Ever since Bill Clinton discovered this tactic in Arkansas, the reflex move for New Labour, Labor, Democrat, [insert name of local centre-left party here] pollies is to do the wedge between parents and teachers thing. I’m not sure that it’s ever been done before in the guise of having parents act as strikebreakers, but this is apparently what Julia Gillard is contemplating, as the AEU asks its members to boycott the administration of national tests.

The teachers’ concern revolves around the misleading data on the MySchool website, and the misleading uses it could be put to.

Julia Gillard’s concern is votes.

Incidentally: The Law Institute of Victoria points out that parents administering tests could be at legal risk.

Michael Bérubé recalls the wonders (ahem) of the Clinton administration, and has some advice for the collective(ist) tubes:

But perhaps the left blogosphere could be of some use in this regard, no? It needn’t be consolidated fully into Obama Enterprises Inc.; it could serve instead as a forum for writers dedicated to things like “hope” and “change” and “arguing that Obama was wrong to cave on FISA and better not do that kind of thing as President.” Of course, it could also serve as a forum for charting and mocking all manner of Ace-of-Confederate-Red-State-Yankeespade wingnuts as they venture into new realms of sheer barking lunacy that even the world’s sheerest barkingest lunatics have hitherto been unable to imagine. That might be fun. And it could do “shorters” and cat blogging and Theory Tuesdays and Friday Random Tens too. It’s a blogosphere. It’s a big place, with many many tubes.

Iceland right now is apparently in a state of shock and gives a snapshot of what a depression with the Great in it will look like everywhere – “cafes were half-empty, real estate agents sat idle, and retailers reported few sales” says the AP.

This after the government basically took over its banking sector, with Russian money, which as noted in the linked post, has real geopolitical implications.

Meanwhile, the British government is laying out 500 billion pounds to take equity in its banking sector, but basically proposing business as usual. Co-ordinated interest rate cuts are having very little impact on the stock market, and more worryingly, on the liquidity crisis. Paul Krugman writes:

We’re way past the point at which conventional monetary policy has much traction.

In America, in the eye of the economic storm, the Fed has basically become the financial system, but to little avail:

The time for a recession was 2005. At that time simple macroeconomic policy; simply raising interest rates, would have ended the bubbles in credit and housing at the cost of a standard if somewhat nasty recession. Trillions of dollars of intervention would not have been needed. Just standard macro policy. Even in 2006 it might still have worked. The Fed blew it, and they broke the system, and now with the system broken they may have to either buy it all out (and Paulson may be considering that after all) or just become the system. And even if they do that may not work, because, well, who wants to borrow and invest right now?

Bernanke and Greenspan are certainly in the “worst Fed chairman of all time” stakes in a big, big way.

So what does all this mean? It’s not “financial socialism” or the “end of capitalism”. While there are some truly absurd narratives circulating about how the meltdown is all the fault of… you guessed it, regulation, the Left and/or Bill Clinton, this nonsense is not unrelated to the coincidence between the financial meltdown and the American Presidential election, and it can be disposed of very easily:

Although financial institutions were evaluated for compliance with the act, it never required they lose money on mortgages or that they be given to people with slim prospects of repaying them. Even if, as some claim, the legislation ultimately played a part in encouraging excesses, such as the bundling of sub-prime loans into packages that hid their riskiness, that was a failure not of too much but of too little regulation.

[Mike Steketee]

What conservatives can’t point to, ultimately, is any form of regulation that actually caused the crisis. No one put a gun to the head of US bank executives and made them lend to people without the means to repay loans. No one threatened dire retribution to investment bankers unless they packaged sub-prime securities. And no one compelled Standard and Poor’s and Moody’s to inexplicably and wholly irresponsibly rate those securities at AAA levels even when they didn’t understand the packaging mechanisms being used.

[Bernard Keane]

As Keane points out, this sort of thing is a classic example of the moveable feast that is the right wing opinionating machine – an “ownership society” and aspirational citizens were the mark of the success of right wing governments yesterday, and today evil lefties encouraged passive banks to lend money to all sorts of unsuitable poor people.

While it may be difficult at the moment for the Right to point to capitalism as a roaring success story, what’s occurring in response is very far from being socialism, or even nationalisation.

