Saturday, September 27, 2008
Nouriel Roubini has a characteristically scathing takedown of the Paulson plan, and here’s the thing: language aside, his economic analysis is similar to mine. The fundamental problem in the financial system is too little capital; bizarrely, the Treasury chose not to address that problem directly, by (say) purchasing preferred shares in financial institutions. Instead, the plan is premised on the belief that toxic mortgage-related waste is underpriced, and that the Treasury can recapitalize banks on the cheap by fixing the markets’ error.
The Dodd-Frank changes make the plan less awful, mainly by creating an equity stake. Essentially, this makes it possible for the plan to do the right thing through the back door: use toxic-waste purchases to acquire equity, and hence inject capital after all. Also, the oversight means that Treasury can be prevented from making the plan a pure gift to financial evildoers. But it’s still not a good plan.
On the other hand, there’s no prospect of enacting an actually good plan any time soon. Bush is still sitting in the White House; and anyway, selling voters on large-scale stock purchases would be tough, especially given the cynical attacks sure to come from the right. And the financial crisis is all too real.
So is it better to have no plan than a deeply flawed plan? If it was the original Paulson plan, no plan is better. Dodd-Frank-Paulson may just cross the line — let’s see what details we have if and when agreement is reached.
If the plan looks not-awful enough, I’ll be pro. But I won’t be cheering — I’ll be holding my nose.
Brad DeLong essentially agrees on the relative merits of the Dem plan, but not the politics:
If the House Republicans won't vote for the Paulson-Dodd-Frank plan, then the Democrats should not either. They should write the best bill possible--which I think is the Swedish model--pass it, and send it to Bush to sign.
Although I can't quite tell if by this he means that the Dems should write the best bill possible after the House Reps refuse the PDF Plan, or that he thinks the PDF Plan is the best possible. I doubt the latter.
Note to Krugman: You're not a party officer and not up for re-election. You could actually use your column to educate the public by discussing what the best bill possible would be and why it's not being enacted. Or you could accept the choice horizon dictated by apparatchiks and give tepid endorsements. What possible reason is there to choose the latter course? Where's all that Sturm and Drang you used to direct at Bush so well?
We don't need your judgments about what's possible shaping the horizon of the possible. We need expertise in economic analysis, not expectation management.
For me, both candidates played to their bases tonight. Safety move when maybe there isn't as much preparation time...
Friday, September 26, 2008
If you squint, you may see people you recognize in some of them.
So what if McCain shows up and tonight and says, "I'm sorry I couldn't sign on to this Washington-Wall Street plan that I worried was putting an even bigger burden on taxpayers than this mess already has. Now, Sen. Obama, I understand that you are confident in these folks in Washington and New York who have everyone convinced this is the only plan. And I respect that, but I am hearing from people all over the country who don't get this plan and don't understand how it will work. And why should they trust a group of folks in Washington and New York who broke this system to fix it?"Ugh.
McCain is not winning this political battle right now as the media elite do believe the White House, Wall Street and Congressional Democrats on this. It's a pretty strong united front for us not to believe this. That said, McCain and House Republicans are channeling their inner populist, something the Republican Party hasn't done in quite some time. Don't write off this McCain strategy just yet if Obama appears too cozy with Washington and New York elites, and it's McCain who is the one looking like the outsider.
Capitol Hill sources are telling me that senior McCain people are more than concerned about Palin. The campaign has held a mock debate and a mock press conference; both are being described as “disastrous.” One senior McCain aide was quoted as saying, “What are we going to do?” The McCain people want to move this first debate to some later, undetermined date, possibly never. People on the inside are saying the Alaska Governor is “clueless.”
and the debate is on:
The McCain campaign is resuming all activities and the Senator will travel to the debate this afternoon. Following the debate, he will return to Washington to ensure that all voices and interests are represented in the final agreement, especially those of taxpayers and homeowners.
Landslide. I'm telling you. Landslide.
