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Monday, December 19, 2011

The McDonald-Smith interview, Part 1

Last week, we posted a portion of Bill McDonald's disastrous interview with Portland mayoral candidate Jefferson Smith, along with Bill's side of what happened. We still haven't heard any response from the Smith camp, and so we're assuming that they're ignoring us.

A few readers wanted to hear the front end of the interview; McDonald had supplied us only with the tail end. At our request, he's now sent along the earlier portion of the sit-down, and here it is. He adds the following color commentary:

Here's the beginning of the Jefferson Smith interview you requested. I've already admitted that I try and start these things with humor, so as I turn on my 2 little tape recorders, I'm saying to him that I use two in case a politician talks out of both sides of his mouth. That was a joke. The rest you can hear for yourself.

The key point in the mood shift of this interview is in the discussion of the economic meltdown. Politicians have a way of latching on to the cause of the day – and I was very interested in whether or not Jefferson Smith really understood what had happened, or was he just playing to the crowd?

After all, Jefferson Smith had just gone national in the Huffington Post, with a plan to move more local government money into credit unions, and it had the standard Occupy Wall Street themes of wealth disparity and the 99%, but there was one sentence in that piece that was a tipoff to me. He said, "This effort is not merely some punishment for national banks…" That sounded like grandstanding.

Meanwhile, his answer as to what caused the great meltdown of the global economy was – like many you hear on TV – a gentle, multi-factored dilution of what took place. It substituted "capital investment schemes" for what was a massive crime of fraud. This was not about capital investment. This was the creation of hundreds of trillions of dollars worth of gambling bets, bets that could never be paid off should they unravel, and bets that were based on fraud.

Bundles of security swaps were rated Triple A and the people on Wall Street sold them to the world, knowing they were not Triple A. It was a crime. If the local gas station sold something they described as premium gas that turned out to be snake oil, the operators would be charged and go to prison. That is what happened here, except that the operators were not prosecuted. They were rewarded.

Once I had asked him about the economic meltdown and heard his rambling explanation, I realized he was like the bimbos (male and female) on Fox Business News who still don’t really know – or are reluctant to say - what happened. The idea of someone with this kind of brainpower being too lazy to learn the basics of the biggest economic scandal in American History, filled me with dismay, but it didn’t surprise me.

To see him milk the situation and jump on the "Let’s punish the banks" bandwagon, is why I hate politics. People like this who are merely reinforcing the convenient spin of the 1% – and letting the truth slip away – should get out of the game. They are not helping. The clearest case of pandering is when he says that part of the problem was banks acting in their own self-interest. What are they supposed to do?

No, the real problem was that a crime had occurred. The easy way out is to pretend that banks in general are the enemy, while the thieves run free. That was a disappointing explanation for me, but it didn’t change my mood. That would come later.

In fact, if you hear my tone during this, I sound respectful and even deferential. Oh, and by the way, I ask what I consider to be the best question in any interview in America this year. Better than anything from the White House press corps. Better than anything on the debates. It went like this:

"The longer these Occupy camps go on, the more we hear people criticize the lawlessness aspect. But how do you expect young people to respect the law, when we, as a society, just witnessed Wall Street commit the biggest rip-off in the history of the world, and not only were they not punished – they were rewarded?"

His answer was: "There’s a major problem with white-collar financial crimes being lawyered away by the highest paid lawyers in the world. We have a national problem with banking regulations not keeping up with realities of the financial markets. We have people either without the tools or without the courage to hold those with a smoking financial gun accountable for a global financial crisis that hopefully will not become a global double-dip financial holocaust. There’s no question about that."

Incidentally, any time someone throws in the "holocaust" word, you can be pretty sure he’s a Newt Gingrich-style, smart-sounding fool, but the answer came out with flair and I complimented him on it. However, it was more of the same spin. The problem was not that banking regulations hadn't kept up. They were deliberately changed. They were rolled back. The rules in the 1990s were altered at the urging of people like Henry Paulson. If anything, Jefferson Smith hadn't kept up. Then I asked:

"As we know from 'It’s a Wonderful Life,' another Jimmy Stewart film, we actually need banks, so why aren’t you stressing banking reform and prosecution of the people who did this, rather than trashing the idea of banking? Aren’t you just playing to the crowd?"

The substance of the question is right on, although I did ask it in a somewhat whimsical way, to reflect the fact that his consulting firm is named after a Jimmy Stewart movie.

