Sunday, March 29, 2009

Zero Sum

U.S. Vice President Joe Biden said Saturday that the United States is not planning to lift its trade embargo on Cuba.

  Google AP

US Vice President Joe Biden said that the United States would no longer "dictate unilaterally" to Latin America, and that it had entered a new era in the historically troubled relationship.

[...]

"My visit here is just the beginning of a renewal of a partnership with the Americas. In the past, even when we engaged positively we tended to engage 'for' the (western) hemisphere. We're not engaging 'for,' this is 'with,'" Biden added.

  Google AFP

And, speaking of Earth Hour

Chilean President Michelle Bachelet — who met with Fidel Castro on a trip to Cuba in February — held a dinner for Biden under candlelight, as lights were turned off in coordination with an international action highlighting climate change.

  Google AP

Cool.


You Better Sit Down

Because this is going to shock you.

[A] quarter of all households, most of them poor, would pay more taxes under the GOP plan, while the richest one percent would pay $100,000 less.

  Washington Independent


Harry Reid, Please Move On

Senate Majority Leader Harry Reid said Friday that liberal groups targeting moderate Democrats with ads should back off, saying pressure from the left wing of his party won't be helpful to enacting legislation.

"I think it's very unwise and not helpful," Reid said Friday morning. "These groups should leave them alone. It’s not helpful to me. It’s not helpful to the Democratic Caucus.”

Reid, who said he hadn’t seen or heard the ads, added that "most of [the groups] run very few ads — they only to do it to get a little press on it."

  Politico

"Don’t make us get too far away from the Republicans. It makes us feel unsafe."

Unlike Harry, and the rest of the Democratic Caucus, these groups are not doing anything to "get a little press" - they're serious about improving things in this country, and they're doing it to get a lot of press in hopes of doing just that.

What’s his problem? I don’t think these groups have any intention to be “helpful to the Democratic Caucus.” I think they want some long overdue progressive movement in this country. If our supposed opposition party members had been actually trying to enact some progressive legislation, they might have had the support of the left wing of their party. And WTF?! Harry? You haven’t seen or heard the ads, but you know they’re not helpful?

Get out of the road, Harry. The country needs to make some progress.


....but hey, do what you want....you will anyway.


Speaking of Things Too Big to Fail Being Too Big to Exist...

There are few things rarer than a major politician doing something that is genuinely courageous and principled, but Jim Webb's impassioned commitment to fundamental prison reform is exactly that. Webb's interest in the issue was prompted by his work as a journalist in 1984, when he wrote about an American citizen who was locked away in a Japanese prison for two years under extremely harsh conditions for nothing more than marijuana possession. After decades of mindless "tough-on-crime" hysteria, an increasingly irrational "drug war," and a sprawling, privatized prison state as brutal as it is counter-productive, America has easily surpassed Japan -- and virtually every other country in the world -- to become what Brown University Professor Glenn Loury recently described as a "a nation of jailers" whose "prison system has grown into a leviathan unmatched in human history.

  Glenn Greenwald

And then Greenwald echos my thoughts about that town meeting comment of Obama’s on the fact that there were lots of online questions about marijuana criminalization:

And, most important of all, Webb is addressing head-on one of the principal causes of our insane imprisonment fixation: our aberrational insistence on criminalizing and imprisoning non-violent drug offenders (when we're not doing worse to them). That is an issue most politicians are petrified to get anywhere near, as evidenced just this week by Barack Obama's adolescent, condescending snickering when asked about marijuana legalization, in response to which Obama gave a dismissive answer that Andrew Sullivan accurately deemed "pathetic."

[...]

I don't think anyone expected him to advocate legalization or was angry that he didn't. It was his mocking, childish snickering about the issue and his refusal to address it seriously (even if to explain why he didn't favor legalization) that prompted the objections.


....but hey, do what you want....you will anyway.


Saturday, March 28, 2009

Earth Hour


Tonight:

Companies, organizations and individuals all over the world are participating.

Read about it here.

From 8:30 - 9:30 pm, whenever that happens for you, shut off those lights.


....but hey, do what you want....you will anyway.


Times Have Changed Since Aesop Was Writing Fables

Obama says he told bankers: "Show some restraint. Show some -- show that you get that this is a crisis and everybody has to make sacrifices."

  TPM

To which there were snickers all ‘round.

It would seem the story of the grasshopper and the ant...

...could use some updating to include another character.

Or two.

And these guys need to revise their page.

To all you ants out there who believed you were doing the right thing by storing up for the future only to find out your store has been robbed....so sorry. It was only a fable after all.


....but hey, do what you want....you will anyway.


Becoming a Banana Republic

Or…”Picking up nickels in front of a steamroller.”

"Anything that is too big to fail is too big to exist.”

One thing you learn rather quickly when working at the International Monetary Fund is that no one is ever very happy to see you. Typically, your “clients” come in only after private capital has abandoned them, after regional trading-bloc partners have been unable to throw a strong enough lifeline, after last-ditch attempts to borrow from powerful friends like China or the European Union have fallen through. You’re never at the top of anyone’s dance card.

The reason, of course, is that the IMF specializes in telling its clients what they don’t want to hear.

[...]

Every crisis is different, of course.

[...]

But I must tell you, to IMF officials, all of these crises looked depressingly similar. Each country, of course, needed a loan, but more than that, each needed to make big changes so that the loan could really work.

[...]

Naturally, the fund’s economists spend time figuring out the policies—budget, money supply, and the like—that make sense in this context. Yet the economic solution is seldom very hard to work out.

No, the real concern of the fund’s senior staff, and the biggest obstacle to recovery, is almost invariably the politics of countries in crisis.

Typically, these countries are in a desperate economic situation for one simple reason—the powerful elites within them overreached in good times and took too many risks.

[...]

[I] nevitably, emerging-market oligarchs get carried away; they waste money and build massive business empires on a mountain of debt.

[...]

From long years of experience, the IMF staff knows its program will succeed—stabilizing the economy and enabling growth—only if at least some of the powerful oligarchs who did so much to create the underlying problems take a hit. This is the problem of all emerging markets.

[...]

In its depth and suddenness, the U.S. economic and financial crisis is shockingly reminiscent of moments we have recently seen in emerging markets (and only in emerging markets): South Korea (1997), Malaysia (1998), Russia and Argentina (time and again). In each of those cases, global investors, afraid that the country or its financial sector wouldn’t be able to pay off mountainous debt, suddenly stopped lending. And in each case, that fear became self-fulfilling, as banks that couldn’t roll over their debt did, in fact, become unable to pay. This is precisely what drove Lehman Brothers into bankruptcy on September 15, causing all sources of funding to the U.S. financial sector to dry up overnight.

[...]

But there’s a deeper and more disturbing similarity: elite business interests—financiers, in the case of the U.S.—played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The government seems helpless, or unwilling, to act against them.

[...]

[V]arious policies—lightweight regulation, cheap money, the unwritten Chinese-American economic alliance, the promotion of homeownership—had something in common. Even though some are traditionally associated with Democrats and some with Republicans, they all benefited the financial sector. Policy changes that might have forestalled the crisis but would have limited the financial sector’s profits—such as Brooksley Born’s now-famous attempts to regulate credit-default swaps at the Commodity Futures Trading Commission, in 1998—were ignored or swept aside.

[...]

The oligarchy and the government policies that aided it did not alone cause the financial crisis that exploded last year. Many other factors contributed, including excessive borrowing by households and lax lending standards out on the fringes of the financial world. But major commercial and investment banks—and the hedge funds that ran alongside them—were the big beneficiaries.

[...]

In a financial panic, the government must respond with both speed and overwhelming force. [...] Yet the principal characteristics of the government’s response to the financial crisis have been delay, lack of transparency, and an unwillingness to upset the financial sector.

