Obama to Hedge Funds: Take That

Jeffrey Feldman writes about Obama's statement today on the Chrysler settlement:

On the 101st day of his Presidency, Barack Obama finally slapped the hedge
funds across the face like they deserved. In his statement about the
Chrysler bankruptcy and subsequent restructuring into a "Chrysler-Fiat
Alliance," President Obama made it perfectly clear that not all the stakeholders
at the table stepped up in good faith for the good of the company or the good of
the nation. Some stakeholders were simply in it for themselves.

Framing his statement about Chrysler in terms of
"shared sacrifice," President Obama elaborated on "substantial financial
contribution" of the Canadian government, the massive debtor-in-possession
financing offered by the U.S. taxpayer, and the significant sacrifices made by
the UAW to guarantee that Chrysler could emerge from bankruptcy a stronger more
viable company in alliance with Italian automaker Fiat.

But there were some parties, according to the President, who deserved
mention only for their unwillingness to join the effort (emphasis added):

"While many stakeholders made sacrifices and worked constructively in
this process, some did not. In particular, a group of investment firms and hedge
funds failed to accept reasonable offers to settle on their debt. In order to
effectuate this alliance without rewarding those who refused to sacrifice, the
U.S. government will stand behind Chrysler's efforts to use our bankruptcy code
to clear away remaining obligations and emerge stronger and more
competitive."

Yes, America. What we read in that statement is the first, high
profile, no nonsense, slap across the face, ouch that hurts, there's plenty more
where that came from, the law and the nation is on our side, Commander in Chief
hedge fund smack down. May it be the first of many, many more to
come.

Liberal Democrat Comes Home

In a quite different take on the Specter defection from the previous post, John Nichols of the Nation Magazine writes:

Arlen Specter started his political life as a liberal Democrat. And now the
senior senator from Pennsylvania is returning to the fold. Specter, who has
served five terms in the Senate as the last of the old-school Rockefeller
Republicans, has finally given up on his long, fruitless quest to revive the
spirit of east-coast liberalism within what has become a hard-right party.

"Since my election in 1980, as part of the Reagan Big Tent, the
Republican Party has moved far to the right," the senator explained in a statement announcing his
decision to leave the GOP fold. "Last year, more than 200,000 Republicans in
Pennsylvania changed their registration to become Democrats. I now find my
political philosophy more in line with Democrats than Republicans."

Specter, who was a liberal Democratic lawyer in Phildelphia in the 1960s
before accepting a GOP nomination for district attorney as part of a
reform-movement battle to break the city's Democratic machine, has long been the
most left-leaning member of the Republican caucus in the chamber. He was
targeted for defeat by conservatives -- led by the Wall Street-funded Club for
Growth -- in 2004. President Bush and other key Republicans defended him that
year, not out of love for Specter but because they did not want to lose a seat
representing a blue state.

Shameless Hack

Jonathan Chait writes about Sen. Arlen Specter changing parties:

When a politician switches parties, it’s customary for the party he’s
abandoned to denounce him as an unprincipled hack, and the party he’s joined to
praise him as a brave convert who’s genuinely seen the light. But I think it’s
pretty clear that Specter is an unprincipled hack. If his best odds of keeping
his Senate seat lay in joining the Communist party, he’d probably do that.

Calling Robert Reich

According to Norm Schreiber in the New Republic, Obama is calling Larry 'Sleepy' Summers the new Robert Reich:

[Leonhardt]: When you and I spoke during the campaign, you made it clear
that you had thought a lot about the economic debates within the Clinton
administration. And you said that you wanted to have a Robert
Rubin type and a Robert Reich type having a vigorous debate in front of you.
...

THE PRESIDENT: ... When I first started having a round table of
economic advisers, and Bob Reich was part of that, and he was sitting across the
table from Bob Rubin and others, what you discovered was that some of the rifts
that had existed back in the Clinton years had really narrowed
drastically.

[Leonhardt:] They agree a lot more than they used to, but not entirely.

THE PRESIDENT: Not entirely. But, I mean, the fact is that Larry
Summers right now is very comfortable making arguments, often quite
passionately, that Bob Reich used to be making when he was in the Clinton White
House. Now Larry might not like me saying that —

[Leonhardt:] Larry Summers is the new Bob Reich —

THE PRESIDENT: — that he’s become a soft touch. But, no, I think that
one of the things that we all agree to is that the touchstone for economic
policy is, does it allow the average American to find good employment and see
their incomes rise; that we can’t just look at things in the aggregate, we do
want to grow the pie, but we want to make sure that prosperity is spread across
the spectrum of regions and occupations and genders and races; and that economic
policy should focus on growing the pie, but it also has to make sure that
everybody has got opportunity in that system.

Excuse me, but Larry Summers cannot be Robert Reich. That's like asking Raum Emmanuel to debate himself and calling it an intense discussion.

Actually, Robert Reich would make a wonderful Robert Reich.

Specter switching parties is a HUGE DEAL

Once Al Franken gets seated, the Democrats will have 60 votes in the Senate. That means no more filibustering, my friends. Health care reform, alternative energy, cap and trade, education reform--you name, it just got a lot more likely.

Also, I want to address this point. A co-worker of mine just said "Specter switching is bad because America is better off with split government which leads to more bi-partisanship."

As ironic as it seems, I think that might be completely wrong at this point in time. We may end up with more bipartisanship because the Dems have 60 votes. I believe that Specter's decision may further split the GOP into two factions: one that wants to deal and affect legislation, and one that wants to remain ideologically pure yet utterly irrelevant.

Look at what happened with the agreement to do reconciliation for health care. Now, the GOP and assorted lobbies are forced to come to the table and craft a bill, rather than remaining secure in the knowledge that they can kill the whole thing with a filibuster. Now, the GOPs choices are stay home and have absolutely no influence, or come to the table and deal. With the president that we have, and what I believe is his sincere belief in bipartisanship, we may end up with more bipartisan legislation with more GOP votes, because Obama will want to get at least the more moderate wing of the GOP on board with his policies so that a national consensus is formed.

Its a beautiful day!

For the Price of a Cup of Coffee, You Could Help a Great Cause......

From the NYTimes:

"As talk continues about possible prosecutions of people involved in the interrogations, waterboarding is once again a hot topic. Last week, Sean Hannity, a conservative Fox News host, said he would agree to be waterboarded (for charity) when a guest proposed that he experience it."

I never thought I'd see "waterboarding for charity" but, hey, in these tough times I guess you do what you gotta do.

Anyways, the whole article is fascinating. It shows that (yet another) conservative source shilling for torture and neverending war has been shown to be a complete and utter liar. Well, when you had the top Conservative, President Bush, out there for years saying "America does not torture" when it is now clear that America did torture, I guess its not surprising.

Torture Caused U.S. Combat Deaths

Another way of looking at torture, from Nicholas Kristof's NYT column:

Alberto Mora, a former general counsel for the Navy, has
said that some flag-rank officers believe that Abu Ghraib and Guantánamo
constitute “the first and second identifiable causes of U.S. combat deaths in
Iraq,” because they galvanized jihadis. An Air Force major and interrogator of
prisoners who goes by the pseudonym Matthew Alexander told Harper’s
Magazine that “hundreds but more likely thousands of American lives” were
lost because of “the policy decision to introduce the torture and abuse of
prisoners.”

Overpaid Bankers

Paul Krugman's column today is a cri de coeur from a very frustrated reformer:

...we should be disturbed by an article in Sunday’s Times reporting that
pay at investment banks, after dipping last year, is soaring again — right back
up to 2007 levels. Why is this disturbing? Let me count the ways.

First, there’s no longer any reason to believe that the wizards of Wall
Street actually contribute anything positive to society, let alone enough to
justify those humongous paychecks. Remember that the gilded Wall Street of
2007 was a fairly new phenomenon. From the 1930s until around 1980 banking was a staid, rather boring business that paid no better, on average, than other
industries, yet kept the economy’s wheels turning.

