Blog on the Run: Reloaded

Friday, March 27, 2009 9:09 pm

No, Mr. Geithner, this thing is NOT like this other thing

Apparently, Treasury Secretary Tim Geithner has been comparing his plan for bailing out banks to how the Resolution Trust Corp. handled the S&L crisis of the late 1980s.

Attorney Carolyn Betts, who did some of that handling, begs to differ, in a five-point essay. At least four of the five are pretty depressing, so I’m picking one at random:

POINT #2: If non-performing assets are to be sold to private investors, those private investors will only pay the best possible price if they have access to reliable data upon which to base their bids. I talked to a senior partner in a DC-based law firm who knows everything there is to know about what goes on in Washington having to do with mortgages. He said he is unaware of any significant efforts to hire government contractors to undertake the type of loan due diligence, review, data collection and valuation that would have to be done to conduct sales of the “TARP” assets that have been talked about since the fall of last year and earlier.

I talked to a national legal temp firm and asked whether there was any work available in toxic asset review. The recruiter said that her firm had expected to see a lot of that type of work coming down the pike, but there is nothing of that type out there so far. By all accounts, government regulators like FDIC and SEC are short of funds, and FDIC is hiring a lot of bank examiners. If you go on USAJobs and look for job openings with FDIC and the Commodity Futures Trading Commission, there are few or no openings for experts in valuing or otherwise dealing with non-performing loans.

We have been talking about the bursting of the housing bubble for over a year now, and there seems to be no one taking any initiative in categorizing, stress-testing, quantifying, defining, analyzing, valuing or otherwise collecting information to define the problem. And if any of this is going on secretly and behind closed doors in Washington, then shame on them. Real estate is all local. And if we don’t know what the problem is, any proposed solution will fail.

From the taxpayers’ standpoint, I can’t see any way this ends well.

Thursday, March 26, 2009 10:02 pm

Hungry new additions

Filed under: Fun — Lex @ 10:02 pm
Tags:

The National Zoo is now home to a newborn pair of rare spotted leopards.

And they’re hungry.

spottedleopardcubs

Wednesday, March 25, 2009 10:57 pm

Jake DeSantis, world-class whiner

Filed under: Aiee! Teh stoopid! It burns! — Lex @ 10:57 pm

Dear AIG: Jake Quits.

Don’t let the door hit you in the butt on your way out, dood. You were there, you had to know what was going on, and you did jack. And you think it’s sad that your biggest worry is where to donate more than $700,000? Please. A high-school friend of mine just died of lymphoma, leaving behind a disabled widower and their four kids, one of whom also is disabled. When your worries get to the level of theirs, then maybe we’ll let you speak up.

You have a quaint notion of “answering the call to public service” when you expect to be paid three quarters of a million dollars — after taxes, mind you– to help run a company that’s into the taxpayers for $160 billion-plus. Moreover, given your own description of your tenure at AIG, you’re lucky you haven’t achieved at least unindicted-co-conspirator status.

You have nothing — and I mean nothing — to complain about. Now shut up and go away.

Heroin: the public sector

As opposed to, say, hunting a shark, I don’t know what you use to build a nation. But whatever it is, as long as we stay in Afghanistan, we’re gonna need a bigger one:

KABUL — In the shadow of the craggy mountains overlooking the road between Kabul and the eastern city of Jalalabad, a specially trained unit of police conducted a nearly perfect ambush of a drug dealer.

Officers surrounded Sayyed Jan’s vehicle so quickly that his two bodyguards never had a chance to fire their weapons, and he was caught moving at least 183 kilograms of pure heroin.

But the Counternarcotics Police of Afghanistan realized they had a problem when they discovered that Mr. Jan’s powerful friends included their own boss. The drug dealer was carrying a signed letter of protection from General Mohammed Daud Daud, the deputy minister of interior responsible for counternarcotics, widely considered Afghanistan’s most powerful anti-drug czar.

That document, along with other papers and interviews with well-placed sources, show that Gen. Daud has safeguarded shipments of illegal opiates even as he commands thousands of officers sworn to fight the trade. Some accuse the deputy minister of taking a major cut of dealers’ profits, ranking him among the biggest players in Afghanistan’s $3-billion (U.S.) drug industry.

I’ll ask again: Is there any reason why we’re not just, like, buying up the entire country’s opium crop so the natives can eat and not be inclined to shoot at us? Compared to what else we’re spending money on, in Afghanistan and elsewhere, $3 billion isn’t even real money.

Just one eensy, weensy little problem

Filed under: We're so screwed — Lex @ 9:57 pm
Tags:

“So there was only one problem with the organization of political economy in the period after 1970; it was always, eventually, going to end in disaster. Other than that it was a great idea.”

– Dan Hind, “Jump! You [Plural Vulgarism]!” (nsfw: language)

(I particularly like this jibe at the media: “Voltaire once wrote that the aim of satire is to decapitate its victim without their becoming aware of it. Events have decapitated much of the Anglo‐American commentariat in the last few months, though many of them continue to walk and talk, for all the world, as if nothing untoward has happened. We have been in the past perhaps too trusting and too easily daunted. It is important now that we gently shake these apologists for the old, discredited order, until their heads fall off.”)

Quote of the day, SomethingTheDogSaid edition

From the dog’s diary at Oxdown Gazette:

“But the problem with that argument that the world has changed [and therefore that Glass-Steagall shouldn't be re-enacted] is that it is demonstrably false. It took exactly nine years for the banks to fall into the same practices that precipitated the Great Depression.”

