Saturday, February 28, 2009

The Republican message for the next 3 years will be:
Obama's tax plan punishes the successful.
Republicans (especially Andrew Sullivan) love the word "successful" to characterize the wealthy. Why? Because it evades any criteria of merit, although it seems to be applicable in casual use.

For example, was an executive that got stock options in a dot-com company in the 1990s and sold at the peak of the bubble successful? Yes. Was that executive lucky? Yes. Were those dollars merited in the same way that, for example, a surgeon's are? No.

Or look at investment banking. In the past, when the partners retained ownership, they made money but didn't take big risks because they had a vested interest in keeping the bank in business. But with the change over the last decade to public ownership (via stocks) of investment banks, the top executives could - and did - gamble wildly and got mega-paychecks for a while - but ultimately the i-banks cratered. Were they successful? Yes. Was that merited. No, not even by Wall Street standards, now that the mess has been exposed.

Libertarians, by contrast, are more honest. They don't give a damn where the money comes from (hard work, the lottery, rich uncle dies); they think a person should keep all of it. But that's not a philosophy that has wide enough appeal. To succeed in the public arena, the wealthy must be seen as deserving of their wealth. Hence the word "successful" is used.

We could also spend some time on the word "punish", and how that's a loaded term, but the focus here is on the "success" angle.

Democrats will need a quick rejoinder to the charge that they have it in for the successful. Nothing as crude as "Stalin was successful, does that mean we shouldn't have challenged him?" But something that's in the current news, a la Madoff or Thune or Pandit (Citi CEO).

Somewhat related essay at Media Matters.

N.B. Andrew Sullivan has written that he got some dot-com stocks and sold for a nice profit (that apparenly paid for a condo) before the tech bubble popped. Congrats, Andrew! On the other hand, some people lost tons of money at that time. Were they failures?

Broadly speaking, taxation on the very rich to pay for support services for the very poor is a way of offsetting the impact of luck. Framed that way, it doesn't come off as class warfare.


Wrong point in time:

We read:
Gov. Sarah Palin on Thursday threw her support behind a controversial [Alaska state] bill that would generally require parental consent before girls under age 17 could get an abortion.
This is wrong. What Palin should be supporting is a bill that requires parental consent before girls under age 17 engage in intercourse.


Friday, February 27, 2009

Shorter George Will:
Instead of honestly discussing the disagreements surrounding what I wrote about global cooling (from the 1970's), I shall instead, attack the New York Times story that reported on my column.
Other observations here: Media Matters, Huffington Post (1, 2), TPM.

While several studies and media reports were commented upon (by Will and his critics), you can safely say this:
George Will asserts that the fact there is less sea ice in the northern hemisphere and more in the southern hemisphere - for a net change of nearly zero over three decades - means global warming is not happening.
Scientists see less-up-north, more-down-south as consistent with warming because, guess what? They are looking at two variables (and what they imply), not Will's one variable (the sum of the two).

By George Will's simplistic analysis, if two cars hurtle towards each other and collide, the change in total momentum is 0, so nothing really bad happened. What a moron.


Thursday, February 26, 2009

What the hell is this?

From Calculated Risk: (emp add)
American International Group Inc. may get a backstop from the U.S. to protect against further losses on credit-default swaps, according to a person familiar with the matter.

The federal guarantees may be included in New York-based AIG’s restructured bailout ...
CR comments:
There you have it.
Credit-default swaps were essentially insurance policies sold to holders of (now) toxic bond instruments, to protect against losses. Those holders were not the banks. They were the wealthy and big institutions (including pension funds). This proposal is nothing more than a taxpayer cover for the losses that would have been sustained by investors. It's awful.


Conservative John Derbyshire critiques right wing radio:

You'll disagree with his stance on policies, but he did write these observations: (excerpts, minor resequencing of text for clarity)
Taking the conservative project as a whole—limited government, fiscal prudence, equality under law, personal liberty, patriotism, realism abroad—has talk radio helped or hurt? [The conservative project is now clearly off the table.] Did the Limbaughs, Hannitys, Savages, and Ingrahams lead us to this sorry state of affairs?

They surely did. At the very least, by yoking themselves to the clueless George W. Bush and his free-spending administration, they helped create the great debt bubble that has now burst so spectacularly. The big names, too, were all uncritical of the decade-long (at least) efforts to “build democracy” in no-account nations with politically primitive populations. Sean Hannity called the Iraq War a “massive success,” and in January 2008 deemed the U.S. economy “phenomenal.”