So why did some bankers suddenly begin making vast fortunes? It was, we
were told, a reward for their creativity — for financial innovation. At this
point, however, it’s hard to think of any major recent financial innovations
that actually aided society, as opposed to being new, improved ways to blow
bubbles, evade regulations and implement de facto Ponzi schemes.

Green President

Tom Friedman on Obama and the Environment:

It is not an exaggeration to say that the team that President Obama
appointed to promote his green agenda is nothing short of outstanding — a great
combination of scientists and policy makers committed to building an energy
economy that is efficient, clean and secure. Now there is only one vacancy left
for him to fill. And it’s one that only he can fill: Green President. Is he
ready to do that job with the passion and fight that will be required to
transform America’s energy future? Hope so. Not sure yet.

Rationing Health Care

It's really interesting to read neo-con par excellence Charles Krauthammer of the Washington Post without his typical venom and high dudgeon. I've read several of his columns now on Obama's social policies which speak fairly objectively and non-critically of Obama's options. It leads me to think that Krauthammer has a bit of soft spot for democratic socialist (read European) social policy. The latest example is today's column and his discussion of the coming rationing of universal health care:

The more acute thinkers on the left can see rationing coming, provoking Slate blogger Mickey Kaus to warn of the political danger. "Isn't it an epic mistake to try
to sell Democratic health care reform on this basis? Possible sales pitch: 'Our
plan will deny you unnecessary treatments!' . . . Is that really why the middle
class will sign on to a revolutionary multitrillion-dollar shift in spending --
so the government can decide their life or health 'is not worth the
price'?"

My own preference is for a highly competitive, privatized health
insurance system with a government-subsidized transition to portability,
breaking the absurd and ruinous link between health insurance and employment.
But if you believe that health care is a public good to be guaranteed by the
state, then a single-payer system is the next best alternative. Unfortunately,
it is fiscally unsustainable without rationing.

How He Operates

Trying to make a decision on the release of the torture memos, Obama did the following, illustrating how he operates:

Seated in Chief of Staff Rahm Emanuel's West Wing office with about a dozen
of his political, legal and security appointees, Obama requested a mini-debate
in which one official was chosen to argue for releasing the memos and another
was assigned to argue against doing so. When it ended, Obama dictated on the
spot a draft of his announcement that the documents would be released, while
most of the officials watched, according to an official who was present. The
disclosure happened the next day.

Reclaiming Our Soul

Paul Krugman argues that we must deal with the torture perpetrated by the past administration:

We are, or at least we used to be, a nation of moral ideals. In the past,
our government has sometimes done an imperfect job of upholding those ideals.
But never before have our leaders so utterly betrayed everything our nation
stands for. “This government does not torture people,” declared former President
Bush, but it did, and all the world knows it.

And the only way we can regain our moral compass, not just for
the sake of our position in the world, but for the sake of our own national
conscience, is to investigate how that happened, and, if necessary, to prosecute
those responsible.

Cheney Unbound

Recent reports makes one wonder whether Cheney could be angling to run for President. Certainly he seems to want to have a major say in who runs for the Republican nomination.

In the three months since leaving office, Mr. Cheney has upended the old
Washington script for former presidents and vice presidents, using a series of
interviews — the first just two weeks after leaving office — to kick off one
last campaign, not for elective office, but on behalf of his own legacy. In the
process, he has become a vocal leader of the opposition to President
Obama, rallying conservatives as they search for leadership and heartening
Democrats who see him as the ideal political foil.

Dominos

There is an article in the NYT this morning explaining the stakes involved with GM's pension plan. If it goes under in a bankruptcy, then that could be the domino that undermines the whole traditional 'defined benefit' pension system throughout the country. This in turn could throw many thousands or even millions of retirees into a much lower standard of living, threatening our economy even more.

Bull in a China Shop

As I scan the headlines this morning, it is clear that Iraq is going crazy again, with suicide bombers killing hundreds every day and civil war ready to break out. On the other side of Iran, The Taliban are moving east into regions of Pakistan, killing police and instituting Islamic law, and the government of Pakistan seem paralyzed to do much about it.

It only seems like yesterday that the Surge seemed the answer to all our problems in Iraq, and might be applied in some fashion in Afghanistan. I wonder what General Petraeus thinks now.

The people whose opinion I respect on the Middle East have never believed that things were so pacified in Iraq that we could leave in peace. They expected a civil war to break out between the Shia and the Sunni, with terrible bloodshed taking place and us unable to stop it. It remains the reality that by removing Saddam, we opened Pandora's Box and that country will probably have to split in three parts before any kind of settlement can be reached. (Joe Biden, by the way, has been arguing this way for quite a while.)

As for Afghanistan, our continuing actions there since 2001 have simply driven the Taliban into Pakistan and have now paved the way for the Talibanization of that country, or part of it anyway. With its fragile, endangered government, and military unwilling to take on the Taliban, Pakistan becomes the West's nuclear nightmare, a nuclear power threatened by radical Islam.

We blunder around in that part of the world, like a bull in a china shop. Will we get out before wrecking the whole place? Or will someone come a shoot the bull?

We arrogantly throw our military weight around the world like we know all the answers and can solve all the problems to our liking. When are our interventionists going to learn that we don't know all the answers? Frankly, at this point, I don't see that much difference between Republicans and Democrats here. Both are caught in this interventionist mindset that is so dangerous to our future.

The Oz

With all the information now being revealed about the United States' use of torture in the last administration, it's no wonder that former Vice President Cheney is all over the airwaves, trying to spin things in his direction and distract attention from the new revelations.

One can almost see the desperation in his eyes. Remember that scene in The Wizard of Oz when the dog pulls down the curtain and reveals the real Oz standing there, trying so hard to hide the truth of who he really is? That's what we have here.

It almost makes you feel sympathetic with George W. Bush, as he remains silent in Texas.

Justice

A plain spoken, ordinary advocate for investigation and prosecution of torturers, writing from outside the beltway:

What Is Being Done In Our Name

The CIA is opposing the exposure of their torture methods. Well, it's a good thing for the American people to know what is being done in their name. Then, they/we can have a real conversation based on the truth, rather than on fiction and myths. There are probably folks who think torture of alleged terrorists is okay, just as they don't have a problem with executing murderers. Others feel that torture as state policy is uncivilized, as is capitol punishment.

Honest disagreement, I suppose. But it helps to know what is actually being done by our agents of force and war.

Waterboarding

From the NYT this morning:

C.I.A. interrogators used waterboarding, the near-drowning technique that top Obama administration officials have described as illegal torture, 266 times on two key prisoners from Al Qaeda, far more than had been previously reported.

Okay, using torture is a war crime, and waterboarding is torture by any measure, and not just once but 266 times on two persons in the course of a month. And war crimes need to be punished by any law-abiding country that wishes to be respected by the world community.

Any questions? I think somebody needs to be indicted here, and the higher up, the better. Or we just need to close all the prisons and forget about our Constitution because we're just the biggest bunch of hypocrites and frauds in the world.

John Ensign, the Great Diplomat

But of course Senator John Ensign, R-Arizona, disagrees with Obama on shaking hands with adversaries like Chavez. "You have to be careful when you're talking about the prestige of the United States and the presidency of the United States, you have to be careful who you're seeing joking around with. I think it was irresponsible for the president to be seen kind of laughing and joking with Hugo Chavez."

Now, who is John Ensign again? I must have missed it when he was elected. He must have a lot of diplomatic experience, don't you think, maybe an expert on international diplomacy?

