Month: September 2008

About the Bailout….

Five good reasons why it stinks and one should be rejected. I’m still waiting for the answers to my two questions: What exactly is it supposed to fix and does it fix it?

Actually, this guy lays out the argument that there is no problem necessitating any bailout.

Thomas Frank fumes (and plugs his book, but that’s okay). Short version: the prospective wannabe bailees got what they wanted and this is what it led to. Full version:

 

The great fear that hung over the business community in the 1970s was death by regulation, and the great goal of the conservative movement, as it rose to triumph in the 1980s, was to remove that threat–to keep OSHA, the EPA, and the FTC from choking off entrepreneurship with their infernal meddling in the marketplace.

Defunding those agencies was one way to stop the killer bureaucrats; another was to stuff them full of business-friendly personnel who would go easy on regulated. The signature conservative regulatory idea became “voluntary enforcement”, because everyone now knew that efficient markets regulated themselves. Bad practices or tainted products drove away consumers; therefore firms had an incentive to behave, an incentive far more powerful than some top-down scheme in which big brother told them what to do.

Whether people ever truly believed this nonsense or not, its application over the years makes up the basic story of conservative governance as I tell it in my book, The Wrecking Crew. This is the philosophy by which conservatives gutted the EPA and the Labor Department, turned over the Interior Department and the FDA to the industries they were supposed to regulate, let the CEO of Enron advise the vice president on energy policy, and generally came to regard business, not the public, as government’s “customer” (a word that crops up with disturbing frequency in conservative regulatory history).

But it is only now, as we watch the financial system crumble around us, that we can really see the devastating consequences of this folly. It turns out the Securities and Exchange Commission (SEC), which was responsible for regulating investment banks, did a significant part of its job through a voluntary program which firms could participate in or not as they saw fit. As the New York Timestold the story on Saturday, this system had–of course–been pushed for by the investment banks themselves, who wanted it in order to avoid the stricter rules from European governments that they would otherwise have had to obey.

And now, as a consequence, the SEC has almost no industry left to regulate. Bear Stearns, Merrill Lynch, Lehman Brothers, Goldman Sachs, Morgan Stanley: All of them are gone or restructured. At business’s urging, business was left up to its own devices; its own devices turned out to be precisely the things that our grandparents set up regulatory agencies to guard against: euphoria that leads to panic; perverse incentives that lead to fraud; boom that leads to bust.

As you watch the world crumble, try taking your Armageddon with this sprinkling of irony: Over the last three decades, business has got virtually everything it wanted, and its doomsday scenario from the 1970s has come true because of it. The regulators have indeed killed the regulated–not by intrusive meddling but by doing nothing, by taking a nap while the financial sector puffed up the bubble and blew itself to pieces.

A post-mortem (or is that celebration) of the defeat of the bill is here.

Advertisements

Warning!

Landover Baptist Church:

PREVIEW OF HELL HOUSE 2008:
“Barack Obama’s Ghastly Ghetto of Demoncratic Terror!”
  

Again, we cannot stress enough that the additional $2 for the plastic ponchos is well worth it, as rancid pig’s blood will be sprayed from the white man’s head in Room 7 with extreme force onto the participants.

Room 1 – A Lilly-White Family Gets Taxed to Death– A normal Christian (white) husband comes home from work to sit down to dinner with his family. Obama is speaking on the television set in the living room. The wife turns the channel but every station has Barack Obama on it, repeating the words, “If u makin’ under $250K, I not be raisin’ yo taxes!” (Participants learn that Obama has switched to speaking Ebonics after taking office and a handy translation chart will be provided as part of your entrance fee) The children want to know what they are having for appetizers before dinner. The mother screams, “We don’t have enough money for appetizers anymore! We’re just going to have dinner! The children start crying as the mother scoops portions of Almar Caviar into their plates. “But this used to be our appetizer, mommy!” says one child. “Yes,” says the mother, “but thanks to liberals electing Barack Obama as their president, now its all we can afford for supper!” The father chokes back his tears, pulls out a gun and shoots his two children. He then shoots his wife and puts the gun to his own head and says, “We can’t live like this, Obama has taxed us all to death.” He pulls the trigger, blowing off his head. Participants will be glad they have a plastic poncho (provided for an additional $2 at the entrance) because they will be sprayed from head to toe in rancid pig’s blood squirting intermittently for over a minute from the white man’s neck as they are given time to contemplate the seriousness of the situation.  They are given one chance to back out with a non-refundable fee or to move on to Room 2.