Much as their blind loyalty discredited the Right, perhaps the worst effect of Limbaugh et al. has been their draining away of political energy from what might have been a much more worthwhile project: the fostering of a middlebrow conservatism. There is nothing wrong with lowbrow conservatism. It’s energizing and fun. What’s wrong is the impression fixed in the minds of too many Americans that conservatism is always lowbrow, an impression our enemies gleefully reinforce when the opportunity arises.

It does so by routinely descending into the ad hominem—Feminazis instead of feminism—and catering to reflex rather than thought. Where once conservatism had been about individualism, talk radio now rallies the mob. ... rather than debating Jimmy Carter’s views on Mideast peace, Michael Savage dismisses him as a “war criminal.” Others are juvenile: Mark Levin blasts the Washington Compost and New York Slimes.

... we get Happy Meal conservatism: cheap, childish, familiar. Gone are the internal tensions, the thought-provoking paradoxes, the ideological uneasiness that marked the early Right. But however much this dumbing down has damaged the conservative brand, it appeals to millions of Americans.

There is nothing wrong with lowbrow conservatism. Ideas must be marketed, and right-wing talk radio captures a big and useful market segment. However, if there is no thoughtful, rigorous presentation of conservative ideas, then conservatism by default becomes the raucous parochialism of Limbaugh, Savage, Hannity, and company. That loses us a market segment at least as useful, if perhaps not as big.

Conservatives have never had, and never should have, a problem with elitism. Why have we allowed carny barkers to run away with the Right?
It's been very interesting to listen to Limbaugh, Hannity, Medved, Levin, et al these recent weeks. They have gone absolutely ballistic of Obama's speeches, policies, and passed and pending legislation. It's the end of capitalism! We're all going to be slaves to the government! An insurrection is perhaps only months away!

One thing that is curious. The Republican stronghold is in the southeast (former states of the Confederacy), yet the radio hosts are based in New York or non-south for the most part. It's strange to listen to the politicians that frequently are guests on right wing radio. Their southern drawl (McConnell,Cornynm, Graham, Sanford, Jindal) is quite a contrast to the mainline speech of the hosts. Sure, there's Pence and Cantor, but the Republican strength is found in the south. Why are there no major southern-accented right wing radio hosts?


Hooray for David Broder!

This is great:
The size of the gambles that President Obama is taking every day is simply staggering. What came through in his speech to a joint session of Congress and a national television audience Tuesday night was a dramatic reminder of the unbelievable stakes he has placed on the table in his first month in office, putting at risk the future well-being of the country and the Democratic Party's control of Washington. ...

The risk to Obama's ambitions is likely to arise less from the defeated Republicans than from the victorious Democrats, who have all too many ideas of their own about what should be done in energy, health care and education.

And the other risk is in what he barely mentioned Tuesday: the rest of the world. Obama has just ordered 17,000 more troops to Afghanistan, a country with a stumbling government and a shaky neighbor in Pakistan, and a place where the United States is still searching for a plausible strategy. ...

When we elected Obama, we didn't know what a gambler we were getting.
George W. Bush was the gambler (ask David Gergen about Bush's Iraq venture, for example).

But back to Broder. If you read his column, you will note that he has nothing to say about the rightness or wrongness of the policies Obama is proposing. Broder is only interested in process (e.g. "Is he naive? Does he not understand the political challenge he is inviting?"). All Broder has to say is
"Obama is trying to do a lot of stuff. Whoa Nellie!"


Wednesday, February 25, 2009

Perhaps David Broder should read this:

Byron York: (emp add)
I just got off the phone with a very plugged-in Republican strategist who told me that Republican reaction to President Obama's speech, which the party will roll out in the next few days, will mark the beginning of a new GOP approach to opposing the president's initiatives.
And Broder expects some sort of bipartisan deals with this being the situation?


Dean Baker on a roll:

Two posts on Citi bailout (1, 2). But here's the best excerpt:
The NYT piece on bailout III for Citigroup looks like it was written by Citi's lobbyists. The piece never once points out that the government has handed tens of billions to Citigroup for almost nothing. Let me say that about six more times: the NYT article on the latest Citi bailout never once points out that the government has handed tens of billions to Citigroup for almost nothing. The NYT article on the latest Citi bailout never once points out that the government has handed tens of billions to Citigroup for almost nothing. The NYT article on the latest Citi bailout never once points out that the government has handed tens of billions to Citigroup for almost nothing.I suppose tens of billions for Citi doesn't deserve as much attention as $50 million for the National Endowment for the Arts or $25 million for the Smithsonian.
In a much earlier Baker post about newspaper reporting on entitlements, he wrote a familiar two-paragraph statement about the solvency of Social Security. Someone in the comments section wondered if Baker had a macro set up for inserting that text. Considering this latest post, maybe he does!


