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.


posted by Quiddity at 2/05/2009 04:02:00 PM

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".


posted by Quiddity at 2/05/2009 07:13:00 AM

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?

posted by Quiddity at 2/04/2009 01:29:00 PM

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.


posted by Quiddity at 2/03/2009 09:38:00 PM

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.


posted by Quiddity at 2/03/2009 04:20:00 PM

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: examiner.com, Daily Mail, LATimes blog


posted by Quiddity at 2/02/2009 01:11:00 AM

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?


posted by Quiddity at 2/01/2009 10:17:00 PM

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.


posted by Quiddity at 2/01/2009 08:25:00 AM

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).


posted by Quiddity at 2/01/2009 07:20:00 AM