"If McCain is elected, he will retain his instinct for the hard challenge. With that Greatest Generation style of his, he will run the least partisan administration in recent times. He is not a sophisticated conceptual thinker, but he is a good judge of character. He is not an organized administrator, but he has become a practiced legislative craftsman. He is, above all — and this is completely impossible to convey in the midst of a campaign — a serious man prone to serious things."
This is too good. What a shame that it's impossible to convey seriousness in the midst of a campaign! Otherwise, I'm sure we would see it, and not a demented, reeling nutcase of a hopeless wreck of a politician.
With my Greatest Generation style laugh, I say HA, HA, HA!!!!
The director of the Congressional Budget Office said yesterday that the proposed Wall Street bailout could actually worsen the current financial crisis.
During testimony before the House Budget Committee, Peter R. Orszag -- Congress's top bookkeeper -- said the bailout could expose the way companies are stowing toxic assets on their books, leading to greater problems.
"Ironically, the intervention could even trigger additional failures of large institutions, because some institutions may be carrying troubled assets on their books at inflated values," Orszag said in his testimony. "Establishing clearer prices might reveal those institutions to be insolvent."
Such companies "look solvent today only because it's kind of hidden," Orszag said. "They actually are insolvent" already, he said.
In hearings on Capitol Hill so far this week, criticism of the bailout plan put forward by Treasury Secretary Henry M. Paulson Jr. and Federal Reserve Chairman Ben S. Bernanke has largely been restricted to the shape of the $700 billion proposal, how the money will be spent and what sort of oversight Treasury should have.
But Orszag yesterday questioned the wisdom of the plan itself, testifying that "it therefore remains uncertain whether the program will be sufficient to restore trust."
In yesterday's interview, Orszag said, "The key question is: What are we buying and what are we paying for it?"
More than 150 prominent U.S. economists, including three Nobel Prize winners, urged Congress to hold off on passing a $700 billion financial market rescue plan until it can be studied more closely.
In a letter yesterday to congressional leaders, 166 academic economists said they oppose Treasury Secretary Henry Paulson's plan because it's a ``subsidy'' for business, it's ambiguous and it may have adverse market consequences in the long term. They also expressed alarm at the haste of lawmakers and the Bush administration to pass legislation.
Advocates for a rescue plan this week point to a seizing up of credit markets, reflected in elevated inter-bank lending rates, as reason for action. Some economists are unconvinced.
``I suspect that part of what we're seeing in the freezing up of lending markets is strategic behavior on the part of big financial players who stand to benefit from the bailout,'' said David K. Levine, an economist at Washington University in St. Louis, who studies liquidity constraints and game theory.
and a lot more on Volokh.
The more time goes by without a deal, the more time people have to learn. The more time they have to learn, the less support there is for a bailout. We might get a shitty deal with McCain, but he may have just saved our asses.
Come to the Dahk Side, Abote.
Thursday, September 25, 2008
Word is that McCain is now enamored with an alternative plan that has emanated from deep in the bowels of the Republican caucus, which calls for:
the removal of regulatory and tax barriers to help facilitate the use of private capital to produce liquidity; temporary tax relief provision to help companies free up capital; and temporary suspension of dividend payments by financial institutions.
In concrete terms, the "alternative" is to get rid of the capital gains tax! And deregulate even more!
I thought the problem was that banks had invested trillions in worthless paper that nobody wants to buy. It is worthless, ergo they cannot sell it for a profit, therefore eliminating the capital gains tax -- a tax on profit -- will not help anyone unload the worthless paper.
Or is the idea that the Wall Street banks should all unload all of their profitable investments, all at once, to raise the cash they need, and eliminating the capital gains tax is an incentive to do this? Capital gains tax is like 15%, kids. If everyone sells their high-performing investments at once, the price would easily be driven down by 15% if not more.
So what McCain wants is to come in on his white horse, throw everything into disarray, and use the crisis as a pretext for yet another tax cut -- not just a tax cut but the wholesale elminiation of a tax -- that will do nothing to solve the crisis but will temporarily enrich wealthy pigs and big corporations during the next few months before they all commit suicide or are murdered by packs of enraged looters.
Who the fuck is this guy?? He's stealing appetizers from the buffet of the Titanic!