John Quiggin writes:

This kind of instalment-plan nationalisation seems to offer the worst of all worlds. At some point, a more systematic approach will have to be adopted, and given the rate at which markets are plummeting, the sooner that point comes the better. This isn’t the return of socialism, but it certainly looks like the end of the kind of financial capitalism that has prevailed for the last few decades.

And his opinion is echoed by a socialist blogging sociologist:

And what about the future of capitalism itself? No one is saying the system itself has collapsed, rather what has gone down the tubes is a particular way of organising capitalism. It is too early to tell what could replace it, though a number of participants flagged up the possibility of a more regulated capitalism, albeit without the welfare and full employment commitments of post-war Keynesian capitalism. It’s also likely that Neoliberalism will continue to cast its shadow.

And in a rather pithy article from Andrew Crook of Business Spectator:

Western economies, with their manufacturing industries gutted and the entrails shipped abroad, are struggling to actually produce anything beyond amorphous “services” and intellectual property. This has mirrored the spread of cancerous and impossible-to-decipher debt instruments, producing the biggest financial bubble in world history. That bubble has just burst.

Sub-prime mortgages may have been the bitter pill, but it’s the yawning distance between these debt vehicles and the bricks-and-mortar of our everyday lives that could prove fatal.

Assuming the current crisis doesn’t result in the second coming of socialism, we’re left with the familiar remedy of ever more-regulated domestic markets. But the genuine policy levers of an earlier era remain out of reach.

Over the last 30 years, the Keynesian social fabric has being steadily eroded by the slavish adherence of Western governments to global market forces (“external harmonisation”) as a non-negotiable pre-cursor to domestic policymaking. Despite the tinkering of Rudd and co, this remains broadly the case. Not that they’d have you believe it.

As I’ve been arguing, the political logics behind neo-liberalism remain well entrenched, despite the recourse had by panicked “free markets” to the “nanny state”. Mark Davis agrees neo-liberalism isn’t finished:

It’s a nice idea, but underestimates just how deeply embedded neoliberal ideas are in the global finance system. My sense is that the bail-out, now passed by the US senate and to be revoted on in Congress tomorrow, will happen, even if it won’t necessarily work because there’s more to this than simply lancing a boil. Regulatory noises are being made and some tightening will take place. But the system will stay relatively unchanged because too much depends on it and because money and power have little respect, in the end, for principle.

We have essentially two problems at the moment from the point of view of the conjuncture of political economy and the alignment of social and economic forces. The first is that social democratic parties have bought into the logic of the dominant paradigm to such an extent that there are very few alternatives on offer. The second is that neo-classical orthodoxy has led to such a mismanagement of the global economy that states appear bamboozled in the face of a liquidity crisis, and few orthodox solutions appear to offer any hope of turning the situation around in the short term. We will probably see some sort of stabilisation, though perhaps not for a while, and we will also see the emergence of a new orthodoxy not too dissimilar to the old one as the superficial lessons of the crisis are absorbed and the wagons of the powers that be circle the camp.

So, if the policy cupboard is bare, and ideologues are trying desparately to readjust themselves to some version of “culture wars as usual”, what is to be done? Andrew Crook, once again, is absolutely on the money:

The broader challenge for the Left, and for politics, is to imagine a radically-different regulatory framework with actual meaning for alienated individuals struggling, in a world of tumult, to carve out a viable identity and a cohesive personal narrative. This won’t come from centre-left policy elites—it requires a new breed of social movements to organise around these faultlines and assert their right to economic and cultural autonomy.

But the outline of such a movement is only just being sketched and echoing Paulson’s doubters on Wall St (the Dow has lost 13 per cent of its value in the last five sessions), there’s little reason to believe conditions on Main St, or anywhere else, will begin to improve any time soon.

Update: New post here. Comments are now closed on this one.

Bill Clinton is the only genuine political talent that creaking heap of donkeys, the beloved Democratic Party, has produced in an age. Damn that Twenty-Second Amendment.

Obama plays it safe yet again, basically following the line of least resistance by endorsing the Paulson bailout plan with some meaningless caveats. There were calls in the States for Obama to actually return to the Senate and get involved in the legislative process over the “plan”, which would be a useful contrast with what firedoglake correctly characterises as McCain’s “empty babbling on the economy”. That might be a smart move particularly given his very thin legislative record.

But, nope.

