Never been a better trainwreck . . .

. . . back behind the woodshed.  

Gotta love how Stewart just eviscerates this guy . . . even if Stewart doesn't seem to understand the first thing about short-selling, hedge funds, CDS's or how any of them have anything to do with our pension plans . . . 

The state of our media

Not sure whether to laugh or cry . . . 

Being treated like grown-ups

Obama explicitly rejected some of the more egregious budgeting practices of his immediate predecessor. President Bush never included the cost of the wars in Iraq and Afghanistan in his budgets, for instance, opting instead to treat those military campaigns as emergencies and fund them off the books. He took a similar approach with the entirely predictable $60 billion it cost the Treasury for each year that Congress spared 20 million taxpayers the expensive bite of the alternative minimum tax. Bush also budgeted nothing for federal disaster response, though natural disasters invariably occur. Obama included all three things in his 10-year budget.

Read the remainder -- a new era.

Report from the bunker

Some disclosure: my real-world avatar is a boring banking lawyer deeply embedded in the belly of the beast.  I can therefore confidently explain what has happened to make all the major financial institutions of the world look like a fleet of Titantics ploughing dead ahead into various icebergs. 

While it may be true, as everyone seems to have concluded, that most bankers are indeed minions of beelzebub, Satan alone should not be blamed for the current mess. Unless we want to make greed a capital offence it's pretty pointless to get all uppity about avaricious bankers. After all, we were the ones who gave them the rope to hang us all with. 

It is important to keep in mind that in the parlance of our times, thanks to Reagan revolution, it has been long accepted conventional wisdom that all government is bad, and regulators are particularly bad, which I think often explained the quality of regulators I myself have come into contact with. This is not always true: some have been astute and very good – but for a long time they have been radically underpaid and maligned to the point of irrelevance. 

So why should anyone be surprised when the end result is massive and comprehensive regulatory failure? 

The financial system, though complex, can work if risks are correctly assessed. The problem is that under conditions of large liquidity, which we had when credit was cheap, the quest for “returns” encourages excessive risk taking and exposes the system’s vulnerabilities: 

Market participants that work for fees (mortgage brokers, payments receivers) don’t have incentives to monitor the quality of loans, only to increase the quantity of loans. 


The same thing happens with the credit rating agencies which supply “ratings” for the structured products and do not face any financial responsibility to cover losses from their mistakes. 


Regulatory Arbitrage: different financial institutions undertaking similar activities face different regulations (especially capital requirements). 


Principal-Agent Problem: huge disparity in traders’ maximum loss (zero bonus) vs. investors’ losses (the full capital invested). 

The job of regulators is to ensure these risks are correctly assessed and, where they aren't, the financial system is protected. 

Guess that hasn't happened.

Stick to baseball, George

So, the global restructuring and geo-strategic recalibration is well under way.  

America's, and Europe's, historic economic predominance can be expected to slip away - with inevitable consequences for the west's ability to lead and shape events on the world stage. In other words, all of this is about something much bigger than a few poorly-managed megabanks: we've seen this movie before. The British Empire effectively spent itself into oblivion as its economic might imploded.  

In recent years foreign central banks and sovereign funds have increasingly propped up the dollar and bought U.S. Treasuries. We can't expect this to continue indefinitely: China now is diversifying aggressively to hedge away from its exposure to a country with such dire long-term fiscal imbalances as the United States. Joseph Stiglitz (Nobel Prize, Economics) calculates the Iraq war will cost the US three trillion alone (all in), which puts Obama's fiscual stimulus package (roughly $800 billion) into perspective.  

In short, as a nation, we've been profligate idiots. This is more true in the U.S. than the UK (as Stiglitz himself has observed) but the UK has been far from prudent itself (as Warren Buffet has repeatedly observed since the 90s).  

Things didn't have to be this way, but, of course, rational discourse hasn't been permitted for a long time, and there certainly was no interest on the Sunday talk shows. Even today we have George Will still blathering about how the New Deal didn't work: it amazes me how many apologists for Hoover are still out there. World War II got us out of the Great Depression? Even if you concede that might be true (and I don't), it doesn't change the fact that massive public spending did the trick. Is George advocating another big war? Iraq wasn't enough?  