CIA: Black-box voting isn’t secure

Filed under: Uncategorized — Lex @ 9:30 pm

And they would know:

The CIA, which has been monitoring foreign countries’ use of electronic voting systems, has reported apparent vote-rigging schemes in Venezuela, Macedonia and Ukraine and a raft of concerns about the machines’ vulnerability to tampering.

Appearing last month before a U.S. Election Assistance Commission field hearing in Orlando, Fla., a CIA cybersecurity expert suggested that Venezuelan President Hugo Chavez and his allies fixed a 2004 election recount, an assertion that could further roil U.S. relations with the Latin leader.

In a presentation that could provide disturbing lessons for the United States, where electronic voting is becoming universal, Steve Stigall summarized what he described as attempts to use computers to undermine democratic elections in developing nations. His remarks have received no news media attention until now.

Stigall told the Election Assistance Commission, a tiny agency that Congress created in 2002 to modernize U.S. voting, that computerized electoral systems can be manipulated at five stages, from altering voter registration lists to posting results.

“You heard the old adage ‘follow the money,’ ” Stigall said, according to a transcript of his hour-long presentation that McClatchy obtained. “I follow the vote. And wherever the vote becomes an electron and touches a computer, that’s an opportunity for a malicious actor potentially to . . . make bad things happen.”

Color me shocked.

The press conference

Filed under: Journalism — Lex @ 1:16 am

Because Hooper was passed out with  his head in my lap and a 102-degree fever and I didn’t want to move and wake him up, I ended up watching the president’s news conference. This was the first such event I’d watched in years that didn’t have to do with 9/11 or take place on election night.

I didn’t catch the whole thing — I had the TV muted while I was on the phone some. My general impressions:

Good god, what a bunch of idiotic questions.

No, really, that’s about it. That and, “No, Major Garrett, I do NOT believe we need an international currency, nor do I believe in One-World Government, the Canada-to-Mexico NAFTA Super-superhighway, the plot to give California back to Mexico, black helicopters carrying aliens from the planet Schmuck, or eating food past its sell-by date. You idiotic douchebag.”

That might not be an actual direct quote of what he said, but it probably is a very accurate quote of what he was thinking.

I did like a few things. I liked how he responded to the “sacrifice” question — an attempt by a simplistic press prole to liken our current situation with that of Bush 43 after 9/11, when reporters were asking about “sacrifice” while the president was telling people to go shopping. “Um, pretty much everybody who isn’t a dimwit Washington media jerkwad or an investment banker is ALREADY sacrificing,” he said. Or words to that effect.

I thought he didn’t handle the question about stimulus spending versus deficit reduction well. I also thought it was phrased as kind of a gotcha question. The truth is that he will not cut the deficit in half in four years, so to that extent the gotcha is justified. Problem is, neither could anyone else without completely destroying the economy. We’re going to be running big deficits for years because we need to generate a lot of spending. Much of that spending, if properly invested, will lay the groundwork for future prosperity, which in turn will make reducing future deficits a lot easier. The bigger danger under current circumstances isn’t spending too much, it’s spending too little: When the economy is shedding almost 700,000 jobs a month, the government has an awful lot of private spending to make up for if the economy isn’t going to go completely down the drain. Just keeping the economy on the far edges of the whirlpool is gonna be jeezily expensive. Under those circumstances, I regret to say, being a deficit hawk, while always good politics (yeah, Kay Hagan, I’m talking to you), is genuinely suicidal economics.

I had some other thoughts, but I can’t remember them now. One of these days I’m gonna liveblog something like this, just because I’ve never liveblogged anything and it looks like it would be a challenge.

Tuesday, March 24, 2009 10:29 pm

Quote of the day, Jonathan Turley edition

Filed under: I want my country back. — Lex @ 10:29 pm
Tags: ,

From the Rachel Maddow Show:

” … let’s be honest here. It is just as bad to prevent the investigation and prosecution of a war crime as its commission because you become part of it. There’s no question about a war crime here. There’s no need for a truth commission. We — some people say, ‘What do you need, a film?’ We actually have films of us torturing people, so this may be the shortest investigation in history.”

Not to mention ample documentary evidence and a presidential confession on national TV about a year ago.

So: Are you listening, Mr. President? Or are you content to remain an unindicted co-conspirator?

Nobel Prize-winning economists agree …

… that the Geithner plan is a stinker. First Krugman, now Joseph Stiglitz:

U.S. Treasury Secretary Timothy Geithner’s plan to wipe up to US$1 trillion in bad debt off banks’ balance sheets, unveiled on Monday, offered “perverse incentives”, Stiglitz said.

The U.S. government is basically using the taxpayer to guarantee against downside risk on the value of these assets, while giving the upside, or potential profits, to private investors, he said.

“Quite frankly, this amounts to robbery of the American people. I don’t think it’s going to work because I think there’ll be a lot of anger about putting the losses so much on the shoulder of the American taxpayer.”

I know you’ll find this hard to believe because I don’t show it, but here at Chez Blog on the Run, there’s already a lot of anger.

This is Obama’s plan. Sort of makes you wonder what he’d be pushing if he hadn’t campaigned for “change you can believe in.”

Relatedly, it seems Wall Street is insisting that the White House play ball with them if it wants to advance its plan.

The administration “is adjusting to find the right balance” between politics and policy, says Thomas Nides, chief administrative officer at Morgan Stanley. “The White House understands that to have a healthy Main Street, you need a healthy Wall Street.”

