SEC: Oops, we *&^#ed up!

One of the frustrating thing about the last three months is, in reality, one of the frustrating things about the last 16 years (at minimum): The SEC's complicity in the downward spiral of the economy and systematic unraveling of the financial safeguards meant to protect everyone from the neophyte investor to, say, the Royal Bank of Scotland.

The commission said it received credible allegations about the scheme at least nine years ago and will immediately open an internal investigation to examine why it had failed to pursue them aggressively.

...

“Our initial findings have been deeply troubling,” Christopher Cox, the S.E.C. chairman, said in his statement. The commission received “credible and specific allegations regarding Mr. Madoff’s financial wrongdoing,” but did not respond aggressively, he said.

“I am gravely concerned by the apparent multiple failures over at least a decade to thoroughly investigate these allegations or at any point to seek formal authority topursue them,” Mr. Cox said.

Best case is the SEC were a bunch of Gomer Pyles too retarded to tie their own shoes. Worst case is we had pedophiles in charge of kindergarten. The truth is probably a combination of the two, with both administrations appointing economically like-minded deregulators who answered to theory instead of fact (ok, maybe that's the worst case).

Either way this is just another example of the need for a) full, unequivocal transparency, and b) total de-politicization of the SEC. They need to be cops, guys who exist to enforce the law, not a political agenda.

Yes, I've been away

Sorry, I've been suffering post-election political burnout and trying to work through a new feature script at the same time, so adhocdaily has been, ahem, less than "daily" for the past month. My apologies.

In the meantime, I'd like to encourage everyone to continue to enjoy the Bernie Madoff story. In case you missed it, here's the money shot:

"Many Wall Streeters suspected the wrong rigged game, though: they thought it was insider trading, not a Ponzi scheme," Blodget wrote. "And here's the best part: That's why they invested with him."

Love is not a strong enough word for my feelings about this story.

The failures of the New Deal

One of the favorite memes of this electoral season has been comparing Obama to Franklin Delano Roosevelt. Paleocon Chris Buckley put it in these terms: "Roosevelt was a successful president because, even though he had a second rate mind, he had a first rate temperment. Well, Obama has a first rate mind and Roosevelt's temperment." Buckley then went on to breech the levee which was, at that point, barely holding back a flood of republican endorsements for Obama. And where he went, others followed, while the comparisons to Roosevelt gained traction.

So what does that comparison actually mean, for better or for worse? Paul Krugman takes a look at it in today's Times:

But Barack Obama should learn from F.D.R.’s failures as well as from his achievements: the truth is that the New Deal wasn’t as successful in the short run as it was in the long run. And the reason for F.D.R.’s limited short-run success, which almost undid his whole program, was the fact that his economic policies were too cautious.

More...

F.D.R. did not, in fact, manage to engineer a full economic recovery during his first two terms. This failure is often cited as evidence against Keynesian economics, which says that increased public spending can get a stalled economy moving. But the definitive study of fiscal policy in the ’30s, by the M.I.T. economist E. Cary Brown, reached a very different conclusion: fiscal stimulus was unsuccessful “not because it does not work, but because it was not tried.”

This may seem hard to believe. The New Deal famously placed millions of Americans on the public payroll via the Works Progress Administration and the Civilian Conservation Corps. To this day we drive on W.P.A.-built roads and send our children to W.P.A.-built schools. Didn’t all these public works amount to a major fiscal stimulus?

Well, it wasn’t as major as you might think. The effects of federal public works spending were largely offset by other factors, notably a large tax increase, enacted by Herbert Hoover, whose full effects weren’t felt until his successor took office. Also, expansionary policy at the federal level was undercut by spending cuts and tax increases at the state and local level.

...

What saved the economy, and the New Deal, was the enormous public works project known as World War II, which finally provided a fiscal stimulus adequate to the economy’s needs.

Now I don't think that Krugman is advocating the invasion of Europe or the reconstruction of Japan. What I do think he's advocating is Obama doubling-down on domestic New Deal projects in the vein of the WPA. Given that rebuilding America's infrastructure was one of the planks of Obama's platform, this seems to dovetail nicely.

Elsewhere in the times, Billy Kristol also makes an FDR comparison in what is, I have to say, one of the most inane columns ever to grace The Paper of Record. Good lord.

In the midst of all the back-slapping on the left (Krugman's column is about the only serious one since last Tuesday) and the self-flagellation on the right (lol@Kristol), the Bush Junta is looting the national coffers on their way out the door.

Fed Defies Transparency Aim in Refusal to Disclose - Bloomberg
Bear Stearns Risk Manager to Guard New Henhouse - Bloomberg
A Quiet Windfall For U.S. Banks - WaPo
U.S. Throws New Lifeline to AIG, Scrapping Original Rescue Deal - WSJ

So on top of the $700 billion bailout, we have another $140 billion in tax breaks for banks. We have AIG getting another $150 billion, but having their interest rate actually drop by 5%. We have, in total, 1.2 trillion dollars of new liabilities on the fed budget, most of it backed by junk.

Obama's going to have a lot to undo.

More elections

Ok the good news is that The Oregonian has called that senate race for Jeff Merkley, bringing the Democratic take to 57 with three seats still in play.

Those three seats are:

(D) Al Franken vs. incumbent (R) Norm Coleman in Minnesota, which is in the midst of a recount. Coleman won this by less than 400 votes out of more than 2.5 million cast. I expect the recount to last until at least December, and honestly this might not be solved until after the new senate takes their oaths on January 3.

(D) John Martin vs. incumbent (R) Saxby Chambliss in Georgia, which will have a special election since neither candidate got 50% of the vote. Chambliss actually got about 49.9%, but Georgia law says you've got to win with a majority, so a run-off it is. Traditionally special elections have lower turnout and victory is determined by which party can do a better job of getting its base to show up at the polls. Obviously in Georgia that has favored the Reeps in Georgia, but the advent of the internet and Obama's amazing ground game have tipped the balance of power. Rumors are that all 38 Obama Victory offices in the state have already been rebranded as Martin for Senate, and the cash is already flowing in. This one is 50/50, folks.

(D) Mark Begich vs. incumbent (R) Ted Stevens in Alaska. As you may have heard once or twice, Alaskan politics are pretty corrupt. And there's definitely something fishy about the numbers in play here: Only 210,000 total votes have been counted in this race. That's a 30% drop from 2004, completely out of whack with the nation's numbers as a whole, which saw a 10% jump. There are still something like 45,000 outstanding votes, but even that is a sharp drop-off from the total expected. Right now Begich is down about 3300 total, but it's Alaska. So who the hell knows.

