Thursday, October 30, 2008
Mindanao Explosion
Sentries and other soldiers who were asleep were roused from their beds after the ammunition dump at the Army's 6th Infantry Division headquarters in Awang, Maguindanao, exploded shortly before dawn Friday. http://ping.fm/pv4Rr
Economist Endorses Obama
America should take a chance and make Barack Obama the next leader of the free world
IT IS impossible to forecast how important any presidency will be. Back in 2000 America stood tall as the undisputed superpower, at peace with a generally admiring world. The main argument was over what to do with the federal government’s huge budget surplus. Nobody foresaw the seismic events of the next eight years. When Americans go to the polls next week the mood will be very different. The United States is unhappy, divided and foundering both at home and abroad. Its self-belief and values are under attack.
For all the shortcomings of the campaign, both John McCain and Barack Obama offer hope of national redemption. Now America has to choose between them. The Economist does not have a vote, but if it did, it would cast it for Mr Obama. We do so wholeheartedly: the Democratic candidate has clearly shown that he offers the better chance of restoring America’s self-confidence. But we acknowledge it is a gamble. Given Mr Obama’s inexperience, the lack of clarity about some of his beliefs and the prospect of a stridently Democratic Congress, voting for him is a risk. Yet it is one America should take, given the steep road ahead.
http://ping.fm/QxCwv
IT IS impossible to forecast how important any presidency will be. Back in 2000 America stood tall as the undisputed superpower, at peace with a generally admiring world. The main argument was over what to do with the federal government’s huge budget surplus. Nobody foresaw the seismic events of the next eight years. When Americans go to the polls next week the mood will be very different. The United States is unhappy, divided and foundering both at home and abroad. Its self-belief and values are under attack.
For all the shortcomings of the campaign, both John McCain and Barack Obama offer hope of national redemption. Now America has to choose between them. The Economist does not have a vote, but if it did, it would cast it for Mr Obama. We do so wholeheartedly: the Democratic candidate has clearly shown that he offers the better chance of restoring America’s self-confidence. But we acknowledge it is a gamble. Given Mr Obama’s inexperience, the lack of clarity about some of his beliefs and the prospect of a stridently Democratic Congress, voting for him is a risk. Yet it is one America should take, given the steep road ahead.
http://ping.fm/QxCwv
Monday, October 20, 2008
Euro Generals
The National Police Commission (Napolcom) on Tuesday said its investigation into the Moscow mess will focus on how retired Philippine National Police (PNP) comptroller Eliseo dela Paz acquired 105,000 euros (P6.9 million) in "contingency funds" when the amount was way below the budget approved for the trip.
MCCAIN's PLEA
Sen. John McCain campaigns in St. Charles, Mo., focusing on taxes, the economy and distancing himself from President Bush. http://ping.fm/CdNQj
The Masa for Obama
Working for the Working-Class Vote
By MATT BAI
For a guy who just four years ago was running his first statewide campaign, Barack Obama has made startlingly few missteps as a presidential candidate. But the moment Obama would most like to take back now, if he could, was the one last April when, speaking to a small gathering of Bay Area contributors, he said that small-town voters in Pennsylvania and other states had grown “bitter” over lost jobs, which caused them to “cling to guns or religion or antipathy toward people who aren’t like them.” That comment, subsequently posted by a blogger for the Huffington Post, undercut one of the central premises of Obama’s campaign, an argument he first floated in his famous 2004 convention address — that he could somehow erode the tired distinctions between red states and blue ones and appeal to disaffected white men who had written off national Democrats as hopelessly elitist. Instead, in the weeks that followed, white working-class primary voters, not only in industrial states like Pennsylvania but also in rural states like Kentucky and West Virginia, rejected his candidacy by wide margins, and he staggered, wounded, toward the nomination.
“That was my biggest boneheaded move,” Obama told me recently. We were sitting across from each other on his plane, the one with the big red, white and blue “O” on the tail, flying some 35,000 feet above Nebraska. “How it was interpreted in the press was Obama talking to a bunch of wine-sipping San Francisco liberals with an anthropological view toward white working-class voters. And I was actually making the reverse point, clumsily, which is that these voters have a right to be frustrated because they’ve been ignored. And because Democrats haven’t met them halfway on cultural issues, we’ve not been able to communicate to them effectively an economic agenda that would help broaden our coalition.”
Obama was wearing his classic starched white shirt (how many of those shirts does he have, exactly?), along with a tie the color of a robin’s egg. One on one, he has a crisp and effortless conversational style; his answers are thoughtful, but you rarely glimpse the thought process itself, the internal calibrations that every politician is constantly making. The only outward sign that Obama is laboring over his formulations is the way he will often elongate the word “and” for several seconds, a processing hitch that enables him to preview in his own head what he is about to tell you, like one of those five-second delays the networks use so they can bleep out profanity.
“I mean, part of what I was trying to say to that group in San Francisco was, ‘You guys need to stop thinking that issues like religion or guns are somehow wrong,’ ” he continued. “Because, in fact, if you’ve grown up and your dad went out and took you hunting, and that is part of your self-identity and provides you a sense of continuity and stability that is unavailable in your economic life, then that’s going to be pretty important, and rightfully so. And if you’re watching your community lose population and collapse but your church is still strong and the life of the community is centered around that, well then, you know, we’d better be paying attention to that.”
In a few minutes, Obama would arrive in Colorado for a campaign stop, followed by another in Nevada — two critical states that neither of the previous two Democratic nominees, Al Gore and John Kerry, came all that close to winning, largely because of their abject failure to connect with white men, especially lower- and middle-class men in rural and exurban counties. A few weeks earlier, I watched Obama campaign in the coal country of Appalachian Virginia, where no one I talked to could remember ever seeing a Democratic nominee come through town. I asked Obama how he thought he could convey to these voters that he was not, in fact, an anthropological observer of the culture. Four years ago, Kerry, a man who was once actually pretty comfortable holding a semiautomatic weapon, donned his hunting gear and traipsed into the woods of Ohio, trailed by cameras, to shoot some geese. The stunt made him look absurd, like an investment banker at rock-’n’-roll fantasy camp.
“First,” Obama said, “you have to show up. I’ve been to Elko, Nev., now three times.”
“Elko?” I asked twice, straining to hear him over the engine noise.
“E-L-K-O.” He sounded vaguely annoyed, as if I had just confirmed something about the media he had long suspected. “That, by the way, is the reason we got more delegates out of Nevada, even though we lost the popular vote there during the primary. We lost Las Vegas and Clark County, but we won handily in rural Nevada. And a lot of it just had to do with the fact that folks thought: Man, the guy is showing up. He’s set up an office. He’s doing real organizing. He’s talking to people.
“No. 2 is how we talk about issues,” Obama went on. “To act like hunting, like somebody who wants firearms just doesn’t get it — that kind of condescension has to be purged from our vocabulary. And that’s why that whole ‘bittergate’ episode was so bitter for me. It was like: Oh, this is exactly what I wanted to avoid. This is what for the last five or six years I’ve been trying to push away from.”
As we talked, consequential events were reshaping the world below. At that very moment, Republicans in Washington were scuttling a $700 billion emergency plan for Wall Street, causing the markets to hemorrhage more value in a single day, in terms of sheer dollar amounts, than at any time in American history and dragging the economy back into the center of the campaign — precisely where John McCain and the Republicans didn’t want it. And yet, what Obama and I were discussing, this cultural disconnect between Democrats and large swaths of white men, remained a lingering and crucial question. It now appeared that the only thing that could still threaten Obama’s march to the presidency was the same resistance from these voters that had, at the last moment, dashed the dreams of both his Democratic predecessors. Gore and Kerry tried, somewhat dutifully, to prove their cultural affinity for regular white guys; when that didn’t work, they tried to change the subject to policy platforms instead, hoping in vain that voters would just sort of forget about all that guns and church stuff. In both cases, that failure translated directly into defeat. According to exit polls in 2004, Kerry lost white men by a crushing 25-point margin.
Given the fact that he is not, in fact, a white male, Obama would seem to face an even-less-forgiving landscape among white-male voters. While voters overall give Obama the advantage over John McCain when asked which candidate is better equipped to navigate these tumultuous economic times, Gallup polls throughout the summer and into the fall consistently showed McCain with a double-digit lead among white men who haven’t been to college.
And yet Obama has persevered, devoting far more time and money than either of the last two Democratic nominees on an effort to persuade working-class and rural white guys that he is not the elitist, alien figure they may be inclined to think he is. The Obama campaign has more than 50 state offices throughout Virginia, a state no Democrat has seriously contested since Obama was a teenager. In Indiana, there are 42 offices; in North Carolina, another 45.
Mathematically, Obama can probably win the election without winning any of these states — or Nevada or Montana or any of the other conservative states where he has campaigned in the past several months. What he probably can’t do, if he doesn’t convert enough voters to throw at least a few traditionally red states into the blue column, is get beyond what he dismissively refers to as the “50-plus-1” governing model, the idea that a president need only represent 50 percent of the country (plus 1 additional vote) to command the office. From the start, Obama has aspired not simply to win but also to stand as a kind of generational break from the polarized era of the boomers, to become the first president in at least 20 years to claim anything more than the most fragile mandate for his agenda. Absent that, even if he wins, Obama could wake up on Nov. 5 as yet another president-elect of half the people, perched uncomfortably on the edge of an impassable cultural divide.
WHEN LYNDON JOHNSON SIGNED the Civil Rights Act of 1964, he famously predicted that his party had just signed away the South for a generation to come. In truth, the outcome was more profound than Johnson could have imagined. The culture war, whose Bunker Hill was the campus quad of the 1960s, soon spread to just about every region of the country, where rural and working-class white voters, already anxious over economic change, recoiled at the vehement strain of antimilitary, antiestablishment liberalism that took hold of the Democratic Party in the era after Selma and Saigon. The effect, especially on the presidential level, was immediate and drastic. In the 32 years before Johnson made his pronouncement, Democrats controlled the White House for all but 8 of them, and only twice — in 1948 and 1960 — had the Democrat won by what could be considered a narrow margin. In the four decades since, only two Democrats have managed to get elected, and only one has claimed a majority of the popular vote. (This was Jimmy Carter, who eked out exactly 50.1 percent without winning a single state west of Texas.) By the turn of the century, almost completely driven from the South and West, Democratic presidential candidates had taken to focusing all their efforts on an ever-shrinking pool of coastal and industrial states.
Obama, though, has talked from the beginning about running a “50-state” campaign, and he has spent considerable time and money in more culturally conservative parts of the country where Democrats rarely, if ever, venture, from Elko and Appalachia to Billings, Mont., and Las Cruces, N.M. To a large extent, this reflects Obama’s personal conviction about modern politics, which he first laid out in his 2004 convention speech when he talked about worshiping “an awesome God in the blue states” and having “gay friends in the red states.” He told me, when we talked, that Washington’s us-versus-them divisions had made it impossible for any president to find solutions to a series of generational challenges, from Iraq to global climate change. “If voters are similarly polarized and if they’re seeing two different realities, a Sean Hannity reality and a Keith Olbermann reality, then we’re not going to be able to get done the work we need to get done,” Obama said.
It is also true, however, that a series of circumstances beyond his control have conspired to make a truly national campaign more feasible for Obama than for any Democrat since Carter ran in the dark days after Watergate. First, of course, there is the national sense of despair over the Bush era, which has made the president more of a uniter than he ever intended and which has enabled Democrats to get a hearing in parts of the country where they were being run off the land 10 years ago. Then there’s the advent of the Internet as a veritable money vacuum, which has enabled Obama to raise more money than any Democrat in history (about $460 million, at last count), meaning he can afford to pour some resources into states he has only a remote chance of winning. Perhaps most important, though, Obama’s campaign has also been able to take advantage of a drawn-out Democratic primary campaign that came through all 50 states before it was over — a draining experience that nonetheless established networks of volunteers and newly registered Democratic voters in states that in any other year would have been overlooked. In three states — Texas, Indiana and North Carolina — more people voted in Democratic primaries this year than voted for Kerry on Election Day in 2004.
For Obama’s political advisers, expanding the electoral map is not about making a philosophical statement; it is simply a strategic imperative. Presidential campaigns, after all, are about getting to 270 — the minimum number of electoral votes needed to win. In relying on the same 20 or so winnable states over the past few elections, Democratic nominees have given themselves almost no margin for error. By contrast, Obama’s campaign, in addition to fighting for the usual complement of about a dozen swing states, has shifted considerable resources into a group of states — the list has, at one time or another, included Virginia, North Carolina, Indiana, Montana, Nevada, North Dakota and Georgia — that haven’t been strongly contested for at least three elections, if not longer. (Alaska was on the list, too, until McCain chose Sarah Palin as his running mate.) The idea here is that the more states you put in play, the more permutations there are that lead to victory.
“If you expand the map, you improve your chances,” David Axelrod, Obama’s lead strategist, told me recently. “We didn’t want to be in that same dreary position where the entire election hinges on three states, and you stay up all night waiting to see who won them.”
Let’s assume, for the sake of argument, that Obama starts with the same relatively safe 19 states (plus the District of Columbia) Kerry won in 2004, along with Iowa, which Gore won and where polls have shown Obama comfortably ahead. He could actually prevail without winning either of the two big perennial battleground states, Ohio and Florida, simply by winning Indiana by itself or by winning both New Mexico and Virginia. It is McCain, in fact, who, having earlier this month abandoned a foray into blue-collar Michigan, seems now to be facing the more restrictive map, betting on the notion that he can hold just about every reliably Republican state while also winning in battlegrounds like Florida and Ohio.
At times during these final months of the campaign, though, Obama’s optimism about the impermanence of blue and red shading has run up against the hard reality that after 40 years of culturally divisive politics, colors don’t easily bleed. Before the conventions, for instance, most polls in North Dakota showed McCain in front by only a few points. When I spoke to Byron Dorgan, the Democratic senator from North Dakota, last month, he sounded ecstatic about Obama’s multiple trips to the state and the more than $400,000 the campaign had already dumped into ads there. “I think it’s the first time you’ve turned on a television set and seen a persuasion ad for a Democratic candidate,” Dorgan said.
Not a week later, however, a new round of post-convention polls showed McCain opening up a double-digit lead in North Dakota, and the Obama campaign abruptly pulled its ads. Dorgan called me back. “I do think this is going to come back to be a fairly close race in North Dakota, but I understand we need the resources in some of the other battleground states at this point,” he said, sounding resigned. “I just called to say, ‘Never mind.’ ”
THE ONE STATE THAT NO ONE expects Obama to surrender before Election Day is Virginia, which may be the most critical of what the Obama campaign labels its “nontraditional” battleground states, both symbolically and mathematically. Like North Dakota, Virginia hasn’t voted for a Democratic nominee since Johnson beat Goldwater. (It was the only state of the Old South to go with Gerald Ford over Carter in 1976.) But the onset of the postindustrial economy has probably wrought more change on Virginia in the last 15 years or so than the state saw in the half-century before that. The new technology corridor running along I-66 in Northern Virginia, just across the Potomac River from Washington, is one of the nation’s most vibrant, and the self-sustaining exurbs growing up around it have rapidly transformed horizons of farmland into expensive town-house clusters and strip plazas. (The area now boasts such high-end stores as Tiffany, Gucci and Hermès.) New exurbs in the central part of the state aren’t far behind, populated by commuters who work in corporate offices in Richmond, the capital of the old Confederacy. Of the 100 fastest-growing counties in the country, 6 of them are in Virginia.
The influx of new residents — many of them highly educated, some of them recent immigrants — has created in Northern Virginia one of the nation’s more reliable and rapidly expanding Democratic voting blocs. In the more socially conservative south and southwest of the state, however, where manufacturing towns once thrived and coal miners once worked the Appalachian seam, the population has been falling steadily as high-school graduates strike out in search of stable work elsewhere. Not surprisingly, the number of statewide voters identifying themselves as Democrats has risen sharply over the last two years, far outpacing Republican growth. The last two governors have been Democrats, and come January — when Mark Warner, the former governor, is widely expected to replace John Warner (no relation) in Washington — both of its senators will likely be Democrats, too. John Kerry lost the state by nine points in 2004, but that was a relatively small margin when you consider that he never bothered to contest it. The McCain campaign is concerned enough about holding onto Virginia, where polls this month showed Obama pulling ahead, that it recently opened 10 new offices there.
Any Democrat who wants a general blueprint for how to win Virginia need only look to election maps from the last few statewide elections, in which the voters narrowly installed Tim Kaine as governor and Jim Webb in the Senate. First, you have to pile up huge margins among liberal voters in the state’s Democratic strongholds, most notably the inner suburbs of Northern Virginia, where Kaine captured more than 60 percent of the vote in his race. (In the southeastern part of the state, black voters are a major Democratic constituency; overall, African-Americans could account for close to a fifth of the statewide vote.) Next, you want to pull off wins in the exploding exurban counties in Northern Virginia and at least come close in the exurbs outside Richmond. Finally, in order to make the overall math work, you have to hold down your losses in the rural areas to the south and southwest. That probably means capturing at least 40 percent in the economically devastated, gun-loving countryside that borders North Carolina and Tennessee to the south and Kentucky and West Virginia to the west.
Obama should have at least a good shot at achieving the first two of those objectives. His campaign says it’s on pace to register as many as 200,000 new voters in reliably liberal parts of the state, and most analysts expect black voters to come to the polls in higher numbers for Obama than they have for other Democrats. For turnout, the campaign is relying on some 10,000 volunteers in the state, who are being trained to work in “neighborhood teams” that go door to door registering and lobbying voters. Obama’s campaign seems to have patterned its turnout effort after George W. Bush’s 2004 campaign, which employed a fervent volunteer network to churn out the suburban votes that put Ohio, among other states, into the Republican column.