I laugh when I think about all those fiscal conservatives who demanded a balanced budget amendment in the late 90s, and who then promptly forgot about it with dubbya in the White House: they discovered John Maynard Keynes and suddenly deficit spending was, like, so cool! Except deficit spending as Kenyes conceived it had nothing to do with tax cuts for the rich. In contrast, fighting stupid wars that make no sense can work as a form of fiscal stimulus (as sort of a large public works project), but dubbya didn’t get the timing quite right. Yes, he’s probably the worst president we’ve ever had.  

But we, the People, put him in office, so who really is to blame?

Let me get this straight . . .

COST OF IRAQ WAR : 

• $3 TRILLION (all in) ***

RETURN ON INVESTMENT: 

• resurgent Al Qaeda 
  
• undermined multilateral nuclear anti-proliferation efforts  
• massive loss of American foreign policy and intelligence agencies credibility
• depletion of armed forces capabilities 
  
• distraction from Afghanistan 
  
• maybe someday "democracy will flower in the middle east" (like it did in Palestine, except they elected Hamas to power - oops)

REPUBLICANS OPPOSED: 

• Zero
  

-- compare and contrast with -- 

COST OF PROPOSED STIMULUS PACKAGE (Senate Version): 

• $780 billion

RETURN ON INVESTMENT: 

• Only hope for avoiding crippling global depression (tax cuts for the rich repeatedly proven ineffective as stimulus)

REPUBLICANS OPPOSED:

• All but three Senators.
  

*** see, Joseph Stiglitz, Columbia University, former chief economist at the World Bank, winner, Nobel Prize for Economics, 2001: monetary estimates may be considered in addition to 100,000 to 655,000 dead, not that many seem to care very much

Our Greatest Jurist

Why is our ever-somnolent media waking up to pay attention to what a boor this guy is all of a sudden now?

Hoover Lives!

Change most definitely has not come to the Beltway Grandees, least of all Wolfie  . . . 

Can we please, please, please have a press corps that is not entirely somnolent?  

Sigh.

Bring out your Dead!

Remember early on during the Bush years all those Republicans who suddenly threw down the mantle of "fiscal responsibility" and donned proudly the one labelled "John Maynard Keynes" as they happily pushed through Bush's tax cuts for the rich?  Yes, deficit spending was suddenly in vogue with a Republican in the White House . . . it mattered not what kind of deficit spending Keynes actually prescribed to combat a recession (needless to say, tax cuts for the wealthy were not what Keynes had in mind).  And . . . don't forget that laugher of a Laffer curve: like that unfortunate old gaffer in the "Bring out your Dead!" bit in Monty Python and the Holy Grail, that little gem of Reagonomics still is not "dead yet", despite being thoroughly discredited many times over.

I really wonder what is going on the heads of Republican lawmakers as we teeter on the precipice of Great Depression 2.0.  Marshall is losing it:

I cannot say my expectations were high. But Sen. DeMint (R) of South Carolina does seem to be an even bigger ignoramus than I'd realized. On This Week this morning he actually said: "Let's don't say it's a stimulus when it's a government spending plan." A 'Stimulus plan' is pretty much by definition a spending plan, though of course it can include tax reductions as well.

As noted, my expectations are not high. But I'm wowed by the amount of nonsense and lies that are being injected into this debate.

Also, high on the list, of course, is the fact that basically all the 'wasteful' spending that's being discussed amounts to a total of what ... maybe 2 or 3 billion out of $819 billion total? Why is this point not being made more clearly?

It's enough to make one want to swing a cat around in the middle of a medieval plague!

Conspiracy Alert

Did you ever notice that the Homeland Security Dept's terror alert color-coding system . . .

. . . corresponds PRECISELY with the colors of the characters in Teletubbies?

. . . think about it.

Homeland Security Live Alert

Krugman

Yep . . . it's a priority:

Let’s talk about the magnitude of the looming health care disaster.

Just about all economic forecasts, including those of the Obama administration’s own economists, say that we’re in for a prolonged period of very high unemployment. And high unemployment means a sharp rise in the number of Americans without health insurance.

After the economy slumped at the beginning of this decade, five million people joined the ranks of the uninsured — and that was with the unemployment rate peaking at only 6.3 percent. This time the Obama administration says that even with its stimulus plan, unemployment will reach 8 percent, and that it will stay above 6 percent until 2012. Many independent forecasts are even more pessimistic.

Why, then, aren’t we hearing more about ensuring health care access?