And yeah, I have't mentioned Prop 8 in California because I'm disgusted. And the sad thing is that, on the night that black Americans won one of their greatest victories, they're the voter base that won a victory for discrimination - by an amazingly large margin, 70% to 30%.

Finally, a bit of happy news: Massachusetts voted for single payer healthcare by an even larger, 72%-28%, margin.

There's work yet to be done, folks.

The Cabinet et al

Well yesterday I said that Rahm Emanuel would be the new Chief of Staff, but apparently that decision is still pending. I personally think it'll happen - Emanuel and Obama go way back and have perfectly complimentary ways of getting things done. Emanuel's a bulldog known for his love of direct confrontation and coercion; Obama, obviously, is The Great Persuader. If it's not Emanuel, I suspect Tom Daschle would be the frontrunner. Daschle's a good choice as well, but he won't be as good at making House dems compliant, and that's where Obama's first internal fights are going to be waged (as was the case for both Carter and, infamously, Clinton). The Times has a very worthwhile look at Emanuel today.

Here's a good article from Politico on the Secretary of State horse race. The top names at this point are Bill Richardson, Richard Holbrooke and John Kerry - known quantities all. Interestingly only Kerry is without significant ties to the Clinton administration, though in Richardson's case that bridge is well burned.

One early disappointment is that Larry Summers is probably going to be Secretary of the Treasury. Summers is another one with Clinton ties (no problem there); the real issue is his outright misogeny. However brilliant an economist he is, I'd be unhappy to see him in any sort of official role. No thanks.

RFK, Jr. for head of the EPA is the frontrunner. He'd be a good choice (and he'd go over very well with the Clinton wing of the party), but I personally hope to see former New Jerson governor Christine Todd Whitman get the spot. It'd be a wonderfully post-partisan appointment, and if Obama does go with Emanuel as Chief of Staff, he'll have to make a couple of post-partisan appointments to balance things out.

Caroline Kennedy as UN Ambassador is probably off the books in Vegas by now. I can't see anyone else getting this appointment.

For the time being I think Bob Gates will remain as SecDef, but eventually Chuck Hagel will end up in that spot - another post-partisan appointment. Same with Colin Powell as Secretary of Education.

I'll post more as I find more to post, but one thing that's clear is that Obama isn't going to make the same mistakes Clinton made in '93. He's going to have an experienced team in place to make the transition as smooth as possible, and we as a country will be better off for it.

The Day After...

So what's the landscape look like this morning?

First, it looks like Obama has won the popular vote by about 6-6.5% or so, which is on the low end of the spectrum from the last set of polls, but still commanding. To put it into perspective, it's smaller than Clinton's win over Dole in 1996 but larger than Clinton's win over Bush in 1992.

Total votes cast will be somewhere north of 135 million, about 15 million more than 2004 (which was the previous record for most votes cast). Turnout nationwide was about 65%, "the highest in generations." I'm too lazy to dig for the turnout numbers of past elections; if anyone wants to do that and post it in the comments section, you're welcome to.

Of the swing states, Obama won New Hampshire, Pennsylvania, Ohio, Indiana, Iowa, New Mexico, Colorado, Nevada, Virginia and Florida. McCain won Georgia, Montana, North Dakota, Arizona and Nebraska's 2nd District. Neither Missouri nor North Carolina have been called yet; McCain's ahead by about 6000 votes in the former, Obama leads by about 12k in the latter.

Illinois representative Rahm Emmanuel, a former staffer in for President Clinton and architect of the 2006 midterm tidal wave that swept so many republicans out of congress, will be Obama's Chief of Staff. That should give folks an idea of how Obama will govern (center-left).

Obama and Biden leave their senate seats, and both slots will be appointed by the respective state's governor. Jesse Jackson, Jr. has the inside track on Obama's seat, while Biden's is up in the air, though his son Beau (AG of Delaware and a Captain in the Delaware ANG, currently serving in Iraq) is the early leader out of the gate.

The Democrats have picked up at least 5 seats in the senate, which is good in a vacuum but disappointing in the greater scope of the election. The most disappointing results were in Oregon, where moderate republican Gordon Smith looks like he's held off Jeff Merkley; Alaska, where octogenarian convicted felon Ted Stevens somehow retained his seat ahead of Marc Begich (the hottest seller in Alaska right now is a t-shirt that says "Vote for Ted Until He's Dead"); and Minnesota, where Norm Coleman is ahead of Al Franken by about 600 votes. That one is headed for a recount and won't be solved until next month, is my guess.

The Dems have picked up somewhere between 15-25 seats in the House, a good night but not epoch-making. Included in the carnage, though, was Christopher Shays of Fairfield County - New England's last republican congressman. Fake America says F**K YOU to small town elitism.

Here in New York, the democrats control the state legislature for the first time since the 1930s. Final tally looks something like 32-27, but there's still vote wrangling.

Some of the stuff I've enjoyed reading this morning:

Obama's Win: A Death-Knell For 1960s Cultural Politics? - TPM
Fight for GOP’s identity begins - TheHill
Republicans Ponder Path to Renewal After Party Suffers a Harsh Setback - WSJ
Reality Suspended, Until It Prevailed - Washington Post
Reactions From Around the World - NY Times

I may be back to post more later, or I may just go back to sleep. After all, campaigning for the 2010 midterms starts tomorrow - gotta get some rest!

EDIT: And sadly, Prop 8 passed in California. The voting internals are here, and paint a pretty revealing picture.

Breaking news!

8:40 pm, and adhocDaily calls it for Obama!

The most trusted name in electoral news... you heard it here first!

All Day Long Open Thread

Feel free to post news articles or your thoughts in the comments section below. I'll start the day with a few links...

Dixville Notch, New Hampshire (made famous by a West Wing episode) is always the first town in the country to the polls, and today was no different. At midnight the tally came in and... 15-6 Obama! Woo-hoo!

Unfortunately, that means precisely bupkus beyond a 9 vote lead for Obama. Still, I'll call it a good start.

TheHill says it could be a surprisingly short night. Key states to watch? Pennsylvania and Virginia. If Obama wins both - and we could know that by 7 pm - it's over before it really began.

Nate Silver has an hour-by-hour breakdown of what to look for tonight over at Newsweek. I'm with Nate in that I believe the real blood will be shed in the Senate races, so pay special attention to Kentucky, Georgia and Alaska. Also, keep an eye on California's Prop 8 ballot.

