Cancel Developing Country Toxic Debt

The worst financial crisis since the 1930’s, if not ever, is shaking the world’s financial system to its core. Congress authorized the Treasury Department to spend $750 billion to support the U.S. banking system, and with the prior loans and efforts, the sum that we are warned has and will be spent is nearly $1 trillion. If published reports are accurate, the European governments are prepared to spend $2 trillion to support the European banking system. If only Carl Sagan was still here to tell us how many billions and billions that is.

The New York Times reported on October 15 that British Prime Minister Gordon Brown is calling for a “new Bretton Woods” by which he refers to the architecture of the current global financial system that was established at the conclusion of World War II. At Bretton Woods, a resort in the New Hampshire mountains, the Allied victors (meaning primarily the US and the UK) established the framework for the International Monetary Fund, whose goal was to provide international financial stability with fixed exchange rates and balance of payments assistance. In the 1950’s a development bank was formed ostensibly to assist the developing world, and it has grown into what we now know as the World Bank.

These international financial institutions were supposed to ensure stability and development, and it appears that they are no longer up to the task. The reason for the lack of stability may be as simple as the growth of technology. When they were established, money was stored in vaults and usually consisted of gold or silver, hence the Pound Sterling, and labor was involved in moving it around the world; today, money is stored in digital accounts kept on computer servers, and vast sums move from New York to London or Singapore and back with a click of the mouse. Financier George Soros demonstrated how the world had radically changed when he brought the Bank of England to its knees one night by selling British Pounds faster than the Bank could soak them up.

Or the explanation for how we got into this predicament may be as simple as the contemporary fact that the banks who loan money for things like residential mortgages sell them quickly to somebody else before payment comes due and the buyers, who may be in another part of the world, are lulled by the assurances of smooth talking brokers with the gold plated reputations of a Lehman Brothers or Goldman Sachs.

Whatever may be the explanation for how we got here, all the hullabaloo over the plight of our Western banks has pushed one other reality of the existing global financial system out of sight. According to the UK based NGO, Jubilee Debt Campaign http://www.jubileedebtcampaign.org.uk/, today developing countries’ debt stocks stand at a staggering $2.9 trillion and every day the poorest countries pay the rich world almost $100 million in debt repayments. In many of these countries millions of people live on less than $2 per day, poverty is everywhere, opportunities and choices are limited or non-existent, and we have yet to see the impact of this year’s doubling of the price of energy, which will only make matters worse.

It is true that economic growth in the developing world has lifted millions of people out of the most abject poverty, and some credit for that progress may be due to the international financial institutions’ efforts. But that success is not evenly distributed around the world and in some regions the problem is getting worse, not better.

The developed world’s Heavily Indebted Poor Counties (HIPC) Initiative was launched in 1996 and expanded in 1998, aiming to bring together the bilateral, multilateral and commercial creditors of some of the poorest countries, and to reduce their debts to a level deemed “sustainable”. In 2005, the G8 countries added the Multilateral Debt Relief Initiative. But, according to the Jubilee Debt Campaign, so far these efforts have delivered about $88 billion of irrevocable debt cancellation to 25 countries. In 10 years, a not so grand total of $88 billion in debt relief has been achieved on a debt that now totals $2.9 trillion.

Surely, if the governments of the developed world’s financial system can come up with $3 trillion in about three weeks time to take care of themselves, there can no longer be any excuse for not addressing the developing world’s $2.9 trillion problem, too. The developing country debt is every bit as toxic as any traunch of ill advised securitized residential mortgages in the developed world.

While the world’s public and private bankers are saving themselves and restructuring the global financial system with a new Bretton Woods, it would be a good time to enact comprehensive and meaningful cancellation of developing country debt.

Mr. Murphy was on the bus

I think I saw Mr. Murphy today. I took the bus to Tacoma for the first time; I work in Seattle and usually drive when I have business in Tacoma, but today I tried something new. An old guy got on the bus and shuffled down the aisle to a seat right behind me, and shortly after he sat down I heard a drawn out dry cough come from deep within him. I've been fighting a cold and didn't want it to get any worse and thought of moving to another seat, but after the second or third time I didn't hear it anymore; maybe he went to sleep. He reminded me of the late Donald B. Murphy, who was the ancient founder of a drilling company I once represented in a case many years ago.