What we get is propaganda about “post-partisan solutions”. The Democratic candidate who won’t even speak the D Word, let alone the L Word. What is it with the DNC/DLC campaign playbook from hell where “play nice” and “move to the centre right” is supposed to be the universal strategy? At one point, Obama was supposed to be aiming at piling up a mega-majority to actually bring about “change we can believe in”. What’s happened to that? What are we at now? A tiny majority in the electoral college, with a mandate for nothing much?

Bill Clinton, by contrast, has actually thought a bit about what a progressive alternative to the GOP plan might be. You can take issue with it, but as Henry Farrell points out at Crooked Timber, at least he’s talking specifics and not just buying the GOP’s pig in a poke as Obama is.

I’ll tell you what, I found voting for Bill a lot more positive an experience in 96 than I’m going to find voting for Barack this year.

The second is more specific and recent – the tendency to replace ‘heavy-handed’ forms of regulation with ‘regulation with a light touch’ and self-regulation. This has been most marked in Anglo-American economies, but other countries (in continental Europe and elsewhere) have faced persistent ideological pressures to move in this direction. This is a large chunk of the so-called ‘reform’ agenda that the Economist magazine, the OECD and other such bodies keep pushing. Both of these shifts are largely ideological – that is, they gained much of their impetus from changes in the ideas which constitute policy-makers’ shared collective wisdom about how to deal with the economy.

The second shift (the reform agenda) is now a busted flush. Its proponents are in disarray (if I’m feeling in a vindictive mood, I may well buy a copy of the next Economist to see how its editorialists try to rationalize all of this).

Any reasonable assessment of the actions of the Fed and the US Treasury would suggest that they’re driven by confusion and are very much ad-hoc measures. Neither Bernanke nor Paulson seems to have much of a big picture grip, and politicians reciting “the fundamentals are sound” is clearly not going to cut the mustard now, even, as with John McCain, precipitating something of a backlash.

John Quiggin has speculated on how all this will play out. The confusion has led to some quite bizarre moments, such as pundits on Lateline Business declaiming “capitalism is in crisis” and “the financial markets may not be viable”. What we’re seeing – among other things – is a decomposition of that abstraction “the markets” and a reduction of these so-called impersonal forces to the panicked reactions of individuals. If Robert Skidelsky is right, and a tipping point has been reached, it begs a very big question, which Farrell answers in terms of process (because no one can know the outcome of such a fluid conjuncture).

Mark Blyth’s book, Great Transformations has a theory of the relationship between economic crises and economic ideas. Very roughly speaking, when a crisis occurs that is difficult or impossible for the prevailing wisdom to explain or deal with, intellectual entrepreneurs have an opportunity to create a new (partly self-reinforcing) collective wisdom. We’re most likely in just such a crisis now. Which set of intellectual entrepreneurs are going to succeed in reshaping a new collective wisdom – economic nationalists like Sarkozy and Putin, social democratic globalizers like Dani Rodrik, or some other crowd entirely – I have no idea.

Farrell rightly quotes Tyler Cowen:

The economic fallout from these events is dominating the headlines. The intellectual and ideological fallout we are just beginning to contemplate.

There’s no doubt as well, particularly in the US and in the UK, that an enormous climate of fear has been created and that there will be huge pressure on politicians to act. In the UK, Gordon Brown’s last shred of credibility – his claim to be a competent economic manager – has collapsed as the realisation has sunk in that his own out-deregulate the Americans strategy to make the City of London a more attractive financial node than Wall Street in the wake of Sarbanes-Oxley puts the British economy at great risk, even if the bursting of the housing bubble has not been as acute as it has in the States. It can confidently be predicted now that Brown’s premiership is terminal.

Many within the Labour Party are suggesting that the time has arrived for the British government to shut the door on neo-liberalism, including Jon Cruddas MP, who was recently in Australia and spoke to Labor MPs about the successes and failures of the “Third Way” project. Cruddas writes in The Guardian:

Labour now has an historic opportunity to seize the political high ground. The era of selfish individualism is on the wane. The electorate is increasingly concerned with social insurance, safeguarding living standards and ensuring social stability and ecological sustainability. From stranded holidaymakers to pension holders, to those falling ill, they are discovering that these collective goods are in dangerously short supply. The future will demand a more active and democratic state engaging with economic development and regulation. The redistribution of wealth and resources will be essential in rebalancing a dysfunctional economy.