[...]

Treasury and the Fed did not act according to any publicly articulated principles, but just worked out a transaction and claimed it was the best that could be done under the circumstances. This was late-night, backroom dealing, pure and simple.

[...]

Even leaving aside fairness to taxpayers, the government’s velvet-glove approach with the banks is deeply troubling, for one simple reason: it is inadequate to change the behavior of a financial sector accustomed to doing business on its own terms, at a time when that behavior must change.

[...]

If you hid the name of the country and just showed them the numbers, there is no doubt what old IMF hands would say:

[...]

Cleaning up the megabanks will be complex. And it will be expensive for the taxpayer; according to the latest IMF numbers, the cleanup of the banking system would probably cost close to $1.5trillion (or 10percent of our GDP) in the long term. But only decisive government action—exposing the full extent of the financial rot and restoring some set of banks to publicly verifiable health—can cure the financial sector as a whole.

This may seem like strong medicine. But in fact, while necessary, it is insufficient. The second problem the U.S. faces—the power of the oligarchy—is just as important as the immediate crisis of lending. And the advice from the IMF on this front would again be simple: break the oligarchy.

[...]

The conventional wisdom among the elite is still that the current slump “cannot be as bad as the Great Depression.” This view is wrong. What we face now could, in fact, be worse than the Great Depression—because the world is now so much more interconnected and because the banking sector is now so big.

[...]

Anything that is too big to fail is too big to exist.

  Simon Johnson, chief economist at the IMF 2007 & 2008

Read the whole article, and have a look at the graphs showing this whole trend beginning with the Reagan presidency (I know, you already guessed that), and continuing to the present.


....but hey, do what you want....you will anyway.


Ladies and Gentlemen...Let the Games Begin!

As we saw this past cycle, it's never too early to start your presidential campaigning. And we get to look forward to some real talent in the GOP for 2012. Sarah Palin doesn't have it sewn up, contrary to early chatter. Michele - aka Paula Revere, The Socialists are coming! The Socialists are coming! - Bachmann is here!

Can't wait for these two idiots to set the female agenda back to the stone age by parading their collective ignorance before the nation and the world.


....but hey, do what you want....you will anyway.


Friday, March 27, 2009

War Crimes Investigations!

No, not here. But in England.


The Revolution Is Coming!

Eric Kleefeld begins this article with the words, "Wow. Just plain wow." And, really, that's about all I could have said, too. Except, that when you read through to the end, you will note well the "Hallelujah" - who do you think the target audience for this whacked-out rebel rousing might be?


....but hey, do what you want....you will anyway.


Sympathy to the people along the Red River. I've got nothing else to give you. At least it was warm down here when Hurricane Ike flooded us out.


Thursday, March 26, 2009

Support Our Troops

Suicides are still going up. What's going on here?

In January, suspected suicides in all branches of the armed forces reached an all-time monthly high of 24, doubling the number of combat deaths in Iraq and Afghanistan combined, according to military data. (Military investigators often take months to confirm suicide as the cause of death.) The number of suspected suicides was 18 in February.

The majority of the suicides happen after soldiers return home, but Hurt and other doctors say the problems tend to take root while troops are still at war, meaning it’s crucial to address their mental health as early as possible.

The strains that the armed forces have endured as they fight two long wars are well-documented: extended deployments, a rash of brain injuries and sometimes insufficient military health care, among others. But military psychologists and troops in Iraq interviewed by USA Today also mentioned other, less conventional explanations. They ranged from boredom as combat operations cease in Iraq to, paradoxically, the improvement in communications that allows troops to keep in better touch with their loved ones — but also immerses them in family problems while they’re still at war.

  Army Times

They’re bored in Iraq? Bored to death? I thought that was just a figure of speech. Are they really asking me to believe soldiers are killing themselves because they’re bored?

Ultimately, Hurt says the military isn’t really sure what’s causing the suicides.

That’s more like it. And it’s high time they start finding out.

In new, hopefully preventive, measures, the Army is now providing mental health classes.

Venutto, the instructor, explains how a soldier will become traumatized and depressed if that is what they expect to happen following a tragedy. If you expect to suffer, you will.

He urges them instead to listen to the words of Epictetus, a former Greek slave turned stoic philosopher. “It is not the thing itself, but the view we take of it which disturbs us,” the quote reads.

Philosophical, indeed. And no doubt a conclusion a slave would necessarily come to, having no way to change his situation. And absolutely true, of course. However, this reminds me of a training seminar I was required to attend at a place of employment. It was a long video course by some “inspirational/motivational” guru, and a major key was adjusting your attitude. Inspirational stories had this same message. We were told how holocaust victims survived by adjusting their attitudes. It’s all about whether you let a bad situation get you down or whether you find ways to mentally deflect the negative.

That’s all fine and good for you individually, if you’re ever in a concentration camp, or a battle zone, or a bad economy, but it doesn’t do a damned thing to right the situation, now does it? Sounds to me like a way to put the onus on the victim and continue the victimization with impunity.


....but hey, do what you want....you will anyway.


Wednesday, March 25, 2009

Finally Facing the Problem

U.S. Secretary of State Hillary Rodham Clinton said Wednesday that America's "insatiable" demand for illegal drugs and inability to stop weapons smuggling into Mexico are fueling an alarming spike in violence along the U.S.-Mexican border.

"I feel very strongly we have a co-responsibility," she told reporters accompanying her to Mexico City a day after the Obama administration said it would send more money, technology and manpower to secure the United States' Southwestern frontier and help Mexico battle the cartels.

Obama himself said Tuesday that he wanted the U.S. to do more to prevent guns and cash from illicit drug sales from flowing across the border into Mexico.

"That's part of what's financing their operations. That's part of what's arming them. That's what makes them so dangerous," he told a news conference. "And this is something that we take very seriously and we're going to continue to work on diligently in the months to come."

[...]

"Clearly, what we have been doing has not worked and it is unfair for our incapacity ... to be creating a situation where people are holding the Mexican government and people responsible," Clinton said. "That's not right."

  Yahoo

I guess that border fence can't cure this problem. And kudos to Hillary and Obama for putting on their reality glasses. But then I guess since it's gotten so bad that it threatens us on this side with violence and business interference, and not just those worthless brown people south of us, we're forced to deal with what hasn't worked.


Presser Clip

Here's that exchange that everybody is talking about from Obama's press conference last night. What they're not including in all the yammer is the prelude to the zinger, and that's a very important piece of the picture. The full press conference transcript is here.

QUESTION [by Ed Henry, CNN]: Thank you. Mr. President. You spoke again at the top about your anger about AIG. You've been saying that for days now. But why is it that it seems Andrew Cuomo seems to be in New York getting more actual action on it?

And when you and Secretary Geithner first learned about this 10 days, two weeks ago, you didn't go public immediately with that outrage. You waited a few days. And then when -- you went public after you realized Secretary Geithner really had no legal avenue to stop it.

And, more broadly, I just want to follow up on Chip and Jake. You've been very critical of President Bush doubling the national debt. And, to be fair, it's not just Republicans hitting you. Democrat Kent Conrad, as you know, said, quote, "When I look at this budget, I see the debt doubling again."

You keep saying that you've inherited a big fiscal mess. Do you worry, though, that your daughters, not to mention the next president, will be inheriting an even bigger fiscal mess if the spending goes out of control?

OBAMA: Of course I do, Ed, which is why we're doing everything we can to reduce that deficit. Look, if this were easy, then, you know, we would have already had it done, and the budget would have been voted on, and everybody could go home. This is hard.

And the reason it's hard is because we've accumulated a structural deficit that's going to take a long time, and we're not going to be able to do it next year or the year after or three years from now. What we have to do is bend the curve on these deficit projections. And the best way for us to do that is to reduce healthcare costs. That's not just my opinion. That's the opinion of almost every single person who has looked at our long-term fiscal situation.