In the mostly white exurbs, meanwhile, the economy alone should guarantee Obama a better hearing than Kerry could have expected. Like their counterparts in other states, young Virginians began moving into the exurbs over the last decade in search of something closer to their parents’ version of the American dream. In the cities and suburbs where many of them grew up, housing prices were rising so rapidly that they couldn’t afford to live in the towns with large lots and great schools. Farther out, however, in the brand-new exurbs that used to be farming towns, they found lower taxes, sprawling malls and affordable mini-mansions with driveways big enough for a couple of S.U.V.’s. For some Virginians, the extended commuting time to Richmond or Washington was worth the extra quality of life.
Perhaps no one is feeling as disoriented by the economic reversal of the past few years as these exurban voters, whose paradises are fast becoming prisons. They’re watching as the value of their stocks and homes plummets, even as the cost of filling up the tank and heating the house soars. Traffic congestion along the state’s main arteries has become a potent political issue, but fixing the problem requires more tax dollars. L. Douglas Wilder, the former Virginia governor and now mayor of Richmond, has seen the desperation rise. “They’re saying, ‘I’m working as hard as I’ve ever worked in my life, but I can’t save any money and I have to cut back, so what’s gone wrong here?’ ” Wilder told me recently. “People who think they had it made — doctors, lawyers, engineers — everybody is feeling the pinch.”
FOR A NATIONAL DEMOCRAT, the hardest part of the electoral formula is probably the last piece — holding one’s own in the sea of small towns in the southern and Appalachian regions of the state that are far more similar to the rest of the Deep South than they are to Virginia’s northern counties. Voters here haven’t known economic expansion in decades, and they seem to have decided long ago that neither party was especially serious about stopping the decline, or even knew how. There is a strong sense in these communities, and not unreasonably, of suffering endless condescension — a feeling that urbane America has already written off the rural lifestyle as a relic or, worse, as a joke. For that reason (and this is actually the point Obama says he was trying to make in San Francisco), cultural issues matter far more in the rural areas than they do in the exurbs, because voters see those issues as a test of whether politicians respect their values or mock them — a construct that Republican strategists have become expert at exploiting.
Democrats running for governor or the Senate can spend a lot more time shaking hands in these parts, working to distance themselves from the national party’s smug image, than can a presidential candidate, who also has to carry all of the extra baggage of the party’s stands on social issues — especially if he happens to be the first black nominee of either party. It probably isn’t encouraging for Obama that in this year’s Virginia primary, which he won easily, Hillary Clinton nonetheless dismantled him in the rural southwest. In tiny Dickenson County, along the western border with Kentucky, Clinton received 1,491 votes to Obama’s 210. Next door in Wise County, it was Clinton 2,310; Obama, 459.
Obama has responded to this challenge principally by doing precisely what he told me he had to do: he has shown up. The first thing he did as his party’s presumptive nominee in June, two days after closing out the final primaries in South Dakota and Montana, was to get on a plane and come to Bristol, Va., on the Tennessee border. He has returned twice more since then to the southern part of the state, and Joe Biden recently headlined a mineworkers’ rally there. Local Democrats told me that Obama’s campaign office in the old manufacturing town of Danville was so unusual for a candidate of either party that its opening was treated almost as a curiosity, as if a smoldering meteor had smashed into the town green.
No Virginia Democrat knows more about how to win over white rural voters than Mark Warner, whose “Virginia story” is now legend for national Democrats. Running for governor in 2001, when Republicans had a virtual monopoly in Virginia, Warner visited the southern areas of the state dozens of times, promising to revive local economies by bringing broadband lines through the region and luring high-tech companies. He not only cut his losses in those remote counties; he carried many of them outright. His proudest achievement as governor, or at least the one he talks about with the most enthusiasm, came just weeks before the end of his term (Virginia is the last state in the union to limit its governors to one term), when he induced two large high-tech companies to open facilities in the tiny southwestern town of Lebanon, bringing more than 700 jobs with them.
When I asked Warner, who has campaigned with Obama, what Obama needed to say to earn the trust of rural Virginians, he suggested Obama spend less time talking about economic despair and more time reminding voters of the hopeful things happening in southern Virginia.
“Celebrate Lebanon,” he said. “Celebrate that we’ve got a place for your community in the 21st century.” “Change” was a good slogan, Warner told me, and people surely wanted it, but you also had to give them a sense that you understood the challenges specific to their communities. “I’d like to hear him talk more about infrastructure, about broadband,” Warner said. “I think he’s still got to make the case that your kids shouldn’t have to leave your hometown to find a world-class job.
“People make a judgment about whether you really care or not. Is it just a drive-by, or are you really going to invest?”
IF YOU WANT TO GET TO LEBANON, a town of about 3,200, the easiest way is to fly into the Tri-City Airport on the Tennessee side of the Appalachians, then drive about 45 minutes northeast through some of the most gorgeous hill country in America. The back road that leads to Lebanon High School is lined with trailer-size houses on the edge of collapse, their front porches buckling in the sun. But then, as you approach the school, you see a few neat rows of brand new town houses, with prices in the high $200,000s — the unmistakable landscape of the new economy. Lebanon is slowly becoming a symbol of hope for towns all over the region that dream of turning southwestern Virginia, with its abundant land and cheap labor, into the next high-tech hub. Local counties have raised up a half-dozen “shell buildings” — essentially empty warehouses already connected to sewers and broadband lines — to attract businesses looking for ready-made space. Inspired by the influx of tech jobs, officials in the area have started what they call the Return to Roots program, in which they aggressively seek out qualified graduates who have moved away for other jobs and try to lure them back home.
Barack Obama came to Lebanon High for a town-hall meeting with voters on the Tuesday after Labor Day, marking the first time any presidential candidate stepped foot in the area since Jimmy Carter came to nearby Castlewood in 1976. The campaign made tickets available to its local offices a few days before the event, and a lot of the roughly 2,400 attendees waited in line to get them. As a result, most of the voters in the school gymnasium seemed to be committed Obama backers already.
The program opened with the validators. This is a critical part of Obama’s small-town strategy — getting respected surrogates to stand up and say that Obama is a guy you can trust. The first person on stage was Ralph Stanley, the 81-year-old legendary bluegrass musician, who was born in nearby Stratton and makes his home in Dickenson County. He unfolded a piece of paper and read, in a shaky voice: “I want to endorse Barack Obama as the next president of the United States. Thank you very much!” The gymnasium exploded. (When the candidate met Stanley backstage, Obama told him that he had some of Stanley’s banjo music on his iPod. Stanley nodded appreciatively, but a few minutes later he turned to a friend and asked, “What’s an iPod?”)
Stanley was followed by Cecil Roberts, the white-bearded president of the mineworkers’ union, who preached as if he were at a revival, putting Obama’s early years into a framework that southwestern Virginians could understand. “Moses was a community organizer!” Roberts thundered. “And yes, Jesus was a community organizer!” Then came Rick Boucher, the owlish congressman who represents Lebanon and its surrounding counties in Washington. “Senator Obama is a friend of coal and the thousands of jobs it brings to Southwestern Virginia,” Boucher assured the crowd. In fact, he repeated this line — “Barack Obama is a friend of coal” — no less than five times in 10 minutes.
Obama finally bounded onstage to an ovation that rocked the bleachers. He delivered a newly sharpened version of his basic rally speech, pacing the stage as he spoke, his pitch rising as he punctuated each point in a long list of indictments against the Bush years and John McCain. He stressed his own American story — the mother on food stamps, the grandfather who fought in “Patton’s army,” the father-in-law who worked a shift job with multiple sclerosis and never missed a day. The speech wasn’t appreciably different from one he would have given at an arena packed with 20,000 people in Philadelphia or St. Louis.
It was only after the speech, prompted by questions from the audience, that Obama tried to reassure the crowd — without ever referring to the “bitter” comment, of course — that he was not some San Francisco liberal who pitied rural people for their religiosity and their pastimes. One man wanted to know what Obama thought of those who looked down on Sarah Palin because she was evangelical. No doubt thinking of the persistent rumors still flying around the Internet that say he is a closet Muslim, Obama reiterated, for about the seven millionth time this year, that he, too, is a practicing Christian. “This is a nation of believers,” he said, “and I’m one of them.”
A teenage girl asked Obama what he might do specifically for rural America. I found it odd that Obama had to be prompted to address this question, but he warmed to it immediately, ticking off a list of public investments that his administration could bring to the region: broadband lines, school financing, the development of biodiesel fuels. He talked about creating more jobs for local students, “so when they graduate from college those kids can stay here and live in Lebanon instead of having to go and work someplace else.”
Having finished that thought, Obama suddenly straightened up, as if something else important had just occurred to him. “One thing I want to make clear while we’re on this topic of rural America,” he said, looking around the gym. “There are a lot of folks who come up to me and say, ‘You know, Barack, I like your economic plan, and I’m tired of George Bush, but you know, I got my N.R.A. mailing, and I’m worried you’re gonna take my gun away.’ ” Obama likes to do this — to momentarily inhabit the mind of some composite character and act out his side of the conversation — and he was met with knowing chuckles.
“I just want to be absolutely clear, O.K.? I just don’t want any misunderstanding when you all go home and you talk with your buddies, and they say, ‘Oh, he wants to take my gun away.’ You heard it here, and I’m on television, so everybody knows. I believe in the Second Amendment. I believe in people’s lawful right to bear arms. I will not take your shotgun away. I will not take your rifle away. I won’t take your handgun away.
“So if you want to find an excuse not to vote for me, don’t use that one!” Obama said, eliciting laughter and cheers from the crowd. “It just ain’t true!”
OBAMA ACHIEVED his main objective in Lebanon: he showed up where no modern Democratic nominee had before, taking on social issues and planting himself squarely in the mainstream, and he hit on the list of issues that Warner and others urged him to mention. When I caught up with Congressman Boucher not long after the event, he told me it had been “terribly important.” Boucher had recently commissioned a poll in his district, which he gave to the Obama campaign, and while he wouldn’t tell me any of the specifics, he did volunteer that McCain was “significantly ahead.” Still, the poll showed an unusually high number of undecided voters — perhaps not surprising given that in the Republican primary McCain lost badly to Mike Huckabee in the southwestern counties. “People are not enthusiastic about McCain,” he told me. “They want to get to know Barack Obama better. They’re waiting to be persuaded.
“The grapevine is the single most powerful form of communication in my district,” Boucher continued. “All those people in that gymnasium, I’ll bet every one of them went out and told 10 people, ‘Hey, he was terrific.’ ”
Still, it occurred to me that during his appearance in Lebanon, Obama did little more than briefly nod to a series of local concerns, as if he had been carrying around a list that needed to be checked off before he got back on his plane and headed east to Norfolk. “Keeping jobs at home” was a great applause line, but Obama didn’t betray any awareness of the novel public programs that might make that goal possible, like the shell buildings or the Return to Roots campaign. Far from celebrating Lebanon, as Warner suggested, Obama made only passing reference to the new jobs that were revitalizing the town, a success story that would seem to have justified his coming there in the first place. Obama mostly made the same general appeal he was making in more diverse and liberal parts of the country, with a few perfunctory detours along the way.
It is often said in politics that a candidate’s strength is also his weakness. Obama’s greatest asset as a candidate, the trait that has enabled him to overcome both a thin résumé and the resistance of his own party’s establishment, is his placidity. Even more than through his ability to give a rousing speech (plenty of other candidates, from Ted Kennedy to Howard Dean, could do that), Obama has differentiated himself from recent Democrats by conveying a sense of inner security that is highly unusual in a business of people who have chosen to spend every day asking people to love them. He does not seem like a candidate who’s going to switch to earth tones in his middle age or who’s going to start dressing up in camouflage to rediscover his inner Rambo. Obama is content to meet the world on his terms, and something about that inspires confidence.
And yet that same lack of pathetic neediness may in fact be a detriment when it comes to persuading voters who, culturally or ideologically, just aren’t predisposed to like him. I once heard a friend of Obama’s compare him with Bill Clinton this way: if Clinton sees you walking down the other side of the street, he immediately crosses over to shake your hand; if Obama sees you coming, he nods and waits for you to cross. That image returned to me as I watched Obama campaign in Lebanon. Clinton wouldn’t have wanted to leave that gym until every last voter had been converted, even if that meant he had to memorize the scheduled sewer installation for every home in Russell County. Mark Warner, a similarly tenacious glad-hander, went to rural Virginia again and again because, deep down, he needed to change people’s perceptions of who he was. Obama doesn’t connect to the world that way, which is probably why his campaign has always preferred big rallies to hand-to-hand venues. Obama gives the impression that he’s going to show up and make his case, and if you don’t fall in love with him, well, he’ll just have to pick up the pieces and go on.
In some other election year, that probably wouldn’t have been enough to sway the subset of undecided voters who came to see Obama at Lebanon High. But this isn’t any other election year. Bush’s approval ratings are the lowest on record, the Republican nominee is an erstwhile foe of the N.R.A. and taxpayers are doling out loans to Wall Street while their own credit suddenly dries up. As this campaign’s symbol of change (the word is all but tattooed on his forehead), Obama has become, in a sense, the default candidate — the guy you choose if he can clear even a modest threshold of acceptability. Voters in places like Lebanon were not, as Obama joked, looking for excuses not to vote for him; they were looking for reasons they should. The uncommitted voters in the gymnasium might not have run back home to tell their friends how “terrific” Obama had been, but they may well have said that Obama didn’t seem alien or condescending — that he wasn’t the contemptuous, tax-loving liberal they had heard so much about. And maybe, this time, that would be enough.
A WEEK AFTER OBAMA VISITED Lebanon and Norfolk, I went to see Jim Webb in his Capitol Hill office. Obama’s campaign considers Webb, a war hero and former Republican, to be one of its most critical validators all over Virginia, specifically because he appeals to white men who are skeptical of Democrats in general. In fact, Webb’s Scots-Irish family hails from coal country. Not long after he entered the Senate, he became embroiled in a mini-controversy when an aide accidentally carried one of Webb’s favorite guns onto the Capitol grounds.
I was surprised, then, when Webb told me that while he was enthusiastic about Obama and would campaign for him, he did not intend to vouch for him on social issues. “I believe that Barack Obama has the temperament and the intellect and the ideas to be president,” Webb said. “But I don’t talk about his positions, and I don’t defend his positions.” When I commented that Webb wasn’t where Obama was on gun rights (Obama favors what he calls some “common sense” restrictions), Webb cut me off. “No, he’s not where I am on guns,” he said pointedly. It occurred to me that this was probably the kind of validation Obama could do without. (Webb appears to have softened his stance. A few weeks later, he decided to tape an ad promising voters in southwestern Virginia that Obama would not, in fact, confiscate their guns.)
Webb and I discussed the conventional wisdom taking hold — in discussions not only about Virginia but about Pennsylvania and Ohio and Michigan as well — that white men weren’t breaking Obama’s way mostly because he’s black. Webb disagreed. When it came to white working-class and rural voters, Webb said, what mattered was whether Obama seemed to share the same basic small-town values. “Does he understand me?” Webb said. “Can I trust him?”
At one point, when we were talking about the southwestern part of the state, Webb suggested, half seriously, that I should talk to his cousin Jimmy, who writes a column for The Lebanon News. (The number of Webb’s cousins is something of a joke in Virginia; he’s basically related in some way to the entire western part of the state.) So when I got back to my office, I tracked down cousin Jimmy, who, it turns out, is 78 years old and knows Virginia politics as well as he knows the old coins he sells to collectors. Jimmy Webb told me he was a strong Obama supporter, but he had a slightly different take on things than his famous cousin.
“When you get past Roanoke and out this way,” he told me, “in southwestern Virginia and eastern Tennessee, blacks are just not that popular. That’s one of Obama’s problems. I’ve had Democrats tell me that they’re not even going to the polls.” I heard much the same thing from Steve Cochran, the Democratic committee chairman in Montgomery County. (Believe it or not, Cochran, too, is somehow a distant cousin of Webb’s.) “I think if the people of southwestern Virginia had the opportunity to meet Barack Obama and see how intelligent he is and how genuine he is and how caring he is, there would be no question,” Cochran said. “But there is still this little bit of skepticism in Appalachian Virginia, as there is in a lot of other parts of the country, that this guy is still just a little bit not like me. I see people having a little trouble getting around that color barrier.”
How race affects Obama’s effort to broaden the electoral map is the most persistent question surrounding his campaign — and perhaps the least answerable. A bracing poll released last month by The Associated Press and Yahoo, in conjunction with Stanford University, concluded that Obama might be losing as many as six percentage points nationally because he’s black. This was based on the finding that 40 percent of white Americans admitted to some negative views toward blacks. Such polls are frequently cited as proof that Obama would be walking away with the election were he more than half white.
And yet from all available data Obama isn’t actually doing any worse with white men than the last two Democratic nominees, both of whom also ran at a time when the national climate offered considerable advantages — Gore because the country had enjoyed a long period of prosperity, Kerry because of the failing war in Iraq. According to exit polls, Kerry lost the overall white vote by 17 points in 2004. Recent Gallup tracking polls, while somewhat erratic from week to week, have shown Obama running above that level; polling in early October had him down by only eight points among white voters. “Obama’s doing better than Gore or Kerry,” says Dee Davis, who founded the Center for Rural Strategies in Whitesburg, Ky. “And I think both of those guys were white the last time I looked at the paper.” According to exit polls, Kerry received only 27 percent of the white-male vote in Virginia in 2004, a figure Obama is poised to surpass, according to a pollster from another campaign who is working in the state.
Perhaps the problem with this entire discussion about race is that it begins with the wrong question. Most polls focus on determining the prevalence of racial bias among white voters and whether it will affect their choices on Election Day. This may be the best way we have to measure the impact of race, but it is hardly revelatory; no one should be surprised to learn that racial stereotypes exist, particularly among lower-income and less-educated white men, or that such stereotypes affect the way voters see Obama. The more important question is not whether race is a factor in people’s votes but whether it is a determinative factor — that is, whether Obama’s being black is the disqualifying fact for white voters that it might have been 20 years ago or whether it has now been reduced to one of those surmountable obstacles that any candidate has to overcome.
