Blog on the Run: Reloaded

Saturday, October 31, 2009 12:25 pm

Subsidizing murder

Filed under: I want my religion back. — Lex @ 12:25 pm
Tags: ,

Excusing deviant behavior is the shortest path to Hell. Just ask the Christianist right:

An Army of God manual. A prison cookbook compiled by a woman doing time for abortion clinic bombings and arsons. An autographed bullhorn.

These are among the items that abortion foes plan to auction on eBay and other Web sites in a fundraiser for Scott Roeder, the Kansas City man charged with killing Wichita abortion doctor George Tiller.

“This is unique,” said Regina Dinwiddie, a Kansas City anti-abortion activist who will sign the bullhorn. “Nobody’s ever done this before. The goal is that everybody makes money for Scott Roeder’s defense.” …

[Auction organizer Dave] Leach and others would like to help Roeder hire a lawyer to present what is known as a necessity defense. That strategy would argue that Tiller was killed to prevent a greater harm — killing babies. Other anti-abortion activists charged with violent crimes have tried to use such a defense but with little success.

Good luck with that. Not even Antonin Scalia will buy that argument.

“Too big to jail”?

Filed under: Hold! Them! Accountable! — Lex @ 11:41 am
Tags: , ,

Matt Taibbi:

… my sources who were involved in the AIG bailout bunker scene of a year ago almost to a man report that Goldman and its chief Lloyd Blankfein took an extremely hard line with AIG.

Why would it act like that? Well, in a normal capitalistic situation, it wouldn’t. But Goldman, it turned out, had an ace in the hole. It seems that when the state stepped in and decided to bail AIG out, its former director, Stephen Friedman, was among those making the decision that AIG’s counterparties should be paid 100 cents on the dollar for its CDS debts. It never made sense that AIG/AIGFP would decide on its own to pay its creditors 100 cents on the dollar for its debts, but now we know, thanks to reporting from Bloomberg, that it wasn’t AIGFP and its CFO Elias Habayeb who was making that decision.

It was, instead, a group of people from the New York Fed who gave that order a group that included Tim Geithner and Friedman. Goldman ended up getting almost $14 billion from AIG after the bailout. And Friedman, we later found out, bought 50,000 shares of Goldman stock after this deal was struck. He resigned in May from the Fed, a few days after the Wall Street Journal broke the story about Friedman’s stock purchases.

Friedman surely had information about key moves involving the bank — like Goldman getting paid off at par in the AIG bailout, or Goldman getting a federal bank charter overnight so that a mountain of cheap Fed money could save it from bankruptcy — before the market got it. That he bought 50,000 shares in Goldman after the AIG bailout and is not in jail right now is sort of amazing, until you consider that it will be a cold day in hell before a former head of Goldman Sachs is arrested for insider trading, even when he gets caught doing it red-handed.

Say it with me, kids: Rigged. Game.

Friday, October 30, 2009 7:58 pm

Odd and ends for 10/30/09

  • Gina Barrera, author of a book on revenge, on the Chronicle of Higher Education’s “Brainstorm” blog, on her appearance on “The Dr. Phil Show” (which aired Wed 10/28): “Hey, it’s television, not NPR. There was emotion, not aphorisms interrupted with reed music.”
  • “Born in the USA,” 25 years later.
  • Mother of all map pr0n: “The Fourth Part of the World,” by Toby Lester.
  • I know every generation says the younger generation is going to hell, but here we may have objective proof. Quasi-related quote from Doug at Balloon Juice: “… the politicians and pundits who stand by and watch millions of lives destroyed by our health care system — are they any better than the people who watched that horrible crime in Richmond? I think you know the answer.”
  • Introducing a new feature here at Blog on the Run: Reloaded: Stuff I’m Finished Arguing About. Our first entry: Rush Limbaugh is indeed a racist.
  • He campaigned on more government transparency, but Barack Obama, our ostensibly Constitution-loving president, is going the obstruction-of-justice route just like his predecessor.
  • My former employer’s Pet-Halloween-Costume contest is over, and you can see all 50 entries here. I think my favorites are the devil dog and the Reservoir Dogs.
  • Questions 31 and 32 of this poll by Fox News are pretty funny. Question 31 asks, “Have you heard about the Obama administration’s criticism of Fox News Channel?” 59% have, 40% haven’t. (The poll doesn’t ask about Fox’s criticism of Obama.) Of those who have, 56% think Fox News is right, 29% think Obama is right. Now think about that: A group that has heard about it is disproportionately likely to be Fox viewers, since Fox is the only news outlet making any kind of big deal about this. And yet just more than half think Fox is right, and fully 3 in 10 think Obama is right. That’s hilarious.
  • Time was, lying to Congress was a crime. Oh. Wait. It still is. So’s perjury. So lock this guy up.
  • Taylor Mitchell, Canada’s up-and-coming answer to Taylor Swift, was killed by coyotes this week while hiking in a national forest. And this wasn’t even like the case of Timothy Treadwell, the documentary filmmaker who spent so much time among Alaskan brown bears that they finally got tired of him and ate him. She was walking just where lots of other people walk all the time. Sad.
  • “I don’t think it’s the government’s place to interfere or set limits or regulations on executive pay,” said Chris Gurkovic, chief market strategist at Deltatide Capital in Jersey City, New Jersey. “If someone is going to take the risk they should be compensated for it.” That’s a fine idea, Chris, especially since these days it’s the taxpayer taking all the risk.
  • Not only is the maker of Tasers now admitting they can be lethal, the courts have decided to start holding cops responsible when they tase someone excessively and he dies. At least in civil court. This cop still should have been looking at a manslaughter charge, minimum.
  • And finally, our quote of the day, from commenter Rayne at FireDogLake: “Seriously, except for the locale, Palin is just one big work of fiction Hiassen hasn’t yet written.”

Wednesday, October 28, 2009 10:23 pm

Odds and ends for 10/28

ECONOMY

HEALTH CARE

  • I’ve said before that the cost of malpractice insurance isn’t enough of a factor in health care to justify damaging the legal system with “tort reform” (read: limits on the only real way to punish a lot of actors in the health-care field). At least one doctor agrees with me.
  • Sen. Joe Lieberman represents a state, Connecticut, where 68% of voters favor a public option in health insurance. So, naturally, Lieberman supports it, too — if, by “supports it,” I mean “intends to filibuster it.” This would be the same Joe Lieberman who told his state’s voters in 2006, “[W]hat I’m saying to the people of Connecticut, I can do more for you and your families to get something done to make health care affordable, to get universal health insurance, to make America energy independent, to save your jobs and create new ones.”

AFGHANISTAN

  • The report the outgoing Bush administration prepared on Afghanistan for the incoming Obama administration was put together in one hour. “The upside is that this was one more hour than was spent reviewing the ‘Bin Laden Determined To Attack Inside The U.S.’ memo.”

CULTURE WARS

SCIENCE

  • Two years ago, while no one was paying attention, two German scientists broke the speed of light. Or so they say. If true, then Einstein is a putz our whole understanding of time and space will change.

CRIMINAL INSANITY N.E.C.*

There’s a word for such people: sociopaths. I hope there’s soon another word for them: defendants.

*Not Elsewhere Classified

Quote of the day

Filed under: Fun,Quote Of The Day — Lex @ 9:04 pm
Tags:

… spotted in the comments on this selection at YouTube: “Ignorance is Right-Wing Erotica.”

Tuesday, October 27, 2009 9:58 pm

“I looked down after coming out of the concussion and saw my leg hanging on by the skin. I looked up and saw bone fragments all over the street.”