Now, how do we -- how are we going to reduce healthcare costs? Because the problem is not just in government-run programs. The problem is in the private sector, as well. It's experienced by families. It's experienced by businesses.

And so what we've said is, look, let's invest in health information technologies. Let's invest in preventive care. Let's invest in mechanisms that look at who's doing a better job controlling costs while producing good quality outcomes in various states and let's reimburse on the basis of improved quality, as opposed to simply how many procedures you're doing. Let's do a whole host of things, some of which cost money on the front end but offer the prospect of reducing costs on the back end.

Now, the alternative is to stand pat and to simply say, "We are just going to not invest in healthcare. We're not going to take on energy. We'll wait until the next time that gas gets to $4 a gallon. We will not improve our schools. And we'll allow China or India or other countries to lap our young people in terms of their performance. We will settle on lower growth rates, and we will continue to contract, both as an economy and our ability to -- to provide a better life for our kids."

That, I don't think, is the better option. Now, am I completely satisfied with all the work that needs to be done on deficits? No. That's why I convened a fiscal responsibility summit -- that started in this room -- to start looking at entitlements and to start looking at the big drivers of costs over the long term. Not all of those are reflected in our budget, partly because the savings we anticipate would be coming in years outside of the 10-year budget cycle that we're talking about. OK?

QUESTION: But on AIG, why did you wait -- why did you wait days to come out and express that outrage? It seems like the action is coming out of New York and the attorney general's office. It took you days to come public with Secretary Geithner and say, "Look, we're outraged." Why did it take so long?

OBAMA: It took us a couple of days because I like to know what I'm talking about before I speak.

Just for the record, I would suggest Obama never use the phrase "this is hard." It's much too reminiscent of the whiny little POS before him always excusing his incompetence by reminding us that preznintin' is hard work.


....but hey, do what you want....you will anyway.


Creative Photography

Remember the photos that kept being framed of Dear Leader Bush so that some piece of prop or light would form a halo behind his head?

Well, I just saw this photo at WIIIAI...

What are they trying to say?

Michelangelo: Genesis


....but hey, do what you want....you will anyway.


Tuesday, March 24, 2009

Geez! They Don't Trust Us

Chinese premier Wen Jiabao says he's “a little bit worried” that we'll pay back their $1.2 trillion in depreciated dollars. The Europeans and the Canadians don't want to put any more money into the financial system until we take steps to keep it from being looted all over again. The only one who doesn't seem to be worried is Timothy "what, me worry?" Geithner, who has no backup plan if his trillion dollar gift to the banks (with no compensation limits) doesn't do the trick.

  FireDogLake

And a comment therein from Matt Taibbi, who wrote the excellent Rolling Stone article on the great clusterfuck:

The other aspect of the Liddy story is that Liddy is an ex Goldmanite who got installed as head of AIG by an ex-Goldmanite (Paulson) in order to bail out… Goldman. Why these people don’t have their heads on pikes, I have no idea.

Let me guess. Oh, but wait. He answers himself.

[The] key thing I wanted to get to in the piece is that voters don’t really have options right now. BOTH parties are completely complicit in this mess. Until there is a real alternative politically, we’re going to keep getting these Wall-Street-friendly pols running things, because the influence of their money is so strong.


....but hey, do what you want....you will anyway.



Ding Ding Ding Ding Ding

Good answer!

I'm coming late to Barack Obama's presser. For the most part, he's sounding very reasonable and thoughtful.

They are not playing softball with him, and yet he doesn't sound annoyed at them and petulant like his predecessor always did on the rare occassion someone asked him something that he hadn't pre-approved. But Obama's not letting them stone him, either.

What a joy to hear our president talk to other people as though they might also be intelligent and thoughtful. And yet, if they don't want to have that kind of conversation...

Somebody with a hardon for a dustup asked him why it took him two days to express outrage about the AIG bonuses. After an actual explanation, the guy demanded to know, "But why did it take a couple of days so long?" Whereupon Obama cut straight and curt, "It took a couple of days because I like to know what I'm talking about before I speak." Unlike you, Asshat. Next question.

Nice block.


Update: Politico has the clip.


Update Tuesday: As could have been predicted, the buzz is all about this Obama quip, but leaving out the prelude exchange where he'd made an effort to respond to the guy's question. Reports are making it appear as though the guy asked a reasonable question (which he did - "Why'd it take two days to respond?") and Obama slapped him down without giving him a courteous response. That would have been the petulant little pissant before Obama who would have done that, folks.

It would have been a good answer anyway.

Update: Transcript

And the "couple of days" exchange:

QUESTION: Thank you. Mr. President. You spoke again at the top about your anger about AIG. You've been saying that for days now. But why is it that it seems Andrew Cuomo seems to be in New York getting more actual action on it?

And when you and Secretary Geithner first learned about this 10 days, two weeks ago, you didn't go public immediately with that outrage. You waited a few days. And then when -- you went public after you realized Secretary Geithner really had no legal avenue to stop it.

And, more broadly, I just want to follow up on Chip and Jake. You've been very critical of President Bush doubling the national debt. And, to be fair, it's not just Republicans hitting you. Democrat Kent Conrad, as you know, said, quote, "When I look at this budget, I see the debt doubling again."

You keep saying that you've inherited a big fiscal mess. Do you worry, though, that your daughters, not to mention the next president, will be inheriting an even bigger fiscal mess if the spending goes out of control?

OBAMA: Of course I do, Ed, which is why we're doing everything we can to reduce that deficit. Look, if this were easy, then, you know, we would have already had it done, and the budget would have been voted on, and everybody could go home. This is hard.

And the reason it's hard is because we've accumulated a structural deficit that's going to take a long time, and we're not going to be able to do it next year or the year after or three years from now. What we have to do is bend the curve on these deficit projections. And the best way for us to do that is to reduce healthcare costs. That's not just my opinion. That's the opinion of almost every single person who has looked at our long-term fiscal situation.

Now, how do we -- how are we going to reduce healthcare costs? Because the problem is not just in government-run programs. The problem is in the private sector, as well. It's experienced by families. It's experienced by businesses.

And so what we've said is, look, let's invest in health information technologies. Let's invest in preventive care. Let's invest in mechanisms that look at who's doing a better job controlling costs while producing good quality outcomes in various states and let's reimburse on the basis of improved quality, as opposed to simply how many procedures you're doing. Let's do a whole host of things, some of which cost money on the front end but offer the prospect of reducing costs on the back end.

Now, the alternative is to stand pat and to simply say, "We are just going to not invest in healthcare. We're not going to take on energy. We'll wait until the next time that gas gets to $4 a gallon. We will not improve our schools. And we'll allow China or India or other countries to lap our young people in terms of their performance. We will settle on lower growth rates, and we will continue to contract, both as an economy and our ability to -- to provide a better life for our kids."

That, I don't think, is the better option. Now, am I completely satisfied with all the work that needs to be done on deficits? No. That's why I convened a fiscal responsibility summit -- that started in this room -- to start looking at entitlements and to start looking at the big drivers of costs over the long term. Not all of those are reflected in our budget, partly because the savings we anticipate would be coming in years outside of the 10-year budget cycle that we're talking about. OK?

QUESTION: But on AIG, why did you wait -- why did you wait days to come out and express that outrage? It seems like the action is coming out of New York and the attorney general's office. It took you days to come public with Secretary Geithner and say, "Look, we're outraged." Why did it take so long?

OBAMA: It took us a couple of days because I like to know what I'm talking about before I speak.

Just for the record, I would suggest Obama never use the phrase "this is hard." It's much to reminiscent of the whiny little POS before him always excusing his incompetence by reminding us that preznintin' is hard work.