A sensible editorial about the mother of octuplets:

In the Daily Titan: (excerpts)
Octomom scrutiny should be elsewhere

... the public outcry against Suleman's decision to have more children through in vitro fertilization after already birthing six children, three of which are on disability according to Los Angeles Times – should be focusing elsewhere. ...

We need to spend less time gossiping about Suleman, and more time questioning the moral and ethical integrity of the person ultimately responsible – her doctor, Michael Kamrava.

He performed all of her in vitro procedures and knew the risks associated with implanting her with six more eggs. Not to mention, he gave his Hippocratic Oath in order to become a doctor. There must be some sort of violation on his part.

He should have realized that Suleman may have not been in the proper state to be birthing again, and send her to a psychiatrist to determine if she would be fit to mother more children.

Kamrava also should not have put all six eggs in Suleman's uterus. He knew the risks and possible outcomes. ...

[Implantation] guidelines state that no woman under 35 should have more than two eggs implanted in her uterus.

In the case of Nadya Suleman and her doctor, the public should be crying out for stricter punishments for guideline violations, and better methods of regulating reproductive technology.
In addition to determining if Suleman is psychologically "fit", existing family size, shelter, and income should also be part of an evaluation.


Jindal's response to Obama:

This has been a frequently quoted excerpt:
We believe the way to strengthen our country is to restrain spending in Washington, to empower individuals and small businesses to grow our economy and create jobs.
Wow. No big businesses involved. No colleges. Certainly no government. Just individuals and small businesses will be sufficient. That's not neo-Hooverism, it's going back to before the Industrial Revolution. Call it neo-Hobbes'-state-of-nature-ism. Or perhaps it could also be called Ayn Randism. A hands off, no taxation environment where governing is a breeze, because nothing needs to be done.

ALSO: From two hard right blogs. Ace of Spades:
Jindal's Response...

Awful. He walked out like an earnest dork and has a weird inflection, trying to sound upbeat and sunny when it's clearly not his natural metier. It sounds false, and he looks false.

I don't care how much of a star Jindal is, America doesn't elect somewhat-off dorks as president.
Hot Air:
“Awful” is Ace’s word but I’m in no mood to disagree. And neither are most HA commenters, judging from this mammoth thread. This was his star turn and he came off wooden, especially at the beginning. Oh well. His loss is the rest of the GOP governors’ gain.


Tuesday, February 24, 2009

Wall Street reaction:

Judging from today's market move, some people actually think Bernanke is a credible person when it comes to predicting the economy. How about that?


Monday, February 23, 2009

Social Security fix?

The barganing power of labor in this country has been substantially weakened over the last 30 years. I attribute it largely to free trade with countries where workers are paid very little (in contrast to a free trade environment where there are "local advantages" of geography and infrastructure, but where a "unit" of work is compensated at a rate that's about the same for each trading partner.*).

This reduction of labor's bargaining power has led to:
  • Weaker unions (and less union membership).
  • Corporations being able to shed pension obligations and put the burden on the individual via 401Ks.
  • Cut backs in health care coverage by employers.
  • The failure of labor to share in the productivity gains over the last three decades. (Instead, those gains go to executives or shareholders.)
Anyway, with that last point in mind, here's Robert Kuttner in the Washington Post: (emp add)
Social Security is financed by taxes on wages -- and since the mid-1970s, wage growth has stagnated. If median wages rose with productivity growth, as they did during the first three decades after World War II, Social Security would enjoy a big surplus.
We've got to get back into some sort of balance where corporations and labor share the benefits of productivity growth. Not only would it help Social Security, but it would mean that the consumer would actually be spending his or her own money, instead of borrowing. And savings would return to a healthy level (approx 4%).

* this topic is full of detail that can't be expanded upon in this blog post.


Sunday, February 22, 2009

Oscar night thought:

The retrospective of those in the movie business who passed away last year was a catastrophe. Instead of somber music (which allows some audio from the clips to be heard - in select cases) there was Queen Latifah singing a song that totally overwhelmed the mood and viewer focus on the people. Not only that, but those being "honored" were displayed in a series of screens - some of which were absurdly small - in the background. The only clip that was actually shown full size with audio was seven seconds of Paul Newman. What a mess.

UPDATE: Comment from a live blog on the Oscars:
Who ever did the "In Memory" section should be shot. You couldn't see more than half of the names of those who passed. Yes, Queen Latifa's song was lovely, but we didn't need to watch her. We were supposed to be seeing who had passed away. Also, with all of the moving and panning in and out, I think I got motion sickness. That was not the right way to remember those who have passed on this year.
And this from another blog:
11:11: If they start showing the In Memorium montage while Queen Latifah is singing… oh my god.


