The Charlotte News
Friday, September 20, 1940
Site Ed. Note: Ah, remember the good ol' days when, as "O Cursed Spite" points out, the national debt was only 44 billion, and it was only to be passed to the great-great grandchildren, that is those being born right about now.
It has doubled, Senator Obama informed us last night in the second presidential debate of 2008, just in the last eight years. We owe China alone 500 billion, over eleven times the entire debt in 1940, as the world was proceeding to war and the United States was beginning at the time its most precipitant expansion of national defense ever.
And it was Senator McCain last night, not unlike Mr. Willkie in 1940, who suggested that the American people and its government in Washington got drunk with spending in the last eight years--four and a half of which had both houses of Congress and the White House controlled by his own Republican Party. But he is a maverick, he says, and will lead his Party and the country to change.
We have to question, however, how he proposes to be greatly more successful in doing so from the White House than he has been as one of either the majority or minority in the Senate for lo these many years.
But the culprit, they say, in the immediate financial crisis, which we are being told is the worst since the Great Depression, threatening the collapse of large financial institutions, is the deregulation of the lending industry and the wild and speculative lending which has taken place over the past several years. And with the downturn in home values, the argument goes, borrowers went into default and banks foreclosed and have gotten stuck with properties which cannot pay off the outstanding principal debt. Hence, the problem--so they say.
But the real issue as we see it is not the hapless borrower, but rather what got the borrower into the position where they couldn't make payments in the first place. If one's home value stagnates or falls, it is true enough that it becomes problematic to obtain more lending to refinance the old mortgage, depending on how high a percentage of loan to value ratio the borrower had in the first instance. If the original loan was 25% loan to value and property value has dropped 20%, the borrower still is at only 31% loan to value ratio, far from the maximum available from lenders, typically up to 70%.
And, regardless of the ratios, that doesn't directly lead to inability to make payments. Higher gas prices, tripling in the last eight years, is one fundamental change in the consumer's pocketbook. For it not only affects the cost of energy dramatically, both at the gas pump and in much higher utility costs, but it also impacts everything else in the economy. For as the cost of energy goes up, delivery costs of products, manufacturing costs of products, go up commensurately, and all down the line from supplier of raw materials to finished product, wholesaler and retailer to consumer. Noticed how the price of meat, for instance, has gone through the roof over the last couple of years, especially in the last year? Everything is affected by gas prices and energy prices. The OPEC crisis of the early seventies, and consequent higher fuel prices left in its wake, were what drove the economy into the so-called "misery index" of the latter seventies, high inflation, high interest rates. It took nearly twenty years, until the Clinton Administration, to fix it. And it has taken eight years to destroy those strides forward out of that morass.
So is it the borrowers' fault for not being able to make payments on a mortgage? Was it too loose regulation on loans to enable loans to people who couldn't afford them? Or was it not a combination of runaway inflation, huge hikes in basic costs of necessities, energy and energy impacting food prices, cutting into normal budgets? And isn't that what drove down home prices also? That plus, the stubborn greed of mortgage companies unwilling to renegotiate interest rates on loans to enable lower payments, especially when they had made loans at extraordinary interest rates, far above the prime lending rate. It is a fact that many of the so-called problem loans were loans originally made at extraordinarily greedy interest rates, 11% and higher, were on refinancing not purchase money mortgages, and those usually on fixed income retirees and the like--based on some premise of an inadequate credit score for a better rate, a score manipulated conveniently by the lending industry itself to enable charging of higher rates when prime lending rates were the lowest since the 1950's. That was not the borrowers' fault. It was the unrestrained greed of the lending industry.
So, instead of addressing the root cause of this problem, the Administration has waited until the eleventh hour of its time in office to declare a fiscal crisis and, a month before election day, summoned Congress to a supposedly do or die mission of passing a 700 billion dollar bailout of a corrupt banking and lending industry--a lending industry which has become next to organized crime in this country in recent years, replete with the hiring of thugs to harass borrowers on the phone, to infiltrate people's lives, even to bribe public officials in some cases, either with campaign contributions or directly, to obtain favorable treatment and to ignore statutes meant to protect consumers. And they get the bailout.
We need instead to get to the heart of the problem: energy, the crucial issue driving the engine of inflation, driving the engine of global warming, driving the engine of dependence on foreign oil, supplying the bank accounts for future acts of terrorism.