Shockingly, Nides gets it precisely bass-ackwards: To have a healthy Wall Street, you need a healthy Main Street. Those stocks, and the mutual funds and derivatives and all those other byzantine securities based on them that got us into this mess, are based on Main Street homes and businesses, not the other way ’round. And it’s way beyond time more people on both Wall Street and Pennsylvania Avenue started remembering that.

UPDATE: The Rude Pundit, who is not, to my knowledge, a Nobel Prize-winning economist, also weighs in:

The first bailout under Bush was a gift to the financial institutions, like giving flowers to your rapist. In as simplistic an explanation as possible, the Obama plan is to keep playing the same hand, with a bit more oversight, a little more in the way of loans, and some cash tossed at homeowners, and that’s a failure to recognize that the game has changed from poker to Go Fish. It seems like Obama wants to get only to second base with nationalization, but abstinence never works, man, never.

And Doctor Housing Bubble ain’t at all thrilled, either:

I’ll get into the details of the plan later in this article but this application pretty much sums up everything that is wrong with this program.  First, participating institutions must have the capacity to raise $500 million of private capital.  This is great for bailout participants that are deemed too big to fail since they’ll have that money easily accessible.  Next, they’ll need a minimum of $10 billion in market value assets under management.  This is important to keep out the riff raff of “small time investors” since only the big boys know how to mange money.  Finally, the deadline for the PPIP application is get this, April 10, 2009 at 5:00pm Eastern Time.  Bwahahaha!  They already know who is going to get the bids!  So much for that “open” market place notion.  They spent such a long time devising this plan and now they expect solid plans to come out in a little over 2 weeks?  The Treasury already has an idea who is going to play in this game on taxpayer funds and it is the same institutions that created this mess.

If you want a sense of who stands to benefit just look who posted massive rallies today:

bigwinners

Even though the market posted a “broad” 7 percent rally, many of these firms tripled that in the same day.  And don’t think this rally was somehow spurred by the retail investor sitting on the sideline.  You mean the unemployed ran back in to gamble in the stock market?  You mean to tell me that 50 percent of those in our country that are 1 or 2 paychecks away from financial trouble knew to invest in these firms that stand to benefit the most from this poorly planned investment program (the real PPIP)?  Amazing isn’t it?  This was a major gift to Wall Street.

I’m still open to arguments that this plan is a good thing for average Americans. Really, I am. But I ain’t feeling that.

Thomas Friedman, Pulitzer Prize winner ignorant tool

Tom Friedman is smarter than a lot of people. Just ask him; he’ll tell you. But his column in today’s N&R was just full of Teh Stupid.

We’re in a once-a-century financial crisis, and yet we’ve actually descended into politics worse than usual. There don’t seem to be any adults at the top — nobody acting larger than the moment, nobody being impelled by anything deeper than the last news cycle.

As opposed to the larger-than-the-moment adults whose wisdom and skill in leadership we enjoyed during the last, oh, say, 40 years.

Oh. Wait.

Instead, Congress is slapping together punitive tax laws overnight like some Banana Republic,

Which it wouldn’t have had to do if Tim Geithner hadn’t been so financially negligent and politically tone-deaf — if he had simply performed his due diligence — when facilitating the AIG bailout last fall.

our president is getting in trouble cracking jokes on Jay Leno comparing his bowling skills to a Special Olympian,

Nope. No weapons of mass destriction here.

and the opposition party‘s is behaving as if its only priority is to deflate President Obama’s popularity. (Fixed.)

I saw Eric Cantor, a Republican House leader, on CNBC the other day, and the entire interview consisted of him trying to exploit the A.I.G. situation for partisan gain without one constructive thought. I just kept staring at him and thinking: “Do you not have kids? Do you not have a pension that you’re worried about? Do you live in some gated community where all the banks will be O.K., even if our biggest banks go under? Do you think your party automatically wins if the country loses? What are you thinking?”

See your own preceding graf (edited version), Tom.

If you want to guarantee that America becomes a mediocre nation,

That America becomes a mediocre nation? Dood, for the past nine years, mediocrity would have been an enormous improvement.

then just keep vilifying every public figure struggling to find a way out of this crisis who stumbles once — like Treasury Secretary Timothy Geithner or A.I.G.’s $1-a-year fill-in C.E.O., Ed Liddy — and you’ll ensure that no capable person enlists in government.

“Stumbles once”? The “stumbling” has been both intentional and systemic — and don’t think the new bailout proposal isn’t a stumble, either. Once it’s explained to them, taxpayers are going to have a cow. Also, a salary of a dollar a year doesn’t insulate you from criticism, particularly when you misspend $160 billion of taxpayers’ money.

Tom, you’re a bright guy, and this is just not that hard: The people you are counting on to do the right thing (by which I mean “the thing(s) that will work best for the greatest number of people”) in this mess are the same people who got us into this mess in the first place, and their personal interests run strongly in opposition to what is best for the economy and the country as a whole.

You will ensure that every bank that has taken public money will try to get rid of it as fast it can, so as not to come under scrutiny, even though that would weaken their balance sheets and make them less able to lend money.

And this is bad why, exactly? If a bank’s insolvent, the FDIC should take it over, clean it up and sell it. If it’s solvent, then it shouldn’t need a government bailout. And anywhere my money’s involved, I want complete transparency. If that’s a problem, don’t take my money.

And you will ensure that we’ll never get out of this banking crisis, because the solution depends on getting private money funds to team up with the government to buy up toxic assets

But it doesn’t depend on doing so under the terms Geithner has laid out, which works pretty much like this: if the operation makes money, the private interests make most of the money. If it loses money, the taxpayers are on the hook and the private interests may still make money.

and fund managers are growing terrified of any collaboration with government.