11:11: This is the happiest death reel in Oscar history. If they really wanted to hit a nerve, they should have run that Sarah McLaughlin ASPCA ad, and CGI’d the faces of the dead over the dogs… this segment is kind of focusing more of the attention on Queen La! This is an abomination. I want to focus in on those who perished in 2008… because lord knows, there were too, too many. This is literally the one time a year I actually sit back and reflect… and it’s being ROONED. Also, how long is she gonna be singing for? 11 minutes? Like 5,000 people died last year. Also why is the camera swinging around so much? This is like the Bourne Ultimatum of Death Montages.
UPDATE 2: This comment from The Flick Chick:
In Memoriam: It annoys me every year but since it continues to happen every year it obviously still needs to be said that there should be no clapping during the In Memoriam section. How is it that a room full of adults doesn’t know that it is exceedingly tacky to turn the memorial segment into a popularity contest? Of course this year my irritation at the clapping has to compete with the way the memoriam segment was produced, making it the background to a stage performance so that the parade of the dead isn’t even the focus.


Friday, February 20, 2009

The Crisis of Credit Visualized:

Over at The Big Picture. A must see overview of what happened with the Federal Reserve, housing, banks, and the toxic paper.


Thursday, February 19, 2009

Shorter David Broder:
I will never, ever give up my advocacy of meaningless* bipartisanship. (Also, Obama will need Republicans hel in reducing Social Security benefits.)
* 3 of 218 Republicans in Congress voting with Democrats.

ALSO: Broder actually wrote this:
... Obama ... will need Republican votes to pass the remaining parts of his program. When it comes to energy, regional and commodity interests will inevitably divide the Democrats. They always do. Oil, coal, natural gas and consumer groups will exert their will. If Obama writes off the Republicans in advance, he will end up with a watered-down bill -- or nothing.
According to Broder, adding Republicans to the mix won't water down a bill! He must not have been following the action involving the stimulus bill. No only that, but he thinks Republicans don't harbor "regional and commodity interests". Self-parody rules once again in the pages of the Washington Post.


Wednesday, February 18, 2009

Could it have been George Soros?

Asks Rush Limbaugh on his radio show.

He was speculating about who was withdrawing $550 billion dollars one day last year, thus threatening the U.S. financial system.

Could it have been George Soros?

Could it have been some other Jew from New York?

Could it have been a shadowy group acting in accord with the Protocols of the Elders of Zion?


Tuesday, February 17, 2009


People who keep 200 pound chimpanzees as pets are idiots.


Sunday, February 15, 2009

Ignorant David Ignatius:

Key claim:
Passage of the Sarbanes-Oxley Act,
  • but not undoing the Gramm-Leach-Bliley Act (that repealed Glass-Stegall)
  • and not undoing the Commodity Futures Modernization Act of 2000 (which exempted much of today's toxic paper from regulation)
  • and not gettting the business-friendly SEC to reverse it's decade-long lax oversight while was headed by buffoons like Harvey Pitt, William H. Donaldson (who allowed greater leverage), and Chris Cox
means that regulation doesn't work, and there's no reason to think it could or even try.


Willful ignorance:

Somewhat shorter George F.
I found a scientist at the edge of the mainstream who was wrong 35 years ago about the future of mineral resources availability. At the same time, scientists thought the planet might be cooling. Those two facts undercut all advances since then in temperature measurement (mostly satellites) and climate modeling (with computers) which have lead to today's concern about global warming.

In writing this, I'm demonstrating my superiority to Energy Secretary Steven Chu, who is merely a Nobel prize winning physicist from Bell Labs and Berkeley, and who happens to agree with the current scientific consensus about climate change.


Broder blather:

In today's Washington Post:
The resistance [to the stimulus bill] proved to be much stiffer than he anticipated. Some of it was partisan, with the GOP leadership sending a message that it would not be rolled. But much of it was the reaction to the staggering sums involved. Republicans asked themselves how we would ever pay for this. Democrats, whose doubts kept breaking out in public despite pleas for unity, questioned whether the mix of spending and tax cuts was what it should be.
In other words:
  • It's understandable that there was GOP resistance to the Obama steamroller, because he didn't reach out sufficiently to Republicans.
  • For the most part, Republican opposition to the bill was principled. They were acting in good faith.
  • Democrats in Congress, who wrote the bill (as opposed to it being a White House diktat) weren't unified in their support of it.
Then there's this:
Republicans have seen to it that Obama has complete ownership of the economic rescue. By withholding nearly all their votes, they are betting that it will fail, just as they did in 1993 when the newly elected Bill Clinton pushed his first budget and tax package through Congress without a single Republican vote.

