but our also society benefits. The people who bought the house were happy to have a nice clean place that didn't require them to do a lot of work around the house. Our neighborhood is New Hampshire is better because we were motivated by the free market. I am glad we made a fair profit. I would have probably settled for less, but certainly would also have taken more. That is a healthy attitude.

Romney made a profit at his firm. He acted according to the laws and ethically. He created wealth for himself and others. Great. I favor free enterprise. I think the market economy and market democracies are the engines of human prosperity and advancement. So somebody like Romney, who shares my faith in such things, is naturally a man I support.

What if you were just thrust into the class? How could knowing this information change your behavior? Under the Democrat regime, you have a smaller scope for success or failure. Doing little or not much will get you a "B". Being a little bit better will bring you to a plateau. After that, additional effort or talent doesn't do much for you. "Pretty good" is good enough; excellence brings no reward.

The Republican way is more challenging. You can go higher and lower. If you are smart and hardworking, you can produce excellence. If you are the Homer Simpson type, however, your result will be lower.

Of course, you can read way too much into this data and the details would be questionable. It would be important to know the distribution of SAT scores. This data is from an elite university, so the median is probably high. We also don't know the distributions. There may be more individuals in the categories. The chart is misleading since it doesn't consider this.

Anyway, don't read too much into the precise details, but look at the general direction and trends.

I am a strong believer in equal opportunity and fairness, which means that I oppose equality of results. Inequality of results in our diverse country need not be very painful. Diversity means inequality. In a free society, it is impossible that the same people will be best at everything. All of us will be winners in some things, losers in others and finish in the middle of most. It is more satisfying to have the chance to do well than be relegated to the mediocre. Who would play a game that always ended with no winners?

I side with Roosevelt on this:

"It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat."

In other words, mediocrity of equality of results sux.

I am glad that the Obama White House drew the line. Perhaps it is too much to wish that a guy like Delonte would be contrite, but it is good to have some standards. We sometimes have to tolerate bad behavior, but we don't have accept it or honor those who do it. I think we should be a little more judgmental. We can recognize that someone might be a great athlete or an important celebrity and still might not be good enough to date our daughter, befriend our son or be invited to our homes. A good, hard working and honest ordinary American is BETTER than many of these rich and out of control celebrities.

We no longer ask very much of those we elevate. In our zeal not to judge and to treat everyone equally, we have inadvertently released the demons. There were always those who behaved badly. In some ways these "bad boys" were attractive because they could flaunt society's norms. They were pushing the limits.

They were also often hypocritical. I know that many people consider hypocrisy a bigger flaw than some of the things the bad NBA stars get into. I see hypocrisy in a different light. Hypocrisy is the tribute that vice plays to virtue. It is better to be sincere, but as the old saying goes, if you cannot be sincere, fake sincerity. At least the hypocrite acknowledges the primacy of the behavior he is pretending to model. Hypocrisy can also help contain the pathogens of bad behavior. Would be scoundrels would not be encouraged by the successful example/excuse & good people would not feel like chumps for hewing to the straight and narrow.

Older people still use the phrase "have you no shame?" to indicate that someone has crossed the line. My impression is that phrase is essentially meaningless or at least hopelessly out of date to many people today.

W/o some boundaries, much of the cleverness is drained out our interactions. You used to be able to look for hidden meanings in conversations, plays or comedy. The double entendre is completely banal if there is nothing off-limits and there are few embarrassing situations for comedians to exploit. Complains about a coarsening of discourse can be attributed to this. As it gets harder to shock, people have to go to greater nastiness just to be noticed in the sea of vulgarity. On the other hand, we are faced with a puritanical adherence to politically correctness where humor is unwelcome, no matter how clever. Have you heard the joke about how many feminists it takes to screw in a light bulb? Punch line - "Shut up. That's not funny."

Anyway, I am glad to hear that President Obama has a boundary in this case. It is especially significant that Obama himself is a basketball fan and pro-basketball players are among the biggest offenders against good manners, polite discourse and even against criminal law. I understand that many fans will respond in the uncomprehending and incompressible fashion of Delonte himself. But I think the message should be set. Behave in some ways and you don't get meet the President, even when you win a championship.

That is what I liked about Steven Pinker's book the Blank Slate when I read it about ten years ago. At first you might feel a little discouraged. Pinker points out that human propensity to violence, intolerance & sloth were bred into us during evolution. Humans of the stone age who didn't react quickly and violently to threats didn't usually live long enough to become our ancestors. The good news is that institutions of civilization and social constraints can (and have) made us behave in ways that are - well - more civilized and socially acceptable.