When Al Smith, New York’s Democratic governor, ran for president in 1928, his Catholicism was a deal breaker. When John F. Kennedy ran in 1960, the prejudice remained, but it had lost its defining intensity. Kennedy felt sufficiently disadvantaged by his religion to address it in a major speech, just as Obama did on race during the primaries, but in the end, some sizable segment of Protestant voters who had concerns about pulling the lever for a Catholic did so anyway. In other words, it may be possible for racial prejudice to exist, as all the polls suggest it does, but for it to be only one significant influence among many, including voters’ views on the economy and on McCain as an alternative.
There is another parallel in the Kennedy example that may prove relevant if Obama’s strategists have their way. While Kennedy undoubtedly lost the votes of some Protestants who feared papal influence over the White House, their numbers were more than canceled out by the Catholic voters who came to the polls at a level never before seen. Obama’s strategists accept that there will be some number of voters — particularly white men — who will reject Obama solely because he is black. But they are betting, first, that most of these voters wouldn’t have voted for a Democrat in any event and, second, that the groundswell of black support for Obama will produce enough new African-American votes in a lot of states to offset them.
In 2004, 60 percent of voting-age black Americans went to the polls (compared with 67 percent of white voters), and about 88 percent of them voted for Kerry. Those are pretty impressive numbers, historically. And yet, with Obama on the ticket, it is not unrealistic to think that black turnout could increase by as many as five points and that Obama could increase the Democratic share of that vote to well over 90 percent. All of which means that if Obama can perform at least as well as Kerry among white men in some of the reliably red states he’s trying to turn blue, most notably Virginia and North Carolina, race as an overall factor in the election could end up winning Obama more votes than it takes away.
WHEN I SAT WITH OBAMA on his plane, just three days after his first debate with McCain and not quite a week since the nation’s credit system went into meltdown, the White House must have felt, finally, within his reach. National tracking polls showed him holding a consistent lead of four to six points for the first time in the campaign. In a string of familiar battleground states where Obama had been struggling to capitalize on anti-Bush sentiment and economic angst, a new round of polls showed him breaking out at last. He had finally put some distance between himself and McCain in Pennsylvania and Michigan, and he was on the verge of driving the Republicans from the latter state altogether. In Ohio and Florida, states that Bush carried twice, Obama appeared to have broken a stalemate and moved solidly into the lead. Such readings were merely snapshots, of course, subject to change at any moment, but even so, both campaigns seemed to sense that McCain’s window for taking command of the campaign was beginning to close.
In Virginia, according to both private and public polling, the shift was especially pronounced. Several polls would soon show Obama pulling ahead of McCain by a significant margin, and two would have his lead in the state soaring into double digits. More staggering was the data concerning white voters and, specifically, men. According to a random telephone poll by SurveyUSA (though often derided by rival pollsters, the outfit compiled a surprisingly strong track record in the primaries), McCain was leading among men in Virginia by 10 points just after the conventions; by the beginning of October, Obama was leading by 11. Among white voters in the state overall, McCain’s 22-point September lead had shrunk to single digits. In the rural Shenandoah Valley region, running along the state’s western border and down into coal country, McCain had led by 24 points in September. Now he and Obama were tied.
And yet it seemed fair to question whether anything about this sudden movement actually validated Obama’s central argument about American politics — this notion that the cultural fault line in the electorate can somehow be bridged by a generational change in leadership — or whether it spoke to some more immediate, more desperate impulse in a shaken electorate. The campaign had become pretty much a referendum on the current economic carnage and eight years of mostly bad news turning to worse, and for the moment, at least, the crisis on Wall Street appeared to have accomplished what Obama’s strategists had been unable to do for months leading up to it: change the focus from Obama’s readiness and supposed elitism to George W. Bush’s myriad failures. In 2004, voters in the newly influential exurbs chose cultural identity over their concerns about war and the economy, and this choice cost John Kerry Ohio and the presidency; this year, it seemed increasingly likely that those
By MATT BAI
For a guy who just four years ago was running his first statewide campaign, Barack Obama has made startlingly few missteps as a presidential candidate. But the moment Obama would most like to take back now, if he could, was the one last April when, speaking to a small gathering of Bay Area contributors, he said that small-town voters in Pennsylvania and other states had grown “bitter” over lost jobs, which caused them to “cling to guns or religion or antipathy toward people who aren’t like them.” That comment, subsequently posted by a blogger for the Huffington Post, undercut one of the central premises of Obama’s campaign, an argument he first floated in his famous 2004 convention address — that he could somehow erode the tired distinctions between red states and blue ones and appeal to disaffected white men who had written off national Democrats as hopelessly elitist. Instead, in the weeks that followed, white working-class primary voters, not only in industrial states like Pennsylvania but also in rural states like Kentucky and West Virginia, rejected his candidacy by wide margins, and he staggered, wounded, toward the nomination.
“That was my biggest boneheaded move,” Obama told me recently. We were sitting across from each other on his plane, the one with the big red, white and blue “O” on the tail, flying some 35,000 feet above Nebraska. “How it was interpreted in the press was Obama talking to a bunch of wine-sipping San Francisco liberals with an anthropological view toward white working-class voters. And I was actually making the reverse point, clumsily, which is that these voters have a right to be frustrated because they’ve been ignored. And because Democrats haven’t met them halfway on cultural issues, we’ve not been able to communicate to them effectively an economic agenda that would help broaden our coalition.”
Obama was wearing his classic starched white shirt (how many of those shirts does he have, exactly?), along with a tie the color of a robin’s egg. One on one, he has a crisp and effortless conversational style; his answers are thoughtful, but you rarely glimpse the thought process itself, the internal calibrations that every politician is constantly making. The only outward sign that Obama is laboring over his formulations is the way he will often elongate the word “and” for several seconds, a processing hitch that enables him to preview in his own head what he is about to tell you, like one of those five-second delays the networks use so they can bleep out profanity.
“I mean, part of what I was trying to say to that group in San Francisco was, ‘You guys need to stop thinking that issues like religion or guns are somehow wrong,’ ” he continued. “Because, in fact, if you’ve grown up and your dad went out and took you hunting, and that is part of your self-identity and provides you a sense of continuity and stability that is unavailable in your economic life, then that’s going to be pretty important, and rightfully so. And if you’re watching your community lose population and collapse but your church is still strong and the life of the community is centered around that, well then, you know, we’d better be paying attention to that.”
In a few minutes, Obama would arrive in Colorado for a campaign stop, followed by another in Nevada — two critical states that neither of the previous two Democratic nominees, Al Gore and John Kerry, came all that close to winning, largely because of their abject failure to connect with white men, especially lower- and middle-class men in rural and exurban counties. A few weeks earlier, I watched Obama campaign in the coal country of Appalachian Virginia, where no one I talked to could remember ever seeing a Democratic nominee come through town. I asked Obama how he thought he could convey to these voters that he was not, in fact, an anthropological observer of the culture. Four years ago, Kerry, a man who was once actually pretty comfortable holding a semiautomatic weapon, donned his hunting gear and traipsed into the woods of Ohio, trailed by cameras, to shoot some geese. The stunt made him look absurd, like an investment banker at rock-’n’-roll fantasy camp.
“First,” Obama said, “you have to show up. I’ve been to Elko, Nev., now three times.”
“Elko?” I asked twice, straining to hear him over the engine noise.
“E-L-K-O.” He sounded vaguely annoyed, as if I had just confirmed something about the media he had long suspected. “That, by the way, is the reason we got more delegates out of Nevada, even though we lost the popular vote there during the primary. We lost Las Vegas and Clark County, but we won handily in rural Nevada. And a lot of it just had to do with the fact that folks thought: Man, the guy is showing up. He’s set up an office. He’s doing real organizing. He’s talking to people.
“No. 2 is how we talk about issues,” Obama went on. “To act like hunting, like somebody who wants firearms just doesn’t get it — that kind of condescension has to be purged from our vocabulary. And that’s why that whole ‘bittergate’ episode was so bitter for me. It was like: Oh, this is exactly what I wanted to avoid. This is what for the last five or six years I’ve been trying to push away from.”
As we talked, consequential events were reshaping the world below. At that very moment, Republicans in Washington were scuttling a $700 billion emergency plan for Wall Street, causing the markets to hemorrhage more value in a single day, in terms of sheer dollar amounts, than at any time in American history and dragging the economy back into the center of the campaign — precisely where John McCain and the Republicans didn’t want it. And yet, what Obama and I were discussing, this cultural disconnect between Democrats and large swaths of white men, remained a lingering and crucial question. It now appeared that the only thing that could still threaten Obama’s march to the presidency was the same resistance from these voters that had, at the last moment, dashed the dreams of both his Democratic predecessors. Gore and Kerry tried, somewhat dutifully, to prove their cultural affinity for regular white guys; when that didn’t work, they tried to change the subject to policy platforms instead, hoping in vain that voters would just sort of forget about all that guns and church stuff. In both cases, that failure translated directly into defeat. According to exit polls in 2004, Kerry lost white men by a crushing 25-point margin.
Given the fact that he is not, in fact, a white male, Obama would seem to face an even-less-forgiving landscape among white-male voters. While voters overall give Obama the advantage over John McCain when asked which candidate is better equipped to navigate these tumultuous economic times, Gallup polls throughout the summer and into the fall consistently showed McCain with a double-digit lead among white men who haven’t been to college.
And yet Obama has persevered, devoting far more time and money than either of the last two Democratic nominees on an effort to persuade working-class and rural white guys that he is not the elitist, alien figure they may be inclined to think he is. The Obama campaign has more than 50 state offices throughout Virginia, a state no Democrat has seriously contested since Obama was a teenager. In Indiana, there are 42 offices; in North Carolina, another 45.
Mathematically, Obama can probably win the election without winning any of these states — or Nevada or Montana or any of the other conservative states where he has campaigned in the past several months. What he probably can’t do, if he doesn’t convert enough voters to throw at least a few traditionally red states into the blue column, is get beyond what he dismissively refers to as the “50-plus-1” governing model, the idea that a president need only represent 50 percent of the country (plus 1 additional vote) to command the office. From the start, Obama has aspired not simply to win but also to stand as a kind of generational break from the polarized era of the boomers, to become the first president in at least 20 years to claim anything more than the most fragile mandate for his agenda. Absent that, even if he wins, Obama could wake up on Nov. 5 as yet another president-elect of half the people, perched uncomfortably on the edge of an impassable cultural divide.
WHEN LYNDON JOHNSON SIGNED the Civil Rights Act of 1964, he famously predicted that his party had just signed away the South for a generation to come. In truth, the outcome was more profound than Johnson could have imagined. The culture war, whose Bunker Hill was the campus quad of the 1960s, soon spread to just about every region of the country, where rural and working-class white voters, already anxious over economic change, recoiled at the vehement strain of antimilitary, antiestablishment liberalism that took hold of the Democratic Party in the era after Selma and Saigon. The effect, especially on the presidential level, was immediate and drastic. In the 32 years before Johnson made his pronouncement, Democrats controlled the White House for all but 8 of them, and only twice — in 1948 and 1960 — had the Democrat won by what could be considered a narrow margin. In the four decades since, only two Democrats have managed to get elected, and only one has claimed a majority of the popular vote. (This was Jimmy Carter, who eked out exactly 50.1 percent without winning a single state west of Texas.) By the turn of the century, almost completely driven from the South and West, Democratic presidential candidates had taken to focusing all their efforts on an ever-shrinking pool of coastal and industrial states.
Obama, though, has talked from the beginning about running a “50-state” campaign, and he has spent considerable time and money in more culturally conservative parts of the country where Democrats rarely, if ever, venture, from Elko and Appalachia to Billings, Mont., and Las Cruces, N.M. To a large extent, this reflects Obama’s personal conviction about modern politics, which he first laid out in his 2004 convention speech when he talked about worshiping “an awesome God in the blue states” and having “gay friends in the red states.” He told me, when we talked, that Washington’s us-versus-them divisions had made it impossible for any president to find solutions to a series of generational challenges, from Iraq to global climate change. “If voters are similarly polarized and if they’re seeing two different realities, a Sean Hannity reality and a Keith Olbermann reality, then we’re not going to be able to get done the work we need to get done,” Obama said.
It is also true, however, that a series of circumstances beyond his control have conspired to make a truly national campaign more feasible for Obama than for any Democrat since Carter ran in the dark days after Watergate. First, of course, there is the national sense of despair over the Bush era, which has made the president more of a uniter than he ever intended and which has enabled Democrats to get a hearing in parts of the country where they were being run off the land 10 years ago. Then there’s the advent of the Internet as a veritable money vacuum, which has enabled Obama to raise more money than any Democrat in history (about $460 million, at last count), meaning he can afford to pour some resources into states he has only a remote chance of winning. Perhaps most important, though, Obama’s campaign has also been able to take advantage of a drawn-out Democratic primary campaign that came through all 50 states before it was over — a draining experience that nonetheless established networks of volunteers and newly registered Democratic voters in states that in any other year would have been overlooked. In three states — Texas, Indiana and North Carolina — more people voted in Democratic primaries this year than voted for Kerry on Election Day in 2004.
For Obama’s political advisers, expanding the electoral map is not about making a philosophical statement; it is simply a strategic imperative. Presidential campaigns, after all, are about getting to 270 — the minimum number of electoral votes needed to win. In relying on the same 20 or so winnable states over the past few elections, Democratic nominees have given themselves almost no margin for error. By contrast, Obama’s campaign, in addition to fighting for the usual complement of about a dozen swing states, has shifted considerable resources into a group of states — the list has, at one time or another, included Virginia, North Carolina, Indiana, Montana, Nevada, North Dakota and Georgia — that haven’t been strongly contested for at least three elections, if not longer. (Alaska was on the list, too, until McCain chose Sarah Palin as his running mate.) The idea here is that the more states you put in play, the more permutations there are that lead to victory.
“If you expand the map, you improve your chances,” David Axelrod, Obama’s lead strategist, told me recently. “We didn’t want to be in that same dreary position where the entire election hinges on three states, and you stay up all night waiting to see who won them.”
Let’s assume, for the sake of argument, that Obama starts with the same relatively safe 19 states (plus the District of Columbia) Kerry won in 2004, along with Iowa, which Gore won and where polls have shown Obama comfortably ahead. He could actually prevail without winning either of the two big perennial battleground states, Ohio and Florida, simply by winning Indiana by itself or by winning both New Mexico and Virginia. It is McCain, in fact, who, having earlier this month abandoned a foray into blue-collar Michigan, seems now to be facing the more restrictive map, betting on the notion that he can hold just about every reliably Republican state while also winning in battlegrounds like Florida and Ohio.
At times during these final months of the campaign, though, Obama’s optimism about the impermanence of blue and red shading has run up against the hard reality that after 40 years of culturally divisive politics, colors don’t easily bleed. Before the conventions, for instance, most polls in North Dakota showed McCain in front by only a few points. When I spoke to Byron Dorgan, the Democratic senator from North Dakota, last month, he sounded ecstatic about Obama’s multiple trips to the state and the more than $400,000 the campaign had already dumped into ads there. “I think it’s the first time you’ve turned on a television set and seen a persuasion ad for a Democratic candidate,” Dorgan said.
Not a week later, however, a new round of post-convention polls showed McCain opening up a double-digit lead in North Dakota, and the Obama campaign abruptly pulled its ads. Dorgan called me back. “I do think this is going to come back to be a fairly close race in North Dakota, but I understand we need the resources in some of the other battleground states at this point,” he said, sounding resigned. “I just called to say, ‘Never mind.’ ”
THE ONE STATE THAT NO ONE expects Obama to surrender before Election Day is Virginia, which may be the most critical of what the Obama campaign labels its “nontraditional” battleground states, both symbolically and mathematically. Like North Dakota, Virginia hasn’t voted for a Democratic nominee since Johnson beat Goldwater. (It was the only state of the Old South to go with Gerald Ford over Carter in 1976.) But the onset of the postindustrial economy has probably wrought more change on Virginia in the last 15 years or so than the state saw in the half-century before that. The new technology corridor running along I-66 in Northern Virginia, just across the Potomac River from Washington, is one of the nation’s most vibrant, and the self-sustaining exurbs growing up around it have rapidly transformed horizons of farmland into expensive town-house clusters and strip plazas. (The area now boasts such high-end stores as Tiffany, Gucci and Hermès.) New exurbs in the central part of the state aren’t far behind, populated by commuters who work in corporate offices in Richmond, the capital of the old Confederacy. Of the 100 fastest-growing counties in the country, 6 of them are in Virginia.
The influx of new residents — many of them highly educated, some of them recent immigrants — has created in Northern Virginia one of the nation’s more reliable and rapidly expanding Democratic voting blocs. In the more socially conservative south and southwest of the state, however, where manufacturing towns once thrived and coal miners once worked the Appalachian seam, the population has been falling steadily as high-school graduates strike out in search of stable work elsewhere. Not surprisingly, the number of statewide voters identifying themselves as Democrats has risen sharply over the last two years, far outpacing Republican growth. The last two governors have been Democrats, and come January — when Mark Warner, the former governor, is widely expected to replace John Warner (no relation) in Washington — both of its senators will likely be Democrats, too. John Kerry lost the state by nine points in 2004, but that was a relatively small margin when you consider that he never bothered to contest it. The McCain campaign is concerned enough about holding onto Virginia, where polls this month showed Obama pulling ahead, that it recently opened 10 new offices there.