Monday, March 23, 2009

Tone Deaf

JP Morgan Chase, fresh from a $25 billion government bailout, is purportedly moving forward with the purchase of two luxury corporate jets with a $120 million pricetag, along with an $18 million renovation at Westchester Airport outside New York City.

  Raw Story

If these guys can’t get a grip, I fear the guillotine will be erected in Central Park.


....but hey, do what you want....you will anyway.


What We Don't See Is the Immense Pool of Grief

Bringing Buddy Home. By John McDermott.

Click to listen.


It's All About Rebranding

Why right the wrong when it's so much easier to just relabel it?

Blackwater is now calling itself Xe.

An AIG Manhattan office is dropping the AIG from its sign and replacing it with one that says AIU Holdings Ltd. (An NPR reporter suggests they just put up a sign that says, "Your tax dollars at work.")

And Obama's treasurer is now calling toxic assets "legacy loans".


....but hey, do what you want....you will anyway.


Sunday, March 22, 2009

Yep, It Really Is About the Greed

NYT business correspondent Joe Nocera: "It’s awful! I’m glad you can laugh about it....They're not sorry about it." Talking about the AIG execs on Wait, Wait, Don’t Tell Me

Where I also heard that if you have Michelle Obamalicious arms, you could show off your tattoos - "Liberty & Justice" on your left, "The Pursuit of Happiness" on your right.

Listen. It’s laughable.


....but hey, do what you want....you will anyway.


(Link fixed.)


Idiot Wind

Bob Dylan’s neighbors in Malibu are not happy with what is Blowing in the Wind from the rock icon’s outdoor portable toilet! A family living near the 67-year-old singer’s house in the posh community have complained to city officials about the Porta Potty, which is used by Dylan’s security guards. Cindy and David Emminger say the toilet wafts fumes from waste treatment chemicals, and that the smell carried by breezes from the Pacific Ocean makes their family feel ill.

  Boston Herald


....but hey, do what you want....you will anyway.


Saturday, March 21, 2009

Smoke and Mirrors

Presto-Chango! Your money becomes theirs.

Yesterday I posted a clip from a lengthy Rolling Stone article by Matt Taibbi. If you have time, do read the whole thing. If you don’t, at least check out the following (lengthy!) excerpts.

The mess [...] had its roots in an investment boom fueled in part by a relatively new type of financial instrument called a collateralized-debt obligation. A CDO is like a box full of diced-up assets. They can be anything: mortgages, corporate loans, aircraft loans, credit-card loans, even other CDOs. So as X mortgage holder pays his bill, and Y corporate debtor pays his bill, and Z credit-card debtor pays his bill, money flows into the box.

The key idea behind a CDO is that there will always be at least some money in the box, regardless of how dicey the individual assets inside it are. No matter how you look at a single unemployed ex-con trying to pay the note on a six-bedroom house, he looks like a bad investment. But dump his loan in a box with a smorgasbord of auto loans, credit-card debt, corporate bonds and other crap, and you can be reasonably sure that somebody is going to pay up. Say $100 is supposed to come into the box every month. Even in an apocalypse, when $90 in payments might default, you'll still get $10. What the inventors of the CDO did is divide up the box into groups of investors and put that $10 into its own level, or "tranche." They then convinced ratings agencies like Moody's and S&P to give that top tranche the highest AAA rating — meaning it has close to zero credit risk.

Suddenly, thanks to this financial seal of approval, banks had a way to turn their shittiest mortgages and other financial waste into investment-grade paper and sell them to institutional investors like pensions and insurance companies, which were forced by regulators to keep their portfolios as safe as possible. Because CDOs offered higher rates of return than truly safe products like Treasury bills, it was a win-win: Banks made a fortune selling CDOs, and big investors made much more holding them.

The problem was, none of this was based on reality. "The banks knew they were selling crap," says a London-based trader from one of the bailed-out companies. To get AAA ratings, the CDOs relied not on their actual underlying assets but on crazy mathematical formulas that the banks cooked up to make the investments look safer than they really were. "They had some back room somewhere where a bunch of Indian guys who'd been doing nothing but math for God knows how many years would come up with some kind of model saying that this or that combination of debtors would only default once every 10,000 years," says one young trader who sold CDOs for a major investment bank. "It was nuts."

Now that even the crappiest mortgages could be sold to conservative investors, the CDOs spurred a massive explosion of irresponsible and predatory lending. In fact, there was such a crush to underwrite CDOs that it became hard to find enough subprime mortgages — read: enough unemployed meth dealers willing to buy million-dollar homes for no money down — to fill them all. As banks and investors of all kinds took on more and more in CDOs and similar instruments, they needed some way to hedge their massive bets — some kind of insurance policy, in case the housing bubble burst and all that debt went south at the same time. This was particularly true for investment banks, many of which got stuck holding or "warehousing" CDOs when they wrote more than they could sell.

[...]

[AIGFPs ] Cassano set out from his offices in London to sell a lucrative form of "insurance" to all those investors holding lots of CDOs. His tool of choice was another new financial instrument known as a credit-default swap, or CDS.

[...]

Investors paid a premium to AIGFP, and in return the company promised to pick up the tab if the mortgage-backed CDOs went bust. But as Cassano went on a selling spree, the deals he made differed from traditional insurance in several significant ways. First, the party selling CDS protection didn't have to post any money upfront. When a $100 corporate bond is sold, for example, someone has to show 100 actual dollars. But when you sell a $100 CDS guarantee, you don't have to show a dime. So Cassano could sell investment banks billions in guarantees without having any single asset to back it up.

[...]

Secondly, Cassano was selling so-called "naked" CDS deals. In a "naked" CDS, neither party actually holds the underlying loan. [...]Unlike traditional insurance, Cassano was offering investors an opportunity to bet that someone else's house would burn down, or take out a term life policy on the guy with AIDS down the street. It was no different from gambling, the Wall Street version of a bunch of frat brothers betting on Jay Feely to make a field goal.

[...]

In 1999, Gramm co-sponsored a bill [...] smoothing the way for the creation of financial megafirms like Citigroup.

[...]

The very next year, Gramm compounded the problem by writing a sweeping new law called the Commodity Futures Modernization Act that made it impossible to regulate credit swaps as either gambling or securities.

[...]

[M]aking up things like credit-default swaps and collateralized-debt obligations [...] combined with wise political investments, enabled the nation's top bankers to effectively scrap any meaningful oversight of the financial industry. [...] The [1999 Gramm] law passed 90-8 in the Senate, with the support of 38 Democrats, including [...] Joe Biden, John Kerry, Tom Daschle, Dick Durbin, even John Edwards.

[...]

Goldman Sachs, it turns out, was Cassano's biggest customer, with $20 billion of exposure in Cassano's CDS book. Which might explain why Goldman chief Lloyd Blankfein was in the room with ex-Goldmanite Hank Paulson that weekend of September 13th, when the federal government was supposedly bailing out AIG.

[...]

That's the essence of the bailout: rich bankers bailing out rich bankers, using the taxpayers' credit card.

[...]

"There's this notion that the regulators couldn't do anything to stop AIG," says a government official who was present during the bailout. "That's bullshit. What you have to understand is that these regulators have ultimate power. They can send you a letter and say, 'You don't exist anymore,' and that's basically that. They don't even really need due process. The OTS could have said, 'We're going to pull your charter; we're going to pull your license; we're going to sue you.' And getting sued by your primary regulator is the kiss of death."

When AIG finally blew up, the OTS regulator ostensibly in charge of overseeing the insurance giant — a guy named C.K. Lee — basically admitted that he had blown it. His mistake, Lee said, was that he believed all those credit swaps in Cassano's portfolio were "fairly benign products." Why? Because the company told him so.