The WSJ, classy as ever, reminds us all that if Obama is elected we'll be in for another 9/11.

Long lines in the Washington, D.C. High turnout is a good thing for Obama (especially in NoVa), but long lines could end up discouraging some folks from sticking around to actually vote. Let's hope that's not the case.

And a really great fluff piece from the NYT doubles as a great example of why I'm sold on Obama:

The subject was raised by Sway Calloway of MTV News, who asked Mr. Obama if he supported ordinances to ban sagging pants, a style inspired by hip-hop artists.

“Here is my attitude,” Mr. Obama replied. “I think people passing a law against people wearing sagging pants is a waste of time. We should be focused on creating jobs, improving our schools, health care, dealing with the war in Iraq, and anybody, any public official, that is worrying about sagging pants probably needs to spend some time focusing on real problems out there.”

But it was clear that Mr. Obama was not a fan of the look.

“Brothers should pull up their pants,” he said. “You are walking by your mother, your grandmother, your underwear is showing. What’s wrong with that? Come on.”

He gets an A+ on both answerws.

Enjoy the election, kids, and don't forget to vote!

Twenty-four hours to go...

I wanna be sedated.

• TheHill says that the House GOP is pinning their hopes on McCain showing well in the general. WTF? To me, this sounds like an extreme-righty (Cole) preemptively blaming a more moderate righty (McCain) for a poor showing overall. In other words, the first shots of the great Reep Civil War have been fired, and battle lines are being drawn: The Palin Camp vs. The McCain Camp. This'll be one bloodbath I'm sure to enjoy.
• Gerry Seib at the WSJ points out what I've been saying for years: The fundamental way that campaigns are run has been changed. Seib, though, addresses primarily the symptoms (red states turning blue zomgz!) and not the symptom - that being, an age of easy-to-hand information and money. This is the first internet election, and Obama was the candidate who had the knowledge and foresight to take advantage of the greatest medium for communication and documentation we as a society have yet created. It is so, so much easier to donate $50 bucks from your couch than it is to mail it by hand; it is so much easier to both register to vote and help others register; it is so much easier to raise $640 million dollars. Obama's campaign saw all of that - thank you, Howard Dean! - and that's how the west is won.
• The Times has a retrospective of the last two years on the stump...
• And The Financial Times has a look at the 36 hours to come.

Enjoy the rest of the day, folks. And don't forget to VOTE!

Krugman lays it out

Nobel winner Paul Krugman explains what's going on...

The long-feared capitulation of American consumers has arrived. According to Thursday’s G.D.P. report, real consumer spending fell at an annual rate of 3.1 percent in the third quarter; real spending on durable goods (stuff like cars and TVs) fell at an annual rate of 14 percent.

...

It’s true that American consumers have long been living beyond their means. In the mid-1980s Americans saved about 10 percent of their income. Lately, however, the savings rate has generally been below 2 percent — sometimes it has even been negative — and consumer debt has risen to 98 percent of G.D.P., twice its level a quarter-century ago.

Some economists told us not to worry because Americans were offsetting their growing debt with the ever-rising values of their homes and stock portfolios. Somehow, though, we’re not hearing that argument much lately.

Sooner or later, then, consumers were going to have to pull in their belts. But the timing of the new sobriety is deeply unfortunate. One is tempted to echo St. Augustine’s plea: “Grant me chastity and continence, but not yet.” For consumers are cutting back just as the U.S. economy has fallen into a liquidity trap — a situation in which the Federal Reserve has lost its grip on the economy.

...

For the fact is that we are in a liquidity trap right now: Fed policy has lost most of its traction. It’s true that Ben Bernanke hasn’t yet reduced interest rates all the way to zero, as the Japanese did in the 1990s. But it’s hard to believe that cutting the federal funds rate from 1 percent to nothing would have much positive effect on the economy. In particular, the financial crisis has made Fed policy largely irrelevant for much of the private sector: The Fed has been steadily cutting away, yet mortgage rates and the interest rates many businesses pay are higher than they were early this year.

...

No, what the economy needs now is something to take the place of retrenching consumers. That means a major fiscal stimulus. And this time the stimulus should take the form of actual government spending rather than rebate checks that consumers probably wouldn’t spend.

Let’s hope, then, that Congress gets to work on a package to rescue the economy as soon as the election is behind us. And let’s also hope that the lame-duck Bush administration doesn’t get in the way.

And read lolDavid Brooks for Krugman's companion piece.

Enjoy your schadenfreude.

Relief

The big story today is this one, from the WSJ:

WASHINGTON -- The U.S. government's latest plan to aid struggling homeowners could move as many as three million people into more-affordable mortgages, according to people familiar with the effort.

The proposal, which has been designed by the Treasury Department and Federal Deposit Insurance Corp., is close to being finalized. Estimated to cost between $40 billion and $50 billion, the plan would have the government agree to share a portion of any losses on a modified mortgage offered by lenders.

Funding for the plan could potentially come out of the $700 billion financial-rescue program authorized by Congress earlier this month. The plan, which was previewed during Congressional testimony last week, would represent one of the most aggressive and sweeping moves to address the nation's foreclosure mess, among the last elements of the crisis yet to be addressed by concerted government intervention.

Sound familiar? It should, because it was the subject of my very first blog post here. The whole point of the bailout is to ensure that not only banks, but people as well, can save the equity they have and/or create new equity. And what's good for Wall St., or for GM, should be good for the typical subprime homeowner as well. They all made mistakes, and it's not "fair" that they're all getting a mulligan, but "fair" is less important than figuring a way out of this mess. And creating 4 million new renters ain't it.

From the same article above:

As many as 7.3 million American homeowners are expected to default on their mortgages between 2008 and 2010, with 4.3 million of those losing their homes, according to Moody's Economy.com, a research firm.

Meanwhile, the economy shrunk like a frightened turtle in the 3rd quarter, its biggest contraction in 7 years.

Barack and Bubba, together at last.

And finally, Christopher Buckley keeps his dad a-spinnin'. It's been a lot of fun to see a bunch of the big name reeps abandoning McCain's ship, and in this installment Buckley takes a crack at an early draft of Johnny Mac's concession speech. The best part:

Looking on the bright side, it looks like I’ll get to go to bed a little earlier than I’d hoped to tonight. To tell the truth, I’m so tired after this 22-month (looking away from TelePrompTer) clusterf ... after this very long campaign that I won’t even have to take a sleeping pill.