Any Democrat who wants a general blueprint for how to win Virginia need only look to election maps from the last few statewide elections, in which the voters narrowly installed Tim Kaine as governor and Jim Webb in the Senate. First, you have to pile up huge margins among liberal voters in the state’s Democratic strongholds, most notably the inner suburbs of Northern Virginia, where Kaine captured more than 60 percent of the vote in his race. (In the southeastern part of the state, black voters are a major Democratic constituency; overall, African-Americans could account for close to a fifth of the statewide vote.) Next, you want to pull off wins in the exploding exurban counties in Northern Virginia and at least come close in the exurbs outside Richmond. Finally, in order to make the overall math work, you have to hold down your losses in the rural areas to the south and southwest. That probably means capturing at least 40 percent in the economically devastated, gun-loving countryside that borders North Carolina and Tennessee to the south and Kentucky and West Virginia to the west.
Obama should have at least a good shot at achieving the first two of those objectives. His campaign says it’s on pace to register as many as 200,000 new voters in reliably liberal parts of the state, and most analysts expect black voters to come to the polls in higher numbers for Obama than they have for other Democrats. For turnout, the campaign is relying on some 10,000 volunteers in the state, who are being trained to work in “neighborhood teams” that go door to door registering and lobbying voters. Obama’s campaign seems to have patterned its turnout effort after George W. Bush’s 2004 campaign, which employed a fervent volunteer network to churn out the suburban votes that put Ohio, among other states, into the Republican column.
In the mostly white exurbs, meanwhile, the economy alone should guarantee Obama a better hearing than Kerry could have expected. Like their counterparts in other states, young Virginians began moving into the exurbs over the last decade in search of something closer to their parents’ version of the American dream. In the cities and suburbs where many of them grew up, housing prices were rising so rapidly that they couldn’t afford to live in the towns with large lots and great schools. Farther out, however, in the brand-new exurbs that used to be farming towns, they found lower taxes, sprawling malls and affordable mini-mansions with driveways big enough for a couple of S.U.V.’s. For some Virginians, the extended commuting time to Richmond or Washington was worth the extra quality of life.
Perhaps no one is feeling as disoriented by the economic reversal of the past few years as these exurban voters, whose paradises are fast becoming prisons. They’re watching as the value of their stocks and homes plummets, even as the cost of filling up the tank and heating the house soars. Traffic congestion along the state’s main arteries has become a potent political issue, but fixing the problem requires more tax dollars. L. Douglas Wilder, the former Virginia governor and now mayor of Richmond, has seen the desperation rise. “They’re saying, ‘I’m working as hard as I’ve ever worked in my life, but I can’t save any money and I have to cut back, so what’s gone wrong here?’ ” Wilder told me recently. “People who think they had it made — doctors, lawyers, engineers — everybody is feeling the pinch.”
FOR A NATIONAL DEMOCRAT, the hardest part of the electoral formula is probably the last piece — holding one’s own in the sea of small towns in the southern and Appalachian regions of the state that are far more similar to the rest of the Deep South than they are to Virginia’s northern counties. Voters here haven’t known economic expansion in decades, and they seem to have decided long ago that neither party was especially serious about stopping the decline, or even knew how. There is a strong sense in these communities, and not unreasonably, of suffering endless condescension — a feeling that urbane America has already written off the rural lifestyle as a relic or, worse, as a joke. For that reason (and this is actually the point Obama says he was trying to make in San Francisco), cultural issues matter far more in the rural areas than they do in the exurbs, because voters see those issues as a test of whether politicians respect their values or mock them — a construct that Republican strategists have become expert at exploiting.
Democrats running for governor or the Senate can spend a lot more time shaking hands in these parts, working to distance themselves from the national party’s smug image, than can a presidential candidate, who also has to carry all of the extra baggage of the party’s stands on social issues — especially if he happens to be the first black nominee of either party. It probably isn’t encouraging for Obama that in this year’s Virginia primary, which he won easily, Hillary Clinton nonetheless dismantled him in the rural southwest. In tiny Dickenson County, along the western border with Kentucky, Clinton received 1,491 votes to Obama’s 210. Next door in Wise County, it was Clinton 2,310; Obama, 459.
Obama has responded to this challenge principally by doing precisely what he told me he had to do: he has shown up. The first thing he did as his party’s presumptive nominee in June, two days after closing out the final primaries in South Dakota and Montana, was to get on a plane and come to Bristol, Va., on the Tennessee border. He has returned twice more since then to the southern part of the state, and Joe Biden recently headlined a mineworkers’ rally there. Local Democrats told me that Obama’s campaign office in the old manufacturing town of Danville was so unusual for a candidate of either party that its opening was treated almost as a curiosity, as if a smoldering meteor had smashed into the town green.
No Virginia Democrat knows more about how to win over white rural voters than Mark Warner, whose “Virginia story” is now legend for national Democrats. Running for governor in 2001, when Republicans had a virtual monopoly in Virginia, Warner visited the southern areas of the state dozens of times, promising to revive local economies by bringing broadband lines through the region and luring high-tech companies. He not only cut his losses in those remote counties; he carried many of them outright. His proudest achievement as governor, or at least the one he talks about with the most enthusiasm, came just weeks before the end of his term (Virginia is the last state in the union to limit its governors to one term), when he induced two large high-tech companies to open facilities in the tiny southwestern town of Lebanon, bringing more than 700 jobs with them.
When I asked Warner, who has campaigned with Obama, what Obama needed to say to earn the trust of rural Virginians, he suggested Obama spend less time talking about economic despair and more time reminding voters of the hopeful things happening in southern Virginia.
“Celebrate Lebanon,” he said. “Celebrate that we’ve got a place for your community in the 21st century.” “Change” was a good slogan, Warner told me, and people surely wanted it, but you also had to give them a sense that you understood the challenges specific to their communities. “I’d like to hear him talk more about infrastructure, about broadband,” Warner said. “I think he’s still got to make the case that your kids shouldn’t have to leave your hometown to find a world-class job.
“People make a judgment about whether you really care or not. Is it just a drive-by, or are you really going to invest?”
IF YOU WANT TO GET TO LEBANON, a town of about 3,200, the easiest way is to fly into the Tri-City Airport on the Tennessee side of the Appalachians, then drive about 45 minutes northeast through some of the most gorgeous hill country in America. The back road that leads to Lebanon High School is lined with trailer-size houses on the edge of collapse, their front porches buckling in the sun. But then, as you approach the school, you see a few neat rows of brand new town houses, with prices in the high $200,000s — the unmistakable landscape of the new economy. Lebanon is slowly becoming a symbol of hope for towns all over the region that dream of turning southwestern Virginia, with its abundant land and cheap labor, into the next high-tech hub. Local counties have raised up a half-dozen “shell buildings” — essentially empty warehouses already connected to sewers and broadband lines — to attract businesses looking for ready-made space. Inspired by the influx of tech jobs, officials in the area have started what they call the Return to Roots program, in which they aggressively seek out qualified graduates who have moved away for other jobs and try to lure them back home.
Barack Obama came to Lebanon High for a town-hall meeting with voters on the Tuesday after Labor Day, marking the first time any presidential candidate stepped foot in the area since Jimmy Carter came to nearby Castlewood in 1976. The campaign made tickets available to its local offices a few days before the event, and a lot of the roughly 2,400 attendees waited in line to get them. As a result, most of the voters in the school gymnasium seemed to be committed Obama backers already.
The program opened with the validators. This is a critical part of Obama’s small-town strategy — getting respected surrogates to stand up and say that Obama is a guy you can trust. The first person on stage was Ralph Stanley, the 81-year-old legendary bluegrass musician, who was born in nearby Stratton and makes his home in Dickenson County. He unfolded a piece of paper and read, in a shaky voice: “I want to endorse Barack Obama as the next president of the United States. Thank you very much!” The gymnasium exploded. (When the candidate met Stanley backstage, Obama told him that he had some of Stanley’s banjo music on his iPod. Stanley nodded appreciatively, but a few minutes later he turned to a friend and asked, “What’s an iPod?”)
Stanley was followed by Cecil Roberts, the white-bearded president of the mineworkers’ union, who preached as if he were at a revival, putting Obama’s early years into a framework that southwestern Virginians could understand. “Moses was a community organizer!” Roberts thundered. “And yes, Jesus was a community organizer!” Then came Rick Boucher, the owlish congressman who represents Lebanon and its surrounding counties in Washington. “Senator Obama is a friend of coal and the thousands of jobs it brings to Southwestern Virginia,” Boucher assured the crowd. In fact, he repeated this line — “Barack Obama is a friend of coal” — no less than five times in 10 minutes.
Obama finally bounded onstage to an ovation that rocked the bleachers. He delivered a newly sharpened version of his basic rally speech, pacing the stage as he spoke, his pitch rising as he punctuated each point in a long list of indictments against the Bush years and John McCain. He stressed his own American story — the mother on food stamps, the grandfather who fought in “Patton’s army,” the father-in-law who worked a shift job with multiple sclerosis and never missed a day. The speech wasn’t appreciably different from one he would have given at an arena packed with 20,000 people in Philadelphia or St. Louis.
It was only after the speech, prompted by questions from the audience, that Obama tried to reassure the crowd — without ever referring to the “bitter” comment, of course — that he was not some San Francisco liberal who pitied rural people for their religiosity and their pastimes. One man wanted to know what Obama thought of those who looked down on Sarah Palin because she was evangelical. No doubt thinking of the persistent rumors still flying around the Internet that say he is a closet Muslim, Obama reiterated, for about the seven millionth time this year, that he, too, is a practicing Christian. “This is a nation of believers,” he said, “and I’m one of them.”
A teenage girl asked Obama what he might do specifically for rural America. I found it odd that Obama had to be prompted to address this question, but he warmed to it immediately, ticking off a list of public investments that his administration could bring to the region: broadband lines, school financing, the development of biodiesel fuels. He talked about creating more jobs for local students, “so when they graduate from college those kids can stay here and live in Lebanon instead of having to go and work someplace else.”
Having finished that thought, Obama suddenly straightened up, as if something else important had just occurred to him. “One thing I want to make clear while we’re on this topic of rural America,” he said, looking around the gym. “There are a lot of folks who come up to me and say, ‘You know, Barack, I like your economic plan, and I’m tired of George Bush, but you know, I got my N.R.A. mailing, and I’m worried you’re gonna take my gun away.’ ” Obama likes to do this — to momentarily inhabit the mind of some composite character and act out his side of the conversation — and he was met with knowing chuckles.
“I just want to be absolutely clear, O.K.? I just don’t want any misunderstanding when you all go home and you talk with your buddies, and they say, ‘Oh, he wants to take my gun away.’ You heard it here, and I’m on television, so everybody knows. I believe in the Second Amendment. I believe in people’s lawful right to bear arms. I will not take your shotgun away. I will not take your rifle away. I won’t take your handgun away.
“So if you want to find an excuse not to vote for me, don’t use that one!” Obama said, eliciting laughter and cheers from the crowd. “It just ain’t true!”
OBAMA ACHIEVED his main objective in Lebanon: he showed up where no modern Democratic nominee had before, taking on social issues and planting himself squarely in the mainstream, and he hit on the list of issues that Warner and others urged him to mention. When I caught up with Congressman Boucher not long after the event, he told me it had been “terribly important.” Boucher had recently commissioned a poll in his district, which he gave to the Obama campaign, and while he wouldn’t tell me any of the specifics, he did volunteer that McCain was “significantly ahead.” Still, the poll showed an unusually high number of undecided voters — perhaps not surprising given that in the Republican primary McCain lost badly to Mike Huckabee in the southwestern counties. “People are not enthusiastic about McCain,” he told me. “They want to get to know Barack Obama better. They’re waiting to be persuaded.
“The grapevine is the single most powerful form of communication in my district,” Boucher continued. “All those people in that gymnasium, I’ll bet every one of them went out and told 10 people, ‘Hey, he was terrific.’ ”
Still, it occurred to me that during his appearance in Lebanon, Obama did little more than briefly nod to a series of local concerns, as if he had been carrying around a list that needed to be checked off before he got back on his plane and headed east to Norfolk. “Keeping jobs at home” was a great applause line, but Obama didn’t betray any awareness of the novel public programs that might make that goal possible, like the shell buildings or the Return to Roots campaign. Far from celebrating Lebanon, as Warner suggested, Obama made only passing reference to the new jobs that were revitalizing the town, a success story that would seem to have justified his coming there in the first place. Obama mostly made the same general appeal he was making in more diverse and liberal parts of the country, with a few perfunctory detours along the way.
It is often said in politics that a candidate’s strength is also his weakness. Obama’s greatest asset as a candidate, the trait that has enabled him to overcome both a thin résumé and the resistance of his own party’s establishment, is his placidity. Even more than through his ability to give a rousing speech (plenty of other candidates, from Ted Kennedy to Howard Dean, could do that), Obama has differentiated himself from recent Democrats by conveying a sense of inner security that is highly unusual in a business of people who have chosen to spend every day asking people to love them. He does not seem like a candidate who’s going to switch to earth tones in his middle age or who’s going to start dressing up in camouflage to rediscover his inner Rambo. Obama is content to meet the world on his terms, and something about that inspires confidence.
And yet that same lack of pathetic neediness may in fact be a detriment when it comes to persuading voters who, culturally or ideologically, just aren’t predisposed to like him. I once heard a friend of Obama’s compare him with Bill Clinton this way: if Clinton sees you walking down the other side of the street, he immediately crosses over to shake your hand; if Obama sees you coming, he nods and waits for you to cross. That image returned to me as I watched Obama campaign in Lebanon. Clinton wouldn’t have wanted to leave that gym until every last voter had been converted, even if that meant he had to memorize the scheduled sewer installation for every home in Russell County. Mark Warner, a similarly tenacious glad-hander, went to rural Virginia again and again because, deep down, he needed to change people’s perceptions of who he was. Obama doesn’t connect to the world that way, which is probably why his campaign has always preferred big rallies to hand-to-hand venues. Obama gives the impression that he’s going to show up and make his case, and if you don’t fall in love with him, well, he’ll just have to pick up the pieces and go on.
In some other election year, that probably wouldn’t have been enough to sway the subset of undecided voters who came to see Obama at Lebanon High. But this isn’t any other election year. Bush’s approval ratings are the lowest on record, the Republican nominee is an erstwhile foe of the N.R.A. and taxpayers are doling out loans to Wall Street while their own credit suddenly dries up. As this campaign’s symbol of change (the word is all but tattooed on his forehead), Obama has become, in a sense, the default candidate — the guy you choose if he can clear even a modest threshold of acceptability. Voters in places like Lebanon were not, as Obama joked, looking for excuses not to vote for him; they were looking for reasons they should. The uncommitted voters in the gymnasium might not have run back home to tell their friends how “terrific” Obama had been, but they may well have said that Obama didn’t seem alien or condescending — that he wasn’t the contemptuous, tax-loving liberal they had heard so much about. And maybe, this time, that would be enough.
A WEEK AFTER OBAMA VISITED Lebanon and Norfolk, I went to see Jim Webb in his Capitol Hill office. Obama’s campaign considers Webb, a war hero and former Republican, to be one of its most critical validators all over Virginia, specifically because he appeals to white men who are skeptical of Democrats in general. In fact, Webb’s Scots-Irish family hails from coal country. Not long after he entered the Senate, he became embroiled in a mini-controversy when an aide accidentally carried one of Webb’s favorite guns onto the Capitol grounds.
I was surprised, then, when Webb told me that while he was enthusiastic about Obama and would campaign for him, he did not intend to vouch for him on social issues. “I believe that Barack Obama has the temperament and the intellect and the ideas to be president,” Webb said. “But I don’t talk about his positions, and I don’t defend his positions.” When I commented that Webb wasn’t where Obama was on gun rights (Obama favors what he calls some “common sense” restrictions), Webb cut me off. “No, he’s not where I am on guns,” he said pointedly. It occurred to me that this was probably the kind of validation Obama could do without. (Webb appears to have softened his stance. A few weeks later, he decided to tape an ad promising voters in southwestern Virginia that Obama would not, in fact, confiscate their guns.)
Webb and I discussed the conventional wisdom taking hold — in discussions not only about Virginia but about Pennsylvania and Ohio and Michigan as well — that white men weren’t breaking Obama’s way mostly because he’s black. Webb disagreed. When it came to white working-class and rural voters, Webb said, what mattered was whether Obama seemed to share the same basic small-town values. “Does he understand me?” Webb said. “Can I trust him?”
At one point, when we were talking about the southwestern part of the state, Webb suggested, half seriously, that I should talk to his cousin Jimmy, who writes a column for The Lebanon News. (The number of Webb’s cousins is something of a joke in Virginia; he’s basically related in some way to the entire western part of the state.) So when I got back to my office, I tracked down cousin Jimmy, who, it turns out, is 78 years old and knows Virginia politics as well as he knows the old coins he sells to collectors. Jimmy Webb told me he was a strong Obama supporter, but he had a slightly different take on things than his famous cousin.
“When you get past Roanoke and out this way,” he told me, “in southwestern Virginia and eastern Tennessee, blacks are just not that popular. That’s one of Obama’s problems. I’ve had Democrats tell me that they’re not even going to the polls.” I heard much the same thing from Steve Cochran, the Democratic committee chairman in Montgomery County. (Believe it or not, Cochran, too, is somehow a distant cousin of Webb’s.) “I think if the people of southwestern Virginia had the opportunity to meet Barack Obama and see how intelligent he is and how genuine he is and how caring he is, there would be no question,” Cochran said. “But there is still this little bit of skepticism in Appalachian Virginia, as there is in a lot of other parts of the country, that this guy is still just a little bit not like me. I see people having a little trouble getting around that color barrier.”
How race affects Obama’s effort to broaden the electoral map is the most persistent question surrounding his campaign — and perhaps the least answerable. A bracing poll released last month by The Associated Press and Yahoo, in conjunction with Stanford University, concluded that Obama might be losing as many as six percentage points nationally because he’s black. This was based on the finding that 40 percent of white Americans admitted to some negative views toward blacks. Such polls are frequently cited as proof that Obama would be walking away with the election were he more than half white.