[...]

When asked in October why the company still retained Cassano at his $1 million-a-month rate despite his role in the probable downfall of Western civilization, CEO Martin Sullivan told Congress with a straight face that AIG wanted to "retain the 20-year knowledge that Mr. Cassano had." (Cassano, who is apparently hiding out in his lavish town house near Harrods in London, could not be reached for comment.)

[...]

Then, in January 2009, the company did it again. After all those years letting Cassano run wild, and after already getting caught paying out insane bonuses while on the public till, AIG decided to pay out another $450 million in bonuses. And to whom? To the 400 or so employees in Cassano's old unit, AIGFP, which is due to go out of business shortly! Yes, that's right, an average of $1.1 million in taxpayer-backed money apiece, to the very people who spent the past decade or so punching a hole in the fabric of the universe!

[...]

The bonuses are a nice comic touch highlighting one of the more outrageous tangents of the bailout age, namely the fact that, even with the planet in flames, some members of the Wall Street class can't even get used to the tragedy of having to fly coach. "These people need their trips to Baja, their spa treatments, their hand jobs," says an official involved in the AIG bailout, a serious look on his face, apparently not even half-kidding. "They don't function well without them."

  Rolling Stone

But wait! That’s not all…

By early 2009, a whole series of new government operations had been invented to inject cash into the economy, most all of them completely secretive and with names you've never heard of. There is the Term Auction Facility, the Term Securities Lending Facility, the Primary Dealer Credit Facility, the Commercial Paper Funding Facility and a monster called the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (boasting the chat-room horror-show acronym ABCPMMMFLF). For good measure, there's also something called a Money Market Investor Funding Facility, plus three facilities called Maiden Lane I, II and III to aid bailout recipients like Bear Stearns and AIG.

While the rest of America, and most of Congress, have been bugging out about the $700 billion bailout program called TARP, all of these newly created organisms in the Federal Reserve zoo have quietly been pumping not billions but trillions of dollars into the hands of private companies (at least $3 trillion so far in loans, with as much as $5.7 trillion more in guarantees of private investments). Although this technically isn't taxpayer money, it still affects taxpayers directly, because the activities of the Fed impact the economy as a whole. And this new, secretive activity by the Fed completely eclipses the TARP program in terms of its influence on the economy.

No one knows who's getting that money or exactly how much of it is disappearing through these new holes in the hull of America's credit rating. Moreover, no one can really be sure if these new institutions are even temporary at all — or whether they are being set up as permanent, state-aided crutches to Wall Street, designed to systematically suck bad investments off the ledgers of irresponsible lenders.

"They're supposed to be temporary," says Paul-Martin Foss, an aide to Rep. Ron Paul. "But we keep getting notices every six months or so that they're being renewed. They just sort of quietly announce it."

[...]

According to [law] the Fed simply cannot be audited by Congress. Or by anyone else, for that matter.

[...]

And the Fed isn't the only arm of the bailout that has closed ranks. The Treasury, too, has maintained incredible secrecy surrounding its implementation even of the TARP program, which was mandated by Congress. To this date, no one knows exactly what criteria the Treasury Department used to determine which banks received bailout funds and which didn't — particularly the first $350 billion given out under Bush appointee Hank Paulson.

[...]

In essence, Paulson and his cronies turned the federal government into one gigantic, half-opaque holding company, one whose balance sheet includes the world's most appallingly large and risky hedge fund, a controlling stake in a dying insurance giant, huge investments in a group of teetering megabanks, and shares here and there in various auto-finance companies, student loans, and other failing businesses. Like AIG, this new federal holding company is a firm that has no mechanism for auditing itself and is run by leaders who have very little grasp of the daily operations of its disparate subsidiary operations.

[...]

How much of what kinds of crap is actually on our balance sheet, and what did we pay for it? When exactly will the rent come due, when will the money run out? Does anyone know what the hell is going on? And on the linear spectrum of capitalism to socialism, where exactly are we now? Is there a dictionary word that even describes what we are now? It would be funny, if it weren't such a nightmare.

[...]

It might not bode well that Geithner, Obama's Treasury secretary, is one of the architects of the Paulson bailouts; as chief of the New York Fed, he helped orchestrate the Goldman-friendly AIG bailout and the secretive Maiden Lane facilities used to funnel funds to the dying company. Neither did it look good when Geithner — himself a protégé of notorious Goldman alum John Thain, the Merrill Lynch chief who paid out billions in bonuses after the state spent billions bailing out his firm — picked a former Goldman lobbyist named Mark Patterson to be his top aide.

[...]

By making an already too-complex economy even more complex, Wall Street has used the crisis to effect a historic, revolutionary change in our political system — transforming a democracy into a two-tiered state, one with plugged-in financial bureaucrats above and clueless customers below.

So, now, how do you feel?

There’s a tome called “The Creature from Jekyll Island” that sets out how the Fed came to be in the first place, and it’s no prettier. Amazon’s product description contains the notes:

“This book is about the most blatant scam of all history. It's all here: the cause of wars, boom-bust cycles, inflation, depression, prosperity. Creature from Jekyll Island will change the way you view the world, politics, and money. Your world view will definitely change. You'll never trust a politician again — or a banker.”
And a review contains this:
"The title refers to the formation of the Federal Reserve System, which occurred at a secret meeting at Jekyll Island, Georgia in 1910. It was at this meeting, as Griffin relates, that the "Money Trust", composed of the richest and most powerful bankers in the world, along with a U.S. Senator, wrote the proposal to launch the Federal Reserve System (which Griffin calls a banking cartel) to control the financial system so that the bankers will always come out on top."

Brought about by a handful of rich bankers so that the myriad small banks which were prospering at the time would be driven out of business. And what a perfect plan it was.

The complete Rolling Stone article.


....but hey, do what you want....you will anyway.


Another Great Idea

Socialist governments are snickering.

The Geithner plan has now been leaked in detail. It’s exactly the plan that was widely analyzed — and found wanting — a couple of weeks ago. The zombie ideas have won.

The Obama administration is now completely wedded to the idea that there’s nothing fundamentally wrong with the financial system — that what we’re facing is the equivalent of a run on an essentially sound bank. As Tim Duy put it, there are no bad assets, only misunderstood assets. And if we get investors to understand that toxic waste is really, truly worth much more than anyone is willing to pay for it, all our problems will be solved.

[...]

  Krugman

The taxpayer always loses. That’s the whole point of getting yourself into a top political position. To funnel tax-payer money into your own and your friends’ pockets. The Bush clan was expert at it. And if Obama is not intentionally playing that same game, then he’s a nice little dupe.


....but hey, do what you want....you will anyway.


Infighting!

As Washington implodes...

Sen. Chris Dodd (D-CT) just spoke to home-state voters about his sudden emergence as the scapegoat for the watering-down of his executive pay amendment to the stimulus bill -- and the Banking Committee chairman was openly angry with the Treasury Department for not owning up to its role in the flap earlier this week.

Dodd defended his role in ensuring that Wall Street compensation limits made it into the stimulus. The senator expressed disappointment that Treasury let him twist in the wind until yesterday evening, when Secretary Tim Geithner admitted that officials from his department requested that Dodd's amendment be changed to grandfather in existing bonus contracts.

  TPM

But you know, I saw Obama on Jay Leno, and he quite frankly stated that no matter who did what, he himself is ultimately the guy responsible. At least he knows that. I wonder how he likes it.

I think this is all working out very nicely for the Republicans. If they can just get a grip on themselves and stop freaking out over their toilet ratings, this will all work out the way it was intended. They can have totally screwed the country (and the world!) with their policies allowing wild and reckless corporate and financial irresponsibility and greed, their neglect of infrastructure and public health and well-being, and the environment, and then have turned it all over to the hapless and otherwise fairly incompetent Democrats to be holding the bag when it all crashes to the ground. The heads that will be demanded by the public will be Democratic heads. Be patient you Republican fools. Be patient.