Also, sweet deal that he didn't come down to fight for a higher equity stake in the banks or for more meaningful mortgage relief or for stronger regulation. Nope, it was all about killing the capital gains tax.
I am so sick right now.
COURIC: Why isn’t it better, Governor Palin, to spend $700 billion helping middle-class families who are struggling with health care, housing, gas and groceries? Allow them to spend more, and put more money into the economy, instead of helping these big financial institutions that played a role in creating this mess?
PALIN: That’s why I say I, like every American I’m speaking with, were ill about this position that we have been put in. Where it is the taxpayers looking to bail out. But ultimately, what the bailout does is help those who are concerned about the health care reform that is needed to help shore up our economy. Um, helping, oh, it’s got to be about job creation, too. Shoring up our economy, and getting it back on the right track. So health care reform and reducing taxes and reining in spending has got to accompany tax reductions, and tax relief for Americans, and trade — we have got to see trade as opportunity, not as, uh, competitive, um, scary thing, but one in five jobs created in the trade sector today. We’ve got to look at that as more opportunity. All of those things under the umbrella of job creation.
From the Battlestar Galactica Wiki:
A Hybrid is an entity that represents the first step in the Cylon evolution from pure machines to organic beings. They serve as the central computer inside a basestar (spaceship).
The Hybrids almost continually speak in phrases that makes little sense to the basestar's crew. The utterances appear to be a mixture of system status reports as well as observations of events in and around the basestar that may not be describable in words. Leoben Conoy believes that the Hybrids can hear or understand the voice of God. A Number Three suggests that the Hybrids have seen the place "between life and death" and have been driven mad as a result
Hybrids have a conscious state that can converse, if only briefly.
We are merely passengers on Basestar America.
Alas, I cannot find any footage of it online. My kingdom for a video clip!
UPDATE: video clip found. hat tip: Rat
UPDATE II: ok. ok. hat tip Dawkins too.
UPDATE III: argh. fuckit. copyright violation took the BSG video down.
Has McCain done any work at all on the bailout since his noble, self-sacrificing announcement nearly 24 hours ago? We know he's not in DC. We know he spent a significant chunk of his time on Wednesday NOT engaged with the bailout but instead chatting with crazy Lady Rothschild. Then, after his big statement, we know he went straight to a $5,000 makeup session, then he gabbed with Katie Couric, then slept overnight in New York, and as we speak he is jacking off donors at the Clinton Global Initiative, also in New York. By the time he gets to the White House photo op this afternoon, the deal will be done.
How can he claim he saved the day? How can he provide the tape loops the TV media will need in order to push the storyline that he galloped in on the white horse to save Country First?
(BTW doesn't Country First sound like the name of an ineptly run predatory lending outfit?)
Also, the campaign is not suspended. Palin is holding a campaign rally this afternoon in Philadelphia. The McCain ads are still on the air.
Someone just help me understand how he thinks this will work out. I realize that he's the Republican nominee so there is no shortage of talking heads to spin this. And I am not about to start celebrating his final defeat or anything, nor am I counting on average voters to see this clearly or fully or in an accurate context.
But, seriously, what is his actual plan?
If he fails to swoop in and claim credit for saving the bailout, will he vote yea or nay?
Why does he even want to be the one putting the debate on hold? How does he think this will enhance his public image?
Is this all just a convoluted way to rig expectations for the debate?
Help me understand, somebody.
The Large Hadron Collider did, as was feared, produce a black hole-- the centripetal, apocalyptic orifice sutured to Bill Clinton's festering corpse.
Wednesday, September 24, 2008
Republican White House hopeful John McCain threw the campaign into turmoil on Wednesday by calling for a delay in the first presidential debate to try to forge a Wall Street rescue plan -- a surprise move promptly rejected by Democrat Barack Obama.
Apparently they're also trying to scotch the VP debate.
McCain supporter Sen. Lindsey Graham tells CNN the McCain campaign is proposing to the Presidential Debate Commission and the Obama camp that if there's no bailout deal by Friday, the first presidential debate should take the place of the VP debate, currently scheduled for next Thursday, October 2 in St. Louis.