Yeah, so terrified the freaking Dow jumped almost 500 points yesterday. These guys know a gravy train when they see one.

[President Obama] should have gone on national TV and had the fireside chat with the country that is long overdue. That’s a talk where he lays out exactly how deep the crisis we are in is, exactly how much sacrifice we’re all going to have to make to get out of it,

All, except, so far, Wall Street.

and then calls on those A.I.G. brokers — and everyone else who, in our rush to heal our banking system, may have gotten bonuses they did not deserve — and tells them that their president is asking them to return their bonuses “for the sake of the country.”

Because asking the Masters of the Universe to do the right thing voluntarily has always worked so well in the past.

Had Mr. Obama given A.I.G.’s American brokers a reputation to live up to, a great national mission to join, I’d bet anything we’d have gotten most of our money back voluntarily.

Tom, you can bet anything you like, as long as it’s not mine. Me, I prefer to let the money boyz’ past behavior be my primary indicator of their likely future behavior. That past behavior says they are well beneath trust.

Right now we have an absence of inspirational leadership. From business we hear about institutions too big to fail — no matter how reckless.

And we’re not hearing Word One about how to prevent businesses from getting Too Big to Fail or what we should do about those businesses that already are both Too Big to Fail and biting the public teat so hard it bleeds.

From bankers we hear about contracts too sacred to break — no matter how inappropriate.

And they can go tell it to the United Auto Workers, stop-lossed military personnel and disabled veterans, among many, many others.

And from our immature elected officials we hear about how it was all “the other guy’s fault.”

And God forbid you actually try to find out who’s really at fault, even though evidence is all around and even though you’re a, you know, journalist and all. Here’s a clue: The blame does not fall equally on all parties; stop writing as though it does.

I’ve never talked to more people in one week who told me, “You know, I listen to the news, and I get really depressed.”

Then, Tom, you really need to get off that farmette of yours and talk to real people more often, because most of us have been depressed by the news for years.

Well, help may finally be on the way: one reason we’ve been sidetracked talking about bonuses is because the big issue — the real issue — the president’s comprehensive plan to remove the toxic assets from our ailing banks, which is the key to our economic recovery, has taken a long time to hammer out.

And it’s not clear why, inasmuch as this plan differs in no material way from an earlier plan by Geithner and an even earlier plan by Henry Paulson, months ago. Also, by “help,” Tom, you mean “another taxpayer screwing.”

So all kinds of lesser issues and clowns have ballooned in importance and only confused people in the vacuum.

Actually, some people in the vacuum are not confused at all: Your colleague Paul Krugman, for one, who knows, believe it or not, one hell of a lot more about this stuff than you do. Also, stop talking as if you have no role to play in minimizing the confusion.

hopefully the president will pull the country together behind [Geithner's plan], and hopefully the lawmakers who have to approve it will remember that this is not a time for politics as usual — and that our country, alas, is not too big to fail. Hopefully …

Tom, given the time you’ve spent in the Middle East, you, of all people, should know that hope is not a plan. Just because we might avoid politics as usual — although it’s unlikely, I could see an alliance of both very liberal and very libertarian/conservative congresscritters arising in opposition to the plan** — does not mean we will avoid business as usual.

And we desperately need to avoid business as usual.

**UPDATE: This may already be happening.

Monday, March 23, 2009 10:24 pm

Quote of the day (not Tim Geithner edition)

Filed under: Quote Of The Day,You're doing WHAT with my money?? — Lex @ 10:24 pm
Tags: ,

Nancy Nall:

“I’m trying very hard not to despair. But I am starting to wonder where we’ll be in a year. We’re both working hard — everyone I know is working hard — and you have to believe work leads to something good, but of late I’m starting to consider lighting a match to the whole place and going on welfare somewhere with a sunny climate. Kind of like AIG.”

Quote of the day, Treasury Secretary Tim Geithner edition

Tbogg, on Geithner’s newly released (but not new; see earlier Geithner plan, Paulson plan) plan to stick taxpayers with the cost of banks’ bad assets while letting private interests get the vast majority of any profits:

“Geithner isn’t Michael Brown. He’s Hurricane Katrina.”

Bankrupt firms belong in bankruptcy court, not sucking endlessly on the public teat. It’s Geithner’s responsibility to get them there, and not only is he not doing it, he’s doing his dead-level best to keep them on life support. (Other things he’s doing wrong here.)

Now, that said, I should point out that Geithner isn’t operating in a vacuum: He’s doing what Barack Obama wants him to do. So either Obama doesn’t understand the ramifications of the plan, or he understands perfectly well and just doesn’t care.

I vote the latter. Obama could well end up a one-term president because of it. And that’s what he would deserve.