It is his answer that turned this interview contentious, and I’m still fuming about him calling this question "crap" even now. I could have sat there and listened to this guy pontificate – or to use the word he used in the last tape, "preach" – but something about hearing him display a disgraceful lack of knowledge about the economic meltdown, even as he lectured America about punishing banks on the Huffington Post, primed me to be upset at his remark calling my question "crap" – especially as it followed so soon after what I maintain is the best interview question asked in America this year.

At this point, I did get "cantankerous." to use a word in the comments, and remain so about Mr. Smith to this day. I apologize for that, but this lazy, babbling buffoon set me off. Nothing about bank reform and prosecuting the people who caused our economic world to collapse is crap. It is at the heart of what we should be doing. Frankly (to use Newt Gingrich’s favorite word), I thought the candidate was being a jerk, and it colored the rest of the interview.

Several times after this in the interview, Jefferson Smith would go on at length about my preconceived notion of who he was, but I think he came in there with a preconceived notion of his own. I think he assumed that he was going to get another fawning Portland interview like the ones I had watched on YouTube. I don’t play that. Just because he founded the Bus Project doesn’t mean he gets an all-day pass.

Comments (15)

Jefferson can get on his bus any time and head out! of town. Portlandia is messed up enough without any more of his pontificating remarks.

Statement of the day:

"Just because he founded the Bus Project doesn’t mean he gets an all-day pass."

And, remember that anyone Democrat under the age of 45 is considered a co-founder of the Bus Project.

Thanks for posting the first half of the interview, I was hesitant to make any judgments based on half the interview.

After hearing the entirety of the interview, it seems pretty clear that Mr. Smith is just another office seeker that lacks any real depth of knowledge or intellectual curiosity. He seemed unable to defend his "positions" on the merits, which led to frustration and eventually hurling insults. The guy sounded like another Sarah Palin, who can only recite talking points and goes on the defensive when asked a question that goes beyond the scope of canned answers.

I wish we had more local journalists with the guts to ask some tough questions instead of just teeing up talking points and printing press releases.

In my opinion if Jefferson Smith is elected Mayor, we may be "Jefferson Smithed" right out of our city.
I can see the busloads of bus project followers around the country being bussed in to fill up the condo bunkers...and our city.

Even sadder is that neither Smith or McDonald appear to realize that the bubble was mostly confined to areas with Oregon style land use restrictions. Bubbles don't get started when supply is easy to create. Many people believe this is the underlying element that enabled the bubble and its fraud.

Even liberal/progressive NYT columnist, Paul Krugman wrote about this. See http://www.portlandfacts.com/krugmanbubble.html


I think the real "turning point" was when the interviewer started out by calling Jefferson "out of shape" and "flabby." That seemed to set the tone for the rest of the "interview."

"Good" "observation."

Even sadder is that neither Smith or McDonald appear to realize that the bubble was mostly confined to areas with Oregon style land use restrictions.

Like Nevada, right?

Dave J:Like Nevada, right
jk; Yeah, like Nevada's shortage of buildable land due to the Feds owning it.

(Also note is said "mostly confined to.." and that I also cited Paul Krugman.)


Agree with him or not, Mr. McDonald has at least a plausible theory of what led to the financial meltdown that's aligned with the relevant facts. Smith, on the other hand, is vacuous and clueless. Jefferson just isn't very smart.

I get the sense that Smith had a beer one night by himself. He thought about the housing bubble, then being a Harvard Ineffectual he had to come up with a "theory" that was contrary to all other theories, passed some gas, and Gas prices became his answer to draw attention to his Ineffectual being and mayoral race.

Pragmatic Portlander,
Thanks for the kind words, but I don't want to leave you with the impression that you heard the whole thing in its entirety.

In fact, not every word in the middle was recorded as this guy eats through recording tape like....let me put it this way:
You could ask Jefferson Smith what time it is, but after he answered, you'd have to ask, "Okay, what time is it now?"

what time it is

I worked with a guy like that for a while - except that if you asked what time it was, you'd get a lecture on how clocks are made.

Check out "Reckless Endangerment" by Gretchen Morgenson and Joshua Rosner. It should be required reading.

Morgenson is a Pulitzer Prize winning business columnist for the New York Times and both of them know their way around the back alleys of Wall Street.

Financial crime is very complicated and there will be high priced lawyers defending these guys so it makes sense that no one is rushing out with indictments.

Hopefully there are prosecutions being built, but rushing in without being able to make the case in court would be disasterous.

Not directly connected, but very connected to the subject.

We are well advised to note our host's opinions on pols, as his instincts are good. He was the first person with a high profile observed noting that St. Ron of Wyden was doing far more damage to Dems than to his supposed opponents. Ron Wyden, the Lieberman of the West Coast.


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