Filed under: Say a prayer — Lex @ 9:58 pm
Tags: , ,

Three years ago today, my cousin Russ Busby and his then-girlfriend were crossing the street in front of the DC train station when they were hit by a cab speeding through a parking lane. Russ suffered, among other injuries, a compound fracture of both lower-leg bones and a concussion and scalping when his head landed on the curb. His girlfriend was knocked out of her boots*, landing 40 feet away with a pelvis broken in four places, among other injuries.

Now (on Facebook), Russ celebrates being alive and reflects on the surgeries, infections, PTSD, depression, survivor’s guilt and his gratitude for just being able to get out of bed without help.

Also today, I learned on FB that a friend of mine since eighth grade has breast cancer. “The good news is that this type is very curable,” she writes. Her keyboard, and mine, to God’s ear.

*In my unfortunate observations as a cops reporter, I found that this happens pretty often to people who get hit by cars.

Odds and ends for 10/27

Making shareholder omelettes, Guardian Life Insurance-style; or, We finally found the death panel

Americans don’t care about collateral damage. I’m not talking about the American military. I’m talking about American insurers:

After decades of medical emergencies, we still weren’t prepared for the latest crisis — this one created by the same insurance company that once saved my life. Guardian abruptly withdrew our health plan from all policyholders in New York where my father’s business is based. Guardian offered a ‘replacement’ plan with low benefits and no home nursing benefits. They knew that I would never survive with such a plan, but they didn’t care.

Suspecting that this action was related to the high cost of my care, we filed a lawsuit and have asked the U.S. Department of Health and Human Services to enforce existing federal laws and require Guardian to continue my health plan. Without federal intervention, I will lose this insurance, and that would be a death sentence.

Our lawsuit uncovered insurance company documents that confirmed my suspicion that I’m a target of discrimination. The documents revealed Guardian had compiled a “hit list” of its costliest members, including patients with muscular dystrophy, multiple sclerosis, brain injury, and paralysis. Guardian executives referred to us all as “dogs” and “trainwrecks,” and they debated how and when to dump us from the rolls. Laws prohibited the cancellation of the individual members with serious chronic health problems, so Guardian opted to cancel the plan for all members of this specific health plan in New York, an action that violates federal law. …

While all this was going on, Guardian reported $7.5 billion revenue, net income of $437 million, and available capital of $4.3 billion in 2008.

Someone should go to prison for this. It’s fraud at the least and, depending on the medical outcomes of the people covered, could well have extended to manslaughter.

Dictionerrory

I’ve so strongly supported Rep. Alan Grayson lately that I feel I have an obligation to call him out when he’s wrong. And when he called lobbyist Linda Robertson “a K Street whore,” he was wrong.

Ms. Robertson is a john, not a whore. The congresscritters who take her money and do her bidding are the whores.

Grayson called Robertson the name in the context of her criticism of his effort to see that the Fed gets audited. Robertson used to lobby for Ben Bernanke, chairman of the Fed, which apparently trumps the obvious public good served by letting the public see how the Fed is handling trillions of dollars of public money.

She also used to be the chief lobbyist for Enron, which, in the eyes of most professional political observers, apparently makes her pure as the driven snow, whilst Grayson is in the wrong not for having falsely accused her of a crime but of having accused her of the wrong crime.

Grayson spokesman Todd Jurkowski delivered an appropriate smackdown:

She attacked the Congressman and his efforts to promote a Republican bill to audit the Federal Reserve. She actually questioned his understanding of the difference between fiscal and monetary policy. This is [a] person who used to be the chief lobbyist for Enron attacking the intelligence and motives of a Congressman who used to be an economist.

I’m sure all the California ratepayers that Enron screwed before it imploded will be really, really concerned that Alan Grayson called Linda Robertson a bad name. I know I am.

He shoots, he (finally) scores!

Filed under: Hooper,Wizards — Lex @ 6:05 am
Tags: , ,

Hooper after his dead-bang shot from 20+ feet out on the right wing

Hooper, after a season and a half of banging shots off uprights and crossbars and goalkeepers’ faces, finally scored on Saturday for the Wizards, and he did so unambiguously. Left unguarded on the right wing, he received a pass, pivoted to the ball just as the keeper pivoted toward him and sent it skimming just over the tops of the grass blades, past the keeper and into the far corner of the net like it had eyes. The Wizards still lost (despite playing rather well), but we celebrated with milkshakes anyway. (Thanks to Lori for the photo.)

Monday, October 26, 2009 8:51 pm

Hitting a curveball

Do pitched baseballs really curve? And if so, do they actually curve as much as they appear to?

This illustration tackles the question in a really interesting way.  However, its hypothesis that the shift from peripheral to foveal (direct) vision creates (or magnifies) the impression of a sudden curve applies only to batters. What do catchers, who presumably use only direct vision when catching a pitch*, see?

*Assuming no runners are on base.

(h/t: Chronicle of Higher Education newsletter)

Sunday, October 25, 2009 8:53 pm

Good news, bad news

Filed under: Fun,Hooper,Panthers,Wizards — Lex @ 8:53 pm
Tags: , ,

First, the good news: Hooper finally scored a goal today in a real game. And he did it with authority. He got passed the ball while all alone out on the right wing, a good 20+ feet from the goal. The keeper edged over toward him, and he unleashed one about two inches over the grass that found the far back corner of the net like it had eyes.

So V., Hooper and I had milkshakes to celebrate.

The bad news: The Panthers are done. If your offense can’t score but one TD against the worst rushing defense in the NFL, you are in bad, bad shape. And this is the easy part of the 2009 schedule. After Arizona next week, the Panthers start playing real teams again, and they were going to have to be 4-3 at that point to have a shot at a playoff spot the way New Orleans is playing. Now they’re 2-4.

So what are the problems?

Well, they certainly start with Jake Delhomme. Thirteen interceptions in six games is a killer. Neither of today’s was run back for a TD, but they gave the Bills a short field with which to work. Carolina had 20 first downs to Buffalo’s 9 and 425 yars of total offense to 167 for Buffalo, but when you start on your opponent’s 12, how good does your offense have to be?

But the problems do not end with Delhomme. For one thing, we’ve known since at least 2005 that pretty much every opponent will double-team Steve Smith pretty much all the time. And yet in the intervening years, the Panthers have never found another receiver who could make opponents pay for that double-team. The announcers said today that the Panthers’ O-line is better at run-blocking than at pass-blocking; that’s both true and unimportant. What’s important is that NO line can protect a QB forever when the receivers are covered. And no Panther besides Smith has demonstrated a consistent ability to get free.

Special teams also are killing us. Kenneth Moore’s muffed punt was just today’s most horrendous example. The team does not have a capable returner, and its coverage of kickoff and punt returns is lame. Coach John Fox pays attention to field position for a reason. And while I don’t mean to criticize John Kasay personally, I do have to ask: When was the last time Kasay missed two field goals from inside 45 yards in the same game?

This game will end up being the one for John Fox that the ’98 game in which Kerry Collins took himself out was for Dom Capers: the last straw for Jerry Richardson. John Fox is gone. And as nice as it would be to think that Delhomme would be gone with him, the fact is that the Panthers have no 1st-round pick in 2010 and, at least as of now, very little room under the salary cap to go after a quality free-agent QB, should one even be available. So we could be stuck with Jake for at least another year.