Game over fuckers. Die.
1. The problem is that all these banks invested in securities backed by home mortgages that the homeowners can't pay off, rendering the investments worthless.
2. If somebody -- say, the federal gov't -- just went ahead and PAID OFF all the delinquent mortgages ... or paid off enough of them, or a sufficient portion of each mortgage, so that the homeowners could make their payments, wouldn't that restore the value to those investments?
3. Couldn't $700 billion go a really long way toward achieving point (2)?
According to Wikipedia (I know, Wikipedia, but anyway), "the U.S. mortgage market is estimated at $12 trillion with approximately 9.2% of loans either delinquent or in foreclosure."
So, just doing a back of the envelope calculation, let's say there's $1 trillion in bad mortgage debt out there (about 9.2% of $12 trillion). That is a shitload of money, but if you just went to the delinquent homeowners and, like, JUST GAVE THEM $700 billion -- the same way they want us to JUST GIVE Wall St. $700 billion -- wouldn't that solve a lot of issues?
Imagine you were struggling to make your monthly payment and then someone came along and gave you 70% of the principal balance, in cash, all at once. Would that not greatly increase the chances that you could pay off the remaining 30% on your own?
And would that not in turn make any bonds, credit swaps, etc. derived from your mortgage a valuable asset once more?
I'm just saying. If we're going to throw away this money on the mortgage crisis, let's do it from the bottom up.
McCain advisors say they will do all the debates but the schedule is up in the air. They also deny that there is a political calculation in this and say without action the country could slide into a Depression by Monday and added "we'll see 12 percent unemployment" if action is not completed.Give me a fucking break. Depression by Monday? It's 4:15 now and the Dow is down 29 points. When does the 12% unemployment hit -- Tuesday or Wednesday?
You know what IS plummeting right now? McCain's numbers in a slew of statewide and national polls. Also Sarah Palin's approval ratings. Also the likelihood that his own campaign manager, who has apparently been running some sort of extortion or graft racket on the side, will continue to remain working on the campaign.
Just like when he picked Palin, McCain senses that he's in his losing position and his first reaction is to overturn the chessboard.
Finish the game, loser!!
So far the Obama people are reacting correctly by saying, nope, we can handle both and Friday's debate is on.
some permutation of the Paulson bailout is basically a fait accompli. The Hill reports that House Democrats have declared their willingness to approve the bailout provided a majority of Republicans join them. ABC News reported today that Democrats are ready to support it provided that McCain supports it as well, and the NYT summarized Obama's position as supportive of the Paulson plan with some oversight provisions and other protections added on (though without the requirement that the Government obtain an equity stake in these companies rather than ownership of their toxic assets -- the provision that Paul Krugman has identified as being an absolute prerequisite for any deal to be remotely fair or tolerable: "No equity stake, no deal").
In sum, it seems as though Democrats and Republicans -- and both presidential campaigns -- are preparing to jointly endorse some mildly improved version of the Paulson plan, on the premise that if they both do it, neither side will pay politically. As David Sirota notes, bank lobbyists have already decided they don't need to take Chris Dodd or any other intransigent members seriously because their winning is inevitable. Wall Street and corporate America can't lose in Congress -- they never do -- for one very simple reason: they own Congress and the "leaders" of it. Just listen to Rep. Marcy Kaptur;
Lenin's analysis of the yesterday still holds:
For one thing it really does look like a parachute for the empire, in that it will bail out any global financial institution that happens to have what Paulson deems 'significant' investments in the US economy, whether they are in deep trouble already or not. This looks like a move to consolidate America's faltering command of the financial system and to ensure that the global appropriation of labour continues to operate overwhelmingly in the interests of US capital. Secondly, there are no protections for homeowners or taxpayers, no limits on executive remuneration, no plans to stimulate the economy, and no demands for reciprocity (ie, we give you $700bn, you give us...). This is just throwing money at the ruling class. So, as one might have predicted, the crisis is being used to shore up the class power of the rich through a massive act of expropriation.