It was a landslide case that arose on a Thanksgiving weekend -- when the rain came down so hard and steady that the Mercer Island floating bridge on Lake Washington sunk. It takes a lot of water to sink a floating bridge. It rained like that all over Western Washington that weekend, three inches or more in a 24 hour period a couple days in a row; the weatherman called it a hundred year storm, which is supposed to mean that much rain comes not more than once every hundred years, but it seems that we get one of those storms about once every other year.

When it rains like this the hillsides start moving -- the rain lubricates the glacial till -- and slabs of earth slip from high ground to low in a kind of leveling flow. There were landslides all over Western Washington that weekend, including one on the Kennydale Hill that allegedly resulted in the death of an old gentleman who lived on the side of the hill.

Mr. Murphy's drilling company was hired to build a retaining wall at the base of the Kennydale Hill where a condominium development was going in, and shortly after they got the wall in, it began to rain. After several days of steady rain, the hillside began to move. Although it is a fact that the new retaining wall stopped that whole hillside from flowing right out onto Interstate 405 that weekend, the heirs of the old man on the hill sued Mr. Murphy's company, and everybody else who worked on the condo project, for wrongful death and other misdemeanors.

Mr. Murphy was long retired by the time all this happened, but I needed a company representative to attend the trial with me and he was chosen. He was a gruff and grizzled old man who survived lung cancer after they took out one of his lungs, but it hardly slowed him up. He came to court early and energized every day dressed in a clean pressed shirt, a regimental tie, and a blue blazer.

During jury selection, it turned out that one of our prospective jurors was an editor for the Seattle Post Intelligencer, and I thought he might know a bit about the rains that caused the hill to move. So in the guise of finding out if this guy could be a fair and impartial judge of the facts of our case, I had him tell us all about the rains that weekend, the flooding, the sinking of the bridge, and all the landslides that happened all over Western Washington. The Seattle PI, as it's known, is the more liberal of our two daily newspapers, and I guess Mr. Murphy had some kind of run in with them, and he wasn't too sure where I was going with all my chummy questions of this newspaper man. During our next break, Mr. Murphy shuffled up to me and said so everybody else could hear, "I don't know what you're doing, but you better get rid of that guy from the fucking PI."

He had a way of making his point understood. He also had a low wet cough that came from deep within his one remaining lung. It was a rumbling thing that took quite a bit of work from start to finish and the first time I heard it I wasn't sure if he was going to make it or expire right there in the courtroom. But he was a tough old guy and one more unpleasant bodily noise wasn't going to disturb him no matter what. He sat right behind me in the court room in the first row of seats, and this gurgling choking cough was not something you could miss. Trouble is, after the trial got started, it seemed to me that one of those coughs came up right about the time some damaging testimony came in, as if to put an exclamation point on something I wished had never been said.

Early on in the case, Mr. Murphy would stand right next to the door as the jury came and went, and he would nod or wink or give them some other sign of affection until one of them said something to the judge who told him to stop. About half way through the trial he attended a luncheon and came back with a gigantic gold medal hung on a red, white and blue ribbon around his neck. There was no missing him whenever he came into the courtroom and this time everybody stopped and watched him; he had a grin on his face from ear to ear as if he had just won an Olympic Gold medal. The jury loved this old man and I did, too.

So it was that I think I saw him again today on the bus to Tacoma even though he passed a few years ago. And tucked up under one arm I do believe he had a copy of the Seattle PI.

Whither American Exceptionalism?

Is there room still in history for American exceptionalism? Or have we wandered to the end of the American rainbow only to find, rather than a pot of gold, an empty pot and bankrupt ideology?

This notion of American exceptionalism gained currency before our independence; it is at once a narrative and an ideology and it has served as the basis for the way we look at and, for better or for worse, how we treat the rest of the world.

Its power as a narrative lies in its re-telling throughout American history. The names and context change but the structural foundation remains the same – we are special – we possess special attributes and visions and capabilities and purpose. From the beginning of the American project these special attributes were said to be God given and infused with messianic features. We were the “city upon the hill”, a promised land, destined for an errand in sacred history; President John F. Kennedy said we would “pay any price, bear any burden, meet any hardship, support any friend, oppose any foe to assure the survival and the success of liberty;” and more recently Secretary of State Madeline Albright said we were the “indispensable” nation.