Saturday, October 24, 2009 10:43 pm

Trigger this

The guy who came up with the idea of a public option in health insurance reform explains why a trigger is a bad idea. The short version: People would be required to buy health insurance a lot sooner than any trigger could possibly be tripped that would lead to creation of a public option, and it would take even longer after the trigger was tripped before that option was available.

In short, any support for a trigger is basically stealth opposition to a public option. So whatever your position on a public option, forget the trigger. Let’s either have a public option or not, and let’s have our public conversation focus on those two choices — at least they’re realistic.

Another bad investment

Filed under: I want my money back. — Lex @ 10:35 pm

Mustafa Qadri raises an interesting point:

You would think that the citizens of a developing country promised $7.5bn over five years would be dancing in the streets. Instead, last week’s approval of the Enhanced Partnership with Pakistan Act, formerly the Kerry-Lugar bill, by Congress met with widespread howls of condemnation in Pakistan.

As nearly as I can tell, Pakistan thinks strings attached to the money would undermine its sovereignty, make Pakistan a client state, blah-dee-blah-dee-blah.

Well, here’s an idea: Let’s not give them the money. We’ve got better uses for it.

(h/t: Fec)

Gallows humor has nothing on newsroom humor

Filed under: Fun,Journalism — Lex @ 2:40 pm
Tags: ,

On Facebook, I follow a “user” called “Overheard in the Newsroom,” which is pretty much what it sounds like: one-liners and snippets of dialogue, ostensibly from real-life newsroom conversations. I don’t know how many of them actually happened, but I have yet to read one that I thought couldn’t have happened.

Today’s:

#2025: Reporter: “There’s something wrong when I see ‘Newspaper reporter killed’ in a headline and my first thought is ‘Sweet. Job opening.’ ”

And there’s something wrong with the industry when MY first thought is, “No, they’ll eliminate the position and call it attrition.”

One of the commenters wrote, “Well we all know the best way to find a new apartment is to check the Obits.” I don’t know if it’s the best way, but it’s definitely one trick I used when looking for an apartment when I lived in New York.

Naturally, as the comment string grew, discussion began as to whether laughing at this joke was in good taste. Which led to this from commenter Felix L. Mendoza III, FTW:

Bad News: You’re ALL going to hell.

Good News: But it’s a step up from where you work.

Friday, October 23, 2009 8:56 pm

Another item from the How-Is-This-Even-Legal? file; or, End Casino Capitalism

R.H. Donnelley:

  • $500+ million cash on hand when it declared bankruptcy.
  • Positive cash flow every single month since declaring bankruptcy.
  • No debt coming due in 2009
  • Most recent audit was clean.
  • Projected 2009 EBITDA: $1 billion.
  • Bankrupt anyway.

Why? If you believe the CEO of the company’s largest creditor,

There is one simple reason: The CEO will make more money bankrupting the company than keeping it alive. It takes a year or more for shareholders to elect new board members who in turn elect the CEO. As a result, when the CEO and board of a company feel threatened they may lose their jobs; they can wipe out current equity at any time regardless of the company’s financial condition by declaring bankruptcy. David Swanson, R.H. Donnelley’s CEO, cut a deal with bondholders to keep his job and have management acquire a 10% stake of the Company when it emerges from bankruptcy. Management had approximately 1% of the shares before bankruptcy. Equity was destroyed before the shareholders could have the CEO or the board members removed. The Company has wiped out six billion dollars of debt through the bankruptcy process and significantly lowered its debt service payments. A conservative valuation puts Management’s 10% stake at a couple hundred million dollars. The stake could be worth considerably more if the economy recovers over the next few years.

The CEO adds, “I believe this is a clear breach of management’s fiduciary duty to stockholders.”

Ya think?

In the past few years, the government has made it more difficult for individuals to file for, and emerge from, bankruptcy. Apparently the reverse has happened for large corporations. And it ain’t just R.H. Donnelley’s stockholders and bondholders whom this screws:

[A]llowing solvent companies to declare bankruptcy raises the cost of capital for all companies. If a company that can pay its debt is allowed to enter bankruptcy, then investors will require a higher interest rate due to the increased risk of all companies defaulting. This will make it harder for companies to undertake new projects and reduce corporate profits. Fewer projects will be profitable for companies, and hiring will suffer as a result. It will mean fewer jobs in America.

Of course, Donnelley employees will lose their jobs. And, the CEO points out, other large companies will follow suit. This is not the kind of thing that is supposed to happen in our system, and it’s just another example of how the game is rigged:

The problems that the Company had were the direct result of inept management. Management should be removed as a consequence of poor decision-making, not rewarded and supported by U.S. bankruptcy courts. The current corporate governance system rewards failure.  R.H. Donnelley sold a billion dollars in bonds last year and made only one interest payment before voluntarily defaulting on its debt.  One can only wonder what would happen if a homeowner walked away from their mortgage after one payment. Would the homeowner be rewarded in the same manner? The Company’s actions not only negatively impacted the equity holders and bond holders, but also Company employees who put in years of sacrifice to make the Company a success and the retirees counting on a pension. Many stockholders were also the Company’s employees and retirees. These people were doubly hurt by the bankruptcy.  The CEO and board of directors must be removed upon the failure of a company rather than be rewarded with hundreds of millions of dollars. This is what happens when banking institutions are taken over by the FDIC, and it should be what happens when any public company fails. Management must be held accountable for its actions.

End Casino Capitalism. Now.

Thursday, October 22, 2009 8:18 pm

Gen. Paul Eaton (Ret.), FTW

Filed under: Hold! Them! Accountable! — Lex @ 8:18 pm
Tags: ,

Not for the first time, former Vice President Dick Cheney criticized the Obama administration’s handling of Afghanistan this week, saying, “President Obama now seems afraid to make a decision, and unable to provide his commander on the ground with the troops he needs to complete his mission.”

Which prompted retired Gen. Paul Eaton, a senior adviser to the National Security Network who oversaw the training of the Iraqi Army in 2003-04, to unload the verbal equivalent of a shotgun blast to the face, and not with birdshot, either:

The record is clear: Dick Cheney and the Bush administration were incompetent war fighters. They ignored Afghanistan for 7 years with a crude approach to counter-insurgency warfare best illustrated by: 1. Deny it. 2. Ignore it. 3. Bomb it. While our intelligence agencies called the region the greatest threat to America, the Bush White House under-resourced our military efforts, shifted attention to Iraq, and failed to bring to justice the masterminds of September 11.

The only time Cheney and his cabal of foreign policy ‘experts’ have anything to say is when they feel compelled to protect this failed legacy. While President Obama is tasked with cleaning up the considerable mess they left behind, they continue to defend torture or rewrite a legacy of indifference on Afghanistan. Simply put, Mr. Cheney sees history throughout extremely myopic and partisan eyes.

And like a shotgun blast to the face, that’s gonna leave a mark.

