Saturday, 21 March 2009

While I sympathize and agree with most of the outrage expressed concerning AIG executive bonuses, it misses a larger point, one Joe Nocera at The New York Times makes in two simple paragraphs:

But there is a much bigger issue that has barely been touched upon by Congress: the way tens of billions of dollars of taxpayers’ money has been funneled to A.I.G.’s counterparties — at 100 cents on the dollar. How can it possibly make sense that Goldman Sachs, Bank of America, Citigroup and every other company that bought credit-default swaps from A.I.G. should be made whole by the government? Why isn’t it forcing them to take a haircut?

What’s worse, some of those companies are foreign banks that used credit-default swaps to exploit a regulatory loophole. Should the United States taxpayer really be responsible for ensuring the safety of European banks that were taking advantage of European regulations?

Eliot Spitzer (yes, that Eliot Spitzer) expresses it in numbers:

But wait a moment, aren’t we in the midst of reopening contracts all over the place to share the burden of this crisis? From raising taxes—income taxes to sales taxes—to properly reopening labor contracts, we are all being asked to pitch in and carry our share of the burden. Workers around the country are being asked to take pay cuts and accept shorter work weeks so that colleagues won’t be laid off. Why can’t Wall Street royalty shoulder some of the burden? Why did Goldman have to get back 100 cents on the dollar? Didn’t we already give Goldman a $25 billion capital infusion, and aren’t they sitting on more than $100 billion in cash? Haven’t we been told recently that they are beginning to come back to fiscal stability? If that is so, couldn’t they have accepted a discount, and couldn’t they have agreed to certain conditions before the AIG dollars—that is, our dollars—flowed?

The appearance that this was all an inside job is overwhelming. AIG was nothing more than a conduit for huge capital flows to the same old suspects, with no reason or explanation.

Spitzer is right: The outrage over executive bonuses is diverting our attention away from bigger, perhaps more difficult issues that must be addressed. Mainly, are U.S. taxpayers shoring up the banking industry worldwide without insisting obscenely wealthy individuals suffer any consequences for playing financial keno with the depositors’ money in their trust?

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Thursday, 19 March 2009

Pig in a blanket, by [diego]

“Pig in a blanket, by [ diego ]

From the Double Handshake blog by Tom Pellman (via How the World Works at Salon), an American writer living in Lima, Peru, comes “On the viability of exporting guinea pigs from Peru to China,” and news that the rodents “reproduce extremely quickly, are full of protein and low in fat, [and] can be fried, broiled, roasted or turned into soup.”

Well, maybe in China, but not on my dinner table.

For me, this quote is money:

Whereas in the US, any guinea pig entrepreneur would need to find ways to tone-down the guinea pig’s lovableness, in China, it seems, cuteness may just indicate it tastes better.

Hmm. The economy could get a hell of a lot worse. Then “Pig in a Blanket” might take on a whole new meaning. (Be sure to check the link for a photo of Cobaye avec des pommes de terre.)

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Thursday, 12 March 2009
Reddy Female condom

Image via Wikipedia

A friend is enraged after reading “Female condom 2.0” at Salon. Here’s the line that set her off:

While fantastic in theory — what’s not to love about a woman-controlled, non-hormonal pregnancy and STD prevention device? — the female condom is not exactly a dream in practice.

The operative words, in this case, are female controlled. My friend’s response?

“There already is a woman-controlled, non-hormonal pregnancy and STD prevention device on the market that is not 75-82 percent effective, but is 99 percent effective,” she said. “It’s called the male condom.”

“While I’m sure Judy Berman is a lovely, educated woman,” she continued, “once again she is putting the onus for birth control on women, not on men. Here’s how the device works: ‘Put this thing on, buster, or it isn’t happening!’”

“That’s what we need to teach our daughters,” she concluded.

I humbly agree. Wrap it up, gentlemen.

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Tuesday, 10 March 2009

A number of bloggers have linked to Jon Stewart’s takedown of CNBC’s Jim Cramer. I won’t belabor the point here, save to say Matthew Yglesias’ post-video commentary is the best I’ve read:

I’ve made this analogy before, but CNBC and much of the rest of the financial media is just what you would have gotten if television existed back when entrail-reading was a popular method of forecasting the future. It’s a national embarrassment that these people are taken seriously.

Is there anything else to say but “amen?”