Room 2 – Families Forced to Pray to Mohammed! – Participants learn over the speaker system that two months after Obama seized control of America, he pulled the troops home from Iraq. As a result, terrorism has spread and Americans are told that every family must pray to Allah for one hour each evening or Al Qaeda will bomb their house. Participants will see a family weeping as they cover the statues of Jesus in their home and take down the crosses they have hanging on the wall. They will throw small rugs on the floor and point them to the East. As they kneel down to pray, Mohammed will appear before them, and laugh maniacally. As Mohammed turns, participants will see a long red pointy tail coming out from his hind side as he makes his way into the shadows.

Room 3 – The Black Penis Room! – Upon entering this room, participants will learn that since Obama took power, white women are leaving their husbands for black men. Every day, innocent white Christian ladies are bombarded with images of black men on billboards and commercials. So much so, that Hasbro created a Ken Doll, darker than Wesley Snipes to be Barbie’s new lover. Participants will enter a room where they see three naked men (A 7 foot tall black man, a 5’10 white man, and a 5’4 tan white man) standing in a row in front of a kindergarten class. The kindergarten teacher will ask the class three questions: 1. Who is the most powerful man. 2. Who is the most successful. 3. Who is the most attractive. All of the children will point to the 7 foot tall Negro in each case. One of the little girls will stand up and say, “I want to marry a giant Negro with a big black penis when I grow up!” Instantly, an actress dressed like Sarah Palin with little angel wings will float down from above and land in front of the black man’s penis. She will turn to the participants and say, “ME TOO!”Then she will pull out a gun, shoot the two white men, and start to lower her head down toward the black man’s private area. The lights will dim in order to spare participants from the blasphemous scene and they will be scurried along by a guide into the next room.

Room 4 – The House of Represent’nat! – Participants will enter a room where they will be seated to view a film. The film will show the new House of Representatives in session. Hundreds of colored men who have replaced all white state representatives are walking around, high-fiving each other and some are shooting hoops (statues of our founding fathers have been removed and basketball nets have been installed in their place toward the rear of the historical auditorium). The speaker will call the House to order by saying, “Yo yo my brothers! Obama be inna house!” A loud song by Busta Rhymes will begin to play and all of the U.S. Representatives will begin to gyrate their bodies and dance while strobe lights flash as Obama hip-hops up to the podium. Obama will say, “I’m all gangsta up in here! Who wants to rap first?” The film will last for roughly 10-minutes as participants view various black representatives “rapping” the latest issues of the day. Pastor Deacon Fred will then appear on the screen and shoot himself in the head.

Rooms 5- 6 – No Whites Allowed– Participants will be guided through a series of areas where they will see how coloreds receive special privileges under the Obama regime. They will pass a drinking fountain that says, “Blacks Only,” a bathroom with a sign that says, “Find Another Place to Do Your Bizness if You is White,” a family restaurant sign that says, “Serving Black Men Only,” and a sign for executive homes that says, “All Black Community.” Participants will then be guided into a small dark room with peeling wallpaper. The rank stench of urine and feces will be piped in through hoses attached to the Port-A-Potties outside Hell House. A spotlight will slowly focus onto a small plastic kiddy pool filled with naked old white men splashing about and laughing giddily. The sign over the pool will read, “Privileged White Democrat Servants of Master Obama Only.”

