Amazing. on Marketplace, Lisa Broome speculates that General Motors may be motivated to become a bank-holding company so that it can submit to regulation and thus inspire investor confidence. Yes, regulation to inspire investor confidence.
is the name of the artist whose work i – and, likely, tens of thousands of other Los Angelenos – have been enjoying for the last two years. without knowing his name or that it was “art,” for that matter.
About those five men just freed from our unconstitutional and immoral prison camp in Cuba after seven years without a trial.
And the man who freed them:
Judge Leon is a Bush-43 appointed Judge [who] was Deputy Chief counsel for the Republicans on the Iran-Contra Committee in 1987, was Special Counsel to the Senate Banking Committee for the Whitewater investigation, and worked for both the Reagan and Bush 41 Justice Departments. That Judge Leon… ruled that there was no credible evidence to suggest that these detainees are “enemy combatants” is as compelling a sign as one can imagine that there is no such evidence.
From Regenerating a Mammoth for $10 Million:
The same would be technically possible with Neanderthals, whose full genome is expected to be recovered shortly, but there would be several ethical issues in modifying modern human DNA to that of another human species.
Everything that is wrong with our press and NPR in particular is on stark display in this exchange between NPR’s Steve Inskeep and Rep. Barney Frank.
It’s 1:30 in the afternoon but it looks like the sun is setting. The sky is filled with smoke of a dozen fires.
update: our smoke detector went off. twice.
I would love to visit and revisit a month by month graph of sales for all the tiers. From the NYT:
As sales at high-end stores like Neiman Marcus plunged by nearly 30 percent in October, compared with a year earlier, Costco sales slipped just 1 percent and Wal-Mart reported gains.
I hope he’s right:
Second, on the question of the environment. There is no question that the internal combustion engine is at the heart of the climate crisis. But getting rid of Detroit won’t get rid of cars. More to the point of creativity — one of the things about crisis is that it opens opportunities would never exist in normal times. People have been looking for ways to get Detroit to get serious about developing cleaner, more fuel efficient cars for years. At this point, we’re beyond that. We need to get serious about cars that don’t use gas at all. If the whole domestic auto industry is all but asking to be taken into federal receivership, that tells me that the people running the federal government now have quite a lot of leverage.
Former Goldman Sachs chairman John Whitehead on why it’s (now) time for sacrifice and leadership:
“Before I go to sleep at night, I wonder if tomorrow is the day Moody’s and S&P will announce a downgrade of U.S. government bonds,” he said. “Eventually U.S. government bonds would no longer be the triple-A credit that they’ve always been.”
There are at least ten “trillion dollar problems,” facing the United States, he said, including social security, expanding health insurance, rebuilding infrastructure and increased spending on green energy. At the same time, the public does not want to pay for it.
“The public is not prepared to increase taxes. Both parties were for reducing taxes, reducing income to government, and both parties favored a number of new programs — all very costly and all done by the government,” he said.
…Whitehead said he is speaking out on this topic because he is concerned no lawmakers are against these new spending programs and none will stand up and call for higher taxes.
David Bromwich has written a monumental and damning profile of Dick Cheney. It begins with this:
The vice-presidential search in the spring of 2000 was characteristic of the co-presidency to come in one other way. It involved the collection of information for future use against political rivals. In this case, the rivals were the other potential VPs, among them Lamar Alexander, Chuck Hagel, and Frank Keating. They had been asked to submit exhaustive data concerning friends, enemies, sexual partners, psychological vicissitudes (noting all visits to therapists of any kind), personal embarrassments, and sources of possible slander, plus a complete medical history. Each also signed a notarized letter that gave Cheney the power to request records from doctors without further clearance.
All this information would prove useful in later years. Barton Gellman reveals in Angler that soon after Frank Keating was mentioned as a likely candidate for attorney general, a story appeared in Newsweek about an awkward secret in his past: an eccentric patron had paid for his children’s college education. No law had been broken, and nothing wrongly concealed; but the story killed a chance for Keating to be named attorney general; and the leak could only have come from one person. Doubtless most of the secrets in Cheney’s possession were the more effective for not being used.
In 2004, I wondered how much time would pass before Americans got a clear look at the amorality, the insidious love of power at the heart of the second Bush administration. I pray this piece is only the beginning.
We would be accessories after the fact if we simply changed the subject. We need a reckoning.
Eighteen years ago I got my first introduction to the world of high finance from Michael Lewis’ awesome memoir Liar’s Poker.