And yet from all available data Obama isn’t actually doing any worse with white men than the last two Democratic nominees, both of whom also ran at a time when the national climate offered considerable advantages — Gore because the country had enjoyed a long period of prosperity, Kerry because of the failing war in Iraq. According to exit polls, Kerry lost the overall white vote by 17 points in 2004. Recent Gallup tracking polls, while somewhat erratic from week to week, have shown Obama running above that level; polling in early October had him down by only eight points among white voters. “Obama’s doing better than Gore or Kerry,” says Dee Davis, who founded the Center for Rural Strategies in Whitesburg, Ky. “And I think both of those guys were white the last time I looked at the paper.” According to exit polls, Kerry received only 27 percent of the white-male vote in Virginia in 2004, a figure Obama is poised to surpass, according to a pollster from another campaign who is working in the state.
Perhaps the problem with this entire discussion about race is that it begins with the wrong question. Most polls focus on determining the prevalence of racial bias among white voters and whether it will affect their choices on Election Day. This may be the best way we have to measure the impact of race, but it is hardly revelatory; no one should be surprised to learn that racial stereotypes exist, particularly among lower-income and less-educated white men, or that such stereotypes affect the way voters see Obama. The more important question is not whether race is a factor in people’s votes but whether it is a determinative factor — that is, whether Obama’s being black is the disqualifying fact for white voters that it might have been 20 years ago or whether it has now been reduced to one of those surmountable obstacles that any candidate has to overcome.
When Al Smith, New York’s Democratic governor, ran for president in 1928, his Catholicism was a deal breaker. When John F. Kennedy ran in 1960, the prejudice remained, but it had lost its defining intensity. Kennedy felt sufficiently disadvantaged by his religion to address it in a major speech, just as Obama did on race during the primaries, but in the end, some sizable segment of Protestant voters who had concerns about pulling the lever for a Catholic did so anyway. In other words, it may be possible for racial prejudice to exist, as all the polls suggest it does, but for it to be only one significant influence among many, including voters’ views on the economy and on McCain as an alternative.
There is another parallel in the Kennedy example that may prove relevant if Obama’s strategists have their way. While Kennedy undoubtedly lost the votes of some Protestants who feared papal influence over the White House, their numbers were more than canceled out by the Catholic voters who came to the polls at a level never before seen. Obama’s strategists accept that there will be some number of voters — particularly white men — who will reject Obama solely because he is black. But they are betting, first, that most of these voters wouldn’t have voted for a Democrat in any event and, second, that the groundswell of black support for Obama will produce enough new African-American votes in a lot of states to offset them.
In 2004, 60 percent of voting-age black Americans went to the polls (compared with 67 percent of white voters), and about 88 percent of them voted for Kerry. Those are pretty impressive numbers, historically. And yet, with Obama on the ticket, it is not unrealistic to think that black turnout could increase by as many as five points and that Obama could increase the Democratic share of that vote to well over 90 percent. All of which means that if Obama can perform at least as well as Kerry among white men in some of the reliably red states he’s trying to turn blue, most notably Virginia and North Carolina, race as an overall factor in the election could end up winning Obama more votes than it takes away.
WHEN I SAT WITH OBAMA on his plane, just three days after his first debate with McCain and not quite a week since the nation’s credit system went into meltdown, the White House must have felt, finally, within his reach. National tracking polls showed him holding a consistent lead of four to six points for the first time in the campaign. In a string of familiar battleground states where Obama had been struggling to capitalize on anti-Bush sentiment and economic angst, a new round of polls showed him breaking out at last. He had finally put some distance between himself and McCain in Pennsylvania and Michigan, and he was on the verge of driving the Republicans from the latter state altogether. In Ohio and Florida, states that Bush carried twice, Obama appeared to have broken a stalemate and moved solidly into the lead. Such readings were merely snapshots, of course, subject to change at any moment, but even so, both campaigns seemed to sense that McCain’s window for taking command of the campaign was beginning to close.
In Virginia, according to both private and public polling, the shift was especially pronounced. Several polls would soon show Obama pulling ahead of McCain by a significant margin, and two would have his lead in the state soaring into double digits. More staggering was the data concerning white voters and, specifically, men. According to a random telephone poll by SurveyUSA (though often derided by rival pollsters, the outfit compiled a surprisingly strong track record in the primaries), McCain was leading among men in Virginia by 10 points just after the conventions; by the beginning of October, Obama was leading by 11. Among white voters in the state overall, McCain’s 22-point September lead had shrunk to single digits. In the rural Shenandoah Valley region, running along the state’s western border and down into coal country, McCain had led by 24 points in September. Now he and Obama were tied.
And yet it seemed fair to question whether anything about this sudden movement actually validated Obama’s central argument about American politics — this notion that the cultural fault line in the electorate can somehow be bridged by a generational change in leadership — or whether it spoke to some more immediate, more desperate impulse in a shaken electorate. The campaign had become pretty much a referendum on the current economic carnage and eight years of mostly bad news turning to worse, and for the moment, at least, the crisis on Wall Street appeared to have accomplished what Obama’s strategists had been unable to do for months leading up to it: change the focus from Obama’s readiness and supposed elitism to George W. Bush’s myriad failures. In 2004, voters in the newly influential exurbs chose cultural identity over their concerns about war and the economy, and this choice cost John Kerry Ohio and the presidency; this year, it seemed increasingly likely that those
The Reckoning
Building Flawed American Dreams
By DAVID STREITFELD and GRETCHEN MORGENSON
SAN ANTONIO — A grandson of Mexican immigrants and a former mayor of this town, Henry G. Cisneros has spent years trying to make the dream of homeownership come true for low-income families.
As the Clinton administration’s top housing official in the mid-1990s, Mr. Cisneros loosened mortgage restrictions so first-time buyers could qualify for loans they could never get before.
Then, capitalizing on a housing expansion he helped unleash, he joined the boards of a major builder, KB Home, and the largest mortgage lender in the nation, Countrywide Financial — two companies that rode the housing boom, drawing criticism along the way for abusive business practices.
And Mr. Cisneros became a developer himself. The Lago Vista development here in his hometown once stood as a testament to his life’s work.
Joining with KB, he built 428 homes for low-income buyers in what was a neglected, industrial neighborhood. He often made the trip from downtown to ask residents if they were happy.
“People bought here because of Cisneros,” says Celia Morales, a Lago Vista resident. “There was a feeling of, ‘He’s got our back.’ ”
But Mr. Cisneros rarely comes around anymore. Lago Vista, like many communities born in the housing boom, is now under stress. Scores of homes have been foreclosed, including one in five over the last six years on the community’s longest street, Sunbend Falls, according to property records.
While Mr. Cisneros says he remains proud of his work, he has misgivings over what his passion has wrought. He insists that the worst problems developed only after “bad actors” hijacked his good intentions but acknowledges that “people came to homeownership who should not have been homeowners.”
They were lured by “unscrupulous participants — bankers, brokers, secondary market people,” he says. “The country is paying for that, and families are hurt because we as a society did not draw a line.”
The causes of the housing implosion are many: lax regulation, financial innovation gone awry, excessive debt, raw greed. The players are also varied: bankers, borrowers, developers, politicians and bureaucrats.
Mr. Cisneros, 61, had a foot in a number of those worlds. Despite his qualms, he encouraged the unprepared to buy homes — part of a broad national trend with dire economic consequences.
He reflects often on his role in the debacle, he says, which has changed homeownership from something that secured a place in the middle class to something that is ejecting people from it. “I’ve been waiting for someone to put all the blame at my doorstep,” he says lightly, but with a bit of worry, too.
The Paydays During the Boom
After a sex scandal destroyed his promising political career and he left Washington, he eventually reinvented himself as a well-regarded advocate and builder of urban, working-class homes. He has financed the construction of more than 7,000 houses.
For the three years he was a director at KB Home, Mr. Cisneros received at least $70,000 in pay and more than $100,000 worth of stock. He also received $1.14 million in directors’ fees and stock grants during the six years he was a director at Countrywide. He made more than $5 million from Countrywide stock options, money he says he plowed into his company.
He says his development work provides an annual income of “several hundred thousand” dollars. All told, his paydays are modest relative to the windfalls some executives netted in the boom. Indeed, Mr. Cisneros says his mistake was not the greed that afflicted many of his counterparts in banking and housing; it was unwavering belief.
It was, he argues, impossible to know in the beginning that the federal push to increase homeownership would end so badly. Once the housing boom got going, he suggests, laws and regulations barely had a chance.
“You think you have a finely tuned instrument that you can use to say: ‘Stop! We’re at 69 percent homeownership. We should not go further. There are people who should remain renters,’ ” he says. “But you really are just given a sledgehammer and an ax. They are blunt tools.”
From people dizzily drawing home equity loans out of increasingly valuable houses to banks racking up huge fees, few wanted the party to end.
“I’m not sure you can regulate when we’re talking about an entire nation of 300 million people and this behavior becomes viral,” Mr. Cisneros says.
Homeownership has deep roots in the American soul. But until recently getting a mortgage was a challenge for low-income families. Many of these families were minorities, which naturally made the subject of special interest to Mr. Cisneros, who, in 1993, became the first Hispanic head of the Department of Housing and Urban Development.
He had President Clinton’s ear, an easy charisma and a determination to increase a homeownership rate that had been stagnant for nearly three decades.
Thus was born the National Homeownership Strategy, which promoted ownership as patriotic and an easy win for all. “We were trying to be creative,” Mr. Cisneros recalls.
Under Mr. Cisneros, there were small and big changes at HUD, an agency that greased the mortgage wheel for first-time buyers by insuring billions of dollars in loans. Families no longer had to prove they had five years of stable income; three years sufficed.
And in another change championed by the mortgage industry, lenders were allowed to hire their own appraisers rather than rely on a government-selected panel. This saved borrowers money but opened the door for inflated appraisals. (A later HUD inquiry uncovered appraisal fraud that imperiled the federal mortgage insurance fund.)
“Henry did everything he could for home builders while he was at HUD,” says Janet Ahmad, president of Homeowners for Better Building, an advocacy group in San Antonio, who has known Mr. Cisneros since he was a city councilor. “That laid the groundwork for where we are now.”
Mr. Cisneros, who says he has no recollection that appraisal rules were relaxed when he ran HUD, disputes that notion. “I look back at HUD and feel my hands were clean,” he says.
Lenders applauded two more changes HUD made on Mr. Cisneros’s watch: they no longer had to interview most government-insured borrowers face to face or maintain physical branch offices. The industry changed, too. Lenders sprang up to serve those whose poor credit history made them ineligible for lower-interest “prime” loans. Countrywide, which Angelo R. Mozilo co-founded in 1969, set up a subprime unit in 1996.
Mr. Cisneros met Mr. Mozilo while he was HUD secretary, when Countrywide signed a government pledge to use “proactive creative efforts” to extend homeownership to minorities and low-income Americans.
He met Bruce E. Karatz, the chief executive of KB Home, when both were helping Los Angeles rebuild after the Northridge earthquake in 1994.
There were real gains during the Clinton years, as homeownership rose to 67.4 percent in 2000 from 64 percent in 1994. Hispanics and African-Americans were the biggest beneficiaries. But as the boom later gathered steam, and as the Bush administration continued the Clinton administration’s push to amplify homeownership, some of those gains turned out to be built on sand.
Mr. Cisneros left government in 1997 after revelations that he had lied to federal investigators about payments to a former mistress. In the following years, HUD continued to draw attention in the news media and among consumer advocates for an overly lenient posture toward the housing industry.
In 2000, Mr. Cisneros returned to San Antonio, where he formed American CityVista, a developer, in partnership with KB, and became a KB director. KB’s board also included James A. Johnson, a prominent Democrat and the former chief executive of Fannie Mae, the mortgage giant now being run by the government. Mr. Johnson did not return a phone call seeking comment.
It made for a cozy network. Fannie bought or backed many mortgages received by home buyers in the KB Home/American CityVista partnership. And Fannie’s biggest mortgage client was Countrywide, whose board Mr. Cisneros had joined in 2001.
Because American CityVista was privately held, Mr. Cisneros’s earnings are not disclosed. He held a 65 percent stake, and KB had the rest. In 2002, KB paid $1.24 million to American CityVista for “services rendered.”
‘A Little Too Ambitious’
One of American CityVista’s first projects, unveiled in late 2000, was Lago Vista — Spanish for “Lake View.” The location was unusual: San Antonio’s proud and insular South Side, a Hispanic area home to secondhand car dealers, light industry and pawnshops.
Mr. Cisneros and KB pledged to transform an overgrown patch of land into a showcase. Homes were initially priced from $70,000 to about $95,000, and Mr. Cisneros promised that Lago Vista would be ringed with jogging paths and maple trees.
The paths were never built, and few trees provide shade from the Texas sun. The adjoining “lake” — at one point a run-off pit for an asphalt plant — is fenced off, a hazard to neighborhood children. The houses are gaily painted in pink, blue, yellow or tan, and most owners keep their yards green and tidy.
KB considers Lago Vista a “model community,” a spokeswoman said.
To get things rolling in Lago Vista, traditional bars to homeownership were lowered to the ground. Fannie Mae, CityVista and KB promoted a program allowing police officers, firefighters, teachers and others to get loans with nothing down and no closing costs.
KB marketed its developments in videos. In one from 2003, Mr. Karatz declared: “One of the greatest misconceptions today is people who sit back and think, ‘I can’t afford to buy.’ ” Mr. Cisneros appeared — identified as a former HUD director — saying the time was ripe to buy a home. Many agreed.
Victor Ramirez and Lorraine Pulido-Ramirez bought a house in Lago Vista in 2002. “This was our first home. I had nothing to compare it to,” Mr. Ramirez says. “I was a student making $17,000 a year, my wife was between jobs. In retrospect, how in hell did we qualify?”
The majority of buyers in Lago Vista “were duped into believing it was easier than it was,” Mr. Ramirez says. “The attitude was, ‘Sign here, sign here, don’t read the fine print.’ ” He added that some fault lay with buyers: “We were definitely willing victims.” (The Ramirez family veered close to foreclosure, but the couple now have good jobs and can make their payments.)
KB and Mr. Cisneros eventually built more than a dozen developments, primarily in Texas. But the shine slowly came off Lago Vista.
“It started off fabulously,” Mr. Karatz recalled. Then sales slowed considerably. “It was probably, looking back, a little too ambitious to think that there would be sufficient local demand.”
And then the foreclosures started. “A lot of people got approved for big amounts,” says Patricia Flores, another Lago Vista homeowner. “They bit off more than they could chew.” Families split up under the strain of mortgage payments. One residence had so much marital turmoil that neighbors nicknamed it “The House of Broken Love.”
Some homes were taken over and sold at a loss by HUD, which had insured them. KB was also a mortgage lender, a business many home builders pursued because it was so profitable. At times, it was also problematic.
Officials at HUD uncovered problems with KB’s lending. In 2005, about two years after Mr. Cisneros left the KB board, the agency filed an administrative action against KB for approving loans based on overstated or improperly documented borrower income, and for charging excessive fees. Because HUD does not specify where improprieties take place, it is not clear if this occurred at Lago Vista.
KB Home paid $3.2 million to settle the HUD action without admitting liability or fault, one of the largest settlements collected by the agency’s mortgagee review board. Shortly afterward, KB sold its lending unit to Countrywide. Then they set up a joint venture: KB installed Countrywide sales representatives in its developments.
By 2007, almost three-quarters of the loans to KB buyers were made by the joint venture. In Lago Vista, residents secured loans from a spectrum of federal agencies and lenders.
During years of heady growth, and then during a deep financial slide, Countrywide became a lightning rod for criticism about excesses and abuses leading to the housing bust — which Countrywide routinely brushed off.
Mr. Cisneros says he was never aware of improprieties at KB or Countrywide, and worked with them because he was impressed by Mr. Karatz and Mr. Mozilo. Mr. Mozilo could not be reached for comment.
Still, Countrywide expanded subprime lending aggressively while Mr. Cisneros served on its board. In September 2004, according to documents provided by a former employee, lending audits in six of Countrywide’s largest regions showed about one in eight loans was “severely unsatisfactory” because of shoddy underwriting.
HUD required such audits and lenders were expected to address problems. Mr. Cisneros was a member of the Countrywide committee that oversaw compliance with legal and regulatory requirements. But he says he did not recall seeing or receiving the reports.
Nor, he says, was there ever a board vote about the wisdom of subprime lending.
“The irresistible temptation to engage in subprime was Countrywide’s fatal error,” he says. “I fault myself for not having seen it and, since it was not something I could change, having left.”
Mr. Cisneros left Countrywide’s board last year. At the time, he expressed “enormous confidence in the leadership.” In 2003, Mr. Cisneros ended his partnership with KB because, he says, he felt constrained working with just one builder. He formed a new company with the same mission, CityView, that has raised $725 million.
Mr. Karatz has a different recollection of why the partnership ended.
“It didn’t become an important part of KB’s business,” he says. “It was profitable but I don’t think as profitable in those initial years as Henry’s group wanted it to be.”
Troubles in Lago Vista
Today in Lago Vista, many are just trying to get by. Residents say crime has risen, and with association dues unpaid, they cannot hire security. Salvador Gutierrez, a truck driver, woke up recently to see four men stealing the tires off his pickup. Seventeen houses are for sale, but there are few buyers.
Hugo Martinez, who got a pair of Countrywide loans to buy a two-bedroom house with no down payment, recently lost his job with a car dealership. He has a lower-paying job as a mechanic and can’t refinance or sell his house.
“They make it easy when you buy,” Mr. Martinez says. “But after a while, the interest rate goes up. KB Home says they cannot help us at all.”
Five years ago, Carlo Lee and Patricia Reyes bought their first home, a three-bedroom house in Lago Vista.
After Mrs. Reyes became ill last year and lost her job, they fell behind on their payments. Last month, Mr. Reyes was laid off from one of his jobs, assembling cabinets. He still works part time at a hospital, but unless the couple come up with missed payments and fees, they will lose their home.
“Everyone isn’t happy here in Lago Vista,” Mr. Reyes says. “Everyone has a lot of problems.”