And by the way, fuck you Obama. Fuck you and Rubin and all your rapist buddies.
Bernie Sanders has a petition to stop the bailout. In addition to writing and calling your reps and getting in the street tomorrow, this is something to do. An Obama presidency is going to be worth a bucket of warm spit if this bailout passes. He's already said that the bailout would force him to delay his proposals. If that's how he's talking now, its gonna be a lot harder down the road. An Obama presidency that can't deliver is just gonna set the Right up for another win. Everyone to the left of Hitler should be focused on stopping this right now.
Don't let your Obama dollars go to waste. Stop the bailout.
And The Field links AmCop.
From Maureen Dowd, who is losing her snark as she realizes the stakes...
Besides talking about what a great man John McCain is on “The View” and “David Letterman,” Bill praised Palin at his Clinton Global Initiative meeting in New York and will receive her there on Thursday.
“I come from Arkansas. I get why she is hot out there,” he said authoritatively, adding: “People look at her, and they say, ‘All those kids. Something that happens in everybody’s family. I’m glad she loves her daughter and she’s not ashamed of her. Glad that girl’s going around with her boyfriend. Glad they’re going to get married.’ ” He said voters would think: “I like that little Down syndrome kid. One of them lives down the street. They’re wonderful. ... And I like the idea that this guy does those long-distance races. Stayed in the race for 500 miles with a broken arm. My kind of guy.”
On “The View,” he said he understood that some women might vote for Palin on the basis of gender, even if it was against their economic interest.
“You can’t tell someone else that the ground on which they make their voting decision is irrational,” he said primly.
And Obama's lead has solidified in the polls.
The modern nation-state is in a secular decline, made inevitable by the rise of a global market system. Even developed nations, like the US, are not immune to this process. The decline is at first gradual and then accelerates until it reaches a final end-point: a hollow state. The hollow state has the trappings of a modern nation-state ("leaders", membership in international organizations, regulations, laws, and a bureaucracy) but it lacks any of the legitimacy, services, and control of its historical counter-part. It is merely a shell that has some influence over the spoils of the economy. The real power rests in the hands of corporations and criminal/guerrilla groups that vie with each other for control of sectors of wealth production. For the individual living within this state, life goes on, but it is debased in a myriad of ways.
The shift from a marginally functional nation-state in manageable decline to a hollow state often comes suddenly, through a financial crisis. This crisis typically has the following features:
Corporations and connected individuals systematically loot the nation-state of financial assets and natural resources through a series of insider/no cost deals. These deals are made to "save" the nation's economy or financial system from collapse.
Once the full measure of the crisis is known, the nation-state's currency falls precipitously, it's debt becomes expensive, and it is forced to submit to international oversight/rules.
The services the state provides rapidly evaporate as its bureaucracy is starved for cash/financing. This opens up a window for the corruption of government employees unused to deprivation.
Tuesday, September 23, 2008
Beginning in October, the Army plans to station an active unit inside the United States for the first time to serve as an on-call federal response in times of emergency. The 3rd Infantry Division’s 1st Brigade Combat Team has spent thirty-five of the last sixty months in Iraq, but now the unit is training for domestic operations. The unit will soon be under the day-to-day control of US Army North, the Army service component of Northern Command. The Army Times reports this new mission marks the first time an active unit has been given a dedicated assignment to Northern Command. The paper says the Army unit may be called upon to help with civil unrest and crowd control. The soldiers are learning to use so-called nonlethal weapons designed to subdue unruly or dangerous individuals and crowds.
Beginning in October. Beginning. in. October. What happens after...
A demonstrator holds up a sign behind U.S. Treasury Secretary Henry Paulson (L) and Federal Reserve Board Chairman Ben Bernanke (R) during a hearing before the Senate Banking, Housing and Urban Affairs Committee September 23, 2008 on Capitol Hill in Washington, DC. The Bush administration officials were testifying about a proposed $700 billion bailout that they hope will stabilize the faltering U.S. financial system.