Lewis has just written what is likely the most telling and poignant account of how Wall Street played Russian roulette and we all lost.
at certain altitudes the turbulence is milder:
“At the right level, the market exists,” said Tobias Meyer, the head of Sotheby’s contemporary art department worldwide and the evening’s auctioneer. “But the audience is smart and seasoned.” He said prices had rolled back to 2006 levels.
General Motors proposes that the public lend it some dozens of billions of dollars more, and Obama seems to think it’s a good idea. Sad to see the new guy pooch a big decision so early.
Detroit is certainly hurting, and the people who live there and near other plants deserve help, perhaps with bus tickets. But these companies have amply demonstrated that their management is pretty good at making twentieth century cars in a protected environment, but profoundly suck at everything since except, well, sucking up taxpayer money and destroying value. Why in the world would one prop up such an enterprise; if it’s a loan, why would one expect it to ever be paid back? We will wind up with a nationalized car manufacturer, and if you like Alitalia, you’ll love US National Motors, a basket case for the ages.
Protecting an enterprise from its deep-seated inability to produce competitively and to engage with the future has never done anything but put off the inevitable, and very expensively. Toyota and Honda (or a competent new team with tough investors), will be happy to recycle the capital of GM into a working car company like their existing US operations. Or into scrap, as reality indicates. The workers need to be taken care of humanely, as their employer has not, trashing their retirement and medical insurance, but they don’t need to be made permanent charity cases, who pretend to create value in a government sheltered workhouse whose every day of operation is a mendacious pretense that the real losses haven’t already occurred. They have: US car companies misused and wasted the resources society entrusted them with and what’s left is a negative sum.
Bruce Schneier quoting an account of a British psychological operations campaign in WW2:
On March 30, 1945, “Aspidistra” intruded into the Berlin and Hamburg frequencies warning that the Allies were trying to spread confusion by sending false telephone messages from occupied towns to unoccupied towns. On April 8, 1945, “Aspidistra” intruded into the Hamburg and Leipzig channels to warn of forged banknotes in circulation. On April 9, 1945, there were announcements encouraging people to evacuate to seven bomb-free zones in central and southern Germany. All these announcements were false.
False telephone messages. Forged money. These were fake broadcast about fakes. Absolute genius. Likely still happening today in all sorts of places. Better:
The German radio network tried announcing “The enemy is broadcasting counterfeit instructions on our frequencies. Do not be misled by them. Here is an official announcement of the Reich authority.” The Aspidistra station made similar announcements, to cause confusion and make the official messages ineffective.
Instead, the schools that make up the upper crust of the public education universe belie the system they are part of and the city where they reside, and the disparity between the races has grown even more pronounced over the past decade.
In this city of 1.1 million public school students, about 40 percent are Hispanic, 32 percent are black, 14 percent are Asian and 14 percent white. More than two-thirds of Stuyvesant High School’s 3,247 students are Asian (up from 48 percent in 1999). At Brooklyn Technical High School, 365 of the 4,669 students, or 8 percent, are Hispanic; at the Bronx High School of Science, there are 114 blacks, 4 percent of the 2,809-student body.
Bucephalus Bouncing Ball. It gets better and better as the years pass.
On shamelessness as a political weapon:
This is why I say that they have retired the concept of hypocrisy. It goes far beyond double standards or duplicity or bad faith. There’s an aggression to it, a boldness, that dares people to bring up the bald and obvious fact that the person making the charge is herself a far worse perpetrator of the thing she is decrying. There’s an intellectual violence in it.
Josh Marshall:
I’m under no illusion that negative or even nasty campaigning will come to an end in the USA. I don’t think that’s realistic or even necessarily desirable. Hard-fought and brass-knuckle politics is something built into the fiber of American politics. It’s part and parcel of the intensity of belief and passion that many of us have for the issues at stake in our elections.
But McCain’s campaign has devolved into something altogether different … what with its increasingly open appeals to racial conflict and aggressive invocations of blood hatred of Arabs and Muslims. As The New Republic phrases it, McCain’s “subtle incitements of racial warfare and underhanded implications of foreign nativity.” Over the months we’ve become desensitized to the moral depravity of McCain’s campaign…
We’ll always have a national dark side. But some signal needs to be sent, at least for a while, that this sort of filth, his character assassination and appeals to race hatred is not an effective life raft for desperate opportunists looking to save themselves by degrading this country. A McCain defeat would go some way to accomplishing that.
CNN:
The U.S. dollar continued to advance Thursday as fears of a global economic recession drained the market of its appetite for risky trades involving the euro and the pound…The dollar’s gains also stem from a perception that economic recovery will first emerge in the United States as the government’s bailout efforts begin to take effect.