One I Missed

My exceptionally lazy blog from this morning now looks even lazier, as I missed the best story of the day. In case anyone was wondering what's going to happen to the GOP after they get their clock cleaned Tuesday...

Win or Lose, Many See Palin as Future of Party - NYT

Hilarious.

Lazy Blogger is Lazy

Dems get ready to rule - TheHill.com
Reid, Pelosi seek more ‘golden parachute’ restrictions - TheHill.com
Stocks Steady With Fed in Focus - WSJ
2 Rivals’ Plans on Fiscal Issue Add to Deficits - NYT
Sleepless in Tehran - NYT
For Your Consideration - NYT (Yes, I'm linking Maureen Dowd. Shut up.)
Global car sales fall 6% in third quarter - FT
US durables rise but weakness remains - FT
Clues in the Mist - WaPo
Accuracy Of Polls a Question In Itself - WaPo
How Congo's heaven became hell - BBC
Scores dead after Pakistan quake - BBC

RE: Syria

One of the biggest tragedies of the WARS in which we are currently engaged is the total lack of awareness and total apathy about them on behalf of the general public. No bodies, no real media coverage, general intellectual laziness, the natural ignorance of the American citizen, whatever the reasons are, no matter how hard I try I simply cannot understand why the first, last and only thing on peoples' minds and out of their mouths are not the TWO wars to which this country has been committed for SEVEN years with no end in sight of either.

That's not fair I suppose.

The fact of the matter is that there is only a very small percentage of the population is even participating in them. Or so people seem to think. It's rough out there with kids and bills and all. Who has time to think these days?

Our armed forces are stretched beyond the limit because of the decisions of a small minority of 'hawks' who have never served a day in their lives and who really can't comprehend (or more accurately don't have an ounce of respect for human life not their own) the meaning of the word war. These same people have managed to convince the masses that war is fun and glorious and that victory is somehow inevitable. This is nothing new of course. In fact, one might say it's a necessary condition to starting a large scale conflict but that's no excuse.

With that said, let me try and explain to anyone out there who still doesn't understand. Of course, anyone reading this probably does if only because they've played a game of Civilization (thank you Sid Meier, you're a god) or any RTS for that matter.

War is a tool, the purpose of which is to acquire something that you want from someone who has it and won't give it up if you ask nicely. In the case of Iraq that thing is oil. Do you know how to 'reduce our dependence on foreign oil'? You make foreign oil our oil that's how.

There is no such thing as a moral war. There is no such thing as a good war. There is no such thing as a just war. Both sides in any war are the 'good guys' to themselves and the 'bad guys' to the other.

In these conflicts if you're a U.S. citizen you're the 'good guys' and if you're not a U.S. citizen you're the 'bad guys.' Remember the Bush Doctrine? Does Global War on Terror ring a bell? 'Enemy non-combatant' sound familiar?

I don't care where you live, what your religion is, whether or not you agree with the premise of these conflicts, if you drive a Prius or an H2, if you think meat is murder or that all homosexuals will be left on the earth to burn with Satan after the Rapture. If you're an American citizen, if you hold a U.S. passport, you are at war and the only acceptable outcome of war is victory. Because if you don't win you die. This is not fear mongering, the time for that has long passed (and it worked by the way). This is fact.

Now that we've got that cleared up, let's have some fun with maps.

Here is a political map of the region courtesy of the Google:


View Larger Map

And here's a link to another from the The Global Education Project:

middle-east-military-and-oil-map

You can zoom in and out of the Google map to follow along.

First look at where the major oil fields in Iraq are (they're purple on the Global Education Project map). Now look at the bodies of water between those oil fields and the U.S. (or Western Europe).

You'll notice that in order to move the purple from one place to another, one must sail through certain narrow bodies of water. Let's call them 'straits'. The closest one is south of the purple but oops! There's somebody there that doesn't want us there.

No problem! We'll just bomb them. But wait! We don't have any more bombs to spare and the Russians (who can do whatever they want thank you very much Georgia and have a nice day) wouldn't approve of anything rash. Oh yeah, they're about to have nukes too. Hmmm. Looks like we'll have to go another way.

Maybe we can put the purple in a pipe, run it past our good friends the Saudis and pick it up somewhere around Egypt. We'll have them over for dinner and maybe give them a kiss or two, that should work perfectly! Ok Ok, so the dinner was great and damn can those Saudis party (how about a quiet stroll in the garden)but for some reason they're being stubborn. Looks like we'll have to go to plan C.

If only there was a country that was in a real political and economic jam, had a huge influx of refugees to deal with, an unstable government close by, and no allies strong enough to help it out just yet. If only that country had a purple pumping pipeline that ran directly through it to friendly waters. Man oh man wouldn't that be great?

Don't get me wrong. Militants are certainly entering Iraq through Syria and we can't let that happen. But I would take a hard look at the location of those air-strikes, some major geographical features, and the route of a certain pipeline. We win this thing or lose kids. And if we lose this one, we're in some serious trouble.

Why Bloomberg?

I've been pretty focused on the national crisis and election over the past few months, so I haven't really had time to devote the full weight of my incredulity at Mayor Bloomberg's coup d'etat. Let me rectify that.

I'll start with the obvious question: What the f*ck?

Second question: What the hell has Bloomberg done to make us think he's the right guy to handle this crisis and the profound effect it is already having on the NYC economy? The argument is that "this is the crisis he's been preparing his whole life for," but the reality is that this is the crisis he helped build.

Let's hop in the way-back machine and travel to 2003, to a point at which then first-term Mike was up against it for the high cost of living and taxes in the face of a decline in the number and spending power of the city's middle class. His answer to his many critics:

''If New York City is a business, it isn't Wal-Mart -- it isn't trying to be the lowest-priced product in the market,'' a draft of the speech reads. ''It's a high-end product, maybe even a luxury product. New York offers tremendous value, but only for those companies able to capitalize on it.''

Mr. Bloomberg's address signaled, in perhaps the starkest terms yet, his change from a man who thought higher taxes would ''destroy this city'' to one who sees the city he governs as a value-added commodity.

''New York City is never going to be the lowest-priced place to do business; it is just the most efficient place to do business,'' Mr. Bloomberg told reporters later. ''You have to get value for the moneys that you're going to spend.''