Wednesday, October 21, 2009 10:46 pm

More odds and ends

  • The Galleon insider-trading case, in which billionaire Raj Rajaratnam was charged and the securities-rating firm Moody’s was implicated? Has been assigned to Judge Jed Rakoff. Yeah, this Jed Rakoff. (I hope the judge is taking extremely good care of his health, if you know what I mean, because he is making life intolerable for some very, very wealthy and powerful people.)
  • Former Fed Chairman Paul Volcker, who got us both into and out of the ’81-’82 recession, thinks we need to kind of restore the Glass-Steagall Act, which kept commercial banks from doing investments (and being dragged under when those investments went south) before its 1999 repeal. But he’s having trouble selling that idea to all the Goldman Sachs alumni on Team Obama.
  • If this hearing in fact happens tomorrow — I read or heard somewhere it could get delayed — it could get real ugly real fast for Fed Chairman Ben Bernanke and former Treasury Secretary Hank Paulson. Hell, it might even get ugly for current Treasury Secretary Tim Geithner. I’d be OK with any and/or all suffering some consequences, because you don’t have to be a Harvard MBA to know Bank of America shareholders got screwed.
  • Speaking of Hank Paulson, turns out that while he was still secretary, he met in Moscow with the board of Goldman Sachs. But nothing improper happened. Really. Move along; nothing to see here. These are not the droids banksters you’re looking for.
  • Dana Perino, concern troll. Memo: advice on how to conduct yourself from a PR standpoint from someone who used to take money to call people traitors and supporters of terrorists is probably not worth what you’re paying for it.
  • Shorter Congressman Jeb Hanserling (R-Texas): I’m here to protect banks; screw the consumers.
  • Another Republican, this time John McCain, thinks another earmark, this one $325,000 for earthquake study in Memphis, is a waste of money, and once again is wrong. Three words: New Madrid Fault.
  • Shorter Timothy Noah: Whatever happened to, you know, reporting?; or, The public option was always popular, you morons — you just pretended otherwise or weren’t paying attention.
  • More Noah, because this is just so good and so true: “Political reporters are momentum junkies, forever plotting out momentary trends to infinity. If they were meteorologists, they’d interpret 90-degree temperatures in July to predict 160-degree temperatures in December.”
  • John Cole righteously dopeslaps neocon pinhead Pete Wehner.
  • Sure, Sarah Palin’s $29 book can become a bestseller — when you sell it for $9 or give it away with a magazine subscription.
  • The Bush and Obama administrations actually threatened not to share intelligence with the U.K. if it released evidence of our torture of a guy named Binyam Mohammed. (Yeah, let’s stop sharing info with our oldest and most trusted ally. Genius.) Fortunately, Britain’s highest court is calling their bluff.
  • The maker of Tasers, which has long claimed that Tasers aren’t lethal, now concedes that they might be, potentially, well, a little bit, um, lethal. I’m guessing someone finally talked to their lawyer and figured that just maybe they might want to do a little butt-covering.
  • Socialism … and its potential benefits.
  • OTOH, let’s foster competition and innovation, not hinder it.

Finally, a bit of a health-care roundup:

  • The House Judiciary Committee voted 20-9 today to strip the health-insurance industry of its federal antitrust exemption. This is such a good idea that three Republicans even went along with it. I dearly hope my own representative, Howard Coble, was one of them. (thomas.loc.gov hasn’t been updated yet so I don’t know.)
  • You can too get a hip replacement under the Canadian health-care system even if you’re of retirement age. Ignore the urban legends/propaganda.
  • Sen. Richard Burr’s health-care reform plan: fail. Not epic fail, not actual sabotage of what the bill purports to support, but also not enough recognition of certain economic and financial realities.
  • Expand Medicare to include — well, anyone who wants in? That’s a public option even some Blue Dogs can believe in.
  • And even if we choose a real public option, the Congressional Budget Office says it won’t cost as much as opponents have been claiming.
  • Apparently, U.S. Sen. Arlen Specter had no idea that some people were unable to start their own businesses, or stuck in jobs they hate or aren’t suited for, because they can’t afford the health insurance costs they’d have to pay if they made those moves. I mean, c’mon, how imaginative do you have to be before that possibility occurs to you?
  • Last but not least, Al Franken humbles a Hudson Institute hack on health-care finance:


Senator Al Franken: I think we disagree on whether or not the healthcare reform we’re talking about now in Congress should pass. And you said that, kind of the way we’re going will increase bankruptcies. I want to ask you, how many bankruptcies because of medical crises were there last year in Switzerland?

Diana Furchtgott-Roth: I don’t have that number in front of me but I could find out and get back to you.

Franken: I can tell you how many it was. It’s zero. Do you know how many medical bankruptcies there were last year in France?

Furchtgott-Roth: I don’t have that number but I can get back to you if you like.

Franken: The number is zero.
…

Wile E. Coyote The Dow Jones Industrial Average, Super Genius, Esq.

Filed under: We're so screwed — Lex @ 8:46 pm
Tags: ,

You remember in all the Road Runner cartoons when Wile E. Coyote, while chasing the Road Runner, runs off the edge of a cliff — and then hangs in midair until he realizes what he has done, before beginning to fall?

That’d be the Dow:

We present some of the key criteria of how previous 60% rallies have looked like when analyzed across 10 different key economic dimensions (which are completely irrelevant now). Data courtesy of Contrary Investor

.

  • Year over Year Retail Sales: 9.3% average in prior 60% rallies versus -5.3% in the current one
  • Consumer Confidence: 95.5 average; 53.1 now
  • Capacity Utilization: 79.9% average; 66.6% now
  • Year over Year Industrial Production: 4.1% avereage; -10.7% now
  • ISM: 53.9 average; 52.6 now
  • Payroll employment gains over period: 2.2% average; -2.0% now
  • Decline in continued unemployment claims from cycle peak: -26.3 average; -11.6% now
  • Year over Year growth in total credit market debt: 9.3% average; 3.0% now
  • Year over Year growth in household debt: 8.8% average; -0.1% now
  • P/E Multiple: 16.8x average; 20.0x now

With the exception of ISM, this 60% rally is completely nonsensical. On 9 out of the key 10 economic dimensions we are cruising purely on hope and on expectations that Uncle Sam will continue printing trillions of dollars simply to get us out of this mess. Or not even that, but merely the excess hundreds of billions in liquidity courtesy of Ben Bernanke, are following the path of least resistance straight to equities.

So, the Dow? Dangling in midair. And unfortunately, your savings probably are as well.

Tuesday, October 20, 2009 8:32 pm

Goring oxen

Filed under: I want my money back. — Lex @ 8:32 pm
Tags:

Two items, offered without comment.

Item the first:

The Wall Street giants that received a financial lifeline from Washington may have no compunction about paying big bonuses to their dealmakers and traders. But their willingness to deliver “thank you” gifts to President Obama and the Democrats is another question altogether. …

“There are sensitivities there,” said Scott Talbot, a lobbyist for the industry’s Financial Services Roundtable. Political contributions “can make a donor a target,” Mr. Talbot said. Many involved, though, say the low attendance [at Democratic fundraisers] from those Wall Street giants also reflected a broader disenchantment with Mr. Obama over the angry language emanating from the White House over the million-dollar bonuses and anti-regulatory lobbying. …

Dr. Daniel E. Fass, another chairman of the event who lives surrounded by financiers in Greenwich, Conn., said: “The investment community feels very put-upon. They feel there is no reason why they shouldn’t earn $1 million to $200 million a year, and they don’t want to be held responsible for the global financial meltdown.” Dr. Fass added, “How much that will be reflected in their support for the president remains to be seen.”

Item the second:

A federal judge Monday blocked California from cutting in-home care for 130,000 elderly and disabled state residents whose services would have been reduced or eliminated Nov. 1.

U.S. District Judge Claudia Wilken in Oakland issued a preliminary injunction against $82.1 million in cuts, siding with the plaintiffs’ argument in a class-action lawsuit that the state’s method of determining whose services would be affected was unfair.

“We’re very relieved,” said Melinda Bird, senior counsel for Disability Rights California and an attorney in the case.