Now, it’s possible that those of us who care about this issue are reading too much into the administration’s silence. But let me address three arguments that I suspect Mr. Obama is hearing against moving on health care, and explain why they’re wrong.

First, some people are arguing that a major expansion of health care access would just be too expensive right now, given the vast sums we’re about to spend trying to rescue the economy.

But research sponsored by the Commonwealth Fund shows that achieving universal coverage with a plan similar to Mr. Obama’s campaign proposals would add “only” about $104 billion to federal spending in 2010 — not a small sum, of course, but not large compared with, say, the tax cuts in the Obama stimulus plan.

It’s true that the cost of universal health care will be a continuing expense, reaching far into the future. But that has always been true, and Mr. Obama has always claimed that his health care plan was affordable. The temporary expenses of his stimulus plan shouldn’t change that calculation.

Second, some people in Mr. Obama’s circle may be arguing that health care reform isn’t a priority right now, in the face of economic crisis.

But helping families purchase health insurance as part of a universal coverage plan would be at least as effective a way of boosting the economy as the tax breaks that make up roughly a third of the stimulus plan — and it would have the added benefit of directly helping families get through the crisis, ending one of the major sources of Americans’ current anxiety.

Finally — and this is, I suspect, the real reason for the administration’s health care silence — there’s the political argument that this is a bad time to be pushing fundamental health care reform, because the nation’s attention is focused on the economic crisis. But if history is any guide, this argument is precisely wrong.

[...] One more thing. There’s a populist rage building in this country, as Americans see bankers getting huge bailouts while ordinary citizens suffer.

I agree with administration officials who argue that these financial bailouts are necessary (though I have problems with the specifics). But I also agree with Barney Frank, the chairman of the House Financial Services Committee, who argues that — as a matter of political necessity as well as social justice — aid to bankers has to be linked to a strengthening of the social safety net, so that Americans can see that the government is ready to help everyone, not just the rich and powerful.

The bottom line, then, is that this is no time to let campaign promises of guaranteed health care be quietly forgotten. It is, instead, a time to put the push for universal care front and center. Health care now!

Just my opinion

Promise me we won't go to a nightclub 

I really think that it's obscene  

What kind of people go to meet people  

In a place you can't be heard or seen  

- The Be Good Tanyas

Yes, the Damage can be undone . . .

. . . but, my oh my, how hard it's looking:

During his eight years in office – fat ones, for the most part, from a fiscal point of view – President George W. Bush moved the budget balance from surplus to structural deficit. Demographic and other pressures will worsen the position over the next decade or two. Now comes a fiscal expansion that will be only partly counter-cyclical: some of the new president’s spending will not reverse automatically as the economy recovers. A structural deficit of the sort taking shape is unsustainable and will be corrected one way or the other – if not by a timely change in policy, then by a new and potentially even worse financial calamity.

So, Happy Inauguration Day!  Eat, Drink and be Merry, for tomorrow we have a hell of a mess to clean up . . .

http://www.ft.com/cms/s/0/5665f224-e568-11dd-afe4-0000779fd2ac.html

 

And, as twilight fades to black for the glory that has been the Cheney/Bush years . . .

. . . we need to send a big Shout! out to the man who made it all possible . . .

To honor this great jurist and his incredible contribution in giving us the Cheney/Bush legacy, here is a link to one of my fave speeches of all time, given in 2002 in Chicago:

http://pewforum.org/deathpenalty

You need to link through the Pew website to get to the speech and then scroll down a bit in the speech itself for the money quote (it's one among many, actually), but I re-print it here in case you'd rather not bother with all of that -- it really is priceless:

It seems to me that the reaction of people of faith to this tendency of democracy to obscure the divine authority behind government should be not resignation to it but resolution to combat it as effectively as possible, and a principal way of combating it, in my view, is constant public reminder that – in the words of one of the Supreme Court’s religion cases in the days when we understood the religion clauses better than I think we now do – "we are a religious people whose institutions presuppose a supreme being".

Got that?  "People of faith" (who, presumably, count for more than people whose faith do not measure up to Justice Scalia's standards, as I assume he, or the Pope perhaps, might choose to define them) must "combat . . . as effectively as possible" democracy's "tendency to obscure the divine authority behind government".  Got it?

This, from a sitting United States Supreme Court Justice.  I had to read it a few times before I could believe what the good Justice was actually saying - not implying - but literally saying.  