Essentially, "suck it up and move to the suburbs." And politically, at least, it worked. The financial sector boomed during the middle part of this decade based largely upon the mortgage industry (more on that in a minute) and produced salad days somewhat akin to the dot-com boom of the mid-90s. Meanwhile, manufacturing jobs in the city have droppped by nearly 30% since 1995.

No one noticed, though, because Bloomberg's gambit of creating higher paying jobs then taxing the bejesus out of them to create his "luxury product" seemed to have worked. You'll have to trust me on these numbers - I can't find the article they're from anywhere, but anyway - 10% of NYC's new jobs added during the Bloomberg administration have been in the financial sector. However, more than 30% of the new income came from those jobs.

Yes, that's insanely out of whack. Building the economy based on speculation and a construction boom begat by shady mortgages is not a long-term solution, nor is it good government. And now we pay the price.

How? Well, I can see from my rooftop half a dozen new condo complexes that have halted construction somewhere between 30% and 70% complete. These are structures that are lying fallow, so to speak - not producing jobs, homes, or tax revenue for the city. The companies that secured the building contracts all buggered off when the property owners, marginal investors all, ran out of money. The owners ran out of money because the banks ran out of money. The banks ran out of money because they were betting on the mortgages that the perspective homeowners who would have been buying a spot in Mayor Mike's highrise hell no longer can get.

I'd call it a vicious cycle if it wasn't so patently stupid. And just as stupid is that Bloomberg has been complicit in the whole deal with his rush to rezone everything into erstwhile Battery Park Cities, and an even bigger rush to tax the middle class into New Jersey.

Yet he says he's the man to lead us out of this crisis. This, the same man who said in May the best solution was to "pray that Wall Street does well."

Well, Mayor Mike, it hasn't, and you're clearly out of ideas. So I'll give you one: Let's pray that the city council (I'm looking at you, Christine Quinn) finds a set and overturns their own vote. No more rewarding the people who got us into this mess because it's politically expedient to do so, and no more short-sighted profiteers masquerading as populist heroes.

Mayor Mike, your experiment is over. Please, just let the clock run out.

Wassup!

Nationalize

• And so it begins. The Treasury Department will, this week, start passing out $125 billion of Halloween treats to the 9 major investment banks involved in the "rescue." Or "bailout." Or, worst case scenario, "armed robbery. Good times.
  

  Assistant Treasury Secretary David Nason said the deals with the nine banks were signed Sunday night and the government will make the stock purchases this week. The deals are designed to bolster the banks' balance sheets so they will begin more normal lending.

  The action will mark the first deployment of resources from the government's $700 billion financial rescue package passed by Congress on Oct. 3.

  The bailout package has undergone a major change in emphasis since it was passed by Congress. Treasury Secretary Henry Paulson decided to use $250 billion of the $700 billion to make direct purchases of bank stock, partially nationalizing the country's banking system, as a way to get money into the financial system more quickly.

  What does that mean for how the banking sector does business? Well, I'd expect things to be a hell of a lot more conservative than what we've seen over the last two decades, for a start. Beyond that... who can say?
  
• The auto industry wants to get in on the nationalization kick, as GM has asked the gov't for some help in acquiring Chrysler. They've gone so far as to ask the Treasure to actually take an official stake in the company, which no doubt has Uncle Milty spinning in his grave. But why do they actually need the money? What, exactly, would the taxpayers be buying into?

  The automakers have estimated that a combination would need $10 billion in new equity to shut plants, cut jobs, integrate operations and add liquidity, the Wall Street Journal reported, citing people involved in the talks or briefed on them.

  Oh good lord. We have to pay GM and Chrysler to cut jobs? Let me be the first to say that this does not look like a particularly compelling plan.
• So as the speculation economy of the past 30 years continues its downward spiral, where does this all end? In a pot of gold. Srinivasan Venkataraghavan (kick-ass name, btw) says that the inevitable inflation caused by the cratering of the current economy will lead just as inevitably to a commodities boom, as folks stop investing in "guesses" and once again begin investing in "things."
• Roger Bootle of The Telegraph has a great piece on the Keynesian reality of the current economic crisis.

  We now find ourselves in Keynesian conditions. So this is the time for Keynesian solutions. What are the implications? There is nothing anti-Keynesian about trying to get out of the current position through lower interest rates. For anyone who believes in markets and is wary about state action, this must be the first resort. But don’t be surprised if this does not work.

  In that instance, don’t be shy about allowing huge increases in government borrowing to stave off depression. Finance must not be confused with economics. Debt has to be serviced all right, and this has costs, but idle men and machines are real costs which are never recoverable and hence are borne forever.

• Also, we're now at war with Syria. And Pakistan. Happy Monday!
  

This gentleman says it all for me:

How to get my Nerd Vote

via BoingBoing

Best Quote Ever

I had previously posted a link from the NY Times, but they changed the article very quickly so, from the Washington Post:

Mr. Greenspan said that he had found “a flaw in the model that I perceived is the critical functioning structure that defines how the world works.”

What, exactly, did you get paid for?

One of my favorite blogs, as you see linked to the left, is The Mess That Greenspan Made by Tim Iacono. He's even got the perfect subhead: How Eighteen Years of Easy Money Changed the World.

Well, today was Tim's day, because Gollum... erm, Greenspan finally got called to the carpet by Henry Waxman and the House Committee on Oversight and Government Reform. And by the end of the session, it was stained with Greeny's blood. To wit:

Greenspan told the House Oversight Committee that his belief that banks would be more prudent in their lending practices because of the need to protect their stockholders had been proven wrong by the current crisis. He called this a "mistake" in his views and said he had been shocked by that.

Greenspan said he had made a "mistake" in believing that banks in operating in their self-interest would be sufficient to protect their shareholders and the equity in their institutions.

Greenspan called this "a flaw in the model that I perceived is the critical functioning structure that defines how the world works."

Greenspan is 82 years old and, apparently, utterly devoid of common sense. This is the equivalent of a teacher putting the bully in charge of class, then looking back and saying "I figured he would have been fair and impartial!" And it's not like there was any lack of direct precedent for him to draw upon. A simple look at what happened in South America in the 1970s and 80s shows that a concentration of wealth, massive inflation and a prolonged recession are all absolutely inevitable in the wake of mass deregulation. Any dilettante knows this, but somehow Gollum didn't.

Waxman was having none of it.

House Oversight Committee Chairman Henry Waxman said that he believed that the Federal Reserve, which regulates banks, the SEC and the Treasury had all played a role in contributing to the mistakes.