We are concerned about the lack of stress so far in either debate on this topic. It received passing attention last night, but still does not appear as the central focus it deserves. It merits attention far above concerns over national defense per se, for the two are inextricably bound together. Both candidates recite a checklist of things to be done: alternative energy, including wind and solar, clean coal technology, nuclear power, increased offshore drilling. Senator McCain adds hybrid and electric vehicles. Senator Obama has so far not mentioned that latter category as a priority he intends to stress if elected. Senator McCain puts much more emphasis on both nuclear energy and offshore drilling than does Senator Obama. Senator Obama points out that the country has only 3% of the world's oil, whereas it uses 25% of the world's oil and thus drilling will not solve the problem. He adds astutely that such also only compounds the usage of fossil fuels and thereby contributes to global warming.
But where are the specifics from each candidate as to how to go about solving this problem? How does either intend to stimulate the production and use of alternative fuels? Wind, solar, clean coal and nuclear fuels are useful in production of electric power on a macro scale. But what about the average consumer driving his fossil fuel guzzling motor vehicle?--the worst contributor by far to global warming.
Sure we need wind and solar and natural gas and clean coal technology. We don't need or want more drilling off shore as that leads to a false sense of security and only delays the solution while contributing to global warming. It is not just energy independence at stake as a national priority, but reducing and ultimately eliminating global warming--the true ticking terrorist time bomb on the whole planet, and one which doesn't leave us much time to arrest the problem until the problem will become irremediable, giving mankind potentially an irrevocable death sentence for his very existence. It is real, as the melting polar cap attests.
The electric car, with an acceptable range of mileage of about 400 miles between charges, comparable to the mileage range between fill-ups on conventional gasoline cars, quick charging capability of no more than 30 minutes to produce a full charge, and suitable appearance and acceleration to go with it and induce a market, appears the only real answer to the dilemma, to go along with the alternative energy packages.
We have talked of alternative energy since the seventies with only marginal results and an increasing global warming factor in the bargain. Nuclear energy is fraught with difficulty and danger as Three Mile Island and Chernobyl visibly attested 25 and 30 years ago. The acceptable storage of nuclear waste is a considerable difficulty. To build hundreds more of these dangerous facilities, as Senator McCain proposes, is to ignore that history, and to ignore the considerable resistance with which such attempts will be met, as in the seventies and eighties--that is unless we have all become lemmings with the passage of time, willing to trade one evil, global warming, for another, increased cancer risk and danger of nuclear accident.
The real culprit is the burning of fossil fuels, and while it is true that conventional power plants must have fossil fuels to operate, the primary consumer of fossil fuels is the motor vehicle, and the United States is the primary operator worldwide of motor vehicles.
So, rather than spending that 700 billion on a corrupt lending industry, we think it would have been most propitious to declare an equivalent emergency on the global warming crisis and devote that money to research and development of such an efficient and marketable electric vehicle, not bail out a bunch of fat cats who aim to fill campaign coffers for the extrication. The savings in having to provide potential future flood and hurricane relief, not to mention other adverse financial effects of global warming, changing areas suitable to food production, for instance, alone would more than offset the expenditure.
And, as we have indicated, even now you can have any car converted to electricity for a price, $4,000 of which the Federal government will rebate. The problem is that the range for the battery presently available in the market is impractical for most people, about 50-75 miles per charge, enough for a commute and basic chores, but given the relative cost of the conversion over and above the government rebate, simply not something most people are going to undertake--defeat, as if by design. The converted vehicle presently available would not be useable for pleasure driving or for someone who makes their living by use of the automobile and consequently drives 100 miles or more per day, as recharging the battery is an overnight proposition.
Yet, the technology exists for producing the better vehicle of which we speak. A company in England has developed one, thrity-minute charges which afford a 250-mile range. The problem is the price tag and thus marketability. That is where government incentives can aid in driving down the cost per widget and enable mass consumption--provided the government in earnest will get behind the thing.
The good part about electric vehicles is that no new infrastructure needs to be instituted, other than perhaps a bank of plugs installed at each of your local service stations replete with a vending machine to charge for use of it. That may be bad news immediately for the oil companies, but sooner or later the oil companies are going to have to go the way of the dinosaur anyway. Oil is a finite resource and the best grades of oil, even in the Middle East, are fast being consumed. Better to do it in a planned way and before it destroys the planet than to wait and have it imposed by an exhaustion of suitable supply--in one of those emergent midnight meetings called by the president.
It took the country about five years in the eighties to convert from the traditional LP record and turntable to the compact disc. Five years before that, no one would have allowed for such a change. While the conversion of automobiles to electric power is a good bit more complicated and costly, it can be done, provided more than checklist-style campaign rhetoric will attach to it priority. Declare that as an emergency and the country might begin to put stock again in its leaders and lawmakers.