Ensign was born in Roseville, California to Sharon Lee Cipriani and a father whose surname was "Mueller"; his maternal grandfather was of Italian descent. Ensign's family moved to Nevada when he was a child. His mother remarried Michael S. Ensign, a gaming industry executive who subsequently became chairman of the board of directors of Mandalay Bay, and who adopted John. Ensign went to UNLV, becoming a member of the Sigma Chi fraternity, Oregon State University, and Colorado State University, becoming a veterinarian in 1985. He then became a successful businessman, opening a 24-hour animal hospital in Las Vegas.--Wikipedia.

Have you noticed that doctors, veterinarians, and pest exterminators become just about the worst legislators ever?

A Big Smile

Obama's outreach to Chavez of Venezuela and Castro of Cuba is brilliant and so costfree. It just goes to show you what a little courtesy, a big smile, a handshake, and humility can do to facilitate relationships.

It helps, of course, that Obama is more popular in Venezuela than Chavez.

Making Change

I just read an article on 'behavioral economics' in Time Magazine that explains alot about how Obama is going about governing. The four basic keys to making change? Make it Clear, Make it Easy, Make it Popular, Make it Mandatory (and in that order). It can be read here.

Obama is something else.

The Commandments

And now for something a little different. I'm starting a book on the Ten Commandments, entitled Losing Moses on the Freeway by Chris Hedges, a former NYT war correspondent who has turned writer and lecturer. I read his first book some years ago, entitled War is Force That Gives Us Meaning, and was blown away by its insight into war, society, and human nature. I have now run across his book on the Commandments, which he has written because of his belief that our innate human sinfulness and corruptibility requires the discipline of rules and commandments. In the prologue I've found the following two wonderful paragraphs giving his essential insight into the place and role of the Commnandments.

The commandments guide us toward relationships built on trust rather than
fear. Only through trust can there be love. Those who ignore the
commandments diminish the possibility of love, the single force that keeps us
connected, whole and saved from physical and pyschological torment. A life
where the commandments are routinely dishonored becomes a life of solitude,
guilt, anger, and remorse. The wars I covered from Central America to
Yugoslavia were places where the sanctity and respect for human life, that which
the commandments protect, were ignored. Bosnia, with its rape camps,
genocide, looting, razing of villages, its heady intoxication with violence,
power, and death, illustrated, like all wars, what happens when societies thrust
the commandments aside.

The commandments do not protect us from evil. They protect us from
committing evil. The commandments are designed to check our darker
impulses, warning us that pandering to impulses can have terrible
consequences. "If you would enter life," the Gospel of Matthew reads,
"keep the commandments" (Matthew 19:17). The commandments hold community
together. It is community that gives our lives, even in pain and grief a
healing solidarity. It is fealty to community that frees us from the
dictates of our idols, idols that promise us fulfillment through the destructive
impulses of constant self-gratification. The commandments call us to
reject and defy powerful forces that can rule our lives and to live instead for
others, even if this costs us status and prestige and wealth. The
commandments show us how to avoid being enslaved, how to save us from
ourselves. They lead us to love, the essence of life.

The 10 Commandments

You shall have no other gods before me.

You shall not make for yourself a graven image, or any likeness of anything

that is in heaven above, or that is in the earth beneath, or that is in the water

under the earth: you shall not bow down to them, or serve them.

You shall not take the name of the Lord your God in vain.

Remember the sabbath day, to keep it holy.

Honor your father and your mother.

You shall not kill.

You shall not commit adultery.

You shall not steal.

You shall not bear false witness against your neighbor.

You shall not covet your neighbor's house.

No One Accountable

Ta-Nehisti Coates reacts against Obama's statement about opposition to 'laying blame for the past', and this is my reaction as well:

I think this is wrong. More than that I think it's dismissive, silly and
bordering on insult to any literate human being. In point of fact "spending our
time and energy laying blame for the past" is exactly what the justice system
does. By Obama's logic murderers would go free in the streets. The real question
is not whether you're going to lay blame for the past, but who your going to lay
it on, and for which past. What Obama is really saying in this statement is he
won't hold this particular group accountable, for this particular past. This is
a dangerous course because it doesn't simply not "lay blame for the past," it
shrugs off arguably the solemn responsibility of safeguarding the future. The
price of doing nothing, of not enforcing laws, is the implicit statement that it
really is OK to torture, that the most you'll face is a wag of the finger.

Torture State Ctd.

Sullivan again:

I do not believe that any American president has ever orchestrated,
constructed or so closely monitored the torture of other human beings the way
George W. Bush did. It is clear that it is pre-meditated; and it is clear that
the parsing of torture techniques that you read in the report is a simply
disgusting and repellent piece of dishonesty and bad faith. When you place it
alongside the Red Cross' debriefing of the torture victims, the fit is almost
perfect. I say "almost" because even Jay Bybee, in this unprofessional travesty
of lawyering, stipulates that these techniques might be combined successively in
any ways that could cumulatively become torture even in his absurd redefinition
of the term. And yet the ICRC report shows, as one might imagine, that outside
these specious legalisms, such distinctions never hold in practice. And they
didn't. Human beings were contorted into classic stress positions used by the
Gestapo; they had towels tied around their necks in order to smash their bodies
against walls; they were denied of all sleep for up to eleven days and nights at
a time; they were stuck in tiny suffocating boxes; they were waterboarded just
as the victims of the Khmer Rouge were waterboarded. And through all this, Bush
and Cheney had lawyers prepared to write elaborate memos saying that all of this
was legal, constitutional, moral and not severe pain and suffering.

Bybee is not representing justice in this memo. He is
representing the president. And the president is seeking to commit war crimes.
And he succeeded. This much we now know beyond any reasonable doubt. It is a
very dark day for this country, but less dark than every day since Cheney
decided to turn the US into a torturing country until now.

Sullivan on the Torture State

Blogger Andrew Sullivan is writing extensively on the recent release of the 'torture memos'. Here is one particularly important paragraph:

...what is far more important and far graver is the decision after the 2004
re-election, after the original period of panic, to set up a torture program,
replete with every professional and bureaucratic nicety. This is why the
Bradbury memo of 2005 is so much more chilling in its way. This was long after
Abu Ghraib, long after the initial panic, and a pre-meditated attempt to turn
the US into a secret torture state. These legal memos construct a form of
torture, through various classic torture techniques, used separately and in
combination, that were to be used systematically, by a professional torture team
along the lines proposed by Charles Krauthammer, and buttressed by a small army
of lawyers, psychologists and doctors - especially doctors - to turn the US into
a torture state. The legal limits were designed to maximize the torture while
minimizing excessive physical damage, to take prisoners to the edge while making
sure, by the use of medical professionals, that they did not die and would not
have permanent injuries.

The Best Hubble Telescope Picture Ever

The Sombrero Galaxy - 28 million light years from Earth - was voted best picture taken by the Hubble telescope. The dimensions of the galaxy, officially called M104, are as spectacular as its appearance. It has 800 billion suns and is 50,000 light years across.

This can't be.

Rush Tortures Himself

I haven't heard it myself, but I understand Rush Limbaugh slapped himself on air when he was discussing the torture memos.

I hope he waterboards himself as well, and then confines himself indefinitely in a small space with no microphone and some small biting insects.

No Retribution? Free All the Criminals. Empty All the Prisons

Howard Rodman writes about Obama's release of the Torture memos, not looking to the past, and justice:

President Obama did something which should be commonplace but which, in this terrible time, is now thought of as optional for high officials, which is to say, he obeyed the law. The law in this case required him, in response to an ACLU lawsuit, to disclose the Torture Memos, prepared by the Office of Legal Counsel under the Bush administration. (It is a sad testimony that doing as the law requires is, in our political climate, an act of bravery.)