Countrywide was bought recently at a fire-sale price by Bank of America. Mr. Cisneros describes Mr. Mozilo as “sick with stress — the final chapter of his life is the infamy that’s been brought on him, or that he brought on himself.”
Mr. Karatz was forced out of KB two years ago amid a compensation scandal. Last month, without admitting or denying the allegations, he settled government charges that he illegally backdated stock options worth $6 million.
For his part, Mr. Cisneros says he is proud of Lago Vista. “It is inaccurate to say that we put people into homes that they couldn’t afford,” he says. “No one was forcing people into homes.”
He also remains bullish on home building, despite the current carnage.
“We’re not selling cigarettes,” he says. “We’re not drawing people into casino gambling. We’re building the homes they’re going to raise their families in.”
David Streitfeld reported from San Antonio, and Gretchen Morgenson from New York.
By DAVID STREITFELD and GRETCHEN MORGENSON
SAN ANTONIO — A grandson of Mexican immigrants and a former mayor of this town, Henry G. Cisneros has spent years trying to make the dream of homeownership come true for low-income families.
As the Clinton administration’s top housing official in the mid-1990s, Mr. Cisneros loosened mortgage restrictions so first-time buyers could qualify for loans they could never get before.
Then, capitalizing on a housing expansion he helped unleash, he joined the boards of a major builder, KB Home, and the largest mortgage lender in the nation, Countrywide Financial — two companies that rode the housing boom, drawing criticism along the way for abusive business practices.
And Mr. Cisneros became a developer himself. The Lago Vista development here in his hometown once stood as a testament to his life’s work.
Joining with KB, he built 428 homes for low-income buyers in what was a neglected, industrial neighborhood. He often made the trip from downtown to ask residents if they were happy.
“People bought here because of Cisneros,” says Celia Morales, a Lago Vista resident. “There was a feeling of, ‘He’s got our back.’ ”
But Mr. Cisneros rarely comes around anymore. Lago Vista, like many communities born in the housing boom, is now under stress. Scores of homes have been foreclosed, including one in five over the last six years on the community’s longest street, Sunbend Falls, according to property records.
While Mr. Cisneros says he remains proud of his work, he has misgivings over what his passion has wrought. He insists that the worst problems developed only after “bad actors” hijacked his good intentions but acknowledges that “people came to homeownership who should not have been homeowners.”
They were lured by “unscrupulous participants — bankers, brokers, secondary market people,” he says. “The country is paying for that, and families are hurt because we as a society did not draw a line.”
The causes of the housing implosion are many: lax regulation, financial innovation gone awry, excessive debt, raw greed. The players are also varied: bankers, borrowers, developers, politicians and bureaucrats.
Mr. Cisneros, 61, had a foot in a number of those worlds. Despite his qualms, he encouraged the unprepared to buy homes — part of a broad national trend with dire economic consequences.
He reflects often on his role in the debacle, he says, which has changed homeownership from something that secured a place in the middle class to something that is ejecting people from it. “I’ve been waiting for someone to put all the blame at my doorstep,” he says lightly, but with a bit of worry, too.
The Paydays During the Boom
After a sex scandal destroyed his promising political career and he left Washington, he eventually reinvented himself as a well-regarded advocate and builder of urban, working-class homes. He has financed the construction of more than 7,000 houses.
For the three years he was a director at KB Home, Mr. Cisneros received at least $70,000 in pay and more than $100,000 worth of stock. He also received $1.14 million in directors’ fees and stock grants during the six years he was a director at Countrywide. He made more than $5 million from Countrywide stock options, money he says he plowed into his company.
He says his development work provides an annual income of “several hundred thousand” dollars. All told, his paydays are modest relative to the windfalls some executives netted in the boom. Indeed, Mr. Cisneros says his mistake was not the greed that afflicted many of his counterparts in banking and housing; it was unwavering belief.
It was, he argues, impossible to know in the beginning that the federal push to increase homeownership would end so badly. Once the housing boom got going, he suggests, laws and regulations barely had a chance.
“You think you have a finely tuned instrument that you can use to say: ‘Stop! We’re at 69 percent homeownership. We should not go further. There are people who should remain renters,’ ” he says. “But you really are just given a sledgehammer and an ax. They are blunt tools.”
From people dizzily drawing home equity loans out of increasingly valuable houses to banks racking up huge fees, few wanted the party to end.
“I’m not sure you can regulate when we’re talking about an entire nation of 300 million people and this behavior becomes viral,” Mr. Cisneros says.
Homeownership has deep roots in the American soul. But until recently getting a mortgage was a challenge for low-income families. Many of these families were minorities, which naturally made the subject of special interest to Mr. Cisneros, who, in 1993, became the first Hispanic head of the Department of Housing and Urban Development.
He had President Clinton’s ear, an easy charisma and a determination to increase a homeownership rate that had been stagnant for nearly three decades.
Thus was born the National Homeownership Strategy, which promoted ownership as patriotic and an easy win for all. “We were trying to be creative,” Mr. Cisneros recalls.
Under Mr. Cisneros, there were small and big changes at HUD, an agency that greased the mortgage wheel for first-time buyers by insuring billions of dollars in loans. Families no longer had to prove they had five years of stable income; three years sufficed.
And in another change championed by the mortgage industry, lenders were allowed to hire their own appraisers rather than rely on a government-selected panel. This saved borrowers money but opened the door for inflated appraisals. (A later HUD inquiry uncovered appraisal fraud that imperiled the federal mortgage insurance fund.)
“Henry did everything he could for home builders while he was at HUD,” says Janet Ahmad, president of Homeowners for Better Building, an advocacy group in San Antonio, who has known Mr. Cisneros since he was a city councilor. “That laid the groundwork for where we are now.”
Mr. Cisneros, who says he has no recollection that appraisal rules were relaxed when he ran HUD, disputes that notion. “I look back at HUD and feel my hands were clean,” he says.
Lenders applauded two more changes HUD made on Mr. Cisneros’s watch: they no longer had to interview most government-insured borrowers face to face or maintain physical branch offices. The industry changed, too. Lenders sprang up to serve those whose poor credit history made them ineligible for lower-interest “prime” loans. Countrywide, which Angelo R. Mozilo co-founded in 1969, set up a subprime unit in 1996.
Mr. Cisneros met Mr. Mozilo while he was HUD secretary, when Countrywide signed a government pledge to use “proactive creative efforts” to extend homeownership to minorities and low-income Americans.
He met Bruce E. Karatz, the chief executive of KB Home, when both were helping Los Angeles rebuild after the Northridge earthquake in 1994.
There were real gains during the Clinton years, as homeownership rose to 67.4 percent in 2000 from 64 percent in 1994. Hispanics and African-Americans were the biggest beneficiaries. But as the boom later gathered steam, and as the Bush administration continued the Clinton administration’s push to amplify homeownership, some of those gains turned out to be built on sand.
Mr. Cisneros left government in 1997 after revelations that he had lied to federal investigators about payments to a former mistress. In the following years, HUD continued to draw attention in the news media and among consumer advocates for an overly lenient posture toward the housing industry.
In 2000, Mr. Cisneros returned to San Antonio, where he formed American CityVista, a developer, in partnership with KB, and became a KB director. KB’s board also included James A. Johnson, a prominent Democrat and the former chief executive of Fannie Mae, the mortgage giant now being run by the government. Mr. Johnson did not return a phone call seeking comment.
It made for a cozy network. Fannie bought or backed many mortgages received by home buyers in the KB Home/American CityVista partnership. And Fannie’s biggest mortgage client was Countrywide, whose board Mr. Cisneros had joined in 2001.
Because American CityVista was privately held, Mr. Cisneros’s earnings are not disclosed. He held a 65 percent stake, and KB had the rest. In 2002, KB paid $1.24 million to American CityVista for “services rendered.”
‘A Little Too Ambitious’
One of American CityVista’s first projects, unveiled in late 2000, was Lago Vista — Spanish for “Lake View.” The location was unusual: San Antonio’s proud and insular South Side, a Hispanic area home to secondhand car dealers, light industry and pawnshops.
Mr. Cisneros and KB pledged to transform an overgrown patch of land into a showcase. Homes were initially priced from $70,000 to about $95,000, and Mr. Cisneros promised that Lago Vista would be ringed with jogging paths and maple trees.
The paths were never built, and few trees provide shade from the Texas sun. The adjoining “lake” — at one point a run-off pit for an asphalt plant — is fenced off, a hazard to neighborhood children. The houses are gaily painted in pink, blue, yellow or tan, and most owners keep their yards green and tidy.
KB considers Lago Vista a “model community,” a spokeswoman said.
To get things rolling in Lago Vista, traditional bars to homeownership were lowered to the ground. Fannie Mae, CityVista and KB promoted a program allowing police officers, firefighters, teachers and others to get loans with nothing down and no closing costs.
KB marketed its developments in videos. In one from 2003, Mr. Karatz declared: “One of the greatest misconceptions today is people who sit back and think, ‘I can’t afford to buy.’ ” Mr. Cisneros appeared — identified as a former HUD director — saying the time was ripe to buy a home. Many agreed.
Victor Ramirez and Lorraine Pulido-Ramirez bought a house in Lago Vista in 2002. “This was our first home. I had nothing to compare it to,” Mr. Ramirez says. “I was a student making $17,000 a year, my wife was between jobs. In retrospect, how in hell did we qualify?”
The majority of buyers in Lago Vista “were duped into believing it was easier than it was,” Mr. Ramirez says. “The attitude was, ‘Sign here, sign here, don’t read the fine print.’ ” He added that some fault lay with buyers: “We were definitely willing victims.” (The Ramirez family veered close to foreclosure, but the couple now have good jobs and can make their payments.)
KB and Mr. Cisneros eventually built more than a dozen developments, primarily in Texas. But the shine slowly came off Lago Vista.
“It started off fabulously,” Mr. Karatz recalled. Then sales slowed considerably. “It was probably, looking back, a little too ambitious to think that there would be sufficient local demand.”
And then the foreclosures started. “A lot of people got approved for big amounts,” says Patricia Flores, another Lago Vista homeowner. “They bit off more than they could chew.” Families split up under the strain of mortgage payments. One residence had so much marital turmoil that neighbors nicknamed it “The House of Broken Love.”
Some homes were taken over and sold at a loss by HUD, which had insured them. KB was also a mortgage lender, a business many home builders pursued because it was so profitable. At times, it was also problematic.
Officials at HUD uncovered problems with KB’s lending. In 2005, about two years after Mr. Cisneros left the KB board, the agency filed an administrative action against KB for approving loans based on overstated or improperly documented borrower income, and for charging excessive fees. Because HUD does not specify where improprieties take place, it is not clear if this occurred at Lago Vista.
KB Home paid $3.2 million to settle the HUD action without admitting liability or fault, one of the largest settlements collected by the agency’s mortgagee review board. Shortly afterward, KB sold its lending unit to Countrywide. Then they set up a joint venture: KB installed Countrywide sales representatives in its developments.
By 2007, almost three-quarters of the loans to KB buyers were made by the joint venture. In Lago Vista, residents secured loans from a spectrum of federal agencies and lenders.
During years of heady growth, and then during a deep financial slide, Countrywide became a lightning rod for criticism about excesses and abuses leading to the housing bust — which Countrywide routinely brushed off.
Mr. Cisneros says he was never aware of improprieties at KB or Countrywide, and worked with them because he was impressed by Mr. Karatz and Mr. Mozilo. Mr. Mozilo could not be reached for comment.
Still, Countrywide expanded subprime lending aggressively while Mr. Cisneros served on its board. In September 2004, according to documents provided by a former employee, lending audits in six of Countrywide’s largest regions showed about one in eight loans was “severely unsatisfactory” because of shoddy underwriting.
HUD required such audits and lenders were expected to address problems. Mr. Cisneros was a member of the Countrywide committee that oversaw compliance with legal and regulatory requirements. But he says he did not recall seeing or receiving the reports.
Nor, he says, was there ever a board vote about the wisdom of subprime lending.
“The irresistible temptation to engage in subprime was Countrywide’s fatal error,” he says. “I fault myself for not having seen it and, since it was not something I could change, having left.”
Mr. Cisneros left Countrywide’s board last year. At the time, he expressed “enormous confidence in the leadership.” In 2003, Mr. Cisneros ended his partnership with KB because, he says, he felt constrained working with just one builder. He formed a new company with the same mission, CityView, that has raised $725 million.
Mr. Karatz has a different recollection of why the partnership ended.
“It didn’t become an important part of KB’s business,” he says. “It was profitable but I don’t think as profitable in those initial years as Henry’s group wanted it to be.”
Troubles in Lago Vista
Today in Lago Vista, many are just trying to get by. Residents say crime has risen, and with association dues unpaid, they cannot hire security. Salvador Gutierrez, a truck driver, woke up recently to see four men stealing the tires off his pickup. Seventeen houses are for sale, but there are few buyers.
Hugo Martinez, who got a pair of Countrywide loans to buy a two-bedroom house with no down payment, recently lost his job with a car dealership. He has a lower-paying job as a mechanic and can’t refinance or sell his house.
“They make it easy when you buy,” Mr. Martinez says. “But after a while, the interest rate goes up. KB Home says they cannot help us at all.”
Five years ago, Carlo Lee and Patricia Reyes bought their first home, a three-bedroom house in Lago Vista.
After Mrs. Reyes became ill last year and lost her job, they fell behind on their payments. Last month, Mr. Reyes was laid off from one of his jobs, assembling cabinets. He still works part time at a hospital, but unless the couple come up with missed payments and fees, they will lose their home.
“Everyone isn’t happy here in Lago Vista,” Mr. Reyes says. “Everyone has a lot of problems.”
Countrywide was bought recently at a fire-sale price by Bank of America. Mr. Cisneros describes Mr. Mozilo as “sick with stress — the final chapter of his life is the infamy that’s been brought on him, or that he brought on himself.”
Mr. Karatz was forced out of KB two years ago amid a compensation scandal. Last month, without admitting or denying the allegations, he settled government charges that he illegally backdated stock options worth $6 million.
For his part, Mr. Cisneros says he is proud of Lago Vista. “It is inaccurate to say that we put people into homes that they couldn’t afford,” he says. “No one was forcing people into homes.”
He also remains bullish on home building, despite the current carnage.
“We’re not selling cigarettes,” he says. “We’re not drawing people into casino gambling. We’re building the homes they’re going to raise their families in.”
David Streitfeld reported from San Antonio, and Gretchen Morgenson from New York.
Sunday, October 19, 2008
Be fearful when others are greedy, Be greedy when others are fearful
Buy American. I Am.
By WARREN E. BUFFETT
Omaha
THE financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.
So ... I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities.
Why?
A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.
Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.
A little history here: During the Depression, the Dow hit its low, 41, on July 8, 1932. Economic conditions, though, kept deteriorating until Franklin D. Roosevelt took office in March 1933. By that time, the market had already advanced 30 percent. Or think back to the early days of World War II, when things were going badly for the United States in Europe and the Pacific. The market hit bottom in April 1942, well before Allied fortunes turned. Again, in the early 1980s, the time to buy stocks was when inflation raged and the economy was in the tank. In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.
Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.
You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain. But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy.
Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.
Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice: “I skate to where the puck is going to be, not to where it has been.”
I don’t like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I’ll follow the lead of a restaurant that opened in an empty bank building and then advertised: “Put your mouth where your money was.” Today my money and my mouth both say equities.
Warren E. Buffett is the chief executive of Berkshire Hathaway, a diversified holding company.
By WARREN E. BUFFETT
Omaha
THE financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.
So ... I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities.
Why?
A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.
Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.
A little history here: During the Depression, the Dow hit its low, 41, on July 8, 1932. Economic conditions, though, kept deteriorating until Franklin D. Roosevelt took office in March 1933. By that time, the market had already advanced 30 percent. Or think back to the early days of World War II, when things were going badly for the United States in Europe and the Pacific. The market hit bottom in April 1942, well before Allied fortunes turned. Again, in the early 1980s, the time to buy stocks was when inflation raged and the economy was in the tank. In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.
Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.
You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain. But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy.
Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.
Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice: “I skate to where the puck is going to be, not to where it has been.”
I don’t like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I’ll follow the lead of a restaurant that opened in an empty bank building and then advertised: “Put your mouth where your money was.” Today my money and my mouth both say equities.
Warren E. Buffett is the chief executive of Berkshire Hathaway, a diversified holding company.
Happy Recession
NY Times Columnist
The Downturn’s Upside
By NICHOLAS D. KRISTOF
Your retirement savings are swirling through the drain of the market meltdown, your home isn’t worth what a Chihuahua’s doghouse was a year ago, and the United States may be facing the most severe recession since the Great Depression.
But cheer up, for this is a happy column! The economic misery is numbingly real, but it’s also true that a downturn isn’t uniformly bad and might even be good for you in several ways:
A recession could save your life. Christopher Ruhm, an economist at the University of North Carolina, Greensboro, argues that death rates go down during economic slowdowns. Professor Ruhm’s research indicates that suicides rise but total mortality rates drop, as do deaths from heart attacks, car accidents, pneumonia and most other causes.
For example, each one-percentage-point drop in unemployment in the United States is associated with an extra 3,900 deaths from heart attacks.
Some experts are skeptical. But in downturns we drive less and so car accidents decline, while less business activity means fewer job accidents and less pollution. Moreover, in recessions people have more leisure time and seem to smoke less, exercise more and eat more healthily.
A bear market might benefit you, if you are in your working years and won’t have to sell your stocks soon. That’s because you’re probably accumulating stocks now in your retirement account, and you’ll accumulate more when share prices are low.
Americans are twice as likely to own a retirement account, like a 401(k) or an I.R.A., as to own a stock portfolio outright. For anyone a decade or more from retirement, a bear market is a chance to pick up bargains.
For such people, today’s bear market probably won’t affect share prices when you have to sell. I hit age 70 in 2029, and I doubt that the market level then will be affected by today’s turmoil.