However, it’s very difficult to see how these sentiments could be easily translated into policy action – here and now.

I don’t have any particular glee, unlike others, in observing that the US government has now become a huge player in its own economy. The US Treasury, if you read anything about the history of globalisation and global finance, has long been a massively influential player – as the point at which the state and capital meet in the world’s central financial node. Having 80% of equity in Freddie and Fannie and the AIG rescue has no particular implication for any project to use the power of the state for truly public purposes. In fact, even such minimal redistribution and healthcare reform as Obama has promised is likely to be impossible in the face of the enormous costs now being borne by the US state. We’ll end up, if Obama is elected, with the same “Eisenhower Republican” strategy Clinton bemoaned.

Nor do I necessarily think that state ownership is either a good in and of itself or some sine qua non of social democratic respectability. It has its purposes, but it shouldn’t be turned into a shibboleth. The lack of participatory and democratic administration of nationalised industries – a fact whose legacy can be traced back to the elitist Fabians – opened the door for privatisation, by failing to actually involve citizens democratically in the economy.

But here’s the rub – there may be an opening here for a revived social democratic economic policy framework. As far as I can see, though, no one has really developed such a framework at the very time it’s needed – so blinded have the left been by the nostrums of neo-liberal “no alternativism” in macro-economic policy. Many of those assumptions, as Farrell indicates, are now collapsing like a house of cards.

The sorts of questions being asked now are precisely the ones that can’t be answered by orthodox economics with a human capital theory supply side twist or by chanting mantras drawn from exogenous growth theory. If there’s a historical moment here that needs to be seized, then the intellectual resources to make a difference appear lacking.

We will probably just have to rely on muddling through. Fingers crossed. But I can’t help feeling that the left is in as much ideological and intellectual disarray here as the right.

Update: Gary Sauer-Thompson:

The significance of this is that politicians are on the sidelines watching like the rest of us despite their claim to inside information from those who really know what’s going on. They really don’t know what is happening or what to do about it.

Or the politicians could ghave mentioned how this financial crisis was different from the previous ones. The previous ones started on fringes of the global financial system– in the developing or emerging economies in Latin America, Asia or Russia— and the West (G7) worried about the contagion. This crisis was made in the US–the heart of the global financial system— and it is the emerging powers of the east that fear contagion. Doesn’t that highlight the big shift in economic power in the world?

Incidentally, the 50 state strategy isn’t looking so good.

And the counter to the whole “Obama’s is an exemplary empty celebrity story” thing? Well, there isn’t one. The attack on his campaign, as the article suggests, for being all about his own personal journey has force.

Lord forbid that the dude might actually talk about what he might do for all those Americans who are basically screwed. Universal health care? No, not for him. It’s a sad sad story when Hillary Clinton is to your left. Don’t say I didn’t warn you.

Don’t take my word for it, though. Go read the whole article in the New York Magazine.

By the way, if you’re looking for a historical analogy, think Nixon/McGovern in 72. It was really the last campaign (and the one that Hillary and Bill were blooded on) that relied almost solely on activating teh youth and teh idealism. Or, to put it another way, turning out an anti-war left base wins you the primaries… and then… It was a 49-1 state wipeout in the Electoral College. Killed by the Culture Wars and Sarah Palin is the new Spiro Agnew. “America Decides 2008″ won’t play itself out that way, and it will be a lot closer, because Bush is a much weaker incumbent President than Nixon (!!!) but beware the “rely on turnout” thing.

The thing about the latest polls is not only that there’s been a big (20 points if you can believe that) turnaround in the white women vote, but that McCain for the first time is ahead among Independents. If Obama can’t regain momentum soon, he’s toast. He needs to talk about the economy – in a way that connects with the voters who are tempted by the culture war stuff – and now. Right now. No one will give a toss about his journey towards personal fulfillment. Maybe there’s a narrative lurking there about the cosmopolitan creative types America needs. But that’s a message best saleable by – because it was first and only the once sold by – a good ol’ boy like Bill Clinton. Obama’s “yes we Can!” schtick excited the bluest of the blue voters in the red states in the Democratic primaries. Yay! Very few of those states – as is now becoming evident – are at all winnable for him in the general election. But he’s got a real problem with tacking to the center too.