The Torture Memos show an attention to the detail of pain reminiscent of The 120 Days of Sodom. They reveal that at the highest level we were a government of sadists, supported by a covey of lawyers (Yoo, Bybee, Addington, Bradbury, Rizzo, Gonzales--look at their faces, look at them) who felt their job was to come up with legal justifications for that sadism. Yet even while the memos provide incontrovertible evidence of war crimes, President Obama 'split the difference' by stating that the torturers would not be held accountable for their actions. He said, "This is a time for reflection, not retribution... nothing will be gained by spending our time and energy laying blame for the past."

Imagine this last statement trotted out (for instance) by the Phil Spector defense. Would you take it seriously? Would you buy it? Or would you laugh hysterically and forward it to Paul Slansky? Isn't "laying blame for the past" exactly what our justice system was designed to do? Isn't that the basis of every criminal case in every criminal court in the nation?

The idea that criminal acts must, indeed should, go unpunished, if--and only if--they are committed by the ruling class or government officials, is at the heart of what's wrong with our republic. It is as appallingly true with respect to the looting of the economy as it is with respect to the war crimes these memos disclose.

Agreed.

Crystal Clear

An anonymous commenter to this blog wrote:

I really don't get where you are coming from on this blog...times are
rough...here's the proof...we need to be counter cultural...but nothing
practical here....blah blah blah

Well, I think it's crystal clear where I'm coming from. To begin with, while I like a lot of things about President Obama (and obviously voted for him), I don't like Obama's picks for his key economic advisor and Treasury secretary, Lawrence Summers and Tim Geithner. I've said this time after time ad nauseum. Summers is a retread from the Clinton years who was partly responsible for all the deregulation that got us into our current problem. Geithner is turning out to be a lackey for his friends in the big banks. Together they're not doing anything to tame the big banks and prevent the same problems from happening again a few years down the road.

If the commenter would go and listen to someone like Simon Johnson, I think he would at least understand the critique, if not agree with it. It's the same that coming from economists Paul Krugman, Joe Stiglitz, Jeff Sachs, and others as well. We've got to shrink the banking and financial sector and make it MORE BORING and LESS THREATENING to our economy.

As for the countercultural posts, like James Kunstler, there is a part of me that feels that our society and economy may well be heading for REALLY troubled times, in part due to things like peak oil and our almost incomprehensible indebtedness. I don't know if they are right, but I think they're at least worth paying attention to for their analysis. They were, after all, right about the economic crisis we are in.

So that's where I'm coming from.

Ps. If the 'anonymous' commenter would point the way to his/her blog, I would be glad to look at what kind of 'practical' solutions they are recommending and have a good dialogue about it. But it's awful easy to take potshots from behind your anonymity.

An Interview with Economist Simon Johnson

One of the most respected economists now speaking out about tougher action against the big banks and other financial 'oligarchs' is Simon Johnson. No, he's not a socialist. He's professor at MIT's Sloan School of Management and former chief economist for the International Monetary Fund. He had an interview yesterday on Fresh Air with Terri Gross that gave a lot of insight into our current financial crisis. He is calling for shrinking any bank that is 'too big too fail.'

It can be heard here.

Also, his major article in the May issue of the Atlantic Monthly on this same issue can be read here.

Controlling Health Care Costs

Timothy Noah writes in Slate about the crisis in health care:

Between 1999 and 2008, employer-sponsored health insurance premiums increased six times faster than wages. Average employer contributions to family health care plans more than doubled, and so did average worker contributions to those plans. Whatever pay increases the average worker received were wiped out, and then some, by the rapidly growing amounts deducted from his paycheck to cover health insurance. That's assuming he was lucky enough to be among the 59 percent of the U.S. population that received employment-based health insurance. (Fifteen percent have no health insurance at all. The other 26 percent either buy their own health insurance or get it through government programs like Medicare and Medicaid.) These calculations don't take into account the rising cost of actually using ever-pricier health coverage. During the same period, deductibles tripled. Health care costs have spiraled out of control.

That, in a nutshell, is why Congress and the Obama administration must enact health care reform.

Jive Talk

Readers, beware of the current hype about quarterly profits from the big banks:

Wall Street has long viewed quarterly earnings skeptically, but this season may be one of the least realistic in recent memory. That's because banks are doing everything they can to wring out a profit and gain that most valued of commodities--investor confidence.

Facilitating the banking industry's efforts to post a profit is the relaxation of mark-to-market accounting and the fact banks can borrow funds at historically low rates while selling them at historically high rates.

"Banks are doing everything and anything in their power right now to get their earnings as high as possible," Paul Larson, an equities strategist at research firm Morningstar, said. "I have been in the business 25 years and earnings have always been an ongoing mystery, but it has gotten worse and worse," said James Paulsen, the chief investment strategist at Wells Capital Management.

Main Street Banking

Arianna Huffington does a good job in this column of making distinctions between the healthy and properly functioning Main Street banking versus the corrupt Wall Street institutions. A good thing to keep in mind when you're looking for a checking account or a loan.

Depressed and Bitter

In this NYT article about Supreme Court Justice Clarence Thomas, he comes across, well, not so good. In fact, he comes across depressed, bitter, antagonistic to the Bill of Rights, and nostalgic for his childhood. Justice Thomas, please retire if your job is that painful and burdensome, and let the first black President appoint someone to your seat a little more in touch with things. You seem ready for it.

Growing Inequality

Matthew Yglesias posts the following graph on his blog, demonstrating the growing disparity between the economy as a while and the medium family income.

And then he adds this:

Whether or not you see this as a problem per se, it’s important to keep these facts in mind when thinking about where the United States stands in the world. For a long time, median income pretty much tracked a measure of per family GDP, so you could rely on the GDP growth rate as a decent proxy for the well-being of the typical family. But since the mid-1980s that relationship hasn’t really stood up. Another country with a lower GDP but less inequality could still be a country in which most people are richer than most Americans, and I believe there’s pretty compelling evidence that that’s now the case in a number of European countries.

The Cultural Bear Market

In a very articulate and almost inspiring essay/plea for alternative thinking and instititions for this time of crisis, Sam Smith concludes his essay with these thoughts:

To reverse what is happening, we must create strong alternative ideas and hardy alternative institutions and communities, a counter culture that rejects the myths of Washington and Wall Street just as, in the 1960s, a generation put the establishment on the defensive or in the closet.

This won't happen easily. The establishment has become far more skillful at defending its turf - using everything from fake town meetings to greater illegal spying. But there's another even more discouraging problem: the acceptance of helplessness by so many of those one might, in other times, have been expected to lead the rebellion against the catatonic confederacy of those in control.

A particularly painful example is the support of the Af-Pak war by those who still boast of their liberalism. This is a war - after Obama adds his most recent announced troops - that will bring us to the same status as we were with Vietnam in mid 1965 when a visible anti-war movement was already underway. Why such silence now? Are liberals on their way to extinction, too?

In any case, we need to act, but independent of those responsible for the mess, those exculpating them, those offering remedies that are mere manipulated shadows of the failure, and those engaged in misleading or misguided organizing on their behalf even if with purportedly noble intent.

There is no salvation to be found in the Democratic Party, in Obama or in more ranting about how bad Rush Limbaugh is. We need a loud and clear agenda - with things like single payer, no more imperial wars, public campaign financing and an economic policy that helps real people and not just bankers and hedge fund hustlers. We need to be at odds with both the criminally egregious and their ineffective or unintentional enablers.

The collapse of American culture was an inside job. Its cure is to be found on the outside, in a counter culture that is clear and worthy in its goals, eclectic in its alliances, and which builds community, recovers integrity and helps us to sing again. If we can't save our culture, we can at least create a new one.

Revisioning the Economy

Robert Samuelson, resident economic columnist for the WaPo, shares his concerns about the Obama vision for the American economy. He summarizes the vision as consisting of health care reform, clean energy development, and education for all. And he says,

What Obama proposes is a "post-material economy." He would de-emphasize the production of ever-more private goods and services, harnessing the economy to achieve broad social goals. In the process, he sets aside the standard logic of economic progress.