....but hey, do what you want....you will anyway.


Another Republican Reminded Who's Boss

[In] the special election for Kirsten Gillibrand's old House seat, Republican candidate Jim Tedisco declared that "Rush Limbaugh is meaningless to me."

  TPM

Later his campaign released a statement saying any effort to characterize that as anything other than a statement of “support for lower property taxes” and “fiscal responsibility” and a condemnation of his opponent's support for the AIG bonuses is a “distortion of the facts.”

Horse puckey. Not even close to believable.

I think a real apology is in order, don't you?


Pot Meets Kettle

The age-old Washington story: pot calls kettle black.

[Sarah] Palin, the former Republican vice-presidential candidate and the mother of a young son with Down syndrome, said she was "shocked" by the "degrading remark about our world's most precious and unique people, coming from the most powerful position in the world".

She added that she hoped the president's comment did not reflect his true feelings about the special needs community.

  UK Telegraph

Indeed, it was a terrible gaffe, and I really can’t imagine being so insensitive as to have that come out of his mouth on (inter)national TV if it isn’t simply the kind of thing he says regularly enough that it just comes out of his mouth at any similar occasion without him even thinking about it. But for Sarah Palin to be publicly complaining is at the very least disingenuous.

Gov. Sarah Palin is refusing to accept over 30 percent of the federal economic stimulus money being offered to Alaska, including dollars for schools, energy assistance and social services.

[...]

Palin said she is accepting the federal stimulus money that would go for construction projects, but not funding directed at government operations.

[...]

The biggest single chunk of money that Palin is turning down is about $170 million for education, including money that would go for programs to help economically disadvantaged and special needs students.

  Anchorage Daily News

May I add that I hope her actions do not reflect her true feelings about the special needs community.


....but hey, do what you want....you will anyway.


Friday, March 20, 2009

Vegetable Gardening at the White House


That's the way I dress when I dig a garden, too.

And by the way, she had help. Twenty-six fifth-graders. I thought child labor was illegal in this country.

Obama’s fellow gardeners got a healthy snack when they were done working the soil. Apples, apple cider and sugar cookies -- with organic flour -- and in the shape of shovels.

They didn't even get paid! Child slave labor. But they get the satisfaction of knowing that the royal family will be eating healthy fresh vegetables.

I like the idea that the Obamas are promoting local, sustainable growing, but there's something really wrong with this picture, and not just in the haute couture gardening duds.


....but hey, do what you want....you will anyway.


Very Bad Form

Obama got a little too relaxed with Jay Leno.

Appearing on "The Tonight Show" Thursday, the president told host Jay Leno he'd been practicing at the White House's bowling alley but wasn't happy with his score of 129. Then he remarked: "It was like the Special Olympics or something."

  Yahoo

Foot in mouth disease.


....but hey, do what you want....you will anyway.


Where Would We Be Without Irony?

And all this happened at the end of eight straight years that America devoted to frantically chasing the shadow of a terrorist threat to no avail, eight years spent stopping every citizen at every airport to search every purse, bag, crotch and briefcase for juice boxes and explosive tubes of toothpaste.

  Rolling Stone

Ah, yes. I think we are still doing that.

Yet in the end, our government had no mechanism for searching the balance sheets of companies that held life-or-death power over our society and was unable to spot holes in the national economy the size of Libya (whose entire GDP last year was smaller than AIG's 2008 losses).

[...]

The mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class. But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the federal government into a kind of giant Enron — a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers.

Ooops. Already there.

Obama claims he knew nothing of the bonus money, yet he signed the stimulas package. "When I become president I will read line by line every bill that comes accross my desk". Anouther caimpaign promise broken.

  Comment (exactly as written) at Rolling Stone

Hmm. Yeah. What about that?


....but hey, do what you want....you will anyway.


Thursday, March 19, 2009

Days of Reckoning Ahead

I guess Mexico isn’t afraid of us any more.

U.S. officials are assessing the cost of new Mexican tariffs that take effect Thursday in retaliation for a U.S. decision to cancel a cross-border program that gave Mexican truckers access to their northern neighbor's highways.

[...]

"In good times, an economy may be able to weather this kind of thing. But now it's devastating," said Rep. Dave Camp of Michigan, whose district is home to cherry farmers, manufacturers and chemical producers such as Dow Chemical Co. that will be affected.

[...]

The U.S. was required under the North American Free Trade Agreement to grant Mexican trucks full access to its highways by January 2000, but domestic opposition led U.S. legislators to delay the opening until a pilot program allowing some trucks was instituted in 2007.

The U.S. ended that program last week — a move that Mexican Economy Secretary Gerardo Ruiz Mateos called "wrong, protectionist and a clear violation" of NAFTA.

  Yahoo

Mexico might have been forewarned had they been thinking about this: we signed treaties with the Native Americans, too.

This brings up something nobody is talking about yet: what happens when our economy is so bad that we can no longer threaten, bully and manipulate other countries with our dollar power?


....but hey, do what you want....you will anyway.


Tuesday, March 17, 2009

Have Ya Got No Fockin' Homes of Your Own?

To the occupied countries throughout time and space:


Reasons to Drink

Aside from it being St. Pat's Day, there are plenty of reasons these days to knock back some Guinness. The random Mark Twain quote generator tossed up another appropriate one for the day:

Sometimes too much to drink is barely enough. --Mark Twain


Bonus Backhand

I was reading this very dispiriting article in the Times about how folks in the administration have known about the AIG bonuses for months, how the folks at AIG are now saying they'd never have done any of it without the go-ahead from the Treasury and -- best of all -- how the plan to get AIG to pay the bonus money back appears to involve giving AIG still more taxpayer money which they can then hand back to us as 'repayment', while the new bonused execs (bonees?) get to keep the money anyway.

  TPM

And that’s how it’s done. Now do you see why these people deserve bonuses?

[AIG’s financial wing is] located in London. What that means for what law governs the different questions about the bonuses? I'm not sure. Second, as the Times notes, this is a derivatives trading shop located in London. How many of the people working there are US citizens? Not that there's anything wrong with that. It's a global economy. It's a company (a division of AIG) operating in the UK. But I suspect it may play some role in the resistance to identifying who the bonees are.

Dude, the American taxpayers are the bonees. I would have thought that was obvious.


....but hey, do what you want....you will anyway.


My Favorite Irish Joke

To my favorite Irishman at Camp Liberty, Baghdad. Happy St. Pat's Day, son:

Into a Belfast pub comes Paddy Murphy, looking like he'd just been run over by a train. His arm is in a sling, his nose is broken, his face is cut and bruised, and he's walking with a limp.

"What happened to you?" asks Sean, the bartender.

" Jamie O'Connor and me had a fight," Paddy replies.

" That little shit, O'Connor?" says Sean. "He couldn't do that to you. He must have had something in his hand."

" That he did," answers Paddy. "A shovel is what he had, and a terrible lickin' he gave me with it."

" Well," says Sean, "you should have defended yourself. Didn't you have something in your hand?"

" That I did," says Paddy. "Mrs. O'Connor's breast, and a lovely thing it was, too, but useless in a fight."


And thanks to LaBelle for reminding me.


Our Greed Will Not Be Denied

Anticipating restrictions on bonuses, officials at Citigroup Inc and Morgan Stanley are exploring ways to sidestep tough new federal caps on compensation, the Wall Street Journal said.

Executives at these banks and other financial institutions that received government aid are discussing increasing base salaries for some executives and other top-producing employees.

  Yahoo

Better tighten down the rules.