Salon’s Gabriel Winant wonders whether Cramer is really as bad as Jon Stewart says he is in “Why is Jim Cramer shouting at me?” His conclusion? All of CNBC is deluded:

In mistaking themselves for the country at large, and the bouncing of the market for the health of the economy as a whole, Cramer, Kudlow and the whole talking-head crew give the lie to Rick Santelli’s assertion about a “silent majority.” CNBC feels like bizarro world because, in an important sense, it is.

Later on Tuesday, Andrew Leonard adds insult to injury in his “How the World Works” blog, asking Cramer for an extension of his pretzel logic:

A report in the Wall Street Journal that the Treasury Department is discussing “contingency plans” for yet another Citigroup bailout seems good cause for more panic, rather than euphoria. And Bernanke’s hint that mark-to-market accounting rules might need to be tweaked (although not “suspended”) seems uncomfortably close to attempting to paper over the toxic asset nightmare with some bookkeeping sleight-of-hand. But for now, let’s all tune in to CNBC, to see if Jim Cramer is preaching the new gospel of Obama. Because, you know, if investors are happy, the president must suddenly be doing a great job. Right?

I have just three words to add here concerning CNBC: They’re all assholes.

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The Murrah Federal Building damage

Image via Wikipedia

It’s pretty clear to me that Glenn Beck and Chuck Norris have lost their minds. I understand Norris’ crackup. He’s old enough and has done enough reps on the cheap exercise machine he hawks in late-night informercials that he is finally confusing the characters he played on television and in the movies with reality. But Beck is clearly insane and needs serious professional help and lots of psychotropic pharmaceuticals.

Seriously. How far will Rupert Murdoch go for ratings? Would he genuinely risk the lives of innocents to prevent the collapse of his media empire? Let’s be clear: It doesn’t take much to legitimize violence in the minds of self-proclaimed “revolutionaries.” Let’s hope Beck and Murdoch don’t incite another Oklahoma City bombing.

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Monday, 9 March 2009

President Barack Obama signed an executive order today lifting George W. Bush’s strict limits on stem cell research, saying the previous administration had forced “a false choice between sound science and moral values.”

In remarks made prior to the signing, Obama said he wanted “America to lead the world in the discoveries [stem cell research] one day may yield.” But this is the paragraph that hooked me:

Now, this order is an important step in advancing the cause of science in America. But let’s be clear: Promoting science isn’t just about providing resources — it’s also about protecting free and open inquiry. It’s about letting scientists like those who are here today do their jobs, free from manipulation or coercion, and listening to what they tell us, even when it’s inconvenient — especially when it’s inconvenient. It is about ensuring that scientific data is never distorted or concealed to serve a political agenda — and that we make scientific decisions based on facts, not ideology.

What? An administration driven by rational thought over religious dogma? Well, Toto, we aren’t in Kansas any more. The next thing you know the president will recommend the teaching of evolution over “intelligent design.”

Maybe I’ve set the bar of expectation awfully low following the rule of George W. Bush, but when the President of the United States talks about “protecting free and open inquiry” I get a little misty. Its eight-year exile sure was a long one.

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Nobel Prize-winning economist Joseph Stiglitz has written an essay for The Nation that may well be the clearest defense of bank nationalization I have yet read. I strongly urge you to click the link and read the entire piece, as I cannot begin to reduce all the information available to a single quote; still, for me, Stiglitz’ explanation of the difference between a large bank and the local pizza parlor was telling:

Banks differ in only one respect. The failure of a bank results in particular hardship to depositors and can lead to broader problems in the economy. These are among the reasons that the government has provided deposit insurance. But this means that when banks fail, the government comes in to pick up the pieces—and this is different from when the local pizza parlor fails. Worse still, long experience has taught us that when banks are at risk of failure, their managers engage in behaviors that risk losing even more taxpayer money. They may, for instance, undertake big bets: if they win, they keep the proceeds; if they lose, so what?—they would have died anyway. That’s why we have laws that say when a bank’s capital is low, it should be shut down. We don’t wait for the till to be empty. Because the government is on the hook for so much money, it has to take an active role in managing the restructuring; even in the case of airline bankruptcy, courts typically appoint someone to oversee the restructuring to make sure that the claimants’ interests are served.