The state pays for aides to cook, clean, shop and perform other services to assist the elderly or infirm so they can remain in their homes rather than be forced into nursing homes or other facilities. The Legislature and governor cut $263.5 million in such services from the state budget in July. …

Before Monday’s court ruling, an estimated 36,000 were to have their home services eliminated. Another 97,000 would have had them reduced. The program serves approximately 462,000 Californians.

Calling out Sen. Kay Hagan

I mentioned earlier that North Carolina’s junior senator, Democrat Kay Hagan, had not signed on to S. 604, the Senate companion to Rep. Ron Paul’s HR 1207 audit-the-Fed measure. Now we know why: She opposes it:

Under common usage of the term audit — an examination of accounts and records — there is already a 100 percent audit of the Federal Reserve.

And the records of these audits are publicly available where, exactly?

Furthermore, Congress already reviews semi-annual reports on monetary policy submitted by the Board of Governors as required under the Full Employment and Balanced Growth Act (PL 95-523).

Bully for Congress. What about the rest of us?

When Congress passed the Federal Banking Agency Audit Act in 1978, the legislation attempted to balance the need for public accountability of the Federal Reserve with the need to insulate the Reserve’s monetary policy function from political pressures. I believe this balance must be maintained going forward.

Because that’s worked out so well up ’til now.

There are political pressures and political pressures. Messing with the money supply or meddling in markets for partisan advantage is one thing, and a very bad thing at that. That said, the public needs to know how its economy and its fiat currency are being managed, so that the experts among the public can advocate for policy on the basis of the soundest possible information. That isn’t happening now, mainly because under current circumstances, it can’t.

The formulation of monetary policy is a decision-making process that involves information gathering from a host of foreign governments and central banks. The information provided from those exchanges is critical and extremely sensitive. The immediate and broad disclosure that S. 604 would require could disrupt the financial markets, and jeopardize our country’s international finance relationships.

Release of information can be delayed just long enough to keep it from being able to move markets.

Ultimately, it would be taxpayers who would bear the brunt of any losses resulting from policies caused by untimely disclosure of sensitive information. Because of this, I do not believe the benefits of legislation like the Federal Reserve Sunshine Act outweigh the costs.

Like we haven’t been bearing the brunt of losses already.

As Zero Hedge points out, we need answers to other questions, among them:

Under what circumstances, and under what authority, did the Federal Reserve step in and become the lender of last resort to the entire world?

Given what has happened in the past year, why is it such a good idea to have the Fed (which is to say, us) remain on the hook for $6.5 trillion in other countries’ potential problems?

Why have we not mitigated the international conditions that made it necessary for the Fed to bail out these other countries, so that we’re at just as much risk now as we were before the collapse of Lehman Bros. a year ago?

To what extent do we recognize, and to what extent are we addressing, the dangers created by the weakening dollar? (Yeah, I realize a weak dollar should help exports, but with capacity down in the 60s and not likely to budge soon, it ain’t helping much.)

Why is the Fed’s discount window allowing banks to offer stock in bankrupt companies as collateral? And if the banks can do it, why can’t I?

Cuz here’s the thing:

… the Fed’s liquidity swaps are now back to almost zero. This means that foreign Central Banks believe they have the [foreign-exchange] swap and dollar maturity situation under control. They thought the same before Lehman blew up. And they were wrong. As the [dollar] continues tumbling ever lower [against the yen] to fresh 2009 lows, the trade de jour is once again the dollar funding one, although unlike before when the Yen was the carry currency of choice, this time it is the dollar itself, positioning banks for the double whammy of not just a dollar funding shock, but one coupled with a potential massive and historic short squeeze. If and when an exogenous event occurs, not even $6.5 trillion in Fed swap lines will be sufficient to bail out the world economy.

In plain English, if something else bad happens, we’re going to go through the same thing we went through a year ago. Only worse.

And then there are the categories of information Rep. Alan Grayson has asked for — and still not gotten:

  • Information that Bloomberg reporter Mark Pittman has requested via a Freedom of Information Act Request on the Bear Stearns rescue and that the Federal Reserve is contesting in the courts,[i] and which Manhattan Chief U.S. District Judge Loretta Preska has ordered by turned over by the Federal Resrve.
  • Information that Rep. Grayson requested in February at a hearing and by follow-up letter on which institutions received the $1.2 trillion added to the Federal Reserve’s balance sheet, how much reach institution received, and what was promised in return.
  • All Federal Reserve documents that went to Attorney General Andrew Cuomo’s office relating to the Bank of America/Merrill Lynch merger in which potentially illegal and coercive activity might have occurred, as well all Federal Reserve documents relating to the lawsuit pursued by Merrill Lynch shareholders in the US District court for the Southern District of New York.
  • Transcripts of all Open Market Meeting Minutes up to and including that of June, 2009, transcripts which are normally withheld from the public for five years.
  • Full disclosure of all terms and conditions of all off-balance sheet Fed transactions in the past three years.

In light of all of this, someone needs to explain to me again why Ben Bernanke should be re-confirmed. Because I’m thinking Sen. Hagan needs to vote a big, fat, resounding “Nay!” on that one.

Elsewhere, Zero Hedge writes:

We hope that the over 300 members of Congress who already support Ron Paul’s “Audit the Fed” Initiative consider the implications of what the Lehman fiasco has taught us, and how this unique look into the Fed’s balance sheet should be a very critical reminder of just how much risk the Fed is willing to take on with taxpayer capital when bailing out a financial system that, absent ongoing accounting gimmickry and endless Reserve Banking System subsidies, is still rotten to its core.

If they support Paul’s measure or its Senate companion measure, it’s probably because they’ve already considered those implications.

Sen. Hagan would be wise to do the same.

UPDATE: Kay, here’s a clue: Whatever Jon Kyl wants to do, both you and Americans in general are probably better off doing the opposite.

Has American capitalism lost its soul?

Filed under: We're so screwed — Lex @ 7:40 pm
Tags:

Twenty reasons for arguing in the affirmative, none calculated to engender a good night’s sleep.

Sunday, October 18, 2009 10:56 pm

The toll of the bell(-ringing)

This week’s New Yorker has an article in it by Malcolm Gladwell that, apparently prompted by the return of QB Michael Vick to the NFL after his prison term for dogfighting, asks how similar football and dogfighting are.

He argues that they are similar in that both dogs trained to fight and NFL players are “selected for gameness” (along with Marines and physicians) — their respective systems weed out those unwilling to continue trying to persevere even in the face of great pain and suffering. The dogs do it out of love for and devotion to their owners, which is why during dogfights, the owners maneuver around the pit to stay within their dogs’ fields of vision. The players do it for more complicated reasons — a mix of love of the game itself, camaraderie, money and a long list of other enticements, tangible and intangible.

The difference, of course, is that NFL players 1) have a choice and 2) are highly compensated — even those making the league minimum are making substantially more money than most Americans.

Until recently, or at least so we thought, there was one other difference: No dog, no matter how aggressive and well-trained, will live forever. Sooner or later, it will age or slow or just catch a bit of bad luck and go down to another dog. NFL players, on the other hand, almost all walk away from the game relatively intact, or so most fans think. (The less glamorous reality, which the NFL doesn’t talk much about, is that a large percentage of NFL players who play in the league any length of time leave with some sort of permanent injury or disability.)

And although there’s no conclusive proof, Gladwell writes, there is some disturbing evidence that NFL players as a group may be at far greater risk than the general population for a form of brain damage called chronic traumatic encephalopathy (C.T.E.) because of the pounding their heads take during the course of a career. C.T.E. presents, as the doctors say, a lot like Alzheimer’s, but it’s caused by brain injury and the brain cells of its victims look different from those of Alzheimer’s patients. It gets worse over time. And as with Alzheimer’s, there’s no cure.