We hope to hear more in detail from each candidate about the energy program each intends to promulgate if elected. So far, there has been a great deal of generality regarding alternative energy--rhetoric of the type we have heard since the 1970's--and look where we are after those 30 years: melting icecaps and fierce hurricanes, twisters and floods by the dozens.
Senator Obama does promise that energy will be one of three prime priorities in his administration, that plus the financial crisis and health care. Senator McCain appears to view the priorities about the same.
But we would like to know in the concluding debate, in some detail, precisely how each candidate intends to address the energy problem, not just the general standard rhetoric of more attention to stimulating alternative energy. How, with precision, is that to be done? Tax credits? Rebates from the government? Stimulating the states to provide tax incentives for both research and consumption of alternative energy? How are we going to loose the oil companies from their insatiable desire for excess profits?
And what about the electric vehicle? How is that to be stimulated under President Obama? Under President McCain? Saying that change is necessary is not to change the current policy. The present President has been saying it since at least 2005. Some change has occurred, more hybrid vehicles are being manufactured and marketed, a few more strictly electric vehicles likewise, even if not particularly desirable or practical, but not nearly enough, and not nearly fast enough to combat the real threat of global upheaval by the monster afoot among us.
There will come a point of no return on the melting of the icecap. Just when that will be, no one, with precision, can predict. But with 20% gone in a little over 25 years and with the pace accelerating, not decelerating, it does not take much imagination to understand the problem. And it does not take the melting of the entire icecap to create global disaster. It probably means that we have less than 20 years to arrest the problem or we face global disaster inside of 50 years, certainly within the lifespans of those now living.
Regardless of what opinion polls may say, we suspect that most people in truth would like to know, even before issues of health care and domestic security, what those answers are, with specificity, on this particular issue. For, domestic security is reliant on resolution of this global warming crisis. The financial crisis is dependent on its resolution. Health care, no matter how good or how universal its access, will be of little use if we're dead from the effects of global warming--or from cancer trying to employ nuclear power as a panacea.
Raymond Clapper's column of this date's page reminds of the basic necessities as impacting on war: that Hitler could not invade England or sustain the bombing effort without increased supplies of food and oil, that weather in any event prevented invasion until spring. Thus, would come the more sporadic bombing in the winter and spring; thus would come on June 22 the invasion of Russia, to afford precisely the food and oil necessary for continued sustenance of war, to obtain the approval of the America Firsters and isolationists who saw Hitler as a bulwark to Communism under Stalin. The whole war was about not having the basic necessities felt to be adequate to sustain life, an oppressed and weakened people in Germany, in Central Europe generally in the 1920's and early 1930's. Thus, came Hitler to obtain the good life for them again. The scapegoating of a conveniently despised minority was the way of tyrants to get the masses unified around an emotional issue, ethnic prejudice, much as had the Confederacy in the Civil War galvanized virtual unanimous opinion over both enslavement of a race condemned as subhuman stock animals and, more generally, the independent existence of states rights from the central government.
Had oil not been a precious commodity for Germany's sustenance, perhaps World War II never would have occurred, perhaps Hitler would never have come to power.
O Cursed Spite
Time Is Out of Joint For Willkie's Campaign
Mr. Willkie must grow furious at the untimeliness that makes his most vicious stabs at the vulnerable points of the New Deal go unnoticed amid the overwhelming events taking place abroad. If the issues of this Presidential campaign were wholly or largely domestic, the Republican candidate would be making more hay then Henry Wallace ever paid farmers for planting instead of cotton.
As it is in the welter of dismay at what's happening to Britain and what may happen to the United States, Mr. Willkie's telling points like the following go virtually unnoticed:
"What a piker was Louis XIV! And the Rajahs of Persia, with their diamonds, didn't spend pennies compared to these boys. The Roosevelt Administration has been on the most drunken orgy of spending that ever occurred in the history of the world."
As though in token of the truth of this great charge, the Federal debt was hitting a new high of $44,000,000,000 almost as Mr. Willkie spoke. And the expenditures were still going for the normal needs of the Government and for its unabated "emergency" spending to relieve the 1932 Depression--not for national defense. (The deficit so far this fiscal year is only a third of what it was at the same point last year.)
It is a serious and a justifiable accusation that Mr. Willkie makes against the New Deal, but, la!, nobody is paying much attention. The lucky breaks that have always taken care of the personal political fortune of FDR are again coming his way. Though he would never wish it so, a crisis has arisen to obscure the ineptness of his everyday administration, and on crises he thrives.