I don't recollect many examples of guardians of the republic using the word "combating" and "democracy" in the same sentence, unless they were referring to combating somebody else in defense of democracy.  I don't know about you but I'm having a really hard time imagining any circumstances under which citizens would justifiably "combat" their own democratic form of government.  Remember: Justice Scalia is issuing a call to arms not to combat corruption in government, or a particular political party he doesn't like, or even the government itself: he is stating clearly and unequivocally that there is something inherent in our form of government - a democracy - which is inimical to something else that he believes is more important: the "divine authority behind government".  

This isn't just about semantics: don't all Americans have a pressing interest in understanding exactly how Justice Scalia proposes to combat an inherent "tendency" of democracy without combating democracy itself?  

There are other equally outrageous statements in this particular speech that betray a quite candidly unapologetic contempt for democracy -- mostly as a justification for the death penalty, of all things.  You gotta hand it to him: you could never accuse Justice Scalia of trying to pull the wool over anyone's eyes.  The statements in his Chicago speech and myriad other statements (see posts further below) have been practically screaming at us for years just what he thinks of the sanctity (triviality) of the vote and the importance (irrelevance) of the Establishment clause, not to mention the Great Mistake that was the Enlightenment.   Bush vs Gore should not have come as a surprise. 

The Obama cavalry arrived in the nick of time -- with people so focused on the economy, the wars and the various other Cheney/Bush-set brush fires and lapses requiring immediate attention, I'm not too sure they are aware of what a bullet we've dodged in the Supreme Court.  Now Justice Stevens can retire with some semblance of peace of mind.

Uh . . . duh . . .

From Josh Marshall: 

"No U.S. president can justify a policy that fails to achieve its intended results by pointing to the purity and rectitude of his intentions," - Paul Wolfowitz, "Statesmanship in the New Century," in Kagan, R. and Kristol, W, eds.

I guess what's notable is seeing Paul Wolfowitz saying something sensible, in a book edited by Robert Kagan and William "the bloody" Kristol, no less . . .  doesn't quite make up for the mess they've made . . . but every little, I guess.

Digby Roolz

. . . drumroll please: here she is.

Here's the text of the speech.

Judy's Lament

Imagine, poor Judy could have avoided "these very difficult times" if she and her like-minded counterparts throughout the main steam media had just done their jobs instead of acting as stenographers for the White House. Too much to ask for, I guess.

Nothing we didn't already know

Not surprised, just sad.

Just stop it . . .

An excellent article by Kevin Bales, president of Free the Slaves. What will it take to get the world's governments to focus sufficiently on contemporary slavery? How can 27 million people still remain enslaved in today's world. How can this be?

Well, it happens and, as Mr. Bales points out, it often happens right under your nose. That slavery came to church in suburban Fort Worth is an extreme yet highly ironic reminder of how comfortable westerners may be unwitting accomplices to this horror even in cases where we think we're helping.

What I don't follow entirely is Mr. Bales' resigned acceptance of the opacity of the supply chain of goods that make there ways to rich countries. Taking up Mr. Bales' example of cocoa, I would guess that slave-owning suppliers could always under-bid legitimate suppliers. I would guess it's safe to assume the law of supply and demand is encouraging slavery. Mr. Bales suggests that boycotting certain goods such as cocoa is akin to killing the patient in order to stop the disease: this is because legitimate (often family-owned businesses) would be wiped out along with the illegitimate. The only way to attack slavery, therefore, is through relentless enforcement, which means spending money. In addition, industries should be relentlessly pressured at the public policy level to step up to their responsibility to aid in this enforcement. Not sure how well big business would take to this idea. Not sure I give a damn.

So. Let's not let the beltway pundits and the editorial page of the Wall Street Journal pull the wool over our eyes, yet again, with the old "consumers demand low prices" and "over-regulation" shell games. On this one, you can be sure the industries and their lobbyists would hammer at our obliging representatives in government. They will do so successfully unless there is a counterbalancing force -- which can only be at the grass-roots level -- which can keep the focus on the real issue: ending slavery.

Of course, there is a long way to go before we even get to the point of government action. Mr. Bales needs to be watched and encouraged -- who will join him in the cause?

The Wal-Mart defence just doesn't cut it, not on this one.

Digby Roolz . . .

. . . exactement, you crazy hippy.