Two neuropathologists are looking at this particular question. One is Dr. Ann McKee, who is doing the neuropathology research associated with the long-running Framingham heart-disease study, which has been following a large group of patients for decades. She also is involved with the New England Centenarian Study, which looks at the brains of people who lived an extraordinarily long time. (“I’m looking at brains constantly,” McKee says.) In the course of her work, she has run across close to two dozen brains of former athletes — mostly football players, a couple of boxers.

The other is Dr. Bennet Omalu, who has found cases of C.T.E. in several former NFL players. Both are disturbed by their findings, although both also say they haven’t seen enough cases yet to decide anything.

The league also has been looking, and what it has found is disturbing:

… late last month the University of Michigan’s Institute for Social Research released the findings of an N.F.L.-funded phone survey of just over a thousand randomly selected retired N.F.L. players—all of whom had played in the league for at least three seasons. Self-reported studies are notoriously unreliable instruments, but, even so, the results were alarming. Of those players who were older than fifty, 6.1 per cent reported that they had received a diagnosis of “dementia, Alzheimer’s disease, or other memory-related disease.” That’s five times higher than the national average for that age group. For players between the ages of thirty and forty-nine, the reported rate was nineteen times the national average. …

“A long time ago, someone suggested that the [C.T.E. rate] in boxers was twenty per cent,” McKee told me. “I think it’s probably higher than that among boxers, and I also suspect that it’s going to end up being higher than that among football players as well. Why? Because every brain I’ve seen has this [damage]. To get this number in a sample this small is really unusual, and the findings are so far out of the norm. I only can say that because I have looked at thousands of brains for a long time. This isn’t something that you just see. I did the same exact thing for all the individuals from the Framingham heart study. We study them until they die. I run these exact same proteins, make these same slides—and we never see this.”

McKee’s laboratory occupies a warren of rooms, in what looks like an old officers’ quarters on the V.A. campus. In one of the rooms, there is an enormous refrigerator, filled with brains packed away in hundreds of plastic containers. Nearby is a tray with small piles of brain slices. They look just like the ginger shavings that come with an order of sushi. Now McKee went to the room next to her office, sat down behind a microscope, and inserted one of the immunostained slides under the lens.

“This is Tom McHale,” she said. “He started out playing for Cornell. Then he went to Tampa Bay. He was the man who died of substance abuse at the age of forty-five. I only got fragments of the brain. But it’s just showing huge accumulations of tau [a protein that damages brain cells, found in both Alzheimer's and C.T.E. patients and detectable only at autopsy -- Lex] for a forty-five-year-old—ridiculously abnormal.”

She placed another slide under the microscope. “This individual was forty-nine years old. A football player. Cognitively intact. He never had any rage behavior. He had the distinctive abnormalities. Look at the hypothalamus.” It was dark with tau. She put another slide in. “This guy was in his mid-sixties,” she said. “He died of an unrelated medical condition. His name is Walter Hilgenberg. Look at the hippocampus. It’s wall-to-wall tangles. Even in a bad case of Alzheimer’s, you don’t see that.” The brown pigment of the tau stain ran around the edge of the tissue sample in a thick, dark band. “It’s like a big river.”

McKee got up and walked across the corridor, back to her office. “There’s one last thing,” she said. She pulled out a large photographic blowup of a brain-tissue sample. “This is a kid. I’m not allowed to talk about how he died. He was a good student. This is his brain. He’s eighteen years old. He played football. He’d been playing football for a couple of years.” She pointed to a series of dark spots on the image, where the stain had marked the presence of something abnormal. “He’s got all this tau. This is frontal and this is insular. Very close to insular. Those same vulnerable regions.” This was a teen-ager, and already his brain showed the kind of decay that is usually associated with old age. “This is completely inappropriate,” she said. “You don’t see tau like this in an eighteen-year-old. You don’t see tau like this in a fifty-year-old.”

McKee is a longtime football fan. She is from Wisconsin. She had two statuettes of Brett Favre, the former Green Bay Packers quarterback, on her bookshelf. On the wall was a picture of a robust young man. It was McKee’s son—nineteen years old, six feet three. If he had a chance to join the N.F.L., I asked her, what would she advise him? “I’d say, ‘Don’t. Not if you want to have a life after football.’ ”

At the core of the C.T.E. research is a critical question: is the kind of injury being uncovered by McKee and Omalu incidental to the game of football or inherent in it?

(I should point out that both researchers say that other factors, such as genetics and steroid use, may well figure into this phenomenon — neither is drawing any straight-line conclusions at this point.)

As it happens, I read this article just last night, so it was still very much on my mind as I watched today’s Panthers-Buccaneers game.

Just seconds before halftime, the Panthers punted, and the Bucs’ returner, Clifton Smith, signaled for a fair catch. When a punt returner signals for a fair catch, that means he’s supposed to be allowed to catch the ball, and then his team starts its next play from that spot — he doesn’t run with it once he catches it. In return for his not running, not only is the punting team not allowed to tackle that returner, for the past few years they haven’t even been allowed within a 3-yard “halo” around such a returner.

But on this play, the Panthers’ Dante Wesley, the “gunner” (first guy to sprint downfield on punts to try to tackle the returner), launched himself into Clifton Smith, who, having signaled for a fair catch, was watching the ball coming down out of the sky and had no idea what Wesley was doing. Wesley slammed into him at full speed, appearing to catch him under the chin with his shoulder pad and knocking him out cold. (You can see the play here.)

Smith suffered a concussion — he “got his bell rung,” as the players sometimes say — and did not return. Wesley was ejected and likely will be fined by the league. For such a blatant and excessive hit — not only running into Smith, but also leaving his feet to do so, an additional violation of the rules — he might even be suspended. (I hope he is. What he did came as close to assault with a deadly weapon as an unarmed man is ever likely to come without martial-arts training.)

Now, you might suppose that it’s hits like that that cause the kind of brain trauma these researchers are finding. And they can. But research just down the road in Chapel Hill suggests a more disturbing problem for those of us who play and/or love football:

Take the experience of a young defensive lineman for the University of North Carolina football team, who suffered two concussions during the 2004 season. His case is one of a number studied by Kevin Guskiewicz, who runs the university’s Sports Concussion Research Program. For the past five seasons, Guskiewicz and his team have tracked every one of the football team’s practices and games using a system called HITS, in which six sensors are placed inside the helmet of every player on the field, measuring the force and location of every blow he receives to the head. Using the HITS data, Guskiewicz was able to reconstruct precisely what happened each time the player was injured.

“The first concussion was during preseason. The team was doing two-a-days,” he said, referring to the habit of practicing in both the morning and the evening in the preseason. “It was August 9th, 9:55 A.M. He has an 80-g hit to the front of his head. About ten minutes later, he has a 98-g acceleration to the front of his head.” To put those numbers in perspective, Guskiewicz explained, if you drove your car into a wall at twenty-five miles per hour and you weren’t wearing your seat belt, the force of your head hitting the windshield would be around 100 gs: in effect, the player had two car accidents that morning. He survived both without incident. “In the evening session, he experiences this 64-g hit to the same spot, the front of the head. Still not reporting anything. And then this happens.” On his laptop, Guskiewicz ran the video from the practice session. It was a simple drill: the lineman squaring off against an offensive player who wore the number 76. The other player ran toward the lineman and brushed past him, while delivering a glancing blow to the defender’s helmet. “Seventy-six does a little quick elbow. It’s 63 gs, the lowest of the four, but he sustains a concussion.”