"The list of mistakes is long and the cost to taxpayers is staggering," Waxman, D-Calif., told the three men. "Our regulators became enablers rather than enforcers. Their trust in the wisdom of the markets was infinite. The mantra became that government regulation is wrong. The market is infallible."

And that's the bottom line: People who think the market will regulate itself are either stupid or evil. This is the most important message here, and this is what everyone living through this time must remember - the market never regulates itself, and folks who say it's a good model to try it are only after easy, borderline illegal money and the continued stratification of the classes.

If someone says "deregulate," they're really saying "let's steal from the working and middle class." Remember that.

Worldwide recession looming...

• From the AP, major corporations from all over the world are girding their loins for a legitimate recession. The culprit this time isn't the credit crunch - at least not directly - but poor earnings reports from the very top of the corporate food chain. The result? Merck is cutting 8000 jobs. Yahoo! 1500. And so on and so forth. The Dow, of course, is feeling the blow already, as it's down nearly 300 points.
  
• "That's not exactly worldwide, Matt," you're saying. Well, look at what's happening in China according to McPaper.
  

  Tao built River Dragon from a start-up with four employees into one of China's biggest textile printing firms in just five years. He had even grander dreams: He wanted to see his company's stock trade on Nasdaq alongside the likes of Microsoft and Intel.

  The dreams are dead. River Dragon shut down on Oct. 7. Tao and Yan have vanished, leaving behind more than $290 million in debt and a lot of anger in this city 140 miles south of Shanghai in the Yangtze River Delta. The company's demise put 4,000 workers on the street and jilted hundreds of suppliers and creditors.

• It's happening in Latin America, too.
• The FT points out that, while we've weathered the initial storm, the clean-up is going to be a long, long process. And that we've reaped what we sowed:
  

  Consider the burdens weighing down on these countries. Between 1980 and 2007, the ratio of US gross financial debt to gross domestic product – a measure of the sector’s leverage – jumped from 21 per cent to 116 per cent. Today, as a result, the arteries are clogged with bad debt.

• LOL@Friedmanites. Your Southern Cone Counter-revolution of the 1970s (finally) breathes its' last.
• The Making (and Remaking) of John McCain is this week's most illuminating read from the campaign trail. Robert Draper does a good job of shedding light on how and why McCain has lurched drunkenly from policy position A to policy position B without any seeming regard for message coherence. The result? A candidate and campaign that's lacks an overarching message beyond "Elect me!" and a candidate that looks woefully out of his depth.
• How bad has it gotten for McCain? Rahm Emanuel asks for an apology from the GOP for all their negative campaigning...
• ... and Sarah Palin delivers. Think the transformation from "Pit-bull" to "Repentant 3rd Grader" was part of Team McCain's long-term strategy?
• And finally, Al-Qaeda is trying its hand at American electoral politics, just as they did in 2004. From the AP courtesy of Breitbart:

  Al-Qaida supporters suggested in a Web site message this week they would welcome a pre-election terror attack on the U.S. as a way to usher in a McCain presidency.

  The message, posted Monday on the password-protected al-Hesbah Web site, said if al-Qaida wants to exhaust the United States militarily and economically, "impetuous" Republican presidential candidate Sen. John McCain is the better choice because he is more likely to continue the wars in Iraq and Afghanistan.

  "This requires presence of an impetuous American leader such as McCain, who pledged to continue the war till the last American soldier," the message said. "Then, al-Qaida will have to support McCain in the coming elections so that he continues the failing march of his predecessor, Bush."

  SITE Intelligence Group, based in Bethesda, Md., monitors the Web site and translated the message.

• Happy hump-day, everyone.
  

Does this skyline look socialist?

Courtesy of SadlyNo.

Obama the moderate

I had dinner with some relatives last month, and as often happens the conversation turned to politics. We addressed some of the talking points of the election - "Obama doesn't support Israel!" and "It was supposed to be Hillary's turn!" were two favorites - but after the ridiculous portion of the evening, the discussion turned to something a little more substantial. Namely, is Obama too liberal?

Armed with the courage of three glasses of wine (this was Rebecca's family, after all, so I generally try not to be too bellicose), I attempted to make the point that he's not too liberal, that he is, in fact, a moderate pragmatist. I say "attempted" because truth be told, I didn't acquit myself particularly well. I was unprepared to frame the debate in any meaningful fashion and ended up spouting talking points like some kind of mindless automaton.

It was not my finest moment.

So let me attempt to make amends here. Let's take a look at the issues where Obama is chided as being "too liberal" and remove the cloak of right-wing spin to reveal what the man actually is: A pragmatic moderate.

• The War in Iraq. Obama is generally criticized on two fronts here. First is his opposition to the Surge, which is roundly hailed as a smashing success. Except it's not. The Surge has splintered Iraq into three (Sunni, Shi'a, Kurdish) ethno-religious geographic states and indirectly given Iran and Turkey greater power over a still-deteriorating situation. It's also, as the article linked shows, made things increasingly deadly for Iraq's religious minorities. Relying on the surge to fix Iraq was like using a band-aid to treat gangrene, a metaphorical analysis Obama hasn't yet made but is welcome to, free of charge.
• The War in Iraq part 2. Obama has favored a phased withdrawl from Iraq for years, which McCain has chided as "waving the white flag of surrender." This in spite of the fact that both the Iraqi regime and the Bush Administration have now agreed to that same phased withdrawl. And the Brits are about to bugger off permanently. In light of the fact that four of the five parties now mentioned share the same view, with McCain's being the only outlier, isn't it more likely that Obama is not in fact liberal on this position but is, instead, moderate and correct?
• Taxes. Very simply, McCain's plan is a radical redistribution of wealth upwards. Obama would raise raise taxes on the rich while cutting taxes on the middle and working class. To put the first part of the previous statement in context: Obama would raise the capital gains tax to the rate it was at under Reagan. Reagan! Was Reagan too liberal as well? Or perhaps have we discovered the truth that Obama is a unique politician beholden only to the ideology of "finding shit that works."
• Health Care. Obama is often derided for his "socialist, universal health care" plan. Except that it's neither socialist - the market still has a say - nor universal. It was Hillary Clinton whose plan called for universal health care up front, while Obama instead took the moderate approach of calling for mandates only for children. As for comparing Obama's plan to McCain's, the following paragraph pretty neatly sums it up:

  Obama follows the Democratic health care template by building on existing private and public programs such as employer health insurance, private individual health insurance, Medicare, and Medicaid. This is unlike the Republican approach that would refashion the private market by providing incentives to encourage a reinvigorated individual health insurance platform focused on personal choice and responsibility (see McCain post).