It is without question a distinctly American conception of liberty, one in which the vision did not neatly correspond to the domestic realities, but one to which all Americans subscribe nonetheless. In the context of the greater Middle East, Michael Oren showed us how the story is told and re-told in our use of power, our professions of faith and our popular literature, art and motion pictures in his work “Power, Faith, and Fantasy: America and the Middle East 1776 to the Present.”

Its power as an ideology is revealed by the way government and the vested interests have mobilized American exceptionalism to legalize, or at least to justify, our conduct vis a vis the world. We are special, our values and traditions are the best, and everybody else had best get with the program. At its best, Woodrow Wilson mobilized the ideology to fight famine and pursue world peace. At its worst, the current administration mobilized the ideology in pursuit of world war.

The current financial crisis fits squarely within the narrative and ideology of American exceptionalism. The story of the American economy is one of boom and bust, its structure is life, liberty and the pursuit of property; and the latest boom rose from the ashes of World War II when the US dollar became the world’s measure of value. If the government will just let the good times roll then, by the grace of God, the good times will roll; and man what a roll it’s been. But a bleak chorus has become hard to ignore. While the rich really are getting richer, the gap between the top and bottom is growing by exponentially increasing quantum leaps, and those left in the middle are being pushed toward the bottom faster than they can climb into the top.

The ideology of America’s nearly unrestrained capitalist system rewards creative work; and the larger the scale of the creative work the greater the reward. In the span of twenty years, a college drop out became the wealthiest man in world history right here in America. The scale of his invention is global; with a left click of the mouse the world comes to our desks and with another left click we can buy or sell anything we want anywhere in the world we choose. And now we have seen how the magic of creative financial instruments made gold from base materials, and with a click of the mouse the trick appears to have ensnared investors from every corner of the world. It is an ancient and seductive ideology as greed has been a human foible since the dawn of time. But what could be safer than an investment in America, especially one that is insured by the largest insurance company in the world, AIG? It is not mere coincidence that AIG stands for American International Group.

Marx predicted that the cycle of the booms and the busts would eventually cause the system to implode, but he was wrong; mankind’s creative impulse is stronger than the destruction it causes, and from the destruction wrought in the current financial crises new opportunities, new possibilities and new structures will arise. The larger question, it seems to me, is whether that which we have believed in for so long – America’s promise to lead the world to a brighter future – is a promise that anybody, anywhere wants to follow any longer.

The Kingfisher in Yelm

Early in the campaign, the leader of the Democratic district in and around Yelm called me midweek and asked me if I wanted to come speak to the caucus meeting on Saturday. This was one of my first invitations to speak at a political meeting, and I immediately said yes.

He said, "We should have about 800 people there, and last time we might have had 85 people show up." I knew what he was referring to because my wife and I went to our caucus meeting the week before, and we were glad to get there before it was too crowded to get in the door. There was a certain energy this Spring that made me glad I decided to participate in this election season.

Yelm is on a flank of Mt. Rainier, southeast of Olympia, southwest of Tacoma, and very far away from the very liberal neighborhoods of Seattle. It is rural, hard by the Nisqually Indian Reservation, and growing rapidly with families who are happy to find an affordable place to live. The caucus meeting was in the junior high school gymnasium.

I got there on time, found a table for my flyers, and set out to introduce myself to these Democrats. I checked in with the man who invited me and he said I'd get a few minutes to say something when they got started.

Five candidates were there that morning, four who were running for local legislative seats and me, the only judicial candidate. Everybody I met said they'd never seen a candidate for the Supreme Court before.

After the meeting was called to order and the formalities completed, the candidates were called up to say something. The first three legislative candidates gave what I would call a typical, boring, long winded candidate's speech and each of them received tepid, polite applause, at best. This was one of my first campaign speeches and it was by far the largest audience I had ever spoken to -- the gym was full to the rafters. So I planned to keep it short and simple.

After I was introduced, I said a few things about who I was, what I was running for, where I went to school and where I had been working. And then I said, "I want to leave you with this, the most important role of the courts is to protect the people from the power of government."