We cannot build a productive economy on the foundations of health care and "green" energy. These programs would create burdens for many, benefits for some. Indeed, their weaknesses may feed on each other, as higher health spending requires more taxes that are satisfied by stiffer terms for cap-and-trade. We clearly need changes in these areas: ways to check wasteful health spending and promote efficient energy use. I have long advocated a gasoline tax on national security grounds. But Obama's
vision for economic renewal is mostly a self-serving mirage.

My take on this is that we are now in the throes of 'revisioning' our economy. What it has been is not what it will be.

First, some historical perspective on the 20th Century experience of 'Americana Economus.' We became a great power in the late 19th century, based on our abundant natural resources, the rise of our industrial base, and a vibrant capitalist economic system. After World War II, we were the dominant world superpower, economically and militarily. And with the New Deal reforms in place, wealth flowed to the average person in astounding ways, to the point where we truly became the most affluent nation the world has ever known.

That era basically ended in the early 70s, with the first oil embargo and the rise of stagflation. Our domestic oil had run out. Add to that the rising global economic competition of, first, nations like Germany and Japan, and then China and India, and you have an American economy in relative decline. We went from being the largest creditor nation to the largest debtor nation. With the beginning of the Reagan era in 1981, our affluence continued declining, although now the decline was masked by inflation, rising debt levels, easy money from the Fed, two-income households, various economic bubbles (dot-com and housing), Wall Street innovations such as CDO securitization and derivatives, and technological developments like computers, the internet, and DVDs.

The masking of our three-decade-long economic decline ended with the financial and economic collapse of the last two years. Now we find ourselves in a difficult situation, which will not be easy to get out of. And to some extent, I agree with Samuelson that the Obama team doesn't seem to have come to grips with our dilemma. Many critics are saying that the Obama people think we can return to the status quo ante of prosperity that we knew prior to 2007. I don't think we can.

I believe that we have effectively lost something like a quarter to a third of our 'wealth' in the last two years, wealth that cannot be recovered because it was never real to begin with. It was funny, easy, illusory wealth that only existed on paper. We have continued to outsource and deindustrialize our economy to the point where well-paying jobs are getting harder and harder to find. Many baby boomers are not ready for retirement and probably will never be ready, because of the current economic situation. Younger people are beginning to realize that many of the good things they thought just came with being American will never be within their reach. The extent to which incomes and wealth has been concentrated in the upper 1-2% of the population is outrageous and needs to be reversed, though I'm not sure that our politicians are free enough from their plutocratic masters to do so. If oil has really peaked, as more and more people are thinking, then the future gets even more precarious, because energy supplies will get more expensive.

In other words, we are becoming a much more 'normal' and average country in the world. At this point, only our bloated military (along with our dollar as the world's reserve currency) keeps us in the game, so to speak.

Realistically, I agree with Obama that we've got to get our health care costs under control or it will bankrupt us as a nation. We also have to move quickly on clean energy, because we've got to stop importing so much oil, but also because global warming is a real issue that has to be addressed if we want to have a decent future for ourselves and our kids.

Finally, education is important, although I think we can't sustain our current higher educational structure without significant shrinking. (More Bachelors degrees in Psychology and Physical Education are not going to turn around our economy.) And I think much of the educational problem we have is cultural and not a matter of money spent. Too many kids watching too much TV and video games.

It's hard to wrap your mind around the future of our economy because it is so complicated and there are so many unknowns. I tend to be more pessimistic, partly by nature, but also because I think I'm being more realistic about the direction our economy and society is going. Anyway, these are a few of my thoughts in reaction to Robert Samuelson. He may be partly right in what he's saying, but I also don't see him offering any alternatives that are any better.

Let the 'revisioning' continue.

Crazy People

Paul Krugman on the GOP:

Today’s G.O.P. is...very much a minority party. It retains
some limited ability to obstruct the Democrats, but has no ability to make or
even significantly shape policy. Beyond that, Republicans have become
embarrassing to watch. And it doesn’t feel right to make fun of crazy people.

But?

But here’s the thing: the G.O.P. looked as crazy 10 or 15
years ago as it does now. That didn’t stop Republicans from taking control of
both Congress and the White House. And they could return to power if the
Democrats stumble.

Yes, that is scary.

The Chronicler's Interview with James Kunstler

And now, for a little Monday 'gloom and doom' with James Howard Kunstler.

He asks the question: Economic Recovery? Recovery to what?

To Wall Street booking stupendous profits by laundering
"risk" out of bad loans with new issues of tranche-o-matic securitized paper?
This I doubt, since there isn't a pension fund left from San Jose to Bratislava
that would touch this stuff with a stick, even if it could be turned out in
collector's editions of boxed sets. Does it mean that American "consumers"
(so-called) are awaited momentarily in the flat-screen TV sales parlors with
their credit cards fanned-out like poker hands, ready for "action?" Not too
likely with massive non-performance out in cardholder-land, and half the
nation's electronics inventory wending its way onto Craig's List. Are we
expecting more asteroid belts of new suburbs carved in the loamy outlands of
Dallas and Minneapolis, complete with new highway strips of Big Box shopping and
Chuck E. Cheeses? Go to banking's intensive care unit and inquire (if you can)
among the flat-lining production home-builders and the real estate investment
trusts on life support when they expect to rev up the heavy equipment.
The
idea that we're about to resume the insane behavior that induced the current
epochal malaise of economy is so absurd it will only be heard in the faculty
dining halls of the Ivy League.

Okay, James, what then can we expect?

So many forces are arrayed against a return to the previous
"normal" that we will be lucky, in another eighteen months, to still find
ourselves speaking English and celebrating Christmas.

Come on, please get serious.

My guess is that the current mood of public paralysis will
dissolve in a blur of blood and spittle sometime between Memorial Day and July
Fourth, even with Nascar in full swing, and the mushrooming ranks of the
unemployed lost in raptures of engine noise and fried cornmeal.

James, I said get serious!

On the agenda in the second quarter of '09 are ominous
rumblings in the oil and food sectors. Half a year of cratered oil prices have
decimated the oil industry and we're driving at 100-miles-an-hour straight off a
cliff into a new kind of supply crisis -- even if industrial production and
global exports remain moribund. So many drilling rigs are being decommissioned
that the oil industry itself looks like it's preparing for its own death,
investment in exploration and discovery has withered with the credit markets,
and the world may never recover from the year long hiccup in oil industry
activity -- translation: peak oil is biting back now with a vengeance.

That's better. And?

So many dire elements are ranging around our food production
system (i.e. farming), from widespread drought and water table depletion to
"input" shortages (especially fertilizers) to sickness in credit availability,
that we're all one bad harvest away from something that will make Pieter
Bruegel-the-elder's "Triumph of Death" look like Vanity Fair's annual Oscar
Party in comparison.

Okay, then what do you recommend?

Barack Obama, charming as he is, had better drop his
pretensions about kick-starting the old consumer economy, fire the Wall Street
clowns and parasites who are running that futile exercise, and start preparing a
US Lifeboat Economy aimed at reducing the scale and scope of our outlays so we
can survive the coming siege of austerity.

Yeah, really. That ain't gonna happen, James. You know what happened when Jimmy Carter put on his sweater and told the American People that they were in a malaise.
So, any little brightspot or glimmer that you can share before you go?

Meanwhile, I'm glad that he finally got a dog for the White
House, because the President knows full-well where to turn in Washington if you
want some genuine love and affection.

Sweet. Gotta get me one.

Shedding Light on the Absurdity

Robert Kuttner's piece in the HuffPost expresses almost exactly where I'm coming from these days vis-a-vis the Obama administration. A few tidbits:

Progressives now find themselves in an awkward position of
simultaneously wishing Barack Obama well, but feeling dismayed by his policies
on some key issues, most notably the banking bailout. If this were a normal
economic situation, the posture of semi-opposition would not be that big a deal.
We would simply gratefully accept the decent policies and keep pressing for
bolder ones. But a failure to revive the banking system would be Obama's
Vietnam. It would wreck everything else.