In the Dock
But These Culprits Scarcely Deserve the Charge
Fulton Oursler, the editor of Liberty, made a curious statement to the Executives' Club in Charlotte Wednesday evening. He said that the vast increase in crime in this country during the Twenties and Thirties was due to the debunking biographies of great men which first appeared after the World War.
In point of fact, the debunking biographies never were read by anybody but the upper five per cent of society, at most. And not more than ten per cent of the people who read them ever took much stock in their notion that great men consisted entirely of feet of clay--that old Ben Franklin was made up solely of his lamentable lapses from the Seventh Commandment and that Washington was summed up by that time he ordered a ha'penny's worth of bread and an intolerable deal of sack at a Baltimore inn.
Now and then, in the case of a young man lately out of college, these books did tend to produce vast cynicism, of course. But it is the commonest knowledge that such bright young men did not generally end up by taking Caligula as their model and landing in the hoosegow, but that most of them are now ensconced in "Who's Who" and other immensely respectable sites.
The crime population comes mainly from youths who never got far along in the public schools. And none of these ever read the biographies Mr. Oursler mentions. Nor did many of their school ma'ams, save with exclamations of horror.
Mr. Oursler is much too hard on the Rupert Hugheses, the W. E. Wordsworths, the Tom Beers, et al. If their theory of biography didn't last, they nevertheless did biography a service in making it readable and in rescuing it from the entirely platitudinous thing it had become in the years before the World War
Numbers Racket Operators Still Avoid Stern Penalties
At Greensboro Judge Rives of City-County Court announces that "the penalty of operating a lottery... in the future will be a straight road sentence."
But the judge had just suspended a sentence of two years for a woman named Nella Smith, wife of one George Smith, described as No. 1 Man in the numbers racket in Greensboro. This George Smith has a brother in Charlotte who has sometimes been mentioned in the prints
Nor had the judge stopped there. Most of thirteen other people convicted had got off with fines instead of effective jail sentences.
In all this the judge was acting, of course, as judges almost always act in North Carolina. The courts in the state are plainly reluctant to make up their minds to clap the big-shots in these rackets on the roads. In part that is no doubt a reflection of the feeling that gambling is at worst a venial crime, that it is inherent in human nature, and that efforts to put it down have always failed.
Nevertheless, the law is the law, and, in the case of these number rackets, it has been so long and openly flouted that there seems no reasonable cause why its most rigorous penalties should not have begun to apply a long while back. Moreover, there is pretty good reason to believe that these rackets have ramifications extending far beyond the mere question of public gambling. Certainly, if the rumors which fly about Charlotte and break out into offensive scandals have any truth in them, they are sources of corruption and degradation.
German Brazenness Has Its Purposes in View
There are depths of brazen effrontery before which the average human mind staggers and grows numb with incomprehension. Such was on view in Berlin yesterday when the Nazi stooge journals roared in righteous wrath for the "unlimited bombing" of England, for "no more consideration for civilians," as the result of an alleged British bombing of a German hospital for epileptic children.
This is the people which has been incessantly bombing London in the last thirteen days, concentrating on civilian quarters and monuments--killing men, women and children by the thousands, destroying works of art worth more than all Germany--by way of spreading terror.
It is in part the Nazi race theory, brazenly put forth by a "high spokesman" to Louis Lochner, of the Associated Press, the other day--that one German life is worth ten or more British lives. It is in part the Hitler theory of the lie--which is that by staggering people with assertions so brazen as these, you make them wonder if there is truth in them.
But there may be something else here, we hope--the probability that the Nazis are suffering so under British counter-bombing that the German people are beginning to ask questions about the propaganda which they have been fed. Early in the war Hitler himself shouted in one of his speeches that the German air force had been made so strong that not a single Allied bomber would ever penetrate German defenses. And Goebbels has consistently fed the German people on the vision--naturally delightful to the German soul--of their awful bombers swarming out over the earth, killing the women and children of other peoples, while they themselves enjoyed absolute immunity.
The faces of Herr Goebbels and Herr Hitler are naturally a little red, and need some loud noises to cover their confusion.
It is possible also that this uproar is a hedge against the receding chances of invasion of England. On Jan. 1, 1940, Adolf Hitler promised his people positively that he would end the war this year. Now he begins to talk of five years. Even for Germans that will need some explaining--or in the absence of plausible explanation, a great deal of diverting of attention.
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