“The second injury was nine weeks later,” Guskiewicz continued. “He’s now recovered from the initial injury. It’s a game out in Utah. In warmups, he takes a 76-g blow to the front of his head. Then, on the very first play of the game, on kickoff, he gets popped in the earhole. It’s a 102-g impact. He’s part of the wedge.” He pointed to the screen, where the player was blocking on a kickoff: “Right here.” The player stumbled toward the sideline. “His symptoms were significantly worse than the first injury.” Two days later, during an evaluation in Guskiewicz’s clinic, he had to have a towel put over his head because he couldn’t stand the light. He also had difficulty staying awake. He was sidelined for sixteen days.

When we think about football, we worry about the dangers posed by the heat and the fury of competition. Yet the HITS data suggest that practice—the routine part of the sport—can be as dangerous as the games themselves. We also tend to focus on the dramatic helmet-to-helmet hits that signal an aggressive and reckless style of play. Those kinds of hits can be policed. But what sidelined the U.N.C. player, the first time around, was an accidental and seemingly innocuous elbow, and none of the blows he suffered that day would have been flagged by a referee as illegal. Most important, though, is what Guskiewicz found when he reviewed all the data for the lineman on that first day in training camp. He didn’t just suffer those four big blows. He was hit in the head thirty-one times that day. What seems to have caused his concussion, in other words, was his cumulative exposure. And why was the second concussion—in the game at Utah—so much more serious than the first? It’s not because that hit to the side of the head was especially dramatic; it was that it came after the 76-g blow in warmup, which, in turn, followed the concussion in August, which was itself the consequence of the thirty prior hits that day, and the hits the day before that, and the day before that, and on and on, perhaps back to his high-school playing days.

In technological terms, C.T.E. ain’t a bug, it’s a feature.

What football must confront, in the end, is not just the problem of injuries or scientific findings. It is the fact that there is something profoundly awry in the relationship between the players and the game.“Let’s assume that Dr. Omalu and the others are right,” Ira Casson, who co-chairs an N.F.L. committee on brain injury, said. “What should we be doing differently? We asked Dr. McKee this when she came down. And she was honest, and said, ‘I don’t know how to answer that.’ No one has any suggestions—assuming that you aren’t saying no more football, because, let’s be honest, that’s not going to happen.”

I hope we fans — and I am definitely including myself when I say “we” because I love pro football, ran a fantasy-league team for 18 years and am probably overly invested in how well the Panthers do — are going to be able to live with the knowledge I expect we’ll be getting as this research progresses. Because based on what we’ve seen so far, we’re likely to come to two conclusions: The players we love to watch will be at substantially, if not hugely, increased risk for dementia as they age, and the damage won’t stop until we stop paying to watch what causes it.

Double headlines; or, An answer to a question you might not have asked

Filed under: Fun,Housekeeping — Lex @ 12:43 pm
Tags: , ,

A couple of people have e-mailed to ask why I seem so fond of double headlines on my blog posts, such as the headline on this post.

The answer, as are so many answers in our complex world, is rooted in perhaps the Best Cartoon Evah, “Rocky & Bullwinkle,” and the accompanying Fractured Fairy Tales. At the end of each episode, the narrator, William Conrad, perhaps best known for his later role as TV’s portly detective “Cannon,” would say something on the order of, “Tune in next time for, ‘(First part of title, usually short),’ or, ‘(Second part of title, usually longer and often containing a pun.’)”

Here’s a whole pageful of YouTube snippets. Better for you than “Transformers,” for darned sure.

Saturday, October 17, 2009 12:51 pm

Financial roundup, or, The road to perdition

Filed under: I want my money back.,We're so screwed — Lex @ 12:51 pm
Tags: ,

A quick run through some financial/economic items, searching for an overarching theme:

  • Elizabeth Warren, the TARP overseer, on how we got into this:

    Thanks, Hank.
  • Well, sure, the stock market’s up. “Giving people $23 trillion in taxpayer money, especially the banks, it makes their stock price go up.”
  • The criminal complaint against billionaire Raj Rajaratnam for $20 million in insider trading, supposedly one of the largest such cases ever, merited a brief inside today’s News & Record. But it included a detail that should have been front-page news everywhere: the inside information apparently came from the securities-rating firm Moody’s, which has a government- granted near-monopoly on rating the safety and quality of investments — and which rated quite highly some mortgage-backed securities that turned out to be crap. Here’s the thing that worries me: The odds are heavily against this being an isolated case; corrupt organizations are seldom just a little bit corrupt. And if it has happened at Moody’s, it probably also has happened at Standard & Poor’s, the other big securities rater. Say it with me, kids: Rigged. Game.

    UPDATE: McClatchy Newspapers opens up a can of whupass on Moody’s, and it’s at least as bad as you thought:

    As the housing market collapsed in late 2007, Moody’s Investors Service, whose investment ratings were widely trusted, responded by purging analysts and executives who warned of trouble and promoting those who helped Wall Street plunge the country into its worst financial crisis since the Great Depression.

    A McClatchy investigation has found that Moody’s punished executives who questioned why the company was risking its reputation by putting its profits ahead of providing trustworthy ratings for investment offerings.

    Instead, Moody’s promoted executives who headed its “structured finance” division, which assisted Wall Street in packaging loans into securities for sale to investors. It also stacked its compliance department with the people who awarded the highest ratings to pools of mortgages that soon were downgraded to junk. Such products have another name now: “toxic assets.”

  • The banks continue to behave like suicide bombers, threatening to blow up the economy if we don’t allow them to keep lying for years about how much their busted investments are worth. It’s past time to call their bluff.
  • I can’t tell if this is actually happening — surely it’s illegal for a real-estate agent to do this — or if it’s an Onion wannabe, which probably says something about the times in which we live, but here’s a guy who’s short-selling his neighbor’s house.
  • The Securities & Exchange Commission has just hired a former Goldman Sachs employee as — wait for it — chief operating officer … of its enforcement division. A 29-year-old former Goldman Sachs employee. Well, we’re definitely gonna be locking up some banksters now. Right?
  • And, finally, Matt Taibbi points out what anyone who doesn’t work on Wall Street or in Washington already knows: The health of Wall Street no longer has a damn thing to do with the health of Main Street:
  • I watched carefully the reporting of the Dow breaking 10,000 the other day and not anywhere did I see a major news organization include a paragraph of the “On the other hand, so f—— what?” sort, one that might point out that unemployment is still at a staggering high, foreclosures are racing along at a terrifying clip, and real people are struggling more than ever. In fact the dichotomy between the economic health of ordinary people and the traditional “market indicators” is not merely a non-story, it is a sort of taboo — unmentionable in major news coverage.

Once upon a time, the health of Wall Street was determined by the health of Main Street. Somewhere along the way, we as a country decided it was a good idea not only to decouple the two but also to let the health of Wall Street be, really, all that matters. You don’t hear or see any discussion in the mainstream media about the need to alleviate the current unemployment crisis, in which the real unemployment level is substantially higher than the official number. In fact, you hear official Washington accepting as if it were fact that there’s nothing to be done and that unemployment must stay this high for years.

Maybe that’s the overarching theme of these disparate anecedotes and data points: The class war is over, the rich have won, screw you, Jack, you’re on your own.