  So here you have Obama, willing to draw water from every well available to create a public/private partnership in order to solve a problem. McCain on the other hand has an extremist, fundamentalist view and plans to let the market sort it out - just as it sorted out the mortgage and investment banking industries. Only one of these plans looks moderate to me.
• And finally, let's look at this great WaPo story from January. Charles Peters examines what he called Obama's "heart and soul" bill, an effort from Obama's time in the Illinois state senate in which the senator proposed a bill requiring that all interrogations and confessions of murder suspects be videotaped. I'll let Mr. Peters tell the story:
  

  This seemed likely to stop the beatings, but the bill itself aroused immediate opposition. There were Republicans who were automatically tough on crime and Democrats who feared being thought soft on crime. There were death penalty abolitionists, some of whom worried that Obama's bill, by preventing the execution of innocents, would deprive them of their best argument. Vigorous opposition came from the police, too many of whom had become accustomed to using muscle to "solve" crimes. And the incoming governor, Rod Blagojevich, announced that he was against it.

  Obama had his work cut out for him.

  He responded with an all-out campaign of cajolery. It had not been easy for a Harvard man to become a regular guy to his colleagues. Obama had managed to do so by playing basketball and poker with them and, most of all, by listening to their concerns. Even Republicans came to respect him. One Republican state senator, Kirk Dillard, has said that "Barack had a way both intellectually and in demeanor that defused skeptics."

  The police proved to be Obama's toughest opponent. Legislators tend to quail when cops say things like, "This means we won't be able to protect your children." The police tried to limit the videotaping to confessions, but Obama, knowing that the beatings were most likely to occur during questioning, fought -- successfully -- to keep interrogations included in the required videotaping.

  By showing officers that he shared many of their concerns, even going so far as to help pass other legislation they wanted, he was able to quiet the fears of many.

  Obama proved persuasive enough that the bill passed both houses of the legislature, the Senate by an incredible 35 to 0. Then he talked Blagojevich into signing the bill, making Illinois the first state to require such videotaping.

35 to 0 is not "too liberal." It's not even "liberal." 35 to 0 is good government and an obvious gift for finding and creating common ground. That is the very definition of moderate, and that, more than anything, is why I will happily be voting for Obama this November 4. You should, too.

Warren Buffet has some advice.

Buy American. I am.

Enjoy your weekend, everyone.

Joe the Plumber

It was really kind of a bizarre debate last night, with both candidates fixating on one guy who I actually thought was a metaphor. Turns out he wasn't, which I guess is good to know if you live in the Columbus, Ohio area.

But the real funny part about focusing on this guy as the "typical Ohio undecided voter" is this: He's not even registered to vote. And he already supported McCain! So he's neither undecided, nor a voter. *facepalm*

Take a look at this wonderful interview with Katie Couric, where Joe compares Obama to Sammy Davis, Jr:

Watch CBS Videos Online

Let's move beyond Joe, since it seems that's what the audience desperately wanted to do last night. According to Amy Sullivan in Time:

In politics it is generally not considered a good sign when voters are laughing at you, not with you. And by the end of the third and last presidential debate, the undecided voters who had gathered in Denver for Democratic pollster Stan Greenberg’s focus group were “audibly snickering” at John McCain’s grimaces, eye-bulging, and repeated references to “Joe the Plumber.”

The group of 50 uncommitted voters should have at least been receptive to McCain—Republicans and Independents outnumbered Democrats in the group by almost 4 to 1, and they started the evening with much warmer responses to McCain than to his Democratic opponent, Barack Obama. But by the time it was all over, so few of them had declared their support for McCain that there weren’t enough for Greenberg to separate them into a post-debate focus group. Meanwhile, the Obama supporters had to assemble in two different rooms to keep their discussion groups manageable.

That, of course, segues us nicely into the real muck: Who did better in the eyes of the undecideds? The answer was Obama in a rout. Whether it was because of McCain's bizarre answers - like when he said he doesn't think teachers should be certified - or his even more bizarre resemblance to Jabba the Hutt remains to be seen.

Nice eyeroll, John.

Back on the financial front, Wall Street will today try to deal with Wednesday's little 700 point hiccup. Financial Times are expecting yet more ups-and-downs, as the news just keeps changing seemingly hourly.

The good news, though? Consumer prices were flat in September, a nice surprise that has the market rallying early in today's session.

Happy Thursday, everyone.

EDIT: Thanks to our friends at Plunderbund, we find that Joe the hard workin' Plumber somehow has the day off. Check out their story for some (well-deserved) snark.

Paulson's Ultimatum

• Really great bit of journalism from The Times this morning about what happened in Paulson's meeting with The Nationalized Nine two days ago. It covers in brief not only what led to the meeting, but what happened in the meeting itself, who said what, and even the terms of the deal.
  

  Indeed, several of the banks represented in the room are in need of capital. And analysts said the terms of the government’s investment are attractive for the banks, certainly compared with the terms that Warren E. Buffett extracted from Goldman Sachs for his $5 billion investment.

  The Treasury will receive preferred shares that pay a 5 percent dividend, rising to 9 percent after five years. It will get warrants to purchase common shares, equivalent to 15 percent of its initial investment. But the Treasury said it would not exercise its right to vote those common shares.

• WSJ has what amounts to a companion piece to the Times article above.
• Ed Chancellor in the Financial Times draws the obvious comparisons to economic collapses of the past. And yeah, it's a *facepalm* bit of reading:

  Bank panics always have the same origin. “Every genuine business panic springs from the same root, which is rank speculation,” wrote one Victorian commentator. Thomas Tooke, the ­early 19th century merchant and author, ascribed the British crisis of 1793 to “a great and undue extension of the system of credit and paper circulation”. A year earlier, Thomas Jefferson, observing the first financial collapse in the independent United States, noted that “our paper bubble has burst”.

• Here's some fun bailout related news, it turns out AIG executives are complete dickheads. The NY Daily News has a story about four of them shooting up pheasants in England while Rome burned. Money quote:

  "The recession will go on until about 2011 - but the shooting was great today and we are relaxing fine," AIG honcho Sebastian Preil was quoted as saying.

  Preil wasn't the least bit embarrassed that AIG, which got its first $85 billion bailout from the feds last month, needed taxpayer money to stay in business. The hunting trip came the week AIG got a second loan of $37.5 billion.