A two-prong attack:
Stripped down to its components McCain’s message to voters is this: “Don’t forget. He’s definitely black. And he may be a terrorist.” That’s the message. The nuts and bolts is a concerted effort to keep Democrats from voting — through intimidation, by striking new voters from the rolls, which is going to happen to lots of them, clogging polling stations to create delays that keep late day (predominantly) Obama voters from voting altogether. Smears in the air and voter suppression on the ground.
“Governor Palin, are you ready at this moment to perform surgery on this child’s brain?”
“Of course, Charlie. I have several boys of my own, and I’m an avid hunter.”
I finally watched Batman vs. The Penguin: The Debate and it is a genius allusion; the best kind of sampling.
Imagine if you borrowed money from a hundred investors to bet big on a horse race. And then, as the race was underway, and your horse was trailing by a head, your backers decided to collect on their loans, with interest, one by one. Would you still stand to win even if your horse did?
Noting that investment banks are organized gambling, James Surowiecki points out that for investment banks, “going public…meant exposing themselves to a minute-by-minute referendum…on the health of their operations.” Which is to be expected, he adds, since they were betting with other people’s money.
In the same issue of the New Yorker, Nick Paumgarten describes credit-default swaps and related instruments as the products of magical thinking.
It might be a good time for an adaptation of The Rocking-Horse Winner.
I marvel at how well Barack Obama performs. For quite a few years now, the bar for American performance has been lowered in so many ways.
“Heckuva job, Brownie.”
“12 mpg.”
“Performing non-performing loans.”
Performance once meant to enact or do. It can also mean to act only formally – to “go through the motions” or simulate an action. As a nation if not as a global economy, we’ve spent more than decade flirting with the question: can a successful simulation supplant reality?
I believe the answer has turned out to be “no.”
From Baudrillard to Bush.
Michael Bérubé, Regis ‘78:
Beginning with Reagan, the GOP has come to understand that when it runs with amiable dunces—even putatively amiable dunces—at the top of the ticket (Reagan, Bush II), it kicks butt and (as Atrios succinctly puts it) pisses off liberals; when it runs old-school government-and-civics types who understand things like parliamentary procedure and know the names of furren leaders (Bush I, Dole), it doesn’t fare so well (Bush I won but quickly squandered the party’s Reagan Dividend; meanwhile, Quayle kept alive the attack-on-eloquence-and-arugula).
The jokes about “Palin-McCain ‘08″ are clever corrections. The audience knows the score.
But why do we demand this ruse? Because freedom is too much to bear without farce.
Liberty is the question to which man is the incomplete answer. Almost all religion and philosophy is an attempt to circle this square. Does freedom mean a refusal of all authority? Or does rebellion enslave a person in even more binding chains? Could it be that true freedom is achieved only by those who embrace their own subjugation?
It’s this ancient dilemma that inspired George Herbert to wear a harness and George W. to put on a cowboy hat. Americans want to be free to be governed and that contradiction is much easier to confront when we’re looking into the eyes of a clown.
Upon first hearing there was some baulout plan coming out of the White House, I jokingly asked if we were going to use our armed forces to prevent creditors from collecting.
In reality, any plan will require the use our soft and hard power to collect on the public debt:
So is all this magic? No, over time Treasury has to pay interest and principal on the bonds it issues; the value of the bonds comes from the fact that people believe the US government can do that, which ultimately comes from the government’s ability to raise taxes. If investors lose faith in that …
So, the bailout will be based on investors’ trust in – and hope for – the American experiment. Wow. “Obama ‘08.”
this is what happens when the world’s most powerful country elects willful idiots into office, again and again, drunk on its own wealth and power:
World leaders expressed concern at the effect of the US vote.
“It will have a big impact on the US economy, and it will also greatly affect the global economy,” said Japanese Economics Minister Kaoru Yosano.
Australia’s Prime Minister Kevin Rudd said he had spoken to his British counterpart Gordon Brown and they agreed to urge the US Congress to reverse Monday’s decision
“The attitude that we will adopt… is to urge the United States Congress to pass this or a similar measure when it is represented to the Congress later this week,” said Mr Rudd.
Earlier, Brazilian President Luiz Inacio Lula da Silva accused the US and other wealthy nations of financial irresponsibility that could jeopardise the economic progress made in recent years by developing countries.
Brazil’s Ibovespa stock index dropped 9.4% on Monday.
ignorance is bliss, until it isn’t.
from the NYT:
While there were lawmakers who opposed the package on the merits, with Election Day just five weeks away, substantial numbers decided that to favor the bill would be to imperil their own political futures. And once the vote was under way and so few Republicans were voting aye, Democrats were disinclined to force more of their members to help pass the unpopular plan.