  • Regular readers know I believe we didn’t get where we are without massive amounts of fraud. Someone who knows a lot more about this stuff than I do agrees — and says that, despite all the optimism you’ve been hearing (and the absolute joy about the Dow cracking 10,000 again, albeit with the dollar worth 25% less than when it happened the first time), this stuff is nowhere near over:

  • Friday, October 16, 2009 8:25 pm

    What we’ve learned from recent economic events

    Short version: not bloody much if, by “we,” you mean “The Cato Institute.”

    Now, I actually concur with the writer’s assertion that government did, in fact, play a central role in creating the current disaster. Greenspan held interest rates too low too long, creating the credit bubble, for example.

    The writer also asserts that lots and lots of financial laws and rules and regulations have been created to prevent this sort of thing and that none of them worked, and that this problem has gotten as big as it has precisely because of government action. And to a large extent he’s right about both the problem and the solution.

    To a large extent — with one huge exception. See if you can spot it:

    No regulation has had as great an effect on the risk-taking of the banking sector than the lifeguard role of central banks (and now finance ministries, as well). This has taught the major financial players to take hair-raising risks in the knowledge that they can privatize any gains and socialize any losses because they are too big to fail. The dilemma, however, is that they would never have grown so big if they had not had that safety net. Present-day capitalism is sometimes attacked for being nothing more than a “casino economy.” But I know of no casino where the head of a central bank and the finance minister accompany customers to the roulette table, kindly offering to cover any losses.

    The problem is, we do not have a casino economy. To borrow a metaphor from child rearing, we have a “helicopter economy.” Helicopter parents hover over their kids, preventing them falling and hurting themselves. This means their children never grow up and learn to see dangers for themselves. And for this very reason, such children will eventually fall in more serious and dangerous contexts instead, because risk is part of the human condition. The helicopter economy works in a similar way. The government hovers over the banks and investors, making sure they do not get hurt too badly (and cleaning up any messes they leave behind.) Whenever there is an accident, the benchmark rate is lowered, the central bank extends credit and taxpayers’ money is pumped in. The players never learn to look out for risks; they just continue their reckless behaviour, and sooner or later they will fall off a ledge that they were not watching out for and pull us all down with them.

    Capitalism without bankruptcy is like Christianity without hell — it loses its ability to motivate humans to be prudent or respect their fears. If completely removing the safety net from under the financial market is not politically feasible, then it is necessary to make a division so that they protect only pared-down banks engaging in simple operations. All other financial institutions should be told in no uncertain terms that the government’s only responsibility to them, if they fail, is to wish them luck.

    Found it yet?

    Read those last two sentences again, particularly the first of the two.

    “Make a division so that [the safety net protects] only pared-down banks engaging in simple operations.”

    What a great idea! Why hasn’t someone thought of that before?

    Oh. Wait. Someone did. And it worked great for 67 years.

    And then we repealed it. And it took the markets less than a decade to do exactly what the repealed law would have prevented.

    This was huge. And the writer pretends it never happened. Amazing. Apparently I’ve learned more from recent economic events than the Cato Institute.

    Attitude adjustment

    Filed under: Fun — Lex @ 5:55 am
    Tags:

    Since my reaction last week to learning that the president had won the Nobel Peace Prize, I have found that, without previously having been aware of it, I have adopted this rule of thumb for confronting any action or information that evokes a strong, immediate emotion in me, irrespective of which emotion it is.

    I ask myself:  Could this be The Onion?

    Since becoming aware of this reaction, I have at least two observations.

    First, you’d be surprised how often it really is The Onion. I spend more time online than most people, but still. Also, The Onion produces a lot of stuff, and most of what they do produce (actually, most of the time, links to it) gets passed around by multiple online acquaintances.

    Second, you’d be surprised how often things that aren’t The Onion feel like they should be.

    Given the generally high levels of free-floating absurdity currently at large, this approach has brightened my outlook, consequently making me a nicer person. So it’s clearly not for everybody.

    But give it a try and see if it works for you.

    Thursday, October 15, 2009 9:59 pm

    Dow back to 10,000? Big deal; or, Why things are going to get worse …

    Filed under: We're so screwed — Lex @ 9:59 pm
    Tags:

    and NOT get better without, basically, some public hangings.

    Put simply, the economy runs on trust.

    When there is fraud, trust is undermined.

    And there has been fraud, perhaps historically unprecedented levels of it. There is no way in hell our economy crashed the way it did without massive, systemic fraud having played a part in all areas and at all levels.

    Thus, the market is not, and properly should not be, trusted.

    So the economy is not going to get better until trust is restored.

    How do you restore trust? By 1) holding those responsible accountable and 2) making systemic changes to ensure that it never happens again.

    So far, Bernie Madoff is the only person I know of who has been held accountable … and he confessed.

    The SEC has done nothing. The Justice Department has done nothing. The markets themselves have done nothing. And Congress has done nothing.

    Meanwhile, a whole bunch of adjustable-rate residential mortgages will be resetting soon, many of them to payment levels their holders cannot afford. Those homeowners will be out of houses. That won’t help the economy.

    Meanwhile, $300 billion in commercial real estate credit is coming due, badly needs a refi or has balloon payments coming up. And there is no chance the current system will be able to accommodate more than a small percentage of it. (Some of it wouldn’t merit accommodation even in better credit circumstances.) The property owners won’t be able to keep the properties financed and will be foreclosed upon.

    And nobody is being held responsible.

    And nobody is being held accountable.

    And no one trusts the market.

    And so the economy is not going to get better.

    Physics lesson from an English major

    Filed under: Fun,Journalism — Lex @ 8:28 pm
    Tags: , ,

    Memo to Fox News: This is not a “working black hole.” It is a working model of something can affect nearby radiation in some of the same ways that a black hole does, without actually being a black hole.

    A black hole is a collection of matter so dense that its escape velocity exceeds the speed of light. The Chinese scientists have built nothing of the kind. (Memo to Prof. Bob Manning: See? I was TOO awake!)

    Yeah, let’s blame the victim

    Texas Gov. Rick Perry, who may well have negligently allowed the execution of an innocent man in Texas, has decided that the way to shift attention from his own behavior is to shout more allegations against the man he may have killed.

    Gov. Rick Perry, seeking to defuse an election-season controversy over the 2004 execution of Cameron Todd Willingham, described Willingham on Wednesday as a “monster” and “bad man” whose conviction in the deaths of his three daughters was sustained “every step of the way” by the courts.

    Perry also said the news media are being distracted by what he described as “sideshows” in the case, and he invited reporters to review evidence and court records, which he said unquestionably show Willingham was a “heinous individual who murdered his kids.”

    Perry, facing a vigorous re-election challenge in the 2010 Texas governor’s race, has drawn national media scrutiny after shaking up the Texas Forensic Science Commission. Perry dismissed three members two days before the panel was to review an expert report challenging the arson investigation that led to Willingham’s execution.

    Perry, a perennial candidate for the Douglas Feith Award, offered 1) no evidence that his claims about Willingham were true, and 2) no basis for thinking that Willingham was guilty of murder even if the claims about Willingham’s other behavior were true.

    Previously.

    Perry, who dismissed a fire expert’s report demolishing the state’s arson case as “propaganda,” also needs to understand that when you make a claim based upon valid scientific research, it’s not “propaganda,” it’s the truth. Calling it “propaganda” doesn’t make it any less true.

    Face it, Goodhair: You and those judges you tout may well have an innocent man’s blood on your hands. And sooner or later, despite all your screaming and all your obstruction of justice, we’re going to find out for sure whether you do. Your behavior in this case is not that of a man confident of the outcome.

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