Fun with LOLcat

Filed under: Fun — Lex @ 10:04 pm

My very first LOLcat — blank photo courtesy of Fark.com:

cathanggliding

Just a little ray of sunshine, he is

Filed under: We're so screwed — Lex @ 9:35 pm
Tags: ,

Bad as things are right now, James Galbraith says, they’re going to get worse with Tim Geithner’s plan:

For the first time since the 1930s, millions of American households are financially ruined. Families that two years ago enjoyed wealth in stocks and in their homes now have neither. Their 401(k)s have fallen by half, their mortgages are a burden, and their homes are an albatross. For many the best strategy is to mail the keys to the bank. This practically assures that excess supply and collapsed prices in housing will continue for years. Apart from cash—protected by deposit insurance and now desperately being conserved—the American middle class finds today that its major source of wealth is the implicit value of Social Security and Medicare—illiquid and intangible but real and inalienable in a way that home and equity values are not. And so it will remain, as long as future benefits are not cut. In addition, some of the biggest banks are bust, almost for certain. Having abandoned prudent risk management in a climate of regulatory negligence and complicity under Bush, these banks participated gleefully in a poisonous game of abusive mortgage originations followed by rounds of pass-the-bad-penny-to-the-greater-fool. But they could not pass them all. And when in August 2007 the music stopped, banks discovered that the markets for their toxic-mortgage-backed securities had collapsed, and found themselves insolvent. Only a dogged political refusal to admit this has since kept the banks from being taken into receivership by the Federal Deposit Insurance Corporation. …

Delay is not innocuous. When a bank’s insolvency is ignored, the incentives for normal prudent banking collapse. Management has nothing to lose. It may take big new risks, in volatile markets like commodities, in the hope of salvation before the regulators close in. Or it may loot the institution—nomenklatura privatization, as the Russians would say—through unjustified bonuses, dividends, and options. It will never fully disclose the extent of insolvency on its own.

The most likely scenario, should the Geithner plan go through, is a combination of looting, fraud, and a renewed speculation in volatile commodity markets such as oil. Ultimately the losses fall on the public anyway, since deposits are largely insured. There is no chance that the banks will simply resume normal long-term lending. To whom would they lend? For what? Against what collateral? And if banks are recapitalized without changing their management, why should we expect them to change the behavior that caused the insolvency in the first place?

We’re so screwed.

Here’s a hint: Predator drones, while impressive, probably won’t do the job

Filed under: More fact-based arguing, please — Lex @ 9:18 pm
Tags: ,

How best do we end terrorism? Those wild-eyed liberals at the RAND Corporation looked into that, and here’s what they found:

The authors compiled and analyzed a data set of all terrorist groups between 1968 and 2006, drawn from a terrorism-incident database that RAND and the Memorial Institute for the Prevention of Terrorism jointly oversee. …

Of the 648 groups that were active at some point between 1968 and 2006, a total of 268 ended during that period. Another 136 groups splintered, and 244 remained active. … The authors found that most ended for one of two reasons: They were penetrated and eliminated by local police and intelligence agencies (40 percent), or they reached a peaceful political accommodation with their government (43 percent). … In 10 percent of cases, terrorist groups ended because they achieved victory. Military force led to the end of terrorist groups in 7 percent of cases.

Military force hasn’t stopped al-Qaeda, nor, according to this study, is it likely to. So how ’bout we try something else?

(h/t: dday)

If you’re going to start a run on a bank, you’d better hurry …

Filed under: You're doing WHAT with my money?? — Lex @ 6:59 pm

… because Tim Geithner, for whatever reason (perhaps he believes Congress won’t appropriate any more bailout money directly because of the AIG-bonuses flap), apparently expects the Federal Deposit Insurance Corporation to help fund his bailout plan:

In the latest version, the Treasury will put up between $75 to $100 billion to leverage loans and loan guarantees from the Federal Reserve and the FDIC (down from earlier projections as high as $200 billion.) The money will be used to entice a new round of speculative bets by hedge funds and private equity companies.

The FDIC is the newly drafted participant in this scheme and its leaders are said to be less than thrilled with its designated role. Compared to the Treasury, the FDIC has been a model of competence and transparency. The FDIC is coming before Congress to seek replenishment of its somewhat depleted insurance funds, and now Treasury is coveting that money to underwrite much of Geithner’s latest scheme. But you can only safely insure so many risks with the same capital (shades of AIG!)

Two key points about getting the FDIC involved: 1) Its primary purpose is to ensure that people don’t lose their money from basic bank accounts if a bank goes under; this plan would deviate enormously from that purpose. 2) The FDIC already doesn’t have enough money to do its job and is asking taxpayers for a half-trillion-dollar loan. (And the primary reason for that is that between 1995 and 2006, a GOP-controlled Congress refused to give it the authority to hit banks up for the premiums that would fund the agency’s activities in the event of a major downturn.)

I’m not an economics expert by any stretch, but this has “disaster” written all over it.

Friday, March 20, 2009 8:46 pm

For sufferers, is a cloud lifting?

Filed under: Reality: It works — Lex @ 8:46 pm
Tags:

My last piece for the News & Record — it ran a couple of weeks after I left — was an analysis of whether or not marijuana should be legalized for medical purposes. I noted in the article that federal agents have continued to prosecute people who grow and distribute marijuana, even when they’re doing it for medical purposes in states that have expressly legalized marijuana for medical purposes.

Well, the federal law hasn’t changed, but the government’s attitude toward the issue has. Attorney General Eric Holder says the Justice Department will stop pursuing people who are growing or distributing marijuana for medical purposes in states where it is otherwise legal. Up ’til now, and this officially will still be the case unless Congress changes the law, the government has taken the position that marijuana’s risks are too many and its benefits too few to legalize it even to the highly restricted level of codeine and Dilaudid. Government research has shown the drug can ease symptoms and treatment side effects for a number of disorders.

Holder said the government now will pursue only people “who falsely masqueraded as medical dispensaries and ‘use medical marijuana laws as a shield.’”

Monday, March 16, 2009 9:06 pm

AIG bonuses and your tax dollars

Filed under: You're doing WHAT with my money?? — Lex @ 9:06 pm
Tags:

So AIG, which so far is into the taxpayers for more than $170 billion, is saying it was perfectly entitled to pay executives of its Financial Products division, the division that brought the otherwise well run company to its knees, bonuses totaling more than $165 million.