Room 7 – There goes the NeighborHOOD! – We saved the set and materials from this room from 2004 when we created the John Kerry’s Bloodcurdling Agenda for America Hell House . Participants will be introduced to the harsh reality of a world where the government secretly distributes powdered cocaine into poor white communities to keep people down and unproductive. They will hear white people speaking Ebonics and walking around with giant radios on their shoulders. Children will be seen wearing baggy pants with their naked hind sides exposed.  Participants will learn that decent children are now clothed with “hand me downs” from their older siblings because their parents can’t afford to buy new clothes. There will be echoes of gunshots heard in the distance. Participants will learn that gangs of white kids are struggling for areas of land in their community called, “turf.”  After a few minutes, Landover Senior High students who are authentically costumed as black-faced police officers will run into the room as a white man approaches an old black woman.  Just as the white man asks the old Negress if she knows what time it is, he will be beaten down and shot in the head before he even knows what hit him.

Again, How Does She Do it?

Sarah Palin is so awesome she can see hundreds of miles over land.

In the image below, (A) is Wasilla, the land mass in the upper left almost touching the great empty state of Alaska is Russia. Down in the lower left is the scale. Yeah, yeah, I know her people don’t believe in facts. Indeed, her people have so fanned the flames of anti-intellectualism that indisputeable facts and the people who believe in them are pure anathema….

But the mainstream’s journalists? What’s their excuse? Scared of beating up a lying, stupid person who hates them and has the utmost contempt fr the American people because she’s a woman? For that she’s off limits?

(click to enlarge)

 

Deep Thoughts and Good Questions from Arianna

 

"I am the modern Republican party!"

Ronald Reagan, in his first inaugural address, famously declared that “government is not the solution to our problem; government is the problem.”

Twenty-seven years later, in the midst of the worst economic crisis since the Great Depression, and seven-plus years into the reign of Bush and Cheney, Reagan’s anti-government battle cry should be on trial. But, stunningly, it is not.

This needs to change. The presidential candidates’ view of the role of government should be one of the central questions of the last 36 days of the campaign. And it should definitely be a question they are asked at their next debate:

“Sen. McCain, given the part deregulation played in the current economic crisis and your support of a massive government bailout of the financial industry, are you now ready to break with Ronald Reagan’s assessment?”

And, to be even handed: “Sen. Obama, in 1996, Bill Clinton cheerfully announced that ‘the era of big government is over.’ As the Dow plummets and Wall Street and Main Street turn to Washington for big government bailouts, are you now ready to break with President Clinton’s assessment?”

The shift in my own thinking on the role of government was what led to my disillusionment with the Republican Party, and the transformation in my political views. I’ve always been progressive on social issues: pro-choice, pro-gun control, pro-gay rights — even when I was a Republican. The big difference is that I once believed the private sector would address America’s social problems. But the hope that people would roll up their sleeves and solve this country’s social ills without the help of government was never fully realized. There were never enough volunteers or donations — and the problems were just too massive and intractable to tackle without the raw power of appropriations that only government can provide.

Our economy is not the only thing that is crumbling. So is the philosophical foundation of the modern Republican Party — also known as the Leave Us Alone Coalition, led by its spiritual guru, Grover Norquist. His dream of making government so small “we can drown it in a bathtub” has been embraced by the GOP mainstream.

Indeed, during his 2003 inauguration, Jeb Bush stood in front of Florida’s capitol building and said: “there would be no greater tribute to our maturity as a society than if we can make these buildings around us empty of workers; silent monuments to the time when government played a larger role than it deserved or could adequately fill.”

I sadly suspect that Jeb and Grover and their Republican compatriots have not yet updated their views of government — they have not yet made the connection between demonizing government and looking to it to save the day.

The financial meltdown has put the Grand Old Party’s schizophrenia on full display. But why are so many in the media, the Democratic Party, and the Obama campaign averting their eyes from the spectacle of a party that wants to drown government until they need it to bail out Wall Street or AIG — that wants to vanquish government workers, unless they are listening in on our phone conversations or working hard rolling back government regulations?

It’s like the story, probably apocryphal, of the agitated — and obviously confused — senior citizen imploring a GOP politician not to “let the government get its hands on Medicare.”

With the madness of this contradictory mindset exposed, voters will have a chance to decide if they agree with Norquist and Jeb and W and Cheney and the Republican Messiah himself, Ronald Reagan and, yes, with John McCain. And even Cindy McCain who, in her otherwise bland convention speech, called for “the Federal government” to “get itself under control and out of our way.”

