American Terrorism

Back in 2007 I felt pretty close to completely safe from terrorism. I lived in Salt Lake City, not exactly a terrorist target by any means. Also, I believed, with good reason, that the largest extremist threat came from outside the country. I remember reading a New York Times article which referenced a study that found that American Muslims assimilated better and were happier than their counterparts in Europe. Internal extremists bombed "The Tube" in England and attacked Spain but I felt that America was different. There was a much less serious home grown threat than in Europe. If we could effectively regulate who came into the country than the threat seemed manageable. I believe I was right at that time.

Now, after the failed Time Square bombing, my one time sense of security has taken a serious blow. The bomber, Faisal Shahzad, was an American citizen, naturalized on April 17, 2009. He earned his MBA from an American university and worked as a financial analyst. He married an Muslim American born in Colorado. He appeared to be completely naturalized. This was the type of well adjusted Muslim American that the New York Times referred to in their 2007 article. What happened?

Unfortunately, Shahzad is not the only recent example of an American extremist threat. David Coleman Headley was born in Washington DC and he helped plan the Mumbai terrorist attacks. Why does it appear that the threat of home grown extremist is higher now than it was three years ago?

The answer, I believe, has to do with the stability of our financial system. Shahzad struggled to make his mortgage payments soon after becoming a citizen. Eight months ago the bank foreclosed on Shahzad's home. Coincidence? Maybe, but I don't think so.

One of the principal new strategies in Afghanistan is to lure insurgents away with amnesty and a job offer. This strategy has worked in the past and it displays an profound reality: Financial security has a powerful, stabilizing effect. Unfortunately, the reverse is also true. Financial instability moves individuals toward extremes. The Nazi movement was born out of a financially crippled Germany. Communist Russian was born out of a economically troubled Russia. Even here at home in America we have seen the public move away from the middle and toward the poles during this financial crisis. In Utah Senator Bob Bennett, one of the most conservative Senators currently in the Senate, did not make it out of his own party's primary. The reason: He's not conservative enough. The same is happening on the left.

It is not surprising to see a once moderate, well assimilated Muslim American turn toward extremism when the American Dream lets him down for a few years. It is troubling and scary however. With the economy lagging in its recovery we could see more and more backyard disenchanted extremists. Obama has what appears to be a near impossible security task at hand. He must keep America safe at a time when terrorist threats are not just coming from abroad, but from our own backyard as well. As someone who works two blocks away from the tallest building in America, I hope he does good job.

Incumbant Rage

Look out Legislators!

Algorithmic Agony

Algorithms, short selling, leveraging... I have no idea what any of these terms mean. I'm an English major from the 126th ranked undergraduate institution in the country. My financial portfolio consists of a bank account and a checking account. For a while there I also had money in the stock market where I owned 10 shares of Petrobras (PBR). That didn't work out too well. All in all, I'm about as financially savvy as former Boston Celtics star Antoine Walker. Needless to say, I am completely incapable of understanding any of the financial news that's been flowing from Washington and New York over the past eighteen months. Apparently some bubbles popped and now, a year and a half later, I'm working in a job I could have done out of Junior High (I like to think that the two are correlated so as to not bruise my self-esteem). The one upside to my ignorance is that being grossly uninformed about the nations financial troubles puts me a in an ideal position to write about the financial reform bill on this blog. In the end though, I don't think anybody knows what's going on, with the exception of Ben Bernanke, Timothy Geithner and that Harvard undergrad who wrote that thesis.

The bill seems to have run through the same course as every other major bill of the past few months; Obama talks about it, Democrats propose it and Republicans unanimously say they hate it. Republicans say it's a bailout and that it will hurt the competitiveness of our nation's financial industry. The Republican bailout argument seems like pure political posturing to me. From what I've read, the bill would include an emergency pool of money, funded completely by the banks themselves, that would serve as a cushion if another major collapse occurs. Republicans make it sound like it's another tax payer bailout. Their misinformation campaign seems to have worked. After filibustering for three days the Republicans forced the emergency fund out of the bill.

The competitiveness argument makes sense though. If we place restrictions on our financial industry it could become less agile in an ever changing marketplace. It's like adding extra padding to a running back in football. He may be better protected but he will likely not run as fast or be as nimble. Is the trade off worth it? After smarting from the recession it feels like it now but in the long run it may drag us down.

In my uninformed opinion less is more with the financial reform bill. Financial firms don't need new restrictions to learn from their mistakes. Although many of the banks and insurance companies who caused the financial collapse received bailouts, there is still a natural incentive for them to avoid their prior hazardous practices. The brands of AIG, Citi Bank and others have been permanently tarnished, at least in my eyes. I will never bank with Citi and never buy insurance through AIG. I already hate Manchester United so no change there. The hit to their brand equity is in addition to the financial losses and layoffs the company suffered despite the bailout. Causing another financial meltdown is not in anybody's best interest. I believe the financial industry will police itself to a large extent.

I also worry that in the aftermath of an ugly recession the bill will go too far. When people are angry and hurting they overcompensate and overreact. Think Iraq and the Patriot Act after 9-11. A bunch of angry representatives and a bunch of angry, vocal constituents is a recipe for some pretty extreme policies. Reading Yahoo articles that call the financial reform bill "tougher than expected" is unsettling. In this fight I hope Republicans can dumb down the bill before it gets steamrolled through Congress.