Treasury Secretary Tim Geithner asked AIG not to pay the bonuses. AIG’s CEO, Edward Liddy, told Geithner to get bent.

Liddy appears to have two arguments in favor of the bonuses: 1) He needs them to retain top talent. 2) The company is contractually obligated to pay the bonuses and might get sued if it doesn’t.

Well, there’s a single response to both of those lousy arguments, and that is that the people getting the bonuses are the same people, by and large, who got AIG into this mess. So with respect to argument 1, if that’s “top talent,” I’d hate to see the bush leagues, and it’s not like there’s a huge job market for them out there anyway. With respect to argument 2, oh, God, please, throw me into that briar patch. I think the taxpayers would find the proceeds of discovery in such a lawsuit quite enlightening. I also think criminal investigators would, which is why I’m almost certain that the last thing the bonus-receiving execs want right now is to have to explain under oath what they did and how they did it. They would give those bonuses up without a whimper if the government insisted.

Which it should do. But it shouldn’t stop there.

AIG has been happy to take $170 billion of taxpayer money and then do with it what it damn well pleased, including losing more than $60 billion of it last quarter. The president and Geithner need to make abundantly clear to Liddy and his minions that they don’t call the shots, and if Liddy still doesn’t get it, they need to take over the rest of the company (taxpayers now own 80%), fire everyone above the rank of junior VP, fix the damn thing (including destroying the division that got them into this mess) and then sell the newly healthy company back to private interests.

At a profit to taxpayers.

UPDATE: This is beyond contemptible. Seems some of the AIGFP execs are threatening to blow the company up, financially speaking, if they don’t get their bonuses. Inasmuch as “the company” is, to all intents and purposes, U.S. taxpayers, we should just arrest the lot of them.

It was torture

Filed under: Hold! Them! Accountable! — Lex @ 6:51 am

But don’t take my word for it. Take the word of the International Committee of the Red Cross.

Probes. Prosecutions. Punishment. Promptly.

UPDATE: Despite President Obama’s stated inclination to “get it right going forward,” the government may not have a whole lot of choice but to do a criminal investigation:

“The more these kind of reports come out, the more pressure it puts on the government to do something,” said Sarah Mendelson, director of the human rights and security initiative at the Center for Strategic and International Studies. …

As a signatory to the UN convention banning torture, the United States may be legally obliged to carry out a probe of former officials, Mendelson said.

“I think they are compelled to open some kind of investigation by allegations of torture, under the convention against torture,” she said.

“That investigation does not need to be made public but they need to be doing it.”

I would take issue with that last point. The investigation no more needs to be secret than did the Nuremberg trials. There’s plenty of evidence already in the public record.

Friday, March 13, 2009 9:15 pm

Shark fight

Filed under: Salute! — Lex @ 9:15 pm
Tags: ,

Tiger shark prepares to attack diver; friend fights with shark for two hours before killing it. Amazing pictures (click on this one for more, plus story.)

(h/t: Sharpedo)

UPDATE: Link fixed.

Thursday, March 12, 2009 9:47 pm

Nice stock you got there. Be a shame if anything happened to it.

I don’t know whether the proposed Employee Free Choice Act, introduced Tuesday, is a good idea or not. But when tactics like this are being used to oppose it, it pushes me at least a bit in the pro direction:

Embattled financial giant Citigroup Inc., which has received at least $50 billion in federal bailout funds, hosted a private conference call on Wednesday to build opposition to the Employee Free Choice Act. …

Wednesday’s conference call was led by Glenn Spencer, a senior executive at the U.S. Chamber of Commerce and an ardent EFCA opponent. It was promoted as “An Update on the Employee Free Choice Act,” but much of the content was focused on demonizing the legislation. EFCA will “inhibit flexibility,” “hamper companies from competing effectively,” and prove “cumbersome” for business, declared Spencer. “From the Chamber’s perspective, and I would say probably from the whole business communities perspective, there are really no amendments you could make to this bill that would make it acceptable.”

The lines of attack from the Chamber official were familiar. But Citigroup’s participation, led by retail analyst Deborah Weinswig, raised some eyebrows. The bank has received ample taxpayer-funded aid through the TARP program, leading some to question whether rallying support for an anti-union effort was the best use of its time or that money. …

And with Citigroup lowering Wal-Mart’s rating one day before the call [Weinswig herself lowered Wal-Mart's stock from "buy" to "hold" -- Lex], some were left wondering whether the bank was deliberating trying to frame EFCA as so calamitous for business that Congress would recoil from touching it. Indeed, as pointed out by one Democratic observer, Weinswig was high on Wal-Mart just a few weeks ago, giving the company a 9.5 rating out of 10.

Having spent almost all of my career in North Carolina, among the most anti-union states in the nation, I have no direct experience with unions. But I do know that the unionization movement of the mid-20th century, whatever its flaws, was a key factor in the development of a strong middle class. Whether a revived union movement would produce broad benefits to the middle class in the current economic climate, I do not know. But it sure looks to me as if Citi is rigging the game here and using our tax dollars to do so. Why, if EFCA is so bad on the merits?

UPDATE: Turns out some anti-EFCA research that’s been widely reported is so badly flawed it shouldn’t be taken seriously, even before we get to the pro-corporate leanings of its author.

Cheney’s ring of killers??