A staggering 83 percent of Americans believe that we are heading in the wrong direction. And, I’m sorry, Sen. McCain, I don’t think it’s because of too many earmarks or because $3 million was spent in 2003 to study bear DNA in Montana.

Size matters in some things, but when it comes to government, it’s not the size of the government, it’s the way it is utilized.

“Big government” didn’t get us into Iraq. It didn’t spy on Americans or open black op rendition facilities all over the world. “Big government” didn’t create Guantanamo or okay the use of torture. “Big government” didn’t leave the residents of New Orleans to suffer in the wake of Katrina. “Big government” didn’t cause the financial industry to run off the rails. Indeed, the free market is what created all the new, risky ways for banks to game the system and, eventually, implode — then come calling on “big government” to ride to the rescue.

So let’s hear what McCain and Obama think the fundamental role of government should be. I can think of no better way to underline the massive gulf between the two candidates — and the two parties they represent — at the very moment when McCain is so desperately trying to blur the differences (see his recent shopping spree at the second-hand populism store: “Big discounts on ‘fat cats’ and ‘Wall Street greed’!”)

Stanford professor Lawrence Lessig says that if Americans recognize that the financial crisis — and the need for a government bailout — is due to “policies McCain still promotes… this could well be the event that effected a generational shift in governmental attitudes. Think Hoover vs. (the eventual) FDR.”

But if we want to make sure that Americans make that connection, we need to put the question of the role of government front and center in the campaign. Economic policy and foreign policy and domestic policy are all important areas of debate. But before we continue looking at the (falling) trees, let’s take a step back and consider the forest.

Link.

GD2

I still don’t quite understand how the bill is really supposed to help much. To the extent that Our Leaders have come forth with clear, lucid explanations of what exactly the problem is and how the bill solves it, it seems that there’s insufficient credit and this bill would sufficiently pump capital into the system.

Um, well, I thought the problem was excess liquidity in the first place. All that loose money from the upward transfer of capital needed investments so a lot of crap ones were created, little more than Ponzi schemes: investments that worth not anything too intrinsic, known or quantifiable but worth pretty much just what people believed them worth (yeah, yeah, I know, very appropriate for these rightist, fact-detached times).

So surely more liquidity can’t be a solution to a crisis created from excess liquidity, can it?

And allowing unsupervised hedge funds to own financial situations?

Second cause of this was the lack of oversight. Or rather, the pre-existing responsible supervisory instiutions, following Our Leaders, deliberately refused to do their jobs.

So even less regulation and supervision can’t be part of the solution either.

Anyway.

Kudos to the Dems for cutting out a chunk of crap from the original proposal from Our Leaders and tossing some crumbs to the populace.

Tragedy is that the Dems got played; The bill was stopped by a 100-odd party-bucking mavericky GOPers who can all paint themselves back home as the saviors of the Little Guys notwithstanding, of course, all the anti-Little Guy garbage they rubber-stamped for Our Leaders.

Rushoff:

 

If you’ve got no money and no debt, then just go about your business normally. I think the smartest long-term positioning is to begin looking at the goods and services you can provide to other people in your community without involving long distance transport or complex supply chains involving multiple creditors and borrowers. In other words, try to make what you do as real as possible.

If you do have money, well, either sit tight through the “capitulation” or do some bottom feeding of favorite underpriced stocks in industries that provide real goods or services to real people, and that don’t need to borrow lots of money to do it. If you’ve got more than 100k in a single bank account, you might spread it out.

The reality of the (failed) bailout plan is so very different from the way people are thinking about it, though, that I thought I might offer some clarity. (I’m sure some of you will interpret this as additional obscurity, so ymmv.)

The main point of the original plan was for the federal government to buy distressed assets – like mortgages – from banks and other institutions. “Distressed” doesn’t necessarily mean these are bad assets, or that the mortgages won’t be paid back. It simply means these are debts that are selling way way below their longterm value. No one wants to pick up anyone’s mortgages because housing prices are going down, foreclosures are going up, and shareholders of banks don’t want them on the books.