Back then, Newt Gingrich predicted that the Democratic plan would lead to "a job-killing recession," and Dick Armey, his lieutenant, called it "a recipe for disaster."

Even if they had been right, they took the risk of seeming to be betting against something most voters hoped would succeed. But they were wrong -- the economy soared under Clinton.
But did the Republicans pay a political price? No, because pundits like Broder didn't make the point at the time (if they do, it's a decade after the fact).


Saturday, February 14, 2009

Thoughts on the octuplet mother:
  • She is clearly mentally ill. Very much so.
  • If a woman undergoing IVF treatment will not consent to selective reduction, then no more than two embryos* should be allowed to be inserted at a time. That should be a law.
  • The doctor committed malpractice and should be responsible for a significant portion of the cost of raising the children, some of which will be seriously disabled.
  • I find it difficult to come up with any law outlawing IVF based on financial status or social circumstances that wouldn't be unfair at times. Perhaps the best solution is stigma for the patient and financial penalties for doctors, on a case-by-case basis. Admittedly, that still allows for the (hopefully rare) situation such as the one we're reading about this month.
* or whatever the standard practice allows


Friday, February 13, 2009

Hummingbird blogging:

First time with a new camera. Not ideal conditions (drizzle, no direct sunlight).


Thursday, February 12, 2009

David Broder one week ago: (excerpts, emp add)
... President Obama filled one Cabinet vacancy on Tuesday ... recruiting Sen. Judd Gregg of New Hampshire as commerce secretary ...

... in months to come, Gregg will be worth celebrating. He is one of the smart guys on Capitol Hill, especially when it comes to fiscal policy. And he provides Obama with a third strong Republican Cabinet member, joining Defense Secretary Bob Gates and Ray LaHood at Transportation.

Gregg and North Dakota Sen. Kent Conrad, the top Republican and Democrat on the Senate Budget Committee, respectively, have been pushing for the creation of a bipartisan commission that would tackle the looming bankruptcy of the three big entitlement programs -- Social Security, Medicare and Medicaid. Conrad told me that he deeply regrets the departure of his partner and does not know where to find a substitute.

But help may be on the way. Lamar Alexander of Tennessee, the No. 3 man in the Senate Republican leadership, quietly joined the Budget Committee last month. When I asked him why, he said it was to "help move the Gregg-Conrad commission proposal forward."

Moreover, Mitch McConnell of Kentucky, the Republican leader of the Senate, told the National Press Club that a bipartisan deal on entitlements is something he thinks can and should happen in this Congress.

Obama said the same thing when he visited The Post just before his inauguration, and now he has in Gregg someone who can help him lobby Congress to move the project forward.
Washington Post editorial (for tomorrow, Friday): (excerpts, emp add)
Sen. Judd Gregg (R-N.H.) withdrew his nomination yesterday to become commerce secretary.

... the reversal should not discourage Mr. Obama from seeking bipartisan cooperation. Maybe he didn't sufficiently think through the merits of handing a key economic position to someone with a radically different philosophy.


Ann Coulter vs. Charles Darwin:

Happy Birthday, Charlie!     (And you too, Abe!)

Last week, as a service to this blog's readers, I went to the library and checked out Coulter's book, Godless: The Church of Liberalism (2007) . Coulter writes a lot of things, but many are hard to conclusively disprove. How do you disprove her charge that politician X is a sleazy guy or dresses funny? But I'd always figured that her weakest stance was her (apparent) dismissal of evolution. So I wanted to see exactly what she'd written on the topic.

Forty pages take up the Darwin/evolution part of the book. It's not well written and has multiple unfunny jokes (e.g. Al Franken looks like a chimp). In it, she constantly refers to "Darwiniacs" which are the main focus of her attacks. She doesn't come right out and say evolution is not true - even writes at one point that something (god, alien space beings, even natural selection) could be the motive force - but instead adopts a position of extreme skepticism towards the field.

Of the forty pages, about thirty are devoted to rehashing the following cases:While there have been some embarrassments in science, pointing to these is hardly a refutation of Darwin. The peppered moth case still seems valid and her dismissal of Darwin's finches is a new one for me. Then Coulter goes on to talk about what constitutes a theory and mistakenly compares physics (e.g. Einstein) with a science of events of the past. A science of the present moment, like chemistry or physics, can be tested in a lab. A science of past events has evidentiary rules just as stringent, but also uses inference to reach conclusions, which Coulter sees as not meeting Karl Popper's test (who is accurately quoted as saying "Darwinism is not a testable scientific theory, but a metaphysical research program"). The thing is, Coulter confines her assault on Darwin and never attacks geology, astrophysics, or other fields that deal with past events.