Investigative reporter Seymour Hersh is now saying, although he hasn’t published this anywhere yet, that we have an “executive assassination ring” that reported directly to then-Vice President Dick Cheney, outside the military chain of command (at the top of which, you’ll recall from Civics 101, sits the president).

I have no way of knowing whether this is true. And the facts that Hersh 1) hasn’t published anything about this (yet) and may be as much as two years from doing so; and 2) appears to be saying he let slip more than he intended, are big red flags.

But if it is true, it’s got all sorts of constitutional, legal and practical ramifications, irrespective of the moral question of whether the people of the United States ought to be in the assassination business. (For the record, if we whacked Osama bin Laden I surely wouldn’t cry, although I would prefer he get due process in a legitimate court. I also believe that any great power, once seized, will be abused.)

Hersh also mentions what he believes were illegal domestic CIA surveillance activities not heretofore brought to light. Again, I have no idea whether this is true.

Emptywheel offers some commentary and commenter discussion here.

Money for nothing

Filed under: Y'all go read this — Lex @ 9:35 pm

When the country last considered a serious makeover of the health-care system, big business was one of the forces arrayed to stop it. This time around, it is at least recognizing the problem:

If the global economy were a 100-yard dash, the U.S. would start 23 yards behind its closest competitors because of health care that costs too much and delivers too little, a business group says in a report to be released Thursday.

The report from the Business Roundtable, which represents CEOs of major companies, says America’s health care system has become a liability in a global economy. …

Americans spend $2.4 trillion a year on health care. The Business Roundtable report says Americans in 2006 spent $1,928 per capita on health care, at least two-and-a-half times more per person than any other advanced country.

In a different twist, the report took those costs and factored benefits into the equation.

It compares statistics on life expectancy, death rates and even cholesterol readings and blood pressures. The health measures are factored together with costs into a 100-point “value” scale. That hasn’t been done before, the authors said.

The results are not encouraging.

The United States is 23 points behind five leading economic competitors: Canada, Japan, Germany, the United Kingdom and France. The five nations cover all their citizens, and though their systems differ, in each country the government plays a much larger role than in the U.S. …

Higher U.S. spending funnels away resources that could be invested elsewhere in the economy, but fails to deliver a healthier work force, the report said.

“Spending more would not be a problem if our health scores were proportionately higher,” Dr. Arnold Milstein, one of the authors of the study, said in an interview. “But what this study shows is that the U.S. is not getting higher levels of health and quality of care.”

There’s a larger lesson here, and it needs to be hammered home because so many people don’t understand it, honestly don’t believe it or lie about it: The United States does NOT have the best health-care system in the world. Far from it.

The report addresses two separate but related issues: cost and effectiveness. Cost is driven by a number of factors, but one big one is profit-driven insurance companies — which play a much lesser role, or no role at all, in the countries that outperform us. The Business Roundtable, whose CEO members include at least one from the insurance industry, says private insurance should continue to play a role in the U.S. health-care system.

As for effectiveness, our system for too long has failed to gauge rigorously how effective health care is, both in absolute terms (Does any single drug or procedure really treat effectively and safely the disease or disorder it is supposed to treat?) and in relative terms (How do different drugs or different procedures for treating any specific illness or disorder compare to one another in terms of effectiveness and safety?). When I was still medical writer for the N&R, I wrote last August about this problem, which may constitute up to a third of the $2.4 trillion the U.S. spends annually on health care — and, worse, may be costing tens of thousands of lives annually.

It obviously is way too early to know what changes, if any, will emerge from the discussions the administration and Congress are having about U.S. health care. But it’s encouraging to know that some of the most influential stakeholders in the discussion are publicly acknowledging the nature and extent of our problem.

Keeping an eye on the surveillance problem

Filed under: Y'all go read this — Lex @ 12:10 pm
Tags: ,

This is cool, not only from a technological standpoint, not only for what it might mean for restoring lost vision, but also for the ramifications it might explore of an increasingly surveilled society:

A one-eyed documentary filmmaker is preparing to work with a video camera concealed inside a prosthetic eye, hoping to secretly record people for a project commenting on the global spread of surveillance cameras.

Surveillance cameras have helped solve crimes — they are not an unalloyed evil. But we are a society that, while it increasingly gives up privacy through blogs, Facebook, reality TV shows and other media, still expects some measure of privacy and expects control over when and when not to give it up. If Rob Spence can shed additional light on those and related issues, his project will be invaluable.

Monday, March 9, 2009 9:45 pm

“AIG, where taxpayers’ dollars go to die”

Filed under: I want my money back. — Lex @ 9:45 pm
Tags: , ,

This short, intriguing and deeply disturbing New York Times piece talks about just how deeply insurer AIG, the parent company of Greensboro’s United Guaranty, is biting into the public teat. Yea, verily, blood is flowing and the flow thereof will not soon be stanched. Worse, the taxpayers’ money flowing through AIG to parties it insured is going in large quantities to some of the biggest creators of the mess in which we now find ourselves.

Relatedly, Felix Salmon suggests something we could do that, while it wouldn’t make us taxpayers whole, might well make us feel a tiny bit better.

Saturday, March 7, 2009 6:22 pm

Company in hell

Last night, I invited state Sen. Dave Schultheis of Colorado Springs to go to hell. Good news: He won’t be alone. I’m  inviting a Roman Catholic archbishop in Brazil to join him:

A Catholic archbishop has sparked controversy in Brazil by saying the mother of a nine-year-old girl who had an abortion on Wednesday following a rape is automatically excommunicated for allowing the procedure to go ahead.