So a package of mortgages that might be worth a million bucks in the long term if they’re all paid back is only getting, say, $200,000 on the market. That’s what’s shrinking the credit markets. So the Federal government wanted to buy all this credit at a higher rate, bail out the creditors, and take on the mortgages. In the best of worlds, the Treasury would have made money off all this. They’d be using what government has over business (time) to purchase depressed investments and wait out the decades it takes for them to earn out.

The deal almost went through until McCain made his highly publicized drop in to DC, accidentally highlighted the leftist underpinnings of any government intervention, and polarized the parties involved. He left, but the damage was done. (It may have failed without McCain’s help, but I enjoy blaming him.) America now saw the bill as an anti-populist bail out of banks. Call it socialism if you like but it was really just business. Democrats compromised by turning the investments into loan guarantees, but conservatives saw the whole plan as much too much like the way FDR got America out of the Depression last time: namely, socialism.

The bigger fact, though, is that even with a short-term bailout, the underlying mega-economy is in the dumps. Government can help lubricate the gears of the economy by utilizing its capacity to engage in longterm investing, as with the failed bailout bill. But this entire effort was really just a balance sheet adjustment. Unless we are also investing our time, energy, and remaining money in productive industries, education, and renewable resources, we will not have changed the real economy at all.

Here’s something to do with your money while the world goes to Hell.

Looks like not just Our Leaders but President McCain failed to lead his troops.

Harry Shearer reports with his perspective:

 

Over dinner last night, i was trying to explain to a British friend why the majority of House Republicans fled the bailout bill compromise. Reading the polls, it’s easy to understand why those with the most hotly contested elections this November were the least eager to sign up for the bill. But, in surveying the wreckage, one fact became clear: the credit crisis was exacerbated by a credibility crisis.

It’s easy for Americans to look at President Bush–he of the 935 lies in the Iraq war runup–and Henry Paulson, the Goldman Sachs-bred Treasury Secretary–and say, “prove it” regarding the dire predictions of doom if a bailout doesn’t occur. As an American typically ignorant of the arcane ways of the financial wizards, what was missing for me in the scare talk last week was somebody who could put the danger in concrete terms: a businessman, say (as opposed to a financier), who could tell me how lack of credit would prevent him from stocking up on new inventory or meeting payrolls. An Administration marked by profound arrogance (hello, Mr. Cheney) sent a financier to Congress to demand unprecedented power for a financier, and the scare talk sounded familiar and empty. It’s the boy who cried Wolfowitz.

Somehow, if the danger is that real and that near, somebody with a shred of credibility and some real skin in the game has to stand up and tell us exactly what’s in the alleged abyss. The Administration’s failure to understand that fact is telling and profound.

Panic in the War Room:

 

Apparently the GOP’s attempt to blame House Speaker Nancy Pelosi immediately after the bill collapsed didn’t do much to calm anything down on Capitol Hill.

House Democrats may try to bring back the bill later in the week, but they say any additional votes will have to come from the other side. “We delivered 140 votes,” one senior Democratic aide said in an e-mail to Salon. “How about House Republicans go take a look at the Dow drop (largest point drop in history), Americans’ 401(k) and mutual funds, and then go find a dozen votes.”

That sounds flip, but it may actually be a pretty good read on how the legislation finally makes it past today’s impasse. Congress is gone for the next two days, and if the stock markets keep plunging, chances are a few members will reconsider their opposition to the bailout once they return. No lawmaker, no matter how safe his or her seat is, wants to be responsible for record stock market losses. If you think Congress is unpopular now, wait till you see the polling when voters realize they can never afford to retire.

Hey, did the GOPers get so mavericky?

A very useful analysis by Nate Silver’s very useful blog FiveThirtyEight.com confirmed my hunch after a quick scan of the House vote against the bailout this afternoon — almost everyone facing a tough reelection race voted no.

Even before his epic failure, Krugman doubted President McCain’s ability to lead through the economic crisis.

Hey! Does Palin have any wisdom to share? Does she know what’s going on? Does she understand the issues?