Those who argue that banks should simply be left to collapse may be short-sighted, but their arguments are at least as sound as those who insist we should open a monetary vein and hemorrhage away our nation’s treasure. As Stiglitz explains, drawing on another economic discipline, such a program rewards bad practice:

There is a basic principle in environmental economics called “the polluter pays”: polluters must pay for the cost of cleaning up their pollution. American banks have polluted the global economy with toxic waste; it is a matter of equity and efficiency that they must be forced, now or later, to pay the price of cleaning it up. As long as the banking sector feels that it will be bailed out of disasters—even ones it created—we will continue to have a moral hazard. Only by making sure that the sector pays the costs of its actions will efficiency be restored.

U.S. taxpayers are, in a sense, already part owners in failed financial corporations. Consider insurer AIG. After warning of “a ‘catastrophic’ collapse that would be worse for markets than the demise of Lehman Brothers” in February, the financial behemoth got assurance of another $30 billion in equity from the federal government. This is in addition to the $150 billion already transfused under the previous (supposedly conservative) administration.

It mystifies me that taxpayers agree to such massive investments without demanding an equity stake in the corporation. In my vision of nationalization, companies would not only be taken over, restructured, and placed on the auction block, but taxpayers would become shareholders in them. Once the federal government took over an institution and cleaned it up, it would issue one share of stock per dollar of federal money invested and distribute 49 percent of the shares to everyone who filed a tax return in 2008. It would then transfer the remaining 51 percent of shares to the company or companies purchasing the pared-down bank. Then we’d all have a stake in the success or failure of the newly organized company.

Those insisting this is “socialism” (as though socialism is an ill right-thinking people should dread) fail to recognize that government has already become financial institutions’ lender of choice — a practice that began not with “liberal” Barack Obama, but with “conservative” George W. Bush in another example of corporate welfare. Calling for an equity stake in bailed-out financial institutions — and for an equity stake that benefits ordinary taxpayers — is not only better use of the treasury, it’s better business.

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Monday, 2 March 2009

Every word of Daniel Froomkin’s “Obama vs. the Washington Establishment” for The Washington Post bears reading; but for me, the following paragraphs were telling:

After all, since the Reagan era, even mainstream Democratic leaders have internalized the trickle-down, free-market, small-government mentality which Obama now blames for our woes. Few in the Democratic party — or the mainstream media — did much more than watch as the economic playing field tilted further and further to the advantage of the rich.

And yes, it’s true that many of Obama’s initiatives could well be described as pent-up Democratic goals. But you might also call them nearly-forgotten goals, as far as the current batch of Democratic leaders is concerned. Even when they controlled Congress, they failed to block budgets that turned out to be blueprints for disaster. And they either didn’t fight for their principles or flinched in a pinch. I described some of their capitulations to former president George W. Bush in this December 2007 column. These very same leaders may well be motivated to — at least — complicate or modify Obama’s proposals to validate their own previous inaction.

As I have said a multitude of times (and once illustrated to the debasement of my career), trickle-down economics is simply the very rich standing atop the mountain of humanity and urinating a shower down on the rest of us. Whatever trickles down is the only gold we get to keep. At this moment the system is hard at work using existent and nonexistent taxpayer dollars to reward the bad behavior of irresponsible greedheads. And this is the system the Washington establishment wants to continue. Before we hang the onus of obfuscation on Republicans alone, a great many Democrats — especially those lashed to the apron strings of the financial community — are equally culpable.

Unless working class voters rise up as a community and back Barack Obama’s defense of them, he simply will not survive, and the very same piggish thugs and robber barons who got us here will continue feeding at a trough sustained by workers.

Class war? Bring it on. For once I’d like to see ordinary Americans on the winning side.

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Sunday, 1 March 2009
This image shows Angela Merkel who is the the ...

Image via Wikipedia

Some years ago I recall Scottish comedian Billy Connolly, after delivering a hilarious stand-up routine in an HBO special, warning somewhat seriously that Europe’s biggest concern wasn’t whether North and South Vietnam got back together, but whether East and West Germany did. “Ye’ve got to watch those bastarrrds,” he cautioned, wagging a stern finger in the direction of the camera.

I was reminded of it this morning, after reading that German Chancellor Angela Merkel has blocked a bailout of eastern Europe at an emergency summit in Brussels.

Germany rejected appeals Sunday for a single multibillion euro (dollar) bailout of eastern Europe, even after Hungary begged EU leaders not to let a new ”Iron Curtain” divide the continent into rich and poor.

The swift, strong comments by German Chancellor Angela Merkel dampened hopes that leaders at Sunday’s European Union summit could forge a unified stance to tackle the worsening economic crisis.

As Europe’s largest economy, Germany has been under rising pressure to take the lead in rescuing eastern EU members, but Merkel insisted that a one-size-fits-all bailout was unwise.