I just started reading Pinker's recent book, the Better Angels of our Nature: Why Violence has Declined. I suppose that good intellectual rigor would dictate that I actually finish the book before commenting on the ideas, but I have read several reviews and I just finished reading an interview with the author in Veja that got me thinking about this. There is a good recent interview here. The best quick background is Pinker's TED talk. (BTW - TED lecture are really interesting in general.)

Pinker studied statistics on violent deaths. Of course there are no statistics on Stone Age people in the actual Stone Age, but it is possible to study more modern Stone Age people. It turns out that murder rates among primitive people about which we have records are astronomical. It is a myth that people were good and later corrupted by civilization. Civilization civilizes and it is better.

Historical records are spotty at first, but it is clear that life was much more dangerous and violent in any ancient or medieval period we study. Death was the penalty for all sorts of minor crimes. And it was never a fast death. Torture was common. Entertainments were cruel and bloody. But things improved, at least in the west.

Despite the great wars and murder on an industrial scale, the 20th Century has been the least violent in history. Of course, more total numbers of people have been killed, but that is because there are more total people. The proportions are way down.

Most people can vouch for this, if they think about it for even a short time. It is only in recent times that most of the population could expect to live a long life w/o ever being the victim of the deadly violence that was common to all humankind in the past.

Pinker has to take a lot of crap for pointing out the truth. One reason is simply because most people like to think they live in the most challenging times. Beyond that, we have much better reporting. If a couple people are killed in nasty ways anywhere in the country and increasingly the world, we get graphic and memorable details on the news.

A counterintuitive reason might be that things are actually improving so quickly that it makes the remaining problems seem that much worse. We repent much more sorrowfully the fewer acts of terrible violence because they seem more personal. "The death of one man is a tragedy; the death of a million is a statistic," is as quote attributed to Stalin, who understood how to kill individuals and millions. It is nasty, but perhaps accurate. We get inured to lots of violence and more afraid of a little.

Pinker also has to face what we might call the miserly industry. Politicians selling programs and NGOs seeking donations need to paint the in the direst colors. Pinker is a brave man to take this on.

Of course, why violence has declines is important. What goes down in human behavior could go back up. Pinker does not think the explanation is that humans have improved or human nature has changed. He is too much a scientist to think these things. He does not try to make a comprehensive explanation, but he mentions some possibilities. The first is the rise of stable states. He doesn't use the word strong, but prefers competent in the sense of keeping order and satisfying the basic needs of its people. Competent states must be strong, but not all strong states are competent. Nazis & communists had strong states.

Another explanation is free trade. In one of the interviews, Pinker quoted that "we can't bomb the Japanese because they make my minivan." Free trade goes with communications. The more we see people are being like us, the less likely we can treat them as sub-human.

We may be less violent because there is less incentive. Hunter-gatherers are always ready for violence. They sometimes commit violence because they fear violence from others and sometimes just to rip off their neighbors, which is one reason everybody fears violence from others. Nomads have incentive to violence, since they must defend their highly moveable property and can themselves easily move to escape retribution for anything they do. War used to be profitable, at least for the winners. Not so much anymore. Finally, there is a prosaic reason of habit. Many of us have lost the habit of using violent solutions.

I don't think violence or war will ever go away, but we have seen less of it. I have never been a victim of serious violence. I felt it personally when Alex was a hate crime victim. This is the kind of senseless thing you cannot purge. His attackers didn't know him or try to rob him. They merely acted out of the dark demons of human nature. I saw war in Iraq and like many observers, I was stuck by the banality of violence. I saw violence drop not because of persuasion but mostly because the Marines and our Iraqi allies established predictable order.

Violence and disorder always lurks under our veneer of civilization. The threat never is gone. We have to work all the time to channel the primitive passions and animal desires. I say "channel" not suppress. These impulses are sources of our energy and creativity. The uncivilized human is not evil or sinful, as was widely thought in some religious circles, but neither is there any such thing as a noble savage. Both these notions have caused great misery, as have the ideas that human behavior is determined by genetics or that humans are blank slates on to which society can stamp any design.

Life provides us with a never ending series of constrained choices. It is certainly not true that anything is possible, but making good choices can expand our contentment as well as our ability to make more good choices. Some human problems are intractable and some "problems" are not really problems in the sense that they cannot be solved. If we ask the wrong questions, we will come up with the wrong answers. We will never achieve a society where everybody is equal because people are not equal. We will never achieve a society w/o violence because people have propensity to selfishness which sometimes leads to violence.