It's a too-familiar position for progressives, one that winds back through all of the postwar Democratic administrations of my adulthood. We wanted Lyndon Johnson to push harder for civil rights and anti-poverty and not ruin it all in Vietnam. We were appalled at Jimmy Carter's attacks on government, his failure to use his large Democratic majority in Congress to press for progressive legislation, his refusal to lift a finger on behalf of labor law reform. The memories of Bill Clinton are sufficiently recent that we need little reminder of the needless tilt to the right on economic issues from NAFTA to welfare reform to financial deregulation.

What makes this situation different is, first, our gratitude on so many
fronts combined with the very high stakes of the financial rescue. Barack Obama
is an exemplary leader in so many ways, the leader we've been waiting for. His
commitment to restore constitutional government is no small achievement. Those
fighting for anti-poverty efforts and children's initiatives have never seen
increases in federal resources comparable to the present ones. His foreign
policy initiatives, from his reaching out to Iran to his efforts on behalf of
nuclear non-proliferation are a breath of fresh air. And speaking of which,
Obama seems serious about reducing the carbon footprint.

The administration's approach to the auto rescue suggests the more robust strategy
needed for the banks: take a hard look at the company's books; fire incumbent
management; make all stakeholders take some sacrifices; and involve government
directly in the design of a leaner and more efficient successor firm. But
nothing of the sort is being done with the banks.

About all that the loyal opposition can do is shed more light on the absurdity of the Summers/Geithner approach and help animate skepticism in the media, the public, and eventually the President.

95% Renewables

Tom Friedman is visiting in Costa Rica and reporting on their energy and environmental policies. He wrote something pretty amazing:

“In Costa Rica, the minister of environment sets the policy
for energy, mines, water and natural resources,” explained Carlos M. Rodríguez,
who served in that post from 2002 to 2006. In most countries, he noted,
“ministers of environment are marginalized.” They are viewed as people who try
to lock things away, not as people who create value. Their job is to fight
energy ministers who just want to drill for cheap oil.

But when Costa
Rica put one minister in charge of energy and environment, “it created a very
different way of thinking about how to solve problems,” said Rodríguez, now a
regional vice president for Conservation International. “The environment sector
was able to influence the energy choices by saying: ‘Look, if you want cheap
energy, the cheapest energy in the long-run is renewable energy. So let’s not
think just about the next six months; let’s think out 25 years.’ ”

As a
result, Costa Rica hugely invested in hydro-electric power, wind and
geo-thermal, and today it gets more than 95 percent of its energy from these
renewables. In 1985, it was 50 percent hydro, 50 percent oil. More interesting,
Costa Rica discovered its own oil five years ago but decided to ban drilling —
so as not to pollute its politics or environment! What country bans oil
drilling?

Are You Kidding Me

Mike Barnacle, hosting 'Hard Ball' last evening, said 'Are you kidding me?', when commenting on Arizona State University's initial decision to not grant Obama an honorary degree in exchange for his Graduation Address.

That's exactly right. It is a petty decision, probably suggested by some pissed-off Republican member of the Board of Trustees, who doesn't like the fact that Obama whomped their homestate Senator in the election. Obama would have every right to now decline their offer to speak, since his granting their request to speak at their University was a nice gesture, when probably hundreds of others of more deserving universities also requested his presence.

What were they thinking? Bunch of dorks.

Chance to Change Wall Street is Gone

Michael Hirsh, editor of Newsweek International, writes this depressing story:

Not long ago, a group of skeptical Democratic senators met at the White House with President Obama, his chief economic adviser, Larry Summers, and Treasury Secretary Tim Geithner. The six senators—most of them centrists, joined by one left-leaning independent, Vermont's Bernie Sanders—said that while they supported Obama, they were worried. The financial reform policies the president was pursuing were not going far enough, they told him, and the people Obama was choosing as his regulators were not going to change things fundamentally enough. His appointed officials and nominees were products of the very system that brought us all this economic grief; they would tinker with the system but in the end leave Wall Street, and its practices, mostly intact, the senators suggested politely. In addition to Sanders, the senators at the meeting were Maria Cantwell, Byron Dorgan, Dianne Feinstein, Carl Levin and Jim Webb.

That March 23 gathering, the details of which have gone largely unreported until now, was just a minor flare-up in a larger battle for the future—one that may already be lost. With the financial markets seeming to stabilize in recent weeks, major Wall Street players are digging in against fundamental changes. And while it clearly wants to install serious supervision, the Obama administration—along with other key authorities like the New York Fed—appears willing to stand back while Wall Street resurrects much of the ultracomplex global trading system that helped lead to the worst financial collapse since the Depression.

At issue is whether trading in credit default swaps and other derivatives—and the giant, too-big-to-fail firms that traded them—will be allowed to dominate the financial landscape again once the crisis passes. As things look now, that is likely to happen. And the firms may soon be recapitalized and have a lot more sway in Washington—all of it courtesy of their supporters in the Obama administration.

It looks like, at least for now, the window for true financial reform has closed. Terrific. Thank you very much, Barack.

Why They Fight

This paragraph from the article by Patrick Cockburn was very revealing and new to me:

The chief US interrogator in Iraq, Major Mathew Alexander, who is credited with finding out the location of the al-Qa'ida leader Abu Musab al-Zarqawi, says that during 1,300 interrogations he supervised, he came across only one true [Islamist] ideologue. He is quoted as saying that "I listened time and time again to foreign fighters, and Sunni Iraqis, state that the No 1 reason they had decided to pick up arms and join al-Qa'ida was the abuses at Abu Ghraib and the authorized torture and abuse at Guantanamo Bay."

If you ever wanted a strategic argument against torture and mistreatment of detainees, here it is.

An Iraq That Will Not Go Away

Patrick Cockburn, longtime war correspondent in Iraq, writes about the current situation there:

It is not easy for Mr Obama to reverse the tide of anti-Americanism or bring to an end the wars which Mr Bush began. For all the Iraqi government's claim that life is returning to normal in Baghdad the last few days have seen a crescendo of violence. The day before the President arrived, six bombs exploded in different parts of Baghdad, killing 37 people.

And as much as Mr Obama would like to treat the Iraq war as ancient history, the US is still struggling to extricate itself. The very fact that the Democratic President had to arrive in Iraq by surprise for security reasons, as George Bush and Tony Blair invariably did, shows that the conflict is refusing to go away.

The Iraqi Prime Minister and President remain holed up in the Green Zone most of the time. The American President could not fly into the Green Zone by helicopter because of bad weather but the airport road is still unsafe and Baghdad remains one of the most dangerous countries in the world. The Iraqi political landscape too was permanently altered by the US invasion and it will be difficult to create a stable Iraqi state which does not depend on the US. Opinion polls in Iraq show that most Iraqis believe that it is the US and not their own government which is in control of their country.

We Need Smaller, Less Powerful, Boring Banks

The author quoted in the previous post, Simon Johnson, writes a blog called The Baseline Scenario, and he posted this yesterday with regards to the question of restructuring the big banks, so as to break the hold of the financial 'oligarchs' on the economy:

The case for keeping banks in something close to their current structure begins to take shape. It’s not about traditional claims that big banks are more efficient, or Lloyd Blankfein’s argument that this is the only way to encourage risk-taking, or even the House Financial Services Committee view that immediate resumption of credit flows is essential for preserving jobs.

Rather, the argument is: those opposed to banks and bankers are angry populists who, if unchecked, would do great damage. Bankers should therefore agree to some mild reforms and more socially acceptable behavior in the short-run; in return, the centrists who control economic policymaking will protect them against the building backlash. This is a version of Jamie Dimon’s line: “if you let them vilify us too much, the economic recovery will be greatly delayed.”