Geez, you'd think this was the only thing happening in the world right now, wouldn't you? Well, of course we are still killing and being killed in Afghanistan and Iraq, Russia is working on beefing up their nuclear arsenal, and Madagascar has just had a coup, to name a few. But those would be headlines at the BBC.


Grassley: There Are Only Two Choices

[Republican] Iowa Sen. Charles Grassley suggested that AIG executives should accept responsibility for the collapse of the insurance giant by resigning or killing themselves.

  KDKA

Well, that’s a little harsh. But what he actually said was really ugly.

"But I would suggest the first thing that would make me feel a little bit better toward them if they'd follow the Japanese example and come before the American people and take that deep bow and say, I'm sorry, and then either do one of two things: resign or go commit suicide.

"And in the case of the Japanese, they usually commit suicide before they make any apology."

Of course, he’s wrong about that. When was the last time you heard of a Japanese business executive committing hara kiri? But, he's trying to make a point. However, some of the things the bloodthirsty Senator Grassley has done to the American people might be looked on as less than honorable. I haven’t heard of any apologies from him.


....but hey, do what you want....you will anyway.


We're All Irish Today

So, cheers!

And special cheers to Johnny in Baghdad, who has been sad to miss St. Pat's at his favorite bar with his friends since he enlisted. I'm sure they'll toast a drink or two to you, Johnny. And I know I will.

I heard a Dublin reporter on NPR this morning say that while the economy in Ireland is tanking with the rest of us, the Irish are giving up their cars before they'll give up their nights at the pub. And sure if you've got to be poor, at least try to be happy.

• Popular myth speculates that St. Patrick chased all of the snakes from Ireland. In reality, there were never any snakes on the island. This myth is considered a metaphor for converting pagans and Druids to Catholocism and "chasing" them from Ireland.

• St. Patrick was born with the given name Macwyn Succat around A.D. 385 in Scotland. It wasn't until he was kidnapped and enslaved by Irish bandits that he was brought to Ireland. Even though he is a Catholic saint, Patrick was actually born to a Roman Christian family. After six years in captivity, Patrick was said to have had religious dreams that told him to escape his captors and convert the people of Ireland to Catholocism.

So says Yahoo.

After six years in prison, anybody would have religious dreams. But, why wait for a dream to tell you to escape? And to chase off the pagans and druids -- that might explain a lot about what has happened to dear old Ireland. Ah, Macwyn, we hardly knew ye.



....but hey, do what you want....you will anyway.


Monday, March 16, 2009

Oh What a Tangled Web

Rep. Brad Sherman (CA), a senior Democrat on the House Financial Services Committee, told TPMDC today that the Obama administration could have prevented excessive bonuses from being paid out at AIG -- but it missed the chance.

Sherman told me in an interview today that the Treasury Department wouldn't have to be withholding $30 billion in aid from AIG until the company restructures its bonus payments, because Congress already had given Treasury the authority to prevent those bonuses from being paid

  TPM

The obvious question is, why didn’t that happen?

Sherman voted against the bailout, he explained, because he didn't believe that Treasury would use the power given to it by Congress. As it turned out, the department ultimately exercised its executive compensation powers last month, but the final regulations were riddled with loopholes -- and only applied to companies receiving "extraordinary" assistance from the government in the future, a standard that no company has officially met so far.

[...]

But Sherman also counseled wariness, as the nation gives in to expend anger over AIG's bonuses and largely ignores the weekend disclosure of the large banks who benefited because of their status as AIG counterparties in credit default swaps deals.

"Arguably, this thing with bonuses is a red herring they're throwing at us [to distract from what AIG] did with the $170 billion" they've received from the U.S. government, Sherman said. "The bonuses are chump change compared with what's going to the uninsured counterparties."

[R] evelations that-billions of U.S. taxpayer dollars were funneled through AIG to Goldman Sachs -- one of Wall Street's most politically connected firms -- and to European banks including Deutsche Bank, France's Societe Generale and the UK's Barclays could stoke further outrage at the entire U.S. bank bailout.

  Financial Post

Hmm. Could.


Thursday for Protests

New York Attorney General Andrew Cuomo has issued a subpoena to American International Group Inc. seeking a list with the names of executives receiving bonuses.

"We had given AGI up to 4 o'clock today to provide the information on the latest round of bonuses that they paid out," Cuomo said. "Four o'clock has come and gone."

[...]

The attorney general said AIG had previously promised to make no payments out of AIG’s $600 million Financial Products deferred compensation pool.

[...]

Cuomo said he wants a list of those who received payments under the retention plan, their positions, job descriptions and performance at AIG Financial Products.

  Business Review

In a letter to Geithner, obtained Saturday by CNN, AIG Chairman and CEO Edward Liddy said his company was taking steps to limit compensation in AIG Financial Products -- the British-based unit responsible for issuing the risky credit default swaps that have brought the company to the brink of collapse.

In the letter to Geithner, Liddy said the unit's 25 highest-paid contract employees will reduce their salaries to $1 this year

  CNN

So they'll be getting overpaid by the amount of their bonuses, plus $1.


Move On This

The people in AIG's financial products division are perhaps more responsible for the severity of our economic meltdown than anyone else.

And yet, they're getting $450 million in bonuses.

That's just plain unacceptable. We have to tell Secretary Geithner and Congress that they need to do everything in their power to cancel these bonuses.

A compiled petition with your individual comment will be presented to Secretary Geithner and Congress.

[...]

Full petition text:

"Under no circumstances should the AIG executives who helped create the financial crisis receive bonuses. That's our money and you should do whatever it takes to get it back."

  Move On

If you’re of a mind to sign…


....but hey, do what you want....you will anyway.


Fools, You Say? Us?

Secretary Geithner found out about the bonuses. He told AIG CEO Edward Liddy it wouldn't fly. And Liddy, in a curiously imperial letter, tells Geithner that much as he is pained by the situation -- to blow it out his ass. Which he apparently proceeded to do.

There's really no other way to describe it.

  TPM

Not so colorfully, anyway.

We're collectively taking our country's future in our hands, spending vast sums of money to keep these companies from suffering the consequences of their own folly and (in many cases) criminality. And in return we're receiving cavalier dictates about pay-outs and bonuses from executives who by any reasonable measure work for us -- dictates we promptly accede to. There's a beggars can't be choosers problem there. And the disconnect is so mighty that it fuels the impression that the whole enterprise is not what it seems, not what we've been told, that in addition to picking up the tab we're being played for fools.

Gee, I don’t know who could possibly think that would work. It’s never worked before.


....but hey, do what you want....you will anyway.


Had AIG gone into chapter 11 bankruptcy or been liquidated, as it would have without government aid, no bonuses would ever be paid (they would have had a lower priority under bankruptcy law that AIG's debts to other creditors); indeed, AIG's executives would have long ago been on the street. And any mention of the word "talent" in the same sentence as "AIG" or "credit default swaps" would be laughable if laughing weren't already so expensive.

  TPM


Spare Us the Faux Outrage

“There are a lot of terrible things that have happened in the last 18 months, but what’s happened at A.I.G. is the most outrageous,” said Lawrence H. Summers, President Obama’s chief economic adviser, during an appearance Sunday on ABC’s “This Week With George Stephanopoulos.” “What that company did, the way it was not regulated, the way no one was watching, what’s proved necessary — is outrageous.”

[...]

Mr. Summers also appeared on CBS’s “Face the Nation,” remaining consistent in his core message about the bonuses: “It is outrageous. The whole situation at AIG is outrageous. What taxpayers are being forced to do is outrageous.”

[...]

Word of the bonuses last week stirred such deep consternation inside the Obama administration that Mr. Geithner told the firm they were unacceptable and demanded they be renegotiated, a senior administration official said. But the bonuses will go forward because lawyers said the firm was contractually obligated to pay them.