But if we recognize constraints, rather than pretend they don't exist or that they result only from the actions of a few bad guys, we can achieve better results. "Going back" to a more primitive society is not an option. It would add to misery. Life was nasty, brutish and short in earlier periods. Going "forward" to a utopia is also not possible. Life is actually pretty good for most people in our Western market democracies and it is getting better for those in the developing world. Maybe we will just have to manage with what we have.

Republicans have an historic opportunity in 2012 not only to wrest the presidency from the Democrats but also to capture the Senate while maintaining control of the House. Indeed, this may be necessary to undo the damage inflicted on our nation by the incompetent Obama administration.

There is little doubt that Mr. Obama was totally unprepared for the demands of the presidency. He had no executive experience, little interest in foreign policy and was guided in his economic policy by ideological principles that clearly did not work. In addition, many of his appointees were equally ideology-bound, incompetent or both. What's more, Mr. Obama - by his own admission, "lazy" - was unwilling or unable to take the lead in advocating for his own agenda, preferring to leave the political horse trading to Democrat congressional leaders, Nancy Pelosi and Harry Reid.

Despite Mr. Obama's miserable performance in office - inviting comparisons with the hapless Jimmy Carter - his defeat in the 2012 election is by no means assured. He may not know what it means to be the leader of the most powerful nation on earth, but he has proved himself to be one of the most effective campaigners in American political history. Couple his superb oratorical skills on the campaign trail with an estimated budget of over $1 billion - far and away the largest in history - and you have a formidable opponent. Throw in the advantages of incumbency, not to mention the undoubted bias of the powerful mainstream media, and you're looking at a guy who has every reason to believe the lease to his residence at 1600 Pennsylvania Ave. will be renewed through 2016. Meanwhile, the Republicans are scrambling to select a challenger to the president, though it appears that Mitt Romney eventually will be chosen.

But none of the polling and speculation has considered who the vice presidential nominees will be. Traditionally, the selection of a running mate is made for reasons of political or geographical "balance" and often is a last-minute decision. As former vice president James Nance Garner once opined: "the vice presidency ain't worth a bucket of warm spit."

For 2012, it generally has been assumed that Joe Biden will once again grace the Democratic ticket with his presence. The Republicans have an ideal candidate for veep -Florida's freshman senator, Marco Rubio. However, Sen. Rubio, a Cuban refugee, has made it abundantly clear that he has no interest in the position.

As for the Dems, Mr. Biden may not be a cinch for the number two spot, especially if it appears the election will come down to the wire. Biden, who suffers from a serious case of foot in mouth disease, adds nothing to the ticket. As for his vaunted expertise in foreign policy, there has been not the slightest evidence of it in the first three years of the current administration.

No, the Democrats have a much better option, though thus far it has only been whispered in the soirées and on the cocktail party circuit in Georgetown and McLean. In a word, that option is Hillary.

Yes, that Hillary. Mrs. Clinton, who had little in the way of credentials for the Secretary of State position, has by most accounts, distinguished herself in the role. She has accomplished this impressive feat primarily by keeping a low profile and speaking softly while attempting to impose some coherence on Obama's incoherent foreign policy. That and also getting an attractive facelift.

The rumor is that Clinton and Biden will be offered the option of trading places. That would give Biden an opportunity to save face by emphasizing his nonexistent foreign policy expertise, while positioning Hillary for another run for the White House 2016. That likely will be her last opportunity as she will be approaching 70 years of age when Mr. Obama finishes a projected second term.

This scenario is by no means a sure thing as the Clinton and Obama camps are more rivals than comrades, and a deal ensuring that Hillary would play an important role in a second Obama administration would not be easy to hammer out. But the two camps are dominated by pragmatic politicians, and if an Obama-Clinton partnership is what it would take to ensure the Democrats maintain control of the White House, then it's a good bet they will find ways to make it happen.

Let's address the biggest one - abortion. All Republican candidates have to be against abortion and all Democratic candidates have to be for it. Most Americans are between the extremes. They believe that abortion should be legal, but with significant restriction. I suspect that most politicians agree, but articulating this position will kill any candidacy, be it Democrat or Republican.

Let's ask the pragmatic question. Does it matter if the President is for or against abortion? The President doesn't decide this issue. The most a President can do is to nominate Supreme Court Justices that agree with his position. These nominees have to get through Senate Confirmations. Then you have to believe they will never change their minds. You have to wait for the right case. It is a long and very uncertain process. So the pragmatic answer is that it really doesn't matter what the President really thinks about abortion.

In fact, the DETAILS of any presidential platform are not very important.Whatever he promises, no matter how sincere, will change as soon as he confronts real conditions. We should be smarter than to accept promises and pledges. If you want to know if someone will do a good job, take a look at what he has done in the past and how he has behaved in similar challenging situations.