There are three problems with this argument: it is wrong, it won’t work, and it doesn’t move the reform process at all in the right direction.

The “center vs. the pitchforks” idea fundamentally misconstrues the current debate. This is not about angry left or right against the center. It’s about centrist technocrat (close to current big finance) vs. centrist technocrat (suspicious of big finance; economists, lawyers, nonfinancial business, and - most interestingly - current/former finance, other than the biggest of the big, particularly people with experience in emerging markets.)

Just as an example, a broad range of entirely centrist people (including in and around the IMF; former Treasury; you’d be amazed) are expressing support for the ideas in our Atlantic article. People on the left are, not surprisingly, also in line with this view; but we’re also hearing convergent thoughts from some on the right - many who emphasize improving the environment for entrepreneurship don’t see big finance as their friend. So far, the only person who called to complain works for an “oligarch.”

Johnson concludes his long, thoughtful post with this:

If the bankers were just stupid, as suggested by David Brooks, then regulatory fixes might make some sense. But we know that bankers are smart, so it is their organizations that became stupid. What is the economic and political power structure that made it possible for such stupid organizations to become so large relative to the economy? Answer this and you address what we need to do going forward.

It’s as if the organizations running the nuclear power industry had shown themselves to be stupid and profoundly dangerous. You might wish to abolish nuclear power, but that is not a realistic option; storming power plants makes no sense; and the industry has captured all regulators ever sent after them.

The technocratic options are simple, (1) assume a better regulator, of a kind that has never existed on this face of this earth, (2) make banks smaller, less powerful, and much more boring.

Financial Oligarchy

Economist Simon Johnson, from his article in the May, 2009 edition of the Atlantic Monthly:

"The crash has laid bare many unpleasant truths about the United States. One of the most alarming... is that the finance industry has effectively captured our government - a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF's staff could speak freely about the U.S., it would tell us what it tells all countries in this situation; recovery will fail unless we break the financial oligarchy that is blocking essential reform."

More Change, Please

From the Left is this statement by Chris Floyd, an interesting and honest writer:

When reality gives it the lie, then it must be abandoned. There is no hope to be found in the Obama Administration: no hope for genuine change, no hope for a clean break (or any kind of break) from the relentless and ruthless promotion of empire, oligarchy and militarism. By his own choices -- his appointments, his policies, his court actions, his rhetoric -- Barack Obama has demonstrated beyond all doubt his sincere and abiding commitment to "continuity" in the most pernicious and corrosive elements of America's lawless hyper-state. To place one's hope in such a figure is a crippling, disastrous folly.

The only hope that can be associated with the Obama Administration is the long-shot, rapidly fading, outside chance that they could be forced -- very much against their will -- into at least slowing the militarist-oligarchic juggernaut by strong, sustained, massive, informed political opposition from the public.

It is too early for me to turn on Obama in this way. But I have to say, as those of you who read this blog well know, that I'm beginning to get frustrated with his failure to appoint the kind of people who will bring 'the change we need.' I like his words and much else about him. But it goes without saying that who you delegate a job to will determine much of what eventually happens. And I have found his choice of Assistants to be often less than inspiring. (The one exception to that would be in the area of climate change and the environment in general.)

The Mystery of Obama and the Banks

I know almost nothing about Henry Blodgett, but this is what he writes about himself on his bio:

Henry worked on Wall Street from 1994-2001. In 2000, he was voted the Street’s top Internet analyst by Institutional Investor and was one of the most-read analysts on Wall Street. After the dotcom crash, Henry had the dubious honor of being the first executive keelhauled by New York Attorney General Eliot Spitzer, in connection with an investigation into conflicts of interest between the research and banking divisions of Wall Street firms.

So those are his credentials. At any rate, he posts often on Huffington Post and today he wrote this, after listing all of the weird behavior of Tim Geithner:

Obama has never explained why he's acting so out of character here, so we have to speculate. The charitable explanation is that Tim Geithner is paralyzed by fear of triggering another post-Lehman credit meltdown and has convinced Obama that that's what will happen if the government holds banks and their bondholders accountable or just comes clean about the shape that banks are in.

As I've said, I disagree with this. No one is arguing for the sort of uncontrolled bankruptcy that Lehman went through. And the seizure, restructuring, and sale of a few major institutions should not be unmanageable, especially if the bondholders are required to pick up the tab.

The more disturbing explanation, meanwhile, is that the Obama administration really is in Wall Street's hip pocket. Jonathan Weil at Bloomberg thinks there's a chance this is the case. And Obama certainly isn't doing anything to discourage this.

By maintaining a double-standard and refusing to address the elephant in the room, Obama is risking his credibility and his reputation for telling it like it is. This behavior, both toward the banks and toward Americans, is a disturbing echo of the Bush administration. It's time for Obama to address it head on.

The Pendulum Swings

In his WaPo column, Michael Kinsley makes some of the arguments for higher estate taxes. I basically agree with him on this. There needs to be some measures that move our country toward greater equity and fairness, narrowing the gap between rich and poor. This has always been an issue in our country, going back to the fight between the Jeffersonians and the Federalists during our nation's infancy. The pendulum swings back and forth, between periods of greater and lesser inequality. We have just completed a 30 year era of growing economic inequality and have entered one of greater equality. I think.

House Boy

Jonathan Capehart, a black opinion writer for the WaPo, writes about the problems of a black person criticizing a black President:

The vitriol hit its peak during the first blow-up over the sermons of Rev. Jeremiah Wright last year. One over-the-top emailer wrote, "What kind of step-n-fetchit, house boy are you? You are DISGRACING Black people....God curse your house with tragedy, calamity, and poverty for the rest of your slimy, miserable days, you minstrel show clown."

The pride among African Americans in having one of our own as president is understandable. As Gene Robinson noted in his column last week, it just makes you feel good to see him not only represent you as a black American, but also represent the United States of America as he's done in Europe. But it does him no good and does the nation a disservice if he is not made to answer tough questions about his policies and decisions. Black reporters fought hard to get into positions from which they can hold the president to account. That cannot change now that the president himself is black.

It isn't close to being the same, but I feel somewhat like a traitor when I, a strong Obama supporter during the campaign, find myself criticizing him for his positions, like on the banks and his Af-Pk policy. There is definitely a split in the 'progressive' community, for lack of a better term, over the direction Obama is going, that is sad and unfortunate. But all we can do is be true to ourselves and let the chips fall where they may.

Counterproductive

In a column by WaPo's David Ignatius, he is reporting on meetings by Ambassador Richard Holbrooke and General Mullen in Pakistan. In one meeting with young tribal chiefs from the frontier area near Afghanistan, we hear this:

"We are all Taliban," one young man said -- meaning that people in his region support the cause, if not the terrorist tactics. He explained that the insurgency is spreading in Pakistan, not because of proselytizing by leaders such as Baitullah Mehsud but because of popular anger. For every militant killed by a U.S. Predator drone, he says, 10 more will join the insurgent cause.

"You can't come see the people because they hate you," he warned. Listening to them speaking through a translator, you realize that "drone attack" has become a vernacular phrase in Urdu.

It looks like Predator drones do more damage than we might imagine.

Making Banking Boring Again

Paul Krugman gives some history of banking in his lifetime:

Thirty-plus years ago, when I was a graduate student in economics, only the least ambitious of my classmates sought careers in the financial world. Even then, investment banks paid more than teaching or public service — but not that much more, and anyway, everyone knew that banking was, well, boring.

In the years that followed, of course, banking became anything but boring. Wheeling and dealing flourished, and pay scales in finance shot up, drawing in many of the nation’s best and brightest young people (O.K., I’m not so sure about the “best” part). And we were assured that our supersized financial sector was the key to prosperity.