Then Coulter says a number of stupid things (e.g. "carbon dating has never proved natural selection; it only disproved Piltdown man", "Why are worms still around? Why haven't they evolved? Wouldn't they want to?"). A bacteria that's become antibiotic resistant is "still a bacteria". She cites remarks by Stephen Jay Gould who, in my opinion, didn't help the debate with his literary ramblings. And she gives a tip 'o the hat to Behe and mentions arguments made by other luminaries of the Intelligent Design movement (Dembski, Johnson).

On the whole, the section on Darwin consists overwhelmingly of attacks on the confusion (and in one case, fraud) in the field that took place 100 to 150 years ago. Coulter's anti-Darwin section is nothing more than a summary of the book Icons of Evolution: Science or Myth? Why Much of What We Teach About Evolution is Wrong by Johathan Wells (a member of the Moon's Unification Church, BTW).

So now you know. And I don't plan to read any more books by Coulter. Her style is rushed, not particularly coherent, and filled with eye-rolling "Coulter giggles" (which are drippingly sarcastic remarks about scientists or Democrats).

Could you say that Coulter doesn't believe in evolution? Not exactly. But you could say that she doesn't accept the scientific status of evolution by natural selection.

NOTE: All quotes are from memory. I couldn't return the book fast enough and don't have it in front of me right now.

CODA: All this talk about evolution through natural selection not being proved in the lab (or in the field) hinges on the "species test", which is artificial. If an animal has changed its DNA due to mutations and managed to survive, that's enough to establish that natural selection has worked. Why should the standard be "species", wherein the organism can only mate within its own group? Why not incompatibility of blood types? (In which case humans are "really" four types: A, B, AB, and O.) Sure, given time, changes will occur so that eventually mating between two groups will not produce viable offspring, but why wait for that to occur? A different threshold can be just as scientifically meaningful.


Wednesday, February 11, 2009

Makes sense to me:

Matt Yglesias alerts us to this item:
U.S. Representative Steve Austria said he supports a scaled-down federal economic-stimulus proposal, but the Beavercreek Republican told The Dispatch editorial board that the huge influx of money into the economy could have a negative effect.

“When (President Franklin) Roosevelt did this, he put our country into a Great Depression,” Austria said. “He tried to borrow and spend, he tried to use the Keynesian approach, and our country ended up in a Great Depression. That’s just history.”
Of course Roosevelt put the country into a Great Depression. That's why he was reelected three times.


Tuesday, February 10, 2009


From But Then What: (excerpts, emp add)
Is The Fed’s Independence At Risk?

Yesterday, Richard Fisher, President of the Dallas Fed, raised the issue of independence and had this to say about buying treasuries:
The Federal Reserve must, of course, be very careful to avoid the perception that it is monetizing the explosion of fiscal deficits, as this would undermine confidence in our independence and raise serious doubts about our long-term commitment to price stability.
Bernanke’s Fed has probably gone beyond the point at which it could have held up its hands and reminded everyone that in the end they don’t answer to Congress or the administration. The moment he appeared at Paulson’s side pleading with Congress for the original TARP money, the die was cast. To be fair, he probably didn’t have much choice and I am willing to assume that the situation was dire enough to warrant the departure from custom.

The problem is that each time the Fed appears to be functioning as an arm of the Treasury, it loses more of its aura. Judging by commentary I read and hear, it’s almost a foregone conclusion that if called upon to use its balance sheet for whatever reason that it will stand up and salute.
Here's something along those lines: (emp add)
WASHINGTON — The White House plan to rescue the nation’s financial system, announced on Tuesday by Timothy F. Geithner, the Treasury secretary, is far bigger than anyone predicted and envisions a far greater government role in markets and banks than at any time since the 1930s.

Administration officials committed to flood the financial system with as much as $2.5 trillion — $350 billion of that coming from the bailout fund and the rest from private investors and the Federal Reserve, making use of its ability to print money.


Sometime later this week, Treasury Secretary Timothy Geithner will unveil a revision to the revised plan that he released today. That will be followed by weekly emendations, modifications, updates, redactions, corrections, and overhauls deemed necessary to keep the ball rolling.