My father used to tell me that you cannot build a reputation on what you are going to do. We made a mistake when we elected Barack Obama based on what he said he was going to do. Look at his experience. Why are we surprised when he failed? This time let's be smarter and NOT choose more Obama hope over real experience.

Below is something I wrote back in 2008. It still makes sense today. The part about Romney's ability in finances is even more important than it was back then. IMO, if we had elected Romney back in 2008, our financial system would be reformed much better and the recovery would be much stronger. This year, we can correct the mistake me made in 2008.

Is it possible to be TOO smart to be president? If we hired presidents based on resume and experience, Mitt Romney would get the job. No recent candidate has been more qualified for the office. But that is not how we pick presidents.

Leadership & Management

Romney has been an outstanding leader business and government. He built his own company and displayed special skill at turning around troubled operations. His skill in managing the Winter Olympics, outlined in his book "Turnaround: Crisis, Leadership, and the Olympic Games", is particularly relevant since it included extensive multilateral negotiations among international stakeholders and leading in a situation where he had limited formal leverage. He did under an elevated threat of terrorism. Romney is rare among politicians in that he has significant executive experience in private business, international organizations and elected office. No other candidate running is better and few are as good in this category.

Intellectual Abilities

Education alone is not proof of intellect, but when a man graduates in the top 5% of his JD/MBA class at Harvard, you give him the benefit of the doubt. After graduation, his ability to master arcane details of financial operations and clear grasp of complicated issues confirms our belief that he highly intelligent. During the 14 years he headed Bain Capital the average annual internal rate of return on realized investments was 113%. Maybe he was just really lucky for 14 years, but probably not.

Substantive Knowledge

See above. Romney is quick on his feet. During This Week with George Stephanopoulos he obviously could call on great reserves of knowledge. Stephanopoulos, a Clinton insider, wasn't throwing only softballs.

Communication Ability

Romney is no Ronald Reagan when it comes to communication. He is obviously on top of the issues and I bet he is wonderful with the give and take of small groups of experts, but like many smart people he lacks a bit of that ability to connect with people on a personal level. As I wrote, he is no Ronald Reagan.

Foreign Affairs

The Winter Olympics showcased Romney's ability to work with diverse international actors in a stressful and partisan environment. He also lived for more than two year overseas and speaks fluent French.

U.S. Economy

No presidential aspirant since Salmon P. Chase has had more relevant experience in finance. As governor, he took the State of Massachusetts from a $3 billion deficit to a surplus. I wrote more about his financial ability above.

Interpersonal skills

Romney is smart, well adjusted & good looking. Some people will dislike him for that reason alone. But a real consideration when dealing with people like that is that things come too easily. This impacts his communication ability as mentioned above. It is a little like the brainy kid who really cannot appreciate why you do not understand the differential equations the first time.

Special Considerations

Bigotry against Mormons still accepted by many otherwise tolerant people. A recent poll indicated that 88% say they would vote for a woman; 94% could support a black nominee, but only 72% would support a Mormon. Romney's challenge parallels the one faced by John Kennedy, an attractive candidate facing the threat of bigotry. Bigotry will be an undertow, although most people will be ashamed to admit it.

I don't feel sorry for myself. This is my choice and among my preferred outcomes given the other choices. I had several options for New Year events, but I don't much like the sorts of parties. It goes beyond just being boring, which I suppose I am. New Year has never been a happy time for me. I suspect it is not happy for lots of people, which accounts for much of the alcohol addling that accompanies most celebrations.

When I was a kid, New Year meant that I stayed up late watching the late-late movies. In those days TV was not twenty-four hours. On most days, the stations would sign off around 2am with the playing of the Star Spangled Banner. New Year was different.

My strongest New Year memory is a very sad feeling. It must have been 1972. I had been in the hospital after spiting up blood. Our doctor called it an ulcer. The diagnosis later kept me out of the Air Force. It also ruined my swim team season. I think it was a misdiagnosis, since it never recurred, but who knows. More serious was my mother's health. We knew there was something seriously wrong, but the (same) doctor couldn't figure it out. She died of leukemia nine months later. I didn't know this would happen, but I remember thinking that things would not be the same, if for no other reason that I was growing up.

I went down into the basement, where we had a refrigerator with Coke. Even then I drank a lot of the stuff (even though I was not supposed to because of the "ulcer"). Our basement was a little bit creepy. It was not finished. My father and grandfather had done a little work, but they were usually drunk when they worked and you could tell. It was also full of spiders and perpetually damp, so damp and full of spiders that when my pet newt escaped his terrarium he managed to survive two years down there, with sufficient habitat. When you wanted to turn the lights on or off, you loosened or tightened the bulbs on the ceiling.