Archbishop José Cardoso Sobrinho of Olinda and Recife also declared that according to canon law the doctor who performed the abortion is considered excommunicated, along with anyone else involved.

The child was raped by her stepfather, who has since admitted abusing her over the last three years. Abortion is generally illegal in Brazil but allowed in cases of rape or when the pregnancy endangers the mother’s life.

The child entered hospital in the northeastern city of Recife on Tuesday night, where she was given medication to interrupt the pregnancy, which doctors said was terminated by early Wednesday morning. She was pregnant with twins.

The archbishop’s statements have drawn condemnation from Brazilian politicians and caused disquiet among some theologians concerned by the difficulties raised by the case.

But Archbishop Cardoso Sobrinho has denied media reports that he personally ordered the excommunications. “I simply recalled what is in church canon law. Excommunication is automatic for those who participate in an abortion. I did not excommunicate anyone, just remembered the church’s law which says they are automatically excommunicated,” he said.

A 9-year-old girl is pregnant. With twins. (Unless the girl is built like Brigitte Nielsen, even continuing the pregnancy to term would raise questions I’m not sure the laws of physics could answer.) Because she was raped. By her stepfather.

And His Wretchedness Archbishop Sobrinho, doing a fan-damn-tastic imitation of Pontius Pilate, excommunicates her mother and then says, “Who, me?” Not for a moment does he consider the circumstances. Not for a moment does he entertain the notion of a conscience. Not for a moment does he consider the possibility that maybe this is one case he ought to punt to the cardinal. In fact — and for a leader in a religion as patriarchical as Roman Catholicism, boy, is this a surprise — not for a moment does he say a word about the rapist.

Don’t even get me started on the Roman Catholic Church’s handling of the priests/sex-abuse scandal. Let’s just focus on Sobrinho. Who should go straight to hell, do not pass go, do not collect 200 penances.

(h/t: Nance Greggs, who uses even more extreme language than I do)

UPDATE: The cardinal is backing this guy. Unbelievable. Well, cardinal makes three: to hell with you, too, Giovanni Battista Re.

Friday, March 6, 2009 10:23 pm

By all means, complain about earmarks …

Filed under: I want my money back. — Lex @ 10:23 pm
Tags: , ,

… as long as you also complain about this:

Defense bloat has stunned auditors. A report last year from the Government Accountability Office found that 95 ongoing major defense programs exceeded their budgets, providing an accumulated excess cost of $295 billion to taxpayers.

Go to hell, Sen. Dave Schultheis of Colorado Springs

No, really, straight to hell:

Sen. Dave Schultheis, of Colorado Springs, on Wednesday opposed a bill requiring pregnant women to be tested for HIV so that if they are infected their babies can be treated to prevent the virus’s transfer.

“This stems from sexual promiscuity for the most part, and I just can’t go there,” he said.

“We do things continually to remove the consequences of poor behavior, unacceptable behavior, quite frankly. I’m not convinced that part of the role of government should be to protect individuals from the negative consequences of their actions.”

And the actions of these unborn children were … what, exactly?

The back-to-back comments were too much for Sen. Jennifer Veiga, D-Denver.

“Where is the Republican leadership on all this?” she asked.

Senate Minority Leader Josh Penry responded he is not going to muzzle his caucus, although he has reminded his colleagues “we should never lose sight of the humanity of people on the other side of an issue.”

“People are entitled to their opinions,” the Grand Junction Republican said. “It’s not my job to go around and censor people and tell them what to say.”

When a member of your caucus is spouting senseless idiocy that can get a lot of innocent babies killed — and Schultheis’s comments are morally indistinguishable from telling 5-year-olds that Drano is good for them —  shutting his criminally uninformed ass up is neither muzzling nor censorship. It’s common sense and human decency and basic safety. Nonetheless, a lot of Republicans were “unwilling to publicly discuss the issue.” Yeah, God forbid you hold one of your own accountable, no matter how many kids he wants to kill.

And if you think Schultheis simply didn’t understand the consequences of what he was saying, think again:

“What I’m hoping is that yes, that person may have AIDS, have it seriously as a baby and when they grow up, but the mother will begin to feel guilt as a result of that. The family will see the negative consequences of that promiscuity and it may make a number of people over the coming years … begin to realize that there are negative consequences and maybe they should adjust their behavior. We can’t keep people from being raped. We can’t keep people from shooting each other. We can’t keep people from jumping off bridges. People drink and drive, and they crash and kill people. Poor behavior has its consequences.”

What a fine Christian human being. He hopes that babies will be born with AIDS, have it “seriously,” because somehow that might make the mommy feel guilty about her (presumed) promiscuity. Oh, and apparently getting raped is “poor behavior” that “has its consequences.”

And you know what’s really sad? Colorado Springs is such a hotbed of Christianist loony tunes that this guy probably really does represent the sentiments of a bunch of his constituents.

So, Dave Schultheis, you utter waste of a carbon-based life form, go straight to hell. Maybe that will “make a number of people over the coming years … begin to realize that there are negative consequences and maybe they should adjust their behavior.”

(h/t: John Emerson)

“Wreaking havoc on the sorry *ss of finance”

Filed under: I want my money back. — Lex @ 7:10 pm
Tags: , , ,

What happens when a leftist decides to stop being tactful? For one thing, he becomes pretty freaking funny. John Emerson, at the new Trollblog, explains, for example, that we don’t need a finance czar, we need Finance Cossacks!

Quasi-related: If you’re going to have social collapse, Dmitry Orlov says, do it right.

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