That new White House website:

It stinks. Doesn't work in some browsers. Something of a heavy load. No calendar! Hard to find things. E.g. yesterday's press conference was found, not in the Briefing Room or the Press Briefings page (!), but in a link found in a White House Blog post. Also, the website designers are under the impression that visitors prefer to watch videos instead of reading transcripts.

Ugh. The Bush White House website was much cleaner, if more sedate.


Michael Ramirez takedown:

Here (h/t Tom Tomorrow, who also links to this wild cartoon. CHECK IT OUT!)


Monday, February 09, 2009

Political dictionary:

cen•trist - someone who goes on vacation with one water ski and one snow ski.


Thursday, February 05, 2009

Contra Cheney:

In a refreshing break from tradition, the former Vice President has decided to trash talk the new President after only two weeks of his assuming office. (Up until now, former Presidents and Vice Presidents have steered clear of critiquing the White House.)

Unfortunately, Cheney did make a mistake when he said:
... the "ultimate threat" facing the country since the September 11 attacks of 2001 was if extremists can unleash "a nuclear weapon or a biological agent of some kind" in the center of a US city.

"That's the one that would involve the deaths of perhaps hundreds of thousands of people, and the one you have to spend a hell of a lot of time guarding against," Cheney said.
That's wrong. The "ultimate threat" would be if extremist can change the trajectory of an asteroid so that it hurtles towards the earth (northern hemisphere, between latitudes 60W and 120W), wiping out half of humanity and many other species.

Cheney is suffering from a failure of imagination.


Thanks, David Broder!

He helpfully writes in his column today: (emp add)
[Judd] Gregg and North Dakota Sen. Kent Conrad, the top Republican and Democrat on the Senate Budget Committee, respectively, have been pushing for the creation of a bipartisan commission that would tackle the looming bankruptcy of the three big entitlement programs -- Social Security, Medicare and Medicaid. Conrad told me that he deeply regrets the departure of his partner and does not know where to find a substitute.

But help may be on the way. Lamar Alexander of Tennessee, the No. 3 man in the Senate Republican leadership, quietly joined the Budget Committee last month. When I asked him why, he said it was to "help move the Gregg-Conrad commission proposal forward."
Relax, help is on the way in the person of Republican Lamar Alexander.

BTW, the definition of "looming" that applies here is "To seem imminent", which for Social Security is definitely not the case. Forty-plus years ahead is not "imminent".


Wednesday, February 04, 2009

All I gotta say is ...
... if the press can't say that Creationism is false, then why would you expect them to challenge Republican ecomomic theory?


Tuesday, February 03, 2009

Now that's what I call globalization:

Via Angry Bear:
Under a program called Project Match, IBM will help workers laid off from domestic sites obtain travel and visa assistance for countries in which Big Blue has openings. Mostly that's developing markets like India, China, and Brazil.
Brad DeLong must surely be smiling.


Paul Krugman gets to the heart of the matter:
If one thing is clear from the stimulus debate, it’s that the two parties have utterly different economic doctrines. Democrats believe in something more or less like standard textbook macroeconomics; Republicans believe in a doctrine under which tax cuts are the universal elixir, and government spending is almost always bad.
Which means Broderism (i.e. bipartisan agreement) is impossible. It's like getting a doctor and Christian Scientist to agree on what to do with a sick person. Can't be done.


Monday, February 02, 2009

The octuplet crazymom:

A good comprehensive story at the Guardian. Excerpts:
...Suleman still lives with her parents. Her family has revealed that she may have serious mental-health problems and be addicted to having children. ...

Court records in nearby San Bernardino show that Suleman's mother filed for bankruptcy last year, claiming $1m in liabilities as a result of a bad housing investment. At the same time, the records hint at an unusual personal history for the family. They show that Suleman - who changed her name from Nadya Doud in 2001 - divorced her husband, Marcos Gutiérrez, a year ago. Gutiérrez, however, may not be the father of her first six children, because the divorce filing indicates no children were produced from the marriage.

In fact, birth certificates name one "David Solomon" as the father of her eldest four children. It also seems that Suleman had been living with her parents, not her husband, for the past eight years, at a variety of addresses. However, her own parents, who still live together, are also divorced, having legally separated in Las Vegas in 1999.

Suleman herself seems to have little employment history. Neighbours have reported that she worked as a psychiatric technician before she began having children.
An "an unusual personal history for the family", indeed.

RELATED STORIES:, Daily Mail, LATimes blog


Sunday, February 01, 2009

I'd like to know more about this:

Ian Welsh writes: (emp add)
... banks and other mortgage brokers sold mortgages to homeowners without due diligence and based on fraud, and they then sold the repackaged mortgage revenue streams to investors based on fraudulent promises about due diligence, revenue and risk.