(This is the view of the “revert to the mean” school of financial economists, who see share prices eventually returning to long-term trends. Conversely, some economists in the “random walk” school think prices won’t necessarily ever catch up. In the absence of firm evidence about who is right, you may as well side with the former; you’ll feel better as you survey the wreckage of your 401(k).)
Falling housing prices harm landlords and speculators but benefit renters and first-time buyers (if they can still get mortgages). These beneficiaries tend to be low-income families, thus in this respect the poor may benefit. Likewise, a recession lowers prices of gas, oil and food, which disproportionately affect the poor.
More broadly, there’s some evidence that falling home and stock prices will raise savings rates in the United States. That is necessary for the long-term health of the economy.
Income doesn’t have much to do with happiness. Americans haven’t become any happier as they have prospered in the last half-century. And winning the lottery doesn’t make people happier in the long term.
This is called the Easterlin Paradox: Once they have met their basic needs, people don’t become happier as they become richer. In recent years, new research has undermined the Easterlin Paradox, yet it’s still true that happiness has less to do with money than with friendships and finding meaning in a cause larger than oneself.
“There’s pretty good evidence that money doesn’t matter much for how you feel moment to moment,” said Alan Krueger, a Princeton University economist who is conducting extensive research on happiness. “What seems to matter much more is having good friends and family, and time to spend on social activities.”
The big exception to all this is people who lose their jobs or homes, and the new president should act immediately to help them. Professor Krueger argues that for these people, the losses are greater than we have generally realized, for their losses are not only monetary but also the erosion of self-esteem and friendships as they are wrenched out of social networks that enrich their lives (and help them find new jobs). And for those who lose health insurance, a medical or dental problem is enormously stressful, even life-threatening.
One lesson is that the government should try particularly hard to keep people in their homes. We should, for example, allow courts to ease the terms of mortgages to prevent foreclosures, while also boosting assistance to help the unemployed find jobs.
Obviously, a meltdown isn’t good. Divorce rates spike in recessions. Credit evaporates, lives are upended, and for retirees counting on selling stocks to survive, a bear market is a catastrophe.
Yet that’s not the whole picture, and we shouldn’t overdo the gloom the way we overdid the giddiness during the boom. For most Americans, those who keep their homes and jobs and are years from retirement, even the most bearish cloud might have a silver lining.
The Downturn’s Upside
By NICHOLAS D. KRISTOF
Your retirement savings are swirling through the drain of the market meltdown, your home isn’t worth what a Chihuahua’s doghouse was a year ago, and the United States may be facing the most severe recession since the Great Depression.
But cheer up, for this is a happy column! The economic misery is numbingly real, but it’s also true that a downturn isn’t uniformly bad and might even be good for you in several ways:
A recession could save your life. Christopher Ruhm, an economist at the University of North Carolina, Greensboro, argues that death rates go down during economic slowdowns. Professor Ruhm’s research indicates that suicides rise but total mortality rates drop, as do deaths from heart attacks, car accidents, pneumonia and most other causes.
For example, each one-percentage-point drop in unemployment in the United States is associated with an extra 3,900 deaths from heart attacks.
Some experts are skeptical. But in downturns we drive less and so car accidents decline, while less business activity means fewer job accidents and less pollution. Moreover, in recessions people have more leisure time and seem to smoke less, exercise more and eat more healthily.
A bear market might benefit you, if you are in your working years and won’t have to sell your stocks soon. That’s because you’re probably accumulating stocks now in your retirement account, and you’ll accumulate more when share prices are low.
Americans are twice as likely to own a retirement account, like a 401(k) or an I.R.A., as to own a stock portfolio outright. For anyone a decade or more from retirement, a bear market is a chance to pick up bargains.
For such people, today’s bear market probably won’t affect share prices when you have to sell. I hit age 70 in 2029, and I doubt that the market level then will be affected by today’s turmoil.
(This is the view of the “revert to the mean” school of financial economists, who see share prices eventually returning to long-term trends. Conversely, some economists in the “random walk” school think prices won’t necessarily ever catch up. In the absence of firm evidence about who is right, you may as well side with the former; you’ll feel better as you survey the wreckage of your 401(k).)
Falling housing prices harm landlords and speculators but benefit renters and first-time buyers (if they can still get mortgages). These beneficiaries tend to be low-income families, thus in this respect the poor may benefit. Likewise, a recession lowers prices of gas, oil and food, which disproportionately affect the poor.
More broadly, there’s some evidence that falling home and stock prices will raise savings rates in the United States. That is necessary for the long-term health of the economy.
Income doesn’t have much to do with happiness. Americans haven’t become any happier as they have prospered in the last half-century. And winning the lottery doesn’t make people happier in the long term.
This is called the Easterlin Paradox: Once they have met their basic needs, people don’t become happier as they become richer. In recent years, new research has undermined the Easterlin Paradox, yet it’s still true that happiness has less to do with money than with friendships and finding meaning in a cause larger than oneself.
“There’s pretty good evidence that money doesn’t matter much for how you feel moment to moment,” said Alan Krueger, a Princeton University economist who is conducting extensive research on happiness. “What seems to matter much more is having good friends and family, and time to spend on social activities.”
The big exception to all this is people who lose their jobs or homes, and the new president should act immediately to help them. Professor Krueger argues that for these people, the losses are greater than we have generally realized, for their losses are not only monetary but also the erosion of self-esteem and friendships as they are wrenched out of social networks that enrich their lives (and help them find new jobs). And for those who lose health insurance, a medical or dental problem is enormously stressful, even life-threatening.
One lesson is that the government should try particularly hard to keep people in their homes. We should, for example, allow courts to ease the terms of mortgages to prevent foreclosures, while also boosting assistance to help the unemployed find jobs.
Obviously, a meltdown isn’t good. Divorce rates spike in recessions. Credit evaporates, lives are upended, and for retirees counting on selling stocks to survive, a bear market is a catastrophe.
Yet that’s not the whole picture, and we shouldn’t overdo the gloom the way we overdid the giddiness during the boom. For most Americans, those who keep their homes and jobs and are years from retirement, even the most bearish cloud might have a silver lining.
Globalization Blues
NY Times Columnist
The Great Iceland Meltdown
By THOMAS L. FRIEDMAN
Who knew? Who knew that Iceland was just a hedge fund with glaciers? Who knew?
If you’re looking for a single example of how the globalization of finance helped get us into this mess and how it will help get us out, you need look no further than British newspapers last week and their front-page articles about the number of British citizens, municipalities and universities — including Cambridge — that are in a tizzy today because they had savings parked in Icelandic banks, through online banking services like Icesave.co.uk.
As Dave Barry would say, I’m not makin’ this up.
When I went to the Icesave Web site to see what it was all about, the headline read: “Simple, transparent and consistently high-rate online savings accounts from Icesave.” But then, underneath in blue letters, I found the following note appended: “We are not currently processing any deposits or any withdrawal requests through our Icesave Internet accounts. We apologize for any inconvenience this may cause our customers.”
Any “inconvenience?” When you can’t withdraw savings from an online bank in Iceland, that is more than an inconvenience! That’s a reason for total panic.
So what’s the story? Around 2002, Iceland began to free its banks from state ownership. According to The Wall Street Journal, the three banks that make up almost the entire banking system in Iceland “grew quickly on easy credit” and “their combined assets rose tenfold in five years.” The Icelandic banks, while not invested in U.S. subprime mortgages, had gone on their own borrowing and lending binges, wooing savers from across Europe with 5.45 percent interest savings accounts.
In a flat world, money can easily seek out the highest returns, and when word got around about Iceland, deposits poured in from Britain — some $1.8 billion. Unfortunately, though, when global credit markets closed up, and the krona fell, “the Icelandic banks were unable to finance their debts, many of which were denominated in foreign currencies,” The Times reported. When depositors rushed to get their money out, the Icelandic banking system had too little reserves to cover withdrawals, so all three banks melted down and were nationalized.
It turns out that more than 120 British municipal governments, as well as universities, hospitals and charities had deposits stranded in blocked Icelandic bank accounts. Cambridge alone had about $20 million, while 15 British police forces — from towns like Kent, Surrey, Sussex and Lancashire — had roughly $170 million frozen in Iceland, The Telegraph reported. Even the bobbies were banking in Iceland!
So think about it: Some mortgage broker in Los Angeles gives subprime “liar loans” to people who have no credit ratings so they can buy homes in Southern California. Those flimsy mortgages get globalized through the global banking system and, when they go sour, they eventually prompt banks to stop lending, fearful that every other bank’s assets are toxic, too. The credit crunch hits Iceland, which went on its own binge. Meanwhile, the police department of Northumbria, England, had invested some of its extra cash in Iceland, and, now that those accounts are frozen, it may have to reduce street patrols this weekend.
And therein lies the central truth of globalization today: We’re all connected and nobody is in charge.
Globalization giveth — it was this democratization of finance that helped to power the global growth that lifted so many in India, China and Brazil out of poverty in recent decades. Globalization now taketh away — it was this democratization of finance that enabled the U.S. to infect the rest of the world with its toxic mortgages. And now, we have to hope, that globalization will saveth.
The real and sustained bailout from the crisis will happen when the strong companies buy the weak ones — on a global basis. It’s starting. Last week, Credit Suisse declined a Swiss government bailout and instead raised fresh capital from Qatar, the Olayan family of Saudi Arabia and Israel’s Koor Industries. Japan’s Mitsubishi bank bought a stake in Morgan Stanley, possibly rescuing it from bankruptcy and preventing an even steeper decline in the Dow. And Spain’s Banco Santander, which was spared from the worst of this credit crisis by Spain’s conservative banking regulations, is purchasing America’s Sovereign Bankcorp.
I suspect we will soon see the same happening in industry. And, once the smoke clears, I suspect we will find ourselves living in a world of globalization on steroids — a world in which key global economies are more intimately tied together than ever before.
It will be a world in which America will not be able to scratch its ear, let alone roll over in bed, without thinking about the impact on other countries and economies. And it will be a world in which multilateral diplomacy and regulation will no longer be a choice. It will be a reality and a necessity. We are all partners now.
The Great Iceland Meltdown
By THOMAS L. FRIEDMAN
Who knew? Who knew that Iceland was just a hedge fund with glaciers? Who knew?
If you’re looking for a single example of how the globalization of finance helped get us into this mess and how it will help get us out, you need look no further than British newspapers last week and their front-page articles about the number of British citizens, municipalities and universities — including Cambridge — that are in a tizzy today because they had savings parked in Icelandic banks, through online banking services like Icesave.co.uk.
As Dave Barry would say, I’m not makin’ this up.
When I went to the Icesave Web site to see what it was all about, the headline read: “Simple, transparent and consistently high-rate online savings accounts from Icesave.” But then, underneath in blue letters, I found the following note appended: “We are not currently processing any deposits or any withdrawal requests through our Icesave Internet accounts. We apologize for any inconvenience this may cause our customers.”
Any “inconvenience?” When you can’t withdraw savings from an online bank in Iceland, that is more than an inconvenience! That’s a reason for total panic.
So what’s the story? Around 2002, Iceland began to free its banks from state ownership. According to The Wall Street Journal, the three banks that make up almost the entire banking system in Iceland “grew quickly on easy credit” and “their combined assets rose tenfold in five years.” The Icelandic banks, while not invested in U.S. subprime mortgages, had gone on their own borrowing and lending binges, wooing savers from across Europe with 5.45 percent interest savings accounts.
In a flat world, money can easily seek out the highest returns, and when word got around about Iceland, deposits poured in from Britain — some $1.8 billion. Unfortunately, though, when global credit markets closed up, and the krona fell, “the Icelandic banks were unable to finance their debts, many of which were denominated in foreign currencies,” The Times reported. When depositors rushed to get their money out, the Icelandic banking system had too little reserves to cover withdrawals, so all three banks melted down and were nationalized.
It turns out that more than 120 British municipal governments, as well as universities, hospitals and charities had deposits stranded in blocked Icelandic bank accounts. Cambridge alone had about $20 million, while 15 British police forces — from towns like Kent, Surrey, Sussex and Lancashire — had roughly $170 million frozen in Iceland, The Telegraph reported. Even the bobbies were banking in Iceland!
So think about it: Some mortgage broker in Los Angeles gives subprime “liar loans” to people who have no credit ratings so they can buy homes in Southern California. Those flimsy mortgages get globalized through the global banking system and, when they go sour, they eventually prompt banks to stop lending, fearful that every other bank’s assets are toxic, too. The credit crunch hits Iceland, which went on its own binge. Meanwhile, the police department of Northumbria, England, had invested some of its extra cash in Iceland, and, now that those accounts are frozen, it may have to reduce street patrols this weekend.
And therein lies the central truth of globalization today: We’re all connected and nobody is in charge.
Globalization giveth — it was this democratization of finance that helped to power the global growth that lifted so many in India, China and Brazil out of poverty in recent decades. Globalization now taketh away — it was this democratization of finance that enabled the U.S. to infect the rest of the world with its toxic mortgages. And now, we have to hope, that globalization will saveth.
The real and sustained bailout from the crisis will happen when the strong companies buy the weak ones — on a global basis. It’s starting. Last week, Credit Suisse declined a Swiss government bailout and instead raised fresh capital from Qatar, the Olayan family of Saudi Arabia and Israel’s Koor Industries. Japan’s Mitsubishi bank bought a stake in Morgan Stanley, possibly rescuing it from bankruptcy and preventing an even steeper decline in the Dow. And Spain’s Banco Santander, which was spared from the worst of this credit crisis by Spain’s conservative banking regulations, is purchasing America’s Sovereign Bankcorp.
I suspect we will soon see the same happening in industry. And, once the smoke clears, I suspect we will find ourselves living in a world of globalization on steroids — a world in which key global economies are more intimately tied together than ever before.
It will be a world in which America will not be able to scratch its ear, let alone roll over in bed, without thinking about the impact on other countries and economies. And it will be a world in which multilateral diplomacy and regulation will no longer be a choice. It will be a reality and a necessity. We are all partners now.
Padayon Ang Sabong
PADAYON ANG SABONG
Dihang ang pangu sa kasundalohan sa Thailand niawhag sa naapiki nilang primero ministro sa pagkanaog gikan sa katungdanan, di gamay sa mga Pilipinhon ang nakugang. Ug nasina. Di silang kapaabot sa pangu sa kasundalohan sa Pilipinas nga mangahas pag-awhag ni Pres. Arroyo sa paglayas sa Malakanyang.
Dihang niawhag si Fidel Ramos sa resignasyon ni Ferdinand Marcos niadtong 1986, di siya maoy pangu sa kasundalohan. Si Heneral Fabian Ver nagpaluyo ni Marcos hangtod sa ilang pagkapukan. Si Angelo Reyes maoy hepe sa AFP sa iyang pag-awhag ni Joseph Estrada pagkanaog sa Malakanyang. Apan di siya maoy tinuod nga yawe sa pagkatangtang ni Erap.
-o0o-
Di kapaabot ang mga Pilipinhon nga mobarug ang mga pangu sa atong kasundalohan alang sa katarung. Susiha lang ang mga eskandalo nga naglambigit sa mga heneral aron ka makumbinser nga wa silay kalainan sa kurakot nga mga politiko nga atong gipanghimaraot. Maong nagpalabwanay ang mga politiko nagpabaha ug mga heneral nga nagkabiba sa minilyon ka pesos nilang katigayonan.
Maong ang batan-ong mga opisyal sa kasundalohan maoy naa sa mas maayong posisyon pagpasiugda og kausaban. Kay naghupot pa sa ilang ideyalismo ug wa pa hingpit nga malubong sa kadudahang mga transaksiyon. Apan ang nangagi nilang mga pag-alsa gidudahang gipaluyohan sa mga politiko. Nga mas nangalisbo kay sa mga opisyal nga gusto nilang pulihan.
-o0o-
Ang kasundalohan gitahasan sa batakang balaod pagpanalipod sa katawhan. Bisan batok sa mga namunoan nga inay mopatigbabaw nibudhi na hinuon sa nasudnong interes. Nga di layo sa ilang kasingkasing. Kay kasagaran sa mga sundawo sama sa kinabag-an sa katawhan---kabos ug timawa.
Apan unsay nahitabo? Ang mga sundawo gigamit paglapas sa balaod---pagdupa sa panlaktod sa higanteng mga patigayon, pagyatak sa tawhanong katungod sa mga mag-uuma ug pagtuman sa ilegal nga sugo sa ilang kadagkoan.
Nganong nahitabo ni? Kay sama sa ubang hut-ong sa katilingban, wa sila makighiusa sa kinabag-an sa katawhan maong sayon kaayong napahimuslan.
-o0o-
Kon wa pa kang kabantay, ang alas sa mga nagpahimus sa nasud ug sa katawhan mao ang ilang paglampos pagbuwag ug pagbuakbuak nato. Ang labing nakapahuyang sa katawhan mao ang atong kapakyas pag-ila sa atong kadaghan ug kagamhanan.
Nga maoy nahitabo sa nangaging kapid-an na ka katuigan. Ang pait nga kahimtang nato karon mao sab ang nahiagoman sa atong katiguwangan. Gikan sa mga datu sa wa pa motakas ang mga langyaw nga way nhibaw-an lapas sa mga baybayon sa ilang giangkon nga mga isla. Ngadto sa mga langyaw nga nipalig-on ug mas nipalig-on pa sa kaburong. Ug sa atong kaugalingong mga kadugo nga nagpaburot pinaagi sa padayong pagsabong nato.
Pila na ka henerasyon tang nag-unay? Ato ba lang gihapon nga paundayonan? O panahon na nga hatagan og kinutoban? [30] leo_lastimosa@abs-cbn.com
Dihang ang pangu sa kasundalohan sa Thailand niawhag sa naapiki nilang primero ministro sa pagkanaog gikan sa katungdanan, di gamay sa mga Pilipinhon ang nakugang. Ug nasina. Di silang kapaabot sa pangu sa kasundalohan sa Pilipinas nga mangahas pag-awhag ni Pres. Arroyo sa paglayas sa Malakanyang.