For years now, they’ve told us that we can’t afford—that the government providing healthcare to all people is just unimaginable; it can’t be done. We don’t have the money to rebuild our infrastructure. We don’t have the money to wipe out poverty. We can’t do it. But all of a sudden, yeah, we do have $700 billion for a bailout of Wall Street.
If a company is too big to fail, it is too big to exist.
When: 4pm Thursday, September 25!
Where: Southern end of Bowling Green Park, in the plaza area
What to bring: Banners, noisemakers, signs, leaflets, etc.
Why: To say we won’t pay for the Wall Street bailout
This week the White House is going to try to push through the biggest
robbery in world history with nary a stitch of debate to bail out the Wall
Street bastards who created this economic apocalypse in the first place.
This is a historic moment. We need to act now while we can influence the
debate. Let’s demonstrate this Thursday at 4pm in Wall Street (see below).
We know the congressional Democrats will peep meekly before caving in like
they have on everything else, from FISA to the Iraq War.
On this list are many key organizers and activists. We have a huge amount of
connections – we all know many other organizations, activists and
community groups. We know P.R. folk who can quickly write up and
distribute press releases, those who can contact legal observers, media
activists who can spread the word, the videographers who can film the
Do whatever you can – make and distribute your own flyers, contact all
your groups and friends. This crime is without precedent and we can’t be
silent! What’s the point of waiting for someone else to organize a protest
two months from now, long after the crime has been perpetrated?
We have everything we need to create a large, peaceful, loud
demonstration. Millions of others must feel the same way; they just don’t
know what to do. Let’s take the lead and make this the start!
See you there.
made by: scats
Monday, September 22, 2008
I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude. I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.
I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transactin is 100% safe.
This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.
Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to firstname.lastname@example.org so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.
Yours Faithfully Minister of Treasury Paulson
h/t The Nation
INSANE BILLIONAIRES: Let's kill everyone and take their money!
SANE BILLIONAIRES: I like the way you think. I really do. But if we keep everyone alive, and working for us, we'll make even more money, in the long term.
INSANE BILLIONAIRES: You communist!!!
At the moment, the insane billionaires are trying to take everyone's money, though the theft will likely result in the deaths of millions -- and even of some rich people. The proposed bailout is evidence of virtually suicidal criminality.
Today the sane billionaires managed to achieve a small victory, temporarily slowing down the bailout juggernaut. But it will be hard for them to hold to this line now that Wall St has freaked out on the news that the criminals might not be able so easily to replace their losses with taxpayer money.
Today I called Schumer, Yvette Clark, and Nancy Pelosi, and told them not to give in to the bailout screamers. Tomorrow morning I think I will do so again -- maybe it makes a difference...
Anyway, it can't hurt:
Congress main line
Sunday, September 21, 2008
For those who still can't grasp the concept of white privilege, or who are constantly looking for some easy-to-understand examples of it, perhaps this list will help.
White privilege is when you can get pregnant at seventeen like Bristol Palin and everyone is quick to insist that your life and that of your family is a personal matter, and that no one has a right to judge you or your parents, because "every family has challenges," even as black and Latino families with similar "challenges" are regularly typified as irresponsible, pathological and arbiters of social decay.
White privilege is when you can call yourself a "fuckin' redneck," like Bristol Palin's boyfriend does, and talk about how if anyone messes with you, you'll "kick their fuckin' ass," and talk about how you like to "shoot shit" for fun, and still be viewed as a responsible, all-American boy (and a great son-in-law to be) rather than a thug.
White privilege is when you can attend four different colleges in six years like Sarah Palin did (one of which you basically failed out of, then returned to after making up some coursework at a community college), and no one questions your intelligence or commitment to achievement, whereas a person of color who did this would be viewed as unfit for college, and probably someone who only got in in the first place because of affirmative action.
White privilege is being able to be a gun enthusiast and not make people immediately scared of you. White privilege is being able to have a husband who was a member of an extremist political party that wants your state to secede from the Union, and whose motto was "Alaska first," and no one questions your patriotism or that of your family, while if you're black and your spouse merely fails to come to a 9/11 memorial so she can be home with her kids on the first day of school, people immediately think she's being disrespectful.