Instead, however, finance turned into the monster that ate the world economy.

To me, history is always more informative than numbers. And what Krugman says here is a reminder that banking needs to be become boring again, because that's when it's doing its job and not screwing things up. As he ends his column,

But my sense is that policy makers are still thinking mainly about rearranging the boxes on the bank supervisory organization chart. They’re not at all ready to do what needs to be done — which is to make banking boring again.

The Big Five Toxic Banks

According to political analyst F. William Engdahl, most of the garbage assets are concentrated in the nation's five biggest banks:

"Today five US banks according to data in the just-released Federal Office of Comptroller of the Currency’s Quarterly Report on Bank Trading and Derivatives Activity, hold 96 per cent of all US bank derivatives positions in terms of nominal values, and an eye-popping 81 per cent of the total net credit risk exposure in event of default."

"The five are, in declining order of importance: JPMorgan Chase which holds a staggering $88 trillion in derivatives (€66 trillion!). Morgan Chase is followed by Bank of America with $38 trillion in derivatives, and Citibank with $32 trillion. Number four in the derivatives sweepstakes is Goldman Sachs with a ‘mere’ $30 trillion in derivatives. Number five, the merged Wells Fargo-Wachovia Bank, drops dramatically in size to $5 trillion. Number six, Britain’s HSBC Bank USA has $3.7 trillion. ("Geithner’s ‘Dirty Little Secret’: The Entire Global Financial System is at Risk", F. William Engdahl, Global Research)"

No More Wars, Just OCOs

Ira Chernus writes about the new Defense Budget proposal:

The new Pentagon budget rollout is part of a larger public relations campaign to promote a simple idea: We're no longer at war, but there's still plenty of fighting to do. There will still be the requisite number of OCOs ['Overseas Contingency Operations'] with substantial costs to bear, not only in dollars but in blood and misery.

Will Americans buy it? Will they give up the war, yet keep paying the sky-high bills for OCOs? The popular reaction to the end of the unmourned Global War on Terror is hard to discern, because there really hasn't been any. The obituaries dutifully appeared, were noticed by only a few, and are already almost forgotten.

Sometimes President Obama sounds like fundamental change is really what he has in mind: to shift the nation's priorities from protecting what we've got to creating a new and better way of life. At other times, he talks like just another commander-in-chief of the national insecurity state, warning us about al-Qaeda and all sorts of other "threats to our nation's security and economy [that] can no longer be kept at bay by oceans or by borders."

This ambiguity reflects the fine political line Obama has chosen to walk. Ending the "war on terror" may please millions of his supporters who expect him to offer genuinely new policies, foreign as well as domestic. Continued dire warnings may satisfy millions of middle-of-the-road voters who opted for him despite fears that he might undermine national security.

Satisfying both groups is no small trick. But if, with linguistic substitutions and innuendo, he can pull it off, he'll be free to carry out the empire's daily round of OCOs, large and small, without having to worry about the meddlesome vagaries of public opinion. That's one big advantage OCOs have over wars: They tend not to attract too much attention.

Conflict of Interest

The continuing sage of Lawrence Summers, head economic advisor to President Obama:

Not surprisingly, Lawrence Summers is convinced that he deserved every penny of the $8 million that Wall Street firms paid him last year. And why shouldn’t he be cut in on the loot from the loopholes in the toxic derivatives market that he pushed into law when he was Bill Clinton’s treasury secretary? No one has been more persistently effective in paving the way for the financial swindles that enriched the titans of finance while impoverishing the rest of the world than the man who is now the top economic adviser to President Obama.

It is especially disturbing that Summers got most of the $8 million from a major hedge fund at a time when such totally unregulated rich-guys-only investment clubs stand to make the most off the Obama administration’s plan for saving the banks. The scheme, as announced by Treasury Secretary Timothy Geithner, a Summers protégé, is to clean up the toxic holdings of the banks using taxpayer money and then turn them over to hedge funds that will risk little of their own capital. At least the banks are somewhat government-regulated, which cannot be said of the hedge funds, thanks to Summers.

It was Summers, as much as anyone, who in the Clinton years prevented the regulation of the hedge funds that are at the center of the explosion of the derivatives bubble, and the fact that D.E. Shaw, a leading hedge fund, paid the Obama adviser $5.2 million last year does suggest a serious conflict of interest. That sum is what Summers raked in for a part-time gig, in addition to the $2.77 million he received for 40 speaking engagements, largely before banks and investment firms, and on top of the $587,000 he was paid as a professor at Harvard.

Bipartisanship

A statement that seems true to me:

"If you can't find common ground, that doesn't mean you're partisan," she said. "It just means you believe two different things."

--Nancy Pelosi

Executive Paycheck

Look here to see what some of the CEOs at the largest public companies made last year (I almost said 'earned' but that would be the wrong word.)

Carbon Tax

Tom Friedman makes a good point when he talks about simplifying our way of taxing carbon so that everyone can understand it and so that it is presented as a matter of national security and economic renewal. This is of greatest importance for future, far more important in my opinion than the Taliban in Afghanistan.

Torture

Mark Danner has been a persistent and courageous witness against the brutality of governments in the form of torture. He has recently provided testimony of our own government's participation in torture in the form of a Red Cross document that can be found here. Danner interprets the document in this way:

When it comes to torture, it is not what we did but what we are doing. It is not what happened but what is happening and what will happen. In our politics, torture is not about whether or not our polity can "let the past be past"—whether or not we can "get beyond it and look forward." Torture, for Dick Cheney and for President Bush and a significant portion of the American people, is more than a repugnant series of "procedures" applied to a few hundred prisoners in American custody during the last half-dozen or so years—procedures that are described with chilling and patient particularity in this authoritative report by the International Committee of the Red Cross.[2] Torture is more than the specific techniques—the forced nudity, sleep deprivation, long-term standing, and suffocation by water," among others—that were applied to those fourteen "high-value detainees" and likely many more at the "black site" prisons secretly maintained by the CIA on three continents.

Torture is at the heart of the deadly politics of national security. The former vice-president, as able and ruthless a politician as the country has yet produced, appears convinced of this. For if torture really was a necessary evil in what Mr. Cheney calls the "tough, mean, dirty, nasty business" of "keeping the country safe," then it follows that its abolition at the hands of the Obama administration will put the country once more at risk. It was Barack Obama, after all, who on his first full day as president issued a series of historic executive orders that closed the "black site" secret prisons and halted the use of "enhanced interrogation techniques" that had been practiced there, and that provided that the offshore prison at Guantánamo would be closed within a year.

...the CIA seems to have arrived at a method that is codified by the International Committee of the Red Cross experts into twelve basic techniques, as follows:
Suffocation by water poured over a cloth placed over the nose and mouth...
Prolonged stress standing position, naked, held with the arms extended and chained above the head...
Beatings by use of a collar held around the detainees' neck and used to forcefully bang the head and body against the wall...
Beating and kicking, including slapping, punching, kicking to the body and face...
Confinement in a box to severely restrict movement...
Prolonged nudity...this enforced nudity lasted for periods ranging from several weeks to several months...
Sleep deprivation...through use of forced stress positions (standing or sitting), cold water and use of repetitive loud noises or music...
Exposure to cold temperature...especially via cold cells and interrogation rooms, and...use of cold water poured over the body or...held around the body by means of a plastic sheet to create an immersion bath with just the head out of water.
Prolonged shackling of hands and/or feet...
Threats of ill-treatment, to the detainee and/or his family...
Forced shaving of the head and beard...
Deprivation/restricted provision of solid food from 3 days to 1 month after arrest...

If it's okay when 'we' do it, then we can hardly complain when other governments do it to their enemies, can we. Our moral highground as a democracy is gone, unless we stand up against this monstrosity.