I hate to say it at this point, folks, but either John Edwards or Hillary Clinton could have won this election. It’s looking increasingly like Barack Obama can’t. But I’ll reiterate what I’ve been saying all along. Despite his “soaring rhetoric” etc. etc. etc. he’s the most right wing donkey in this year’s race. If it’s all going to be about identity politics, he loses, and the Democrats lose. If he can’t reinvent himself – asap – as someone focused on the issues, get ready for President McCain.

As Bismarck commented on this thread, it’s an old trick. As old as Bill Clinton actually – who first trialled it in Arkansas when he wanted to demonstrate that he wasn’t a “traditional” Democrat. And, as we all know, Arkansas now has a school system that’s the envy of the world (ahem)…

Dennis Atkins:

It’s an agenda that will have those working families nodding around the kitchen tables. And it’s got the added advantage of a big stink with the education establishment, particularly teacher unions and some state governments.

Maybe so. I wonder if those same “working families” will be nodding vigorously when it’s their local school that gets closed down. Whatever you think about the ideological agenda behind this (and I’m just repulsed by the demonisation of teachers), there’s an enormous number of ways this could turn into a political negative for the Rudd government. But, in the short term, he’s got the media coverage he wants, and got something that could be portrayed as a positive back on the front pages.

Update: Blogospheric reaction at Road to Surfdom, Public Opinion and Blogocracy.

Update: More from Sam Clifford at Public Polity, while on the other side of the blogosphere, Andrew Norton and Jason Soon are Julia Gillard’s new biggest fans.

The selection of the long serving Senator – who’s been a candidate for the Democratic nomination in the past himself – will be seen as bringing foreign policy gravitas to the ticket. Biden is Chair of the Senate Foreign Relations Committee. At 65, it’s unlikely that he would be seen as a future President, which may have been an issue had Hillary Clinton been picked.

The Obama campaign hasn’t gone for geographical balance – which was the basis for the speculation about possible Veeps such as Governor Kathleen Sibelius of Kansas, Governor Tim Kaine of Virginia and Senator Evan Bayh of Indiana. There’s not much recent evidence that helps much anyway.

Two questions will be asked about this selection – does it represent an acknowledgement of weakness from Obama in terms of experience and foreign policy and defence cred, and what will Hillary do, or more importantly the more undisciplined Bill Clinton do, at the Convention?

Elsewhere: This post probably indicates some of the reasons why there’s a downside to this selection! Melissa McEwen in the Graudian is not excited about Biden. Ann at Feministing thinks “it could have been worse” and links to other reaction while Publius at Obsidian Wings likes the choice, and so does Michael Tomasky.

One of the candidates for president strolled onto the stage at a massive megachurch in suburban Orange County Saturday night and started joking easily with the Rev. Rick Warren, maybe the most popular evangelical leader in America — but just plain “Pastor Rick” to the candidate. He talked about his certainty that “Jesus Christ died for my sins, and I am redeemed through him,” said Americans should be soldiers in the fight against evil and defined marriage as between a man and a woman — “and God is in the mix.” This particular Christian candidate was so on his game that after a segment on domestic policy ended, Warren told him — his mic still live as the TV feed cut to commercial — “Home run.”

Oh, and John McCain was there, too.

Rick Warren‘s been one of the most prominent megachurch Pastors arguing that Evangelicals can vote for Democrats.

Partly Obama’s appearance is electoral calculation – the Democrats have been talking about how to walk the faith talk since some (misleading) exit polls in November 2004. But I have no doubt he’s sincere. So much for separation of Church and State. In another piece in Salon, Michael Lind argues for agnosticism on social conservatism as the way to go to build an enduring Democratic majority. He’s probably thinking what Obama’s thinking. But it doesn’t work like that. If you want people to vote their economic interests, you need to marginalise “social issues” not highlight them. And, anyway, there isn’t – to be truthful – an awful lot in Obama’s platform – certified and written by Ivy League economists – that’s all that different from Clinton’s Rubinomics, except for the anti-free trade rhetoric, and a dash of supply side Reich style “human capital theory”. You’d be waiting a long time indeed – til Judgement Day, perhaps – for a Democratic candidate to start spruiking the true social democratic faith. Or even the New Deal.

Sarah Posner in yet another Salon article looks at Obama’s “religious outreach”.

Elsewhere: Road to Surfdom. And SocProf on “theocracy you can believe in”.