As soon as the words were out of my mouth, over 800 people erupted in a roar of approval that nearly blew me off the stage. And all the way back to my table at the back of the gym, folks clamored after my flyers, my handshake and a chance to pat me on the back. It was a very remarkable experience.

And to think -- these were Democrats.

A 92 Year Old Mother

Many aspects of the recently concluded campaign will stay with me forever and here is an example.

While walking back to my office after what I thought was a very good radio interview, a 92 year old lady called me. I used my cell phone as the campaign telephone and voters called me to find out what I thought about certain issues. Most callers were surprised that I answered my own phone; but I was happy they called and happy to talk to them.

The calls usually started out this way, "I am a voter trying to decide who to vote for and wanted to ask you a few questions." Today's call started the same way.

She said, "Do you favor the death penalty?"

This is a question that I prefer not to answer because in Washington the death penalty is well supported by the voters, and I am personally morally and philosophically opposed to capital punishment. I believe we diminish our humanity when we choose death, and when we make choices we should choose life.

I told the caller, "Ma'am the death penalty is the law of this state and it is clearly consitutional."

She said, "But you haven't answered my question." And I could tell that this 92 year old lady was not going to let me off easy.

So I replied, "But my personal opinion is totally irrelevant because my job as a judge would be to apply the law and Constitution as written by others and not impose my personal opinions as to what the law ought to be."

She said, "Well why are there so many people on death row who have not yet been executed, this is unacceptable!" Seeing an escape door, I said, "You can probably blame the federal judges for that."

With the more conservative callers, like this lady, I would emphasize my Marine Corps experience, and I mentioned it to her when she said she wanted to know more about me.

She said, "I had seven children." I said, "That is terrific, we have two."

She said, "One of my sons was a Marine, and he was 19 years old in 1968 when he was killed in Vietnam." And then she began to cry.

So there I am standing on a sunny street in Seattle, proud of my radio appearance and happy to get this lady's call, when her grief over what happened to her 40 years ago suddenly poured into my ear and directly to my heart.

Let the Sun Shine In!

Seattle attorney Hugh Spitzer wants to know where the candidates for the Supreme Court stand on opening up the Supreme Court's rule making process to more tranparency, and I say "let the sun shine in!"

Mr. Spitzer's article in today's Seattle Post Intelligencer (August 13, 2008) reveals that, alone among our branches of government, the Supreme Court makes rules that impact the courts and the executive and, therefore, the people of Washington, behind closed doors. No good reason exists to treat the Supreme Court's rule making process any differently than the other branches of government.

The Canons allow a judicial candidate to advocate improvements to the administration of justice, and if I am elected I will do what I can to open up the Court's rule making process to greater transparency.

In her 6 years on the bench it is notable that Justice Fairhurst has done nothing about this issue. A lack of leadership on this issue would be consistent with her record of keeping public records secret. The voters can change that on August 19.

My Endorsements

Those who have endorsed my candidacy for a seat on the Washington Supreme Court include:

• The Seattle Times, which is the largest newspaper in Washington,
• The Retired Firefighters of Washington,
• The Seattle Police Officers Guild,
• The Chartered Institute of Arbitrators,
• The Liability Reform Coalition,
• Washington Arms Collectors,
• The Snohomish County Farm Bureau,
• People from all walks of life, like Ralph Cutter -- a Native American and retired Teamsters truck driver whose health insurer sued him to recover over $70,000 in health care payments made to his deceased wife's doctors for medical bills before she died of cancer, public school teacher Ellis Reyes, Seattle orthopedic and plastic surgeon Dr. Alfred Blue, MD, JD, civil engineer Bruce Dodds, P.E., Spokane business executive John Sage, radio host Kirby Wilbur, radio host and reporter John Carlson, and lawyers all over the state.

The Seattle Times said: “we believe he is the best candidate to protect the rights of the people.”

Even those who endorsed my opponent praised my qualifications and capabilities.

For example, the Tri-City Herald said: “the entire board agrees Bond would add a scholarly and forceful dynamic to the court.”

The Yakima Herald Republic said: “we found Bond to be a credible candidate, certainly no extremist.”

The Seattle Post Intelligencer said: “we were impressed.”