Dihang niawhag si Fidel Ramos sa resignasyon ni Ferdinand Marcos niadtong 1986, di siya maoy pangu sa kasundalohan. Si Heneral Fabian Ver nagpaluyo ni Marcos hangtod sa ilang pagkapukan. Si Angelo Reyes maoy hepe sa AFP sa iyang pag-awhag ni Joseph Estrada pagkanaog sa Malakanyang. Apan di siya maoy tinuod nga yawe sa pagkatangtang ni Erap.
-o0o-
Di kapaabot ang mga Pilipinhon nga mobarug ang mga pangu sa atong kasundalohan alang sa katarung. Susiha lang ang mga eskandalo nga naglambigit sa mga heneral aron ka makumbinser nga wa silay kalainan sa kurakot nga mga politiko nga atong gipanghimaraot. Maong nagpalabwanay ang mga politiko nagpabaha ug mga heneral nga nagkabiba sa minilyon ka pesos nilang katigayonan.
Maong ang batan-ong mga opisyal sa kasundalohan maoy naa sa mas maayong posisyon pagpasiugda og kausaban. Kay naghupot pa sa ilang ideyalismo ug wa pa hingpit nga malubong sa kadudahang mga transaksiyon. Apan ang nangagi nilang mga pag-alsa gidudahang gipaluyohan sa mga politiko. Nga mas nangalisbo kay sa mga opisyal nga gusto nilang pulihan.
-o0o-
Ang kasundalohan gitahasan sa batakang balaod pagpanalipod sa katawhan. Bisan batok sa mga namunoan nga inay mopatigbabaw nibudhi na hinuon sa nasudnong interes. Nga di layo sa ilang kasingkasing. Kay kasagaran sa mga sundawo sama sa kinabag-an sa katawhan---kabos ug timawa.
Apan unsay nahitabo? Ang mga sundawo gigamit paglapas sa balaod---pagdupa sa panlaktod sa higanteng mga patigayon, pagyatak sa tawhanong katungod sa mga mag-uuma ug pagtuman sa ilegal nga sugo sa ilang kadagkoan.
Nganong nahitabo ni? Kay sama sa ubang hut-ong sa katilingban, wa sila makighiusa sa kinabag-an sa katawhan maong sayon kaayong napahimuslan.
-o0o-
Kon wa pa kang kabantay, ang alas sa mga nagpahimus sa nasud ug sa katawhan mao ang ilang paglampos pagbuwag ug pagbuakbuak nato. Ang labing nakapahuyang sa katawhan mao ang atong kapakyas pag-ila sa atong kadaghan ug kagamhanan.
Nga maoy nahitabo sa nangaging kapid-an na ka katuigan. Ang pait nga kahimtang nato karon mao sab ang nahiagoman sa atong katiguwangan. Gikan sa mga datu sa wa pa motakas ang mga langyaw nga way nhibaw-an lapas sa mga baybayon sa ilang giangkon nga mga isla. Ngadto sa mga langyaw nga nipalig-on ug mas nipalig-on pa sa kaburong. Ug sa atong kaugalingong mga kadugo nga nagpaburot pinaagi sa padayong pagsabong nato.
Pila na ka henerasyon tang nag-unay? Ato ba lang gihapon nga paundayonan? O panahon na nga hatagan og kinutoban? [30] leo_lastimosa@abs-cbn.com
Friday, October 17, 2008
Kalibotanong Bakak
Way nangutana niya. Way nagpaabot nga mao toy iyang isulti. Way niawhag niya paghatag sa kasayuran. Di matapos ang kalibotan kon di to niya luwatan. Apan si Pres. Arroyo wa magpapiri. Ni magpapugong. Ang iyang pamahayag way bisan gamay na lang panagana.
Ambot kon naapil ba sa script. O iya na lang gidalidali pag-apas ginamit ang laptop nga way guba-guba bisan kapila na niya gibalibag. O iya na lang gipuno kay nikalit lang pagsantop sa iyang hunahuna samtang nagdiskurso na.
Iyang pahibawo: Ang World Bank (WB) dunay giandam nga $10 bilyones alang sa Pilipinas ug ubang mga nasud sa habagatan silangang Asya kon maapiki sa kalibotanong krisis sa panalapi.
-o0o-
Ang iyang sulti wa sugata og sipang pakpak. Ang iyang pamahayag wa hatagi og igong gibug-aton. Kay ang iyang kasayuran di makapakugang. Kasarangan lang nga atubangan sa kalibotanong paningkamot pagluwas sa mga bangko ug ubang mga institusyon sa panalapi nga nangapurdoy, mangandam sab ang WB pag-agak sa iyang sakop nga mga nasud.
Laing hinungdan nga way nakugang sa pahibawo ni Arroyo: Human sa $700 bilyones nga gigahin sa Estados Unidos, wa ra sa kumingking ang $10 bilyones. Ug kon napakyas ang $700 bilyones pagpakalma sa mga magpapatigayon sa nagkalainlaing kanasuran, unsa man intawoy mahimo sa $10 bilyones nga gihisgutan ni Arroyo?
-o0o-
Maong di tiaw ang kakugang sa katawhang Pilipinhon dihang ang pamahayag ni Arroyo gipanghimakak sa WB. Nahasol gyod tingaling WB kay gawas nga paspas kaayo gisangyaw gyod sa tibuok kalibotan ang ilang panghimakak. Mahimo ra man untang hatagan lag higayon ang Malakanyang pagbakwi sa pahibawo sa paagi nga di manlipaghong sa kauwaw si Arroyo.
Ang panagang sa palasyo, sama sa naandan, wa magkadimao. Ang unang lusot ni Trade Secretary Peter Favila mao nga niuyon nang WB sa $10 bilyones nga gisugyot ni Arroyo. Apan nausab ang hunahuna sa kadagkoan sa WB. Sa wa pang kaluwat ang WB og laing panghimakak, giangkon ni Neda Director General Ralph Recto nga sayop si Arroyo—ang $10 bilyones gikan diay sa IMF.
-o0o-
Di ni unang higayon nga naangin ang ubang kanasuran sa sayop nga pamahayag ni Arroyo. Dihang nipadayag siyag kaalarma sa kanihit sa suplay sa bugas sa Pilipinas, nanakod dayon ang iyang kahadlok sa ubang kanasuran—ang importers nisunod sa Pilipinas pagpangomprag mas daghan, samtang ang exporters sama sa Vietnam ug Thailand nihigpit sa ilang pagpamaligya. Ang sangpotanan: Niulbo ang kalibotanong krisis sa pagkaon.
Naanad na ba lang gyod si Arroyo sa pagpangulipas? Nga wa na siyay bisan gamay na lang kaikog nga masakpan? Nga wa na lang magsapayan unsay sangpotanan sa sayop niyang kasayuran? Nihuot na ba pag-ayo sa Pilipinas ang iyang kahigwaos pagsulti sa di tinuod? Nga kinahanglan na niyang iduhig ang tibuok kalibotan? [30] leo_lastimosa@abs-cbn.com
Ambot kon naapil ba sa script. O iya na lang gidalidali pag-apas ginamit ang laptop nga way guba-guba bisan kapila na niya gibalibag. O iya na lang gipuno kay nikalit lang pagsantop sa iyang hunahuna samtang nagdiskurso na.
Iyang pahibawo: Ang World Bank (WB) dunay giandam nga $10 bilyones alang sa Pilipinas ug ubang mga nasud sa habagatan silangang Asya kon maapiki sa kalibotanong krisis sa panalapi.
-o0o-
Ang iyang sulti wa sugata og sipang pakpak. Ang iyang pamahayag wa hatagi og igong gibug-aton. Kay ang iyang kasayuran di makapakugang. Kasarangan lang nga atubangan sa kalibotanong paningkamot pagluwas sa mga bangko ug ubang mga institusyon sa panalapi nga nangapurdoy, mangandam sab ang WB pag-agak sa iyang sakop nga mga nasud.
Laing hinungdan nga way nakugang sa pahibawo ni Arroyo: Human sa $700 bilyones nga gigahin sa Estados Unidos, wa ra sa kumingking ang $10 bilyones. Ug kon napakyas ang $700 bilyones pagpakalma sa mga magpapatigayon sa nagkalainlaing kanasuran, unsa man intawoy mahimo sa $10 bilyones nga gihisgutan ni Arroyo?
-o0o-
Maong di tiaw ang kakugang sa katawhang Pilipinhon dihang ang pamahayag ni Arroyo gipanghimakak sa WB. Nahasol gyod tingaling WB kay gawas nga paspas kaayo gisangyaw gyod sa tibuok kalibotan ang ilang panghimakak. Mahimo ra man untang hatagan lag higayon ang Malakanyang pagbakwi sa pahibawo sa paagi nga di manlipaghong sa kauwaw si Arroyo.
Ang panagang sa palasyo, sama sa naandan, wa magkadimao. Ang unang lusot ni Trade Secretary Peter Favila mao nga niuyon nang WB sa $10 bilyones nga gisugyot ni Arroyo. Apan nausab ang hunahuna sa kadagkoan sa WB. Sa wa pang kaluwat ang WB og laing panghimakak, giangkon ni Neda Director General Ralph Recto nga sayop si Arroyo—ang $10 bilyones gikan diay sa IMF.
-o0o-
Di ni unang higayon nga naangin ang ubang kanasuran sa sayop nga pamahayag ni Arroyo. Dihang nipadayag siyag kaalarma sa kanihit sa suplay sa bugas sa Pilipinas, nanakod dayon ang iyang kahadlok sa ubang kanasuran—ang importers nisunod sa Pilipinas pagpangomprag mas daghan, samtang ang exporters sama sa Vietnam ug Thailand nihigpit sa ilang pagpamaligya. Ang sangpotanan: Niulbo ang kalibotanong krisis sa pagkaon.
Naanad na ba lang gyod si Arroyo sa pagpangulipas? Nga wa na siyay bisan gamay na lang kaikog nga masakpan? Nga wa na lang magsapayan unsay sangpotanan sa sayop niyang kasayuran? Nihuot na ba pag-ayo sa Pilipinas ang iyang kahigwaos pagsulti sa di tinuod? Nga kinahanglan na niyang iduhig ang tibuok kalibotan? [30] leo_lastimosa@abs-cbn.com
Arroyo Lied?
Calling the incident an “international embarrassment,” opposition senators urged President Gloria Macapagal-Arroyo to sack whoever gave her wrong information about a $10 billion regional crisis fund that World Bank supposedly committed for Southeast Asia.
Thursday, October 16, 2008
Princess' Victims
With the extraction of toxic waste almost finished, the Philippine Coast Guard met Friday with firms conducting the salvage work to prepare to retrieve victims' remains from the capsized MV Princess of the Stars.
Wednesday, October 15, 2008
The Last Debate
IF THE THIRD and final debate offered the presidential candidates the opportunity, in some sense, to make their closing arguments to voters, viewers could be forgiven if they felt like jurors in an interminable trial. "By now, we've heard all the talking points, so let's try to tell the people tonight some things that they haven't heard," moderator Bob Schieffer of CBS said at the start of the debate. But the discussion last night, other than in regard to the odd focus on someone named "Joe the Plumber," largely replayed the by-now familiar clashes between Sens. John McCain and Barack Obama -- over tax policy, over health care, over spending. The much-anticipated fireworks fizzled. Mr. McCain, taking up Mr. Schieffer's offer to say it to his opponent's face, went after Mr. Obama's association with former Weather Underground member Bill Ayers -- "an old washed-up terrorist," Mr. McCain called him -- and questioned the Obama campaign's involvement with the community organizing group ACORN, which he said was "maybe destroying the fabric of democracy." But the attacks, under the present unhappy economic circumstances, including yesterday's 733-point drop in the Dow, seemed petty and unconvincing, and Mr. Obama appeared unrattled.
Food for Babes
Senator Richard Gordon on Thursday said the government needs at least P6 billion to fully cover the nutritional needs of millions of preschool and Grades 1 and 2 pupils in the country for the next school year.
RP's Richest
Henry Sy, founder and chairman of the SM group of companies, has been named the Philippines wealthiest man, according to the Forbes Asia 2008 Philippines Rich List. Sy, who ranked second in last year's Forbes list, has an estimated net worth of US$3.1 billion. In second place is business tycoon Lucio Tan and family with a net worth of $1.5 billion, down by $100 million from last year.
RP's Richest
Henry Sy, founder and chairman of the SM group of companies, has been named the Philippines wealthiest man, according to the Forbes Asia 2008 Philippines Rich List. Sy, who ranked second in last year's Forbes list, has an estimated net worth of US$3.1 billion. In second place is business tycoon Lucio Tan and family with a net worth of $1.5 billion, down by $100 million from last year.
Fare Rates Reduction Seen
There is a “good chance” of a jeepney and bus fare rollback by December due to the continuing decline of oil prices, an official of the Land Transportation Franchising and Regulatory Board (LTFRB) said Wednesday.
Tuesday, October 14, 2008
LPG Prices Down
The Liquefied Petroleum Gas Marketers Association (LPGMA) on Tuesday announced it may slash LPG prices during the week.
Monday, October 13, 2008
Boracay Blues
Hotel owners on the Philippine island of Boracay said on Monday they feared for their investment after a Supreme Court ruling last week that the government owned the land at the country's most famous tourist destination.
How Will Barak Fare?
Tight credit, joblessness, taxes and trade pose tough challenges.
'It's 3 a.m. and your children are safe and asleep. But there's a phone in the White House and it's ringing." Those lines from a Hillary Rodham Clinton campaign commercial invoked images of a president responding in the dead of night to "evil" forces threatening Americans' safety. These days, however, the 3 a.m. phone call to the White House is just as likely to come from the secretary of the Treasury, warning of an Asian stock market plummeting or a European government taking over another major bank. That's not a political scare tactic; it's an all-too-real consequence of the subprime mortgage fiasco.
'It's 3 a.m. and your children are safe and asleep. But there's a phone in the White House and it's ringing." Those lines from a Hillary Rodham Clinton campaign commercial invoked images of a president responding in the dead of night to "evil" forces threatening Americans' safety. These days, however, the 3 a.m. phone call to the White House is just as likely to come from the secretary of the Treasury, warning of an Asian stock market plummeting or a European government taking over another major bank. That's not a political scare tactic; it's an all-too-real consequence of the subprime mortgage fiasco.
Friday, October 10, 2008
Once More With Feeling, Gloria Cannot Be Impeached
Less than 24 hours after announcing plans for another impeachment bid against President Gloria Macapagal Arroyo, lawmakers backing the complaint now face their first "technicality."
DENR Cebu Recamped
TWO officials of the Environmental Management Bureau (EMB) 7 were relieved of their positions last week, as part of what Environment Secretary Lito Atienza described as “the continuing organizational development” of the Department of Environment and Natural Resources (DENR). Atienza, in an order dated Sept. 29, 2008, relieved EMB 7 Regional Director Alan C. Arranguez and lawyer Noel C. Empleo, officer-in-charge of the EMB legal division. Arranguez has been transferred to the regional technical division for research of the DENR 7 while Empleo has been returned to the DENR 7 legal division. The order did not state the two officials’ new designations.
Joavan Blues
THE firearms and explosives section of the police has confirmed that Talisay City Mayor Socrates Fernandez’s son Joavan does not own a licensed firearm and is not legally allowed to keep ammunition.
Where's Palin?
Alaska Governor Sarah Palin's meteoric rise to prominence on the national political scene after only 21 months in office came about with the help of a media relations and marketing consulting firm hired to draw national attention to the state's proposed natural gas pipeline project. Alaska's Department of Natural Resources paid public relations expert Marcia Brier of Needham, Massachusetts $31,000 to pitch stories to the national media that promoted Palin as the driving force behind the pipeline and getting the state legislature to go along with it. Brier sent press releases to national media outlets portraying Palin as an "upstart governor" and crusader against Big Oil, the same story line Palin now uses in her campaign with John McCain. Some state legislators take exception to the portayal of Palin as the sole force behind the pipeline, when many other people worked on the project. Once the PR campaign began, Palin was away from the Legislature so much that lawmakers started sporting red and white "Where's Sarah?" buttons. Among Brier's past clients is a 23 year-old Saudi prince, Bader al-Saud, whom she helped to get a plea deal in a vehicular homicide case after he was arrested for drinking and driving in Martha's Vineyard in 2005.
Republicans Desperate?
Republican vice presidential candidate Sarah Palin said more than one person has whispered in her ear in Ohio that John McCain needs "to take the gloves off" in his campaign against Democrat Barack Obama.
Gloria: RP Not Corrupt
President Gloria Macapagal-Arroyo said the image of the country as among the most corrupt in the world stems from a “wrong perception” she blamed on media but an economist said the experience of investors here shows graft is a reality in the Philippines.
Melamine-Safe Milk Products
The Department of Health on Friday declared 20 dairy products as safe for consumption after testing negative for melamine contamination. In a press conference, Health Secretary Francisco Duque said the new batch brings to 69 the number of dairy products that have tested negative for the deadly chemical.
RP's New Taxman
A former official of the Bureau of Internal Revenue (BIR) is being tapped to replace resigned BIR Commissioner Lilian Hefti, Executive Secretary Eduardo Ermita said Friday. He said, however, that he could not yet disclose the name of the replacement.
Thursday, October 09, 2008
Oil Drops Again
Oil prices fell $3 to a fresh one-year low below $84 a barrel on Friday, as fears that market turmoil will send demand for fuel slumping outweighed news that OPEC will hold an extraordinary meeting in November.
Wednesday, October 08, 2008
New GMail Service
In an astonishing pilot service, Google is proposing a new filter on gmail that will prevent you from sending embarrassing or damaging emails when you might not be in total control of your actions.
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