Mustn’t upset the baby.
there is a part of the u.s. government that helps control the complex machine that is the u.s. economy. that part of the u.s. government is missing. let’s see if the rest of the machine is able to operate without it.
John Cassidy on Soros on our current systemic failure:
Outside the idealized world of Lucas’s theory, knowledge is imperfect, people stick to wrongheaded ideas, and there is no agreed version of how the economy works. In these circumstances, Soros rightly points out, economic expectations, even biased ones, can help to determine economic fundamentals.
As in:
Until last summer, the US economy was awash in easy credit. In one way or another, the banking system played an important part in issuing many of these loans, which is hardly surprising since that is how banks make money. Rather than criticizing his fellow investors on Wall Street, who created many of the newfangled debt instruments—such as mortgage-backed securities and collateral debt obligations—that have now imploded, Soros puts the blame on the regulators and central bankers who aided and abetted the financiers’ incendiary activities. Under the system of “self-regulation” adopted by American and European banking regulators, many big financial institutions, such as Citigroup, Barclays, and Union Bank of Switzerland, were allowed to rely on their internal risk-management systems. The only outside check on their activities came from commercial ratings agencies, such as Moody’s and Standard & Poor’s, which depended on the banks’ fees for business.
Or, simply, the referee cannot play in the game.
How did we get to this point? It’s the culmination of many past betrayals.
First of all, we have the Republican Study Committee blowing things up with a complete nonsense proposal — solving the crisis with a holiday on capital gains taxes. How is that possible? Well, if a party runs on economic nonsense for 25 years, eventually many of its foot soldiers will be people who actually believe the nonsense.
In the Valley of Elah is an incredible movie. Long, heart wrenching, polemical, at times sentimental but very well acted and structured. We need a hundred more like it and better.
This is what all the politicians are pussyfooting around right now. Both presidential candidates are on the populist field but they are playing different games. They don’t yet know how to gauge the public mood. But I think when facing these kinds of major crises, politicians shouldn’t try top hard to guess the public mood. These are situations where the public really does look to their leadership to actually lead. We don’t need them telling us who we are allowed to sleep with or what music to listen to. But we do want them to call on all the best minds in the world and try to figure out a solution to a serious, complicated crisis.
Glenn Greenwald is not feeling it:
What is more intrinsically corrupt than allowing people to engage in high-reward/no-risk capitalism — where they reaped tens of millions of dollars and more every year while their reckless gambles were paying off only to then have the Government shift their losses to the citizenry at large once their schemes collapsed? We’ve retroactively created a win-only system where the wealthiest corporations and their shareholders are free to gamble for as long as they win and then force others who have no upside to pay for their losses. Watching Wall St. erupt with an orgy of celebration on Friday after it became clear the Government (i.e., you) would pay for their disaster was literally nauseating, as the very people who wreaked this havoc are now being rewarded.
I guess the plan is to use the U.S. armed forces to deter creditors from collecting.
I just heard part of Terri Gross’ interview with Maher Arar, the Canadian who was kidnapped by the U.S. (our public servants) and dropped off in Jordan / Syria to be tortured on allegations that he was an al Qaeda agent.
If I were a television executive in search of a sensational story to grip viewers, wouldn’t his be money in the bank?
Wow:
More than a billion AIG shares changed hands, a record for the company that was also nearly 30 times the daily average activity so far this year. The AIG activity represented about 12% of all volume in New York Stock Exchange-listed names, which saw an overall record for a second straight day, with 9.3 billion shares changing hands.
Nassim Nicholas Taleb channels Socrates to disparage (now obviously flawed) financial models and the abuse of statistics in general:
Go to a bookstore, and look at the business shelves: you will find plenty of books telling you how to make your first million, or your first quarter-billion, etc. You will not be likely to find a book on “how I failed in business and in life”—though the second type of advice is vastly more informational, and typically less charlatanic. Indeed, the only popular such finance book I found that was not quacky in nature—on how someone lost his fortune—was both self-published and out of print. Even in academia, there is little room for promotion by publishing negative results—though these, are vastly informational and less marred with statistical biases of the kind we call data snooping. So all I am saying is “what is it that we don’t know“, and my advice is what to avoid, no more.
It’s almost good enough for a bumper sticker: “If we have to protect against bank runs by providing deposit insurance, we also have to regulate capital, reserves, and so on to limit the resulting moral hazard.”
The final graph of an epic article:
Outside the public eye, Fed officials had acquired much more information since March about the interconnections and cross-exposure to risk among Wall Street investment banks, hedge funds and traders in the vast market for credit-default swaps and other derivatives. In the end, both Wall Street and the Fed blinked.