I have no horse in the race, so I am neither lauding nor commending Merkel’s position. I do find it interesting that when it comes to their own pocketbooks, even left-leaning nations have a problem “spreading the wealth around.”

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Wednesday, 25 February 2009

The New York Times blog, “The Opinionator,” has a wrap-up of reactions to Barack Obama’s speech last night in “The Critics on Obama’s Opening Night.” Dan Froomkin has other sources, including the loathsome, completely irrelevant ass William Kristol. Here are a few from my reading list:

Matthew Yglesias is still unconvinced:

Obama’s plan for the economy is a three-legged stool—stimulus, housing, banking—but the banking leg is the most important one and it’s also the one on which the administration has been least convincing. I saw a poll showing that 80+ percent of the public feels more optimistic after Obama’s speech. I’ll feel more optimistic when I see a convincing plan for the financial sector.

I’d second that, by the way. One that includes the temporary nationalization of Citigroup and Bank of America.

Steve Benen is more upbeat:

The president wasn’t apologetic about his use of government, it was just a matter of fact. These are times that demand an ambitious federal response and Obama is going to deliver one. We tried pretending that the government is a tool to be mistrusted and used sparingly, and now we’re going to try something different.

Alex Massie calls it “The Age of Obama”:

For better or for worse, this is Obama’s time now. I think he senses that he can be Reagan’s mirror-image: a President who rolls up the political map and draws a new one, redefining an era in his own image. It’s early days yet, but that’s the level of ambition he’s working at. And right now it seems as though the lights of Republicanism are going out and it may be some time yet before we see them again.

It always spooks me when pundits start counting out the Republicans; cockroaches don’t die easy, and they have an uncanny ability to come back in superior numbers, immune to the poison that did away with them earlier.

Josh Marshall live-blogged the event, offering this:

This point about honest budget accounting sounds very wonky. And it is in a lot of ways. But the Obama people are very big on it. It’s actually amazing how much stuff was not included in the Bush era budgeting. Cost of Iraq and Afghanistan for the next 6 or 7 years? Hard to say. So just don’t count it, etc.

Mickey Kaus surprised me:

In general, the speech had its usual effect on me, only amplified this year — which was to make me hate all the senators and representative gathered in the House to unctuously pretend on camera that they’re supportive of the President. They’re not the people who are going to help him succeed. They are the people who are going to conspire, probably successfully, to prevent him from succeeding. That goes for Pelosi’s Democratic troops — who’ll oppose education and entitlement reforms, who’ll oppose ending “programs that don’t work,” who’ve already polluted the stimulus with bureaucracy-building measures — as well as Boehner’s troops who will just oppose.

Digby is glad the new kid’s in town:

And, once again, I’m struck by just how relieved I am. I can’t even imagine the despair we would be feeling if the last regime were still in charge during these troubled times. (Just remembering the glowering visage of Dick Cheney sitting there is enough to send shivers down my spine.) It’s like fate intervened (or just random luck) at the last possible moment. Even the Republicans seem to be letting out a deep breath….

That sentiment was echoed in a tweet by Robb Lejuwaan:

So this is what it’s like to have a true leader as our president — amazing.

On the flip side, Jim McCormick tweeted this about Bobby Jindal’s Non-Response to the Not the State of the Union Address:

Oh. No. Bobby Jindal sounds like he’s a librarian reading to school children. I think the authors at Little Golden Books wrote his speech.

Funny on first read, but even funnier when Nate Silver live-blogged at 10:29:

If it sounds like Jindal is targeting his speech to a room full of fourth graders, that’s because he is. They might be the next people to actually vote for Republicans again.

(In fairness to Jim I should probably add that he is a lifelong Republican who likely agreed with a good deal of what Jindal had to say, though I cannot speak for him.)

Silver has a sharp post about the volcano monitoring Jindal criticized last night. (Ken Rudin at NPR has more.)

Finally, Paul Krugman wonders what Jindal was thinking:

And leaving aside the chutzpah of casting the failure of his own party’s governance as proof that government can’t work, does he really think that the response to natural disasters like Katrina is best undertaken by uncoordinated private action? Hey, why bother having an army? Let’s just rely on self-defense by armed citizens.

The intellectual incoherence is stunning. Basically, the political philosophy of the GOP right now seems to consist of snickering at stuff that they think sounds funny. The party of ideas has become the party of Beavis and Butthead.

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