  NYTimes

AIG is telling us that it must pay those bonuses, because they are required by employment contracts necessary to retain its financial engineers.

Treasury Secretary Geithner has expressed outrage. Instead, he should be embarrassed.

When the Bush White House agreed to bail out General Motors and Chrysler, it required those companies to renegotiate their labor contracts—that’s right contracts—and they are doing just that to keep their federal largess.

The Obama Treasury, headed by Tim Geithner, is forcing the terms of that deal on the United Autoworkers.

[...]

The threat was the same with AIG and GM. If either shut down, the economy would plummet into chaos and depression we were told.

So Mr. Geithner, instead of being outraged at AIG’s last revelations, perhaps you can explain to all of us why a UAW worker earning $29 dollars an hour must give back wages and benefits to keep their company alive, while the architects of the biggest financial disaster in history get to keep their gold plated contracts.

  Statesman Journal

Oh, I think we know. You spell it U-N-I-ON-L-A-B-O-R. And we need to break it, right Tim?

Particularly in circumstances as extreme as these, there are a litany of arguments and legal strategies that any lawyer would immediately recognize to bestow AIG with leverage either to be able to avoid these sleazy payments or force substantial concessions.

[...]

[T]he Obama administration’s claim that nothing could be done about the AIG bonuses because AIG has solid, sacred contractual commitments to pay them is, for so many reasons, absurd on its face.

  Glenn Greenwald

And we live in an absurd world.

One might expect AIG to [willingly pay these bonuses] -- they haven't exactly proven themselves to be paragons of business ethics -- but the fact that Obama officials are also insisting that nothing can be done (even while symbolically and pointlessly pretending to join in the populist outrage over these publicly-funded "retention payments") is what is most notable here.

[...]

If Congress (with Obama's support) was willing to immunize lawbreaking telecoms from lawsuits brought by their illegally-spied-upon customers, shouldn't Congress be willing to immunize AIG from bonus-seeking lawsuits brought by their executives who helped spawn the financial crisis?

[...]

There may be other reasons why the Treasury Department decided it wanted AIG to pay these bonuses (Marcy Wheeler considers some of those reasons here), but this claim from Larry Summers that the sanctity of contracts precludes any alternatives is not just false, but insultingly so. It's difficult to recall anything quite so vile as watching hundreds of millions of dollars in taxpayer money flow to AIG executives. One would expect the Obama administration to do everything possible to prevent that from happening. Instead, they seem to be doing the opposite.

• Yesterday AIG paid out $450 million in "retention bonuses" to executives in its Financial Services Group, the out-of-control derivatives trading arm that looted the company, destroyed its stock and contracted for huge bonuses even after they saw the risk of collapse.

• The $450 million was just a portion of the $1.2 billion AIG paid out in bonuses across the board within a company that lost $100 billion last year.

• Rep. Barney Frank, chairman of the House Financial Services Committee, wants to try and recover these bonuses.

  FireDogLake petition

A.I.G., nearly 80 percent of which is now owned by the government, has defended its bonuses, arguing that they were promised last year before the crisis.

  NYTimes

Last year before general knowledge of the crisis, but when AIG CEOs realized that the day of reckoning for their reckless behavior was at hand, don’t you mean?

The administration official said the Treasury Department did its own legal analysis and concluded that those contracts could not be broken. The official noted that even a provision recently pushed through Congress by Senator Christopher J. Dodd, a Connecticut Democrat, had an exemption for such bonus agreements already in place.

But the official said the administration will force A.I.G. to eventually repay the cost of the bonuses to the taxpayers as part of the agreement with the firm, which is being restructured.

”We shall see,” said Grandpa. “We shall see.”


....but hey, do what you want....you will anyway.


Sunday, March 15, 2009

Don't Say I Never Offered You Anything Educational


Did We Say $165 Million?

[T]he Journal says the number is actually $450 million [in bonuses] to execs at the [AIG] financial products division and a $1.2 billion spread across the whole company.

  TPM


....but hey, do what you want....you will anyway.


In Case You Missed Them the First Time...

Hulu is showing (free online) The Times of Harvey Milk, an excellent documentary, and Crawford, a surprisingly good one that actually brought a tear to my eyes a couple of times.


Laughing All The Way To The Bank

It appears AIG is going to pay out $165 million (Update) in CEO bonuses with its bail-out money. (Didn’t they already do this? Or was that somebody else?) They say they are contractually required to do so. (See Josh Marshall’s comments.) And they say they have to pay big money to the ‘best and brightest’ to keep them. I keep reading complaints that these guys couldn’t possibly be the best and brightest because they took the company down in flames. But I think that maybe they are the brightest, if not the best, because they are still getting million-dollar bonuses even after they took the company down in flames. Certainly they have the money game figured out for their personal benefit.

At any rate, I think your best commentary might be from Driftglass:

Let’s be clear; AIG made its money gambling.

[...]

And now, like any other gambler, AIG has to pay up or go down hard.

Unlike any other gambler, our government says that AIG gets to pick our pockets to make good on its bad bets, because if we don’t go good for these reckless fucknozzles horrendous mistakes, the global economic hard drive will crash and dump us all into the middle of the 11th Century in our underpants.

[...]

Which may be a mile-high pile of happy horseshit, or may be just hard fiscal truth; I don’t know enough to judge.

[...]

So [...] maybe the people who flew the world financial system into a mountain really are holding some Special Genius Monetary Powers in reserve that will save us all, but that for some reason they have clearly not bothered to use so far.

[...]

What I do know is that we have been lied too, used, fucked over, rolled over, rinsed and repeated over and over again by this same species of clowns enough already.


....but hey, do what you want....you will anyway.


Saturday, March 14, 2009

And Speaking of Revisionist History...

According to the Republican version of the history of the financial crisis, as presented on the House floor on Wednesday by Representative Todd Akin (R-MO), Congressman Frank is responsible for the fact that no legislation passed the Congress to regulate Fannie Mae and Freddie Mac until 2007, and no bill trying to restrict subprime lending passed the House between 1994 and 2007. The problem with their argument is that the Republicans were in power from 1995 through 2006 in the House, and they had complete control over what legislation did or did not pass.

“Being accused of having blocked legislation to prohibit irresponsible lending to low-income people from 1995 to 2006 is flattering in a bizarre way,” Frank noted. “Apparently those Republicans parroting these right-wing talking points believe that I had some heretofore undisclosed power over first Newt Gingrich and then Tom DeLay, which allowed me to keep them from passing legislation they wanted to pass. If that had been true, I would have used that power to block the impeachment of Bill Clinton in the House, the war in Iraq, large tax cuts for the very wealthy, the intrusion into the sad case of Terri Schiavo, and appropriations bills that badly underfunded important social priorities.

“I did not try to stop them from passing legislation to control subprime lending or to regulate Fannie Mae and Freddie Mac because in the first case they were never willing to do so, and in the second case, I worked together with Republican Chairman Mike Oxley on the only bill that the Republicans considered during that period to restrict Fannie Mae and Freddie Mac, and the bill was defeated because, in the words of Mr. Oxley, the Bush administration gave his efforts ‘the one-finger salute.’

[...]

[T]he Bush administration pushed for even more subprime lending, Alan Greenspan refused to use congressional authority he’d been given in 1994 to regulate it, and the House Republicans blocked any efforts to legislate against it. In fact, as quoted in a story in the Bloomberg News, when the Bush administration ordered Fannie Mae and Freddie Mac to increase significantly the number of loans they bought for people below median income, I objected saying that this would be good neither for the borrowers who could not repay the loans nor for Fannie Mae and Freddie Mac.”

  Barney Frank Press Release


....but hey, do what you want....you will anyway.