This is also true with credit default swaps. ... Anybody could write the things, whether they had the money to back it up if large numbers of them went bad, and anyone could use any math they wanted to figure out what the likely risk and premium was.

All of this was done explicitly in ways intended to avoid regulation. Contracts were sold which stated that they could never, ever be sold on an open traded market - never be sold on something like the Chicago Board of Trade or the New York Stock Exchange. If they had been, regulators could have gotten their dirty hands on them and started to insist on some standards. But writing that into them means that they were in effect designed to make sure that they were illiquid - that there would be no large public market where large numbers of them could be sold and prices could be set in an open way.
So now the U.S. government is supposed to take on this bad paper, at valuations the banks would like, yet they were designed to be opaque from the beginning. Consider this from Calculated Risk about something that is traded: (excerpt from NYTimes article)
The financial institution that owns the bond calculates the value at 97 cents on the dollar, or a mere 3 percent loss. But S.& P. estimates it is worth 87 cents, based on the current loan-default rate, and could be worth 53 cents under a bleaker situation that contemplates a doubling of defaults. But even that might be optimistic, because the bond traded recently for just 38 cents on the dollar, reflecting the even gloomier outlook of investors.
The bond is backed by 9,000 second mortgages used by borrowers who put down little or no money to buy homes. Nearly a quarter of the loans are delinquent, and losses on defaulted mortgages are averaging 40 percent. The security once had a top rating, triple-A.
CR comments:
To be worth even 38 cents on the dollar, this must be a senior tranche. The lower tranches have absorbed most of the losses so far, and that is why S&P is currently valuing the bond at 87 cents on the dollar, but any higher default assumptions, and the value of this bond will plummet. I'm amazed, given that these are no money down 2nds that the loss severity is only 40 percent.

But this illustrates the problem. If the bank marks the bond to market (38 cents), they will have to take huge losses. But if the government even pays the current S&P estimated value, the bank will have to write the bond down further, and the taxpayers will probably take huge losses too. Unless a bank has been very aggressive with their write downs, buying the toxic assets doesn't help - or is a gift from taxpayers to shareholders.
And here's Paul Krugman, on bailing out the banks: (emp add)
If news reports are right, the bank rescue plan will contain two main elements: government purchases of some troubled bank assets and guarantees against losses on other assets. The guarantees would represent a big gift to bank stockholders; the purchases might not, if the price was fair — but prices would, The Financial Times reports, probably be based on “valuation models” rather than market prices, suggesting that the government would be making a big gift here, too.
But to the main point of this post. Some financial instruments were, according to Welsh, designed not to be traded. Designed to evade regulatory scrutiny. And now the U.S. is going to be purchasing this paper?


Are the Democrats failing to communicate?

Consider the "Stimulus Bill". Here's the definition of stimulus:
something that incites to action
This nation is in the midst of an economic downturn. It would be nice if the economy, on its own, could perk up. A stimulus for the private sector would be preferred, and there are some things that help (e.g. targeted tax credits). But, given the seriousness of the situation, and that
  • stimulus takes time
  • stimulus alone cannot end the recession in a timely manner
  • stimulus simply won't work in some sectors of the economy
What is needed is something that will, at a minimum, keep the economy moving until the private sector - especially banking - is ready to expand again. That means that in addition to stimulus, you extend unemployment, support existing state government programs, and in some cases resort to employment by the government (for worthwhile projects or even make-work). The name for that sort of thing isn't a Stimulus Bill, but an Economic Security Bill, in the sense that the government is stepping in, temporarily, to provide a support level of economic activity.

But when the Democrats talk about the Stimulus Bill, it leaves them open to Republican attacks on elements that do not stimulate the private sector - which are found in many places in the legislation.

Perhaps it's an unwillingness to say out loud that the government is taking over economic activity in areas where the private sector has retreated, but that's what's needed, unless you're a fan of a libertarian just-wait-and-things-will-get-better approach.


Mitch McConnell's deception:

As found in the Republican weekly response, which he was the spokesman for this Saturday:
The task for Democrats in the House was to craft a stimulus plan that was timely, targeted, and temporary. Apparently, they didn’t get the memo. The bill they presented -- and which House Democrats approved this week along a party line vote -- looks more like a $1 trillion Christmas list.
There was a party line vote, but it was the Republicans who aligned completely against the bill. Democrats were not unanimous.

A more apt characterization would be that Congress approved a bill along party lines. But McConnell would have you believe that it's only Democrats who are voting along party lines and are, hence, partisans (upsetting David Broder in the process).