It was one of those times when reality just bites. Outside was sub-zero Wisconsin winter and I could hear the wind. The one bulb that I screwed in threw harsh light that didn't reach into most of the corners. It was around midnight and I was the only one awake. I sang auld lang syne to myself in a quiet voice, not all the words. I didn't know all the words then and I don't know them now. And I didn't know what auld lang syne meant. But I mumbled as much as I knew and then went back up to watch the Late-late movies.

The movies were a strange choice for New Year festivities. TV 6 showed a bunch of World War II movies. I don't remember details, except that one of them ended with an American soldier in the Philippines trying to make a radio broadcast as the Japanese advanced. He repeated "Manila calling, Manila calling".

I don't vouch for all the details of this forty year memory. But that is what I recall.

I spent the New Year 1974 working at Medusa Cement. I was working the night shifts unloading hopper cars. I made good money, but it was cold outside and the work was outside, in the dark. We had to open the bottoms of the hopper cars with heavy crowbars. I couldn't get a good grip with my gloves on, so I took them off. Cold metal against warm skin gives you a good grip but creates a bit of pain. We would work outside as long as we could tolerate it and then retreat to a shack where we had a kind of propane heater shaped like a torpedo. That thing threw off lots of heat and fumes. My associate, a guy called LC Duckworth, the strongest man I ever met, actually set the leg of his coveralls on fire by trying to warm his feet too fast. I helped put him out.

I most enjoyed riding the cars. We had to push them off and jump on the back, turning the break as fast as we could when we got near the end of the track, which would have taken us in the KK River. It could be kind of exciting.

Our operation was on the river, as mentioned above, from which I could see the clock at Allen Bradley. At the time, this was the largest four sided clock in the world. We used to call it the Polish Moon. Next to it was a temperature sign. I watched the clock reach midnight on January 1, 1974. The temperature listed was minus five Fahrenheit.

My work during the Christmas break kept me solvent through the spring semester, but I didn't use all the money I earned wisely. I bought a bunch of booze and held a belated New Year party for my friends. I was determined to enjoy their company w/o drinking myself. I learned that it is impossible to enjoy yourself as the one sober person in a room full of drunks. The jokes just are not as funny. So I decided to catch up. In short order, I drank a full bottle of Tequila and I remember nothing else until the next morning, when I tried to get out of bed, but couldn't. I had never been so sick before and so far have not been since. I couldn't actually move around, or even keep down water until around 7pm. Then I was really hungry and thirsty. Tequila used to be my booze of choice, but I have not consumed a drop of tequila since January 4, 1974. Can't even abide the smell.

A few years later, when I didn't have a Christmas break job, my friends and I went out to the bars and night clubs. I don't recall the year, but it was probably around 1976, maybe 1975. We went down to Lincoln Avenue to a place called the President's Club. I don't know how we chose it, but it was full of old people. They did not appreciate us and we didn't enjoy their company, so we decided to go to Crazy Horse, a younger person club near the airport.

I don't recall why, but our friend Mark decided that he would ride on top of the car instead of inside with the rest of us. It was pretty crowded in the back seat, but mind you that this is Wisconsin with -10 nights in January. He got up on top of the car, sort of like a deer during hunting season, and hung on for the 2 ½ miles from Lincoln Avenue to the airport. He was never quite the same after that, but you have to respect his ability to hold on. There really isn't a lot to hold onto on top of a car. Jerry had a Cutlass Supreme, which had landau roof, giving a little more traction, but not that much.

After these experiences, I adapted to a more boring party scene. The only one that really stands out in the latter days is New Year 1985. Chrissy and I were invited to a kind of command performance at a fancy club called Leopoldina in Porto Alegre. It was actually a pleasant time, with a lot of good canapés. The place was not far from our house, so we could walk back, making it possible for us to drink more freely. It was a warm night in the middle of the antipodal summer and the place had a pool with a cover on the middle. Our friend Pedro drank a few too many caipirinhas. He jumped in the water and swam under the cover, coming up on the other side, evidently just to prove he could. It was not the usual type of behavior expected at such events. All of us just kind of pretended it didn't happen - even when it was happening - and never spoke of it again. But the next year Pedro's invitation ostensibly got lost in the mail.

This New Year will not produce any funny or sad stories. Well, maybe an old guy drinking a glass of Jim Beam chased by Coke Zero is funny or sad, but I am content. "Sou César" is coming on TV. That should take me through the New Year.