• On the campaign trail, WaPo points out that Obama's cash advantage has gone a long way towards flogging McCain into submission. The 50 state strategy, which was once considered folly, has forced McCain to lay cash he doesn't have into markets where he didn't want to spend. So even if Obama doesn't win Indiana, Missouri, Nevada or North Carolina, his investments there have served their purpose by forcing McCain to take money out of even more crucial markets like Colorado, Virginia, Florida and Ohio. It's to the point now that Obama doesn't have to defend a single Kerry state, while McCain has to run the table on what's left as a potential toss-up.
• And finally, Time's Mark Halperin asks if McCain has what it takes to rattle Obama in tonight's third and final presidenial debate. I think it's much more likely that McCain loses his cool and starts shouting at the damn kids to get off his damn lawn than he actually lands a knock-out blow, which is what he needs to get him back into this thing. In other words, the last 20 days before the election should be a processional, not a sprint.
  

Tuesday's rundown

• The US has officially announced plans to buy stakes in nine of the largest banks to recapitalize them and help end the credit crunch. The 250 billion needed will come from the 700 billion already committed to the bailout, so this is more a redistribution of than an addition to the plan.
  

  The government is set to buy preferred equity stakes in Goldman Sachs Group Inc., Morgan Stanley, J.P. Morgan Chase & Co., Bank of America Corp. -- including the soon-to-be acquired Merrill Lynch -- Citigroup Inc., Wells Fargo & Co., Bank of New York Mellon and State Street Corp.

  Banks have a month to join Treasury Department's capital purchase program. They must elect to participate before 5 p.m. on Nov. 14.

• Robert Skidelsky, a columnist after my own heart, says that "Keynes would have seen it coming."

  The Great Financial Meltdown would not have surprised the British economist, who died in 1946, for he thought that this was exactly how unregulated markets would behave. The New Economics, as Keynesian economics was known in the United States until it became the Obsolete Economics, was designed to prevent such collapses. It held that governments should vary taxes and spending to offset any tendency for inflation to rise or productivity to fall. And for roughly 25 years -- from 1950 to 1975 -- they did. The developed world grew at an average annual rate of 3.2 percent without a business cycle, with very moderate inflation, and without the benefit of the huge rewards now deemed necessary to keep executives properly incentivized. Then the free-market deregulators and globalizers seized control of the engine room, and boom-bust cycles returned with a vengeance.

• David Brooks has a laff-a-minute doomsday column in the Times. 1000 monkeys at 1000 typewriters sitting for maybe 15 minutes could all produce more intelligent, nuanced articles than what Mr. Brooks puts forth, and still have 5 minutes left over for flinging poo at one-another.
• And finally, after yesterday's record performance the dow has turtled a little bit, dropping some 280 points today as we're 70 minutes from the final bell.
  

Vote You Must!

A good start

• BBC's round-up of the world press paints a hopeful picture for the world economy - reactions have been largely positive to this weekend's announced plans to partially nationalize both US and Euro banks - and a gloomy one for US pull, as there's schadenfreude from Ammann to Beijing over the Uncle Sam's eroding standing on the world stage.
• While the world reaction to this weekend's summit is "positive," I think it's fair to classify Wall Street's reaction as "positively ecstatic." Not quite 2 hours into the day and the Dow is up almost 500 points.
  
• Paulson has been totally broken by the senate democrats, it turns out: Today he'll be leading a 3 pm meeting about the implementation of the Soros plan, which King Henry was originally so strongly against. Shame it took the donks 8 years to find their balls, but better late than never.
  
• Speaking of the Soros plan: The man himself has a column in the Financial Times. Read it.

  This is how Tarp ought to work. The Treasury secretary should begin by asking the banking supervisors to produce an estimate for each bank, how much additional capital they would need to meet the statutory requirement of 8 per cent. The supervisors are familiar with the banks and are aggressively examining and gathering information. They would be able to come up with an estimate in short order provided they are given clear instructions on what assumptions to use. The estimates would be reasonably reliable for the smaller, simpler institutions, but the likes of Citibank and Goldman Sachs would require some guesswork.

• And finally in the world of finance, NY Times columnist and ad Hoc favorite Paul Krugman won the Nobel Prize for Economics today.

  Mr. Krugman received the award for his work on international trade and economic geography. In particular, the prize committee lauded his work for “having shown the effects of economies of scale on trade patterns and on the location of economic activity.”

• On the campaign trail things continue to look bleak for team McCain. The Post has him up by 10 points, 53-43, in their latest poll. Even more telling is what's happened to McCain's favorability ratings: They're sinking like a stone. And what's worse is that every time the country sees Obama they like him more, while every time the country sees McCain, they like him less:

  Nearly two-thirds of voters, 64 percent, now view Obama favorably, up six percentage points from early September. About a third of voters have a better opinion of the senator from Illinois because of his debate performances, while 8 percent have a lower opinion of him. By contrast, more than a quarter said they think worse of McCain as a result of the debates, more than double the proportion saying their opinion had improved. McCain's overall rating has also dipped seven points, to 52 percent, over the past month.

• Hilldog says that Barack is doing in the general what he struggled to accomplish in the primary: Sealing the deal.
• In the wake of all this bad news for McCain, Reep mouthpiece Bill Kristol says that the old man needs to Ctrl-Alt-Delete his campaign and just start over, starting with firing folks like Steve Schmidt and Rick Davis in an effort to "reclaim the moral highground." Which begs the question, "When did John McCain ever have the moral highground in this election cycle?"

EDIT: Well, this is what I get for not reading Bill Kristol more often. Turns out his column linked above is a total 180 from the advice column he wrote to McCain only last week. Glenn Greenwald does the honors of skewering Kristol.

That’s typical Bill Kristol — not only chronically wrong about everything, but far worse, completely incapable of acknowledging mistakes. He just suppresses them, pretends they don’t exist, and in that regard is the perfect face for the right-wing movement that is dying a painful, harsh and profoundly well-deserved death in front of everyone’s eyes.

Required Viewing

This is dangerous

It occurs to me that the mad dash for cash is going to have some significant consequences beyond the credit crunch. Namely inflation.

If people are going to start turning all their assets, devalued or not, to cash, what happens when inflation starts to kick in as it inevitably will? Disaster.

Wanted: Script Supervisor

This is what happens when you run a lousy, jumbled, dishonest campaign - you can't keep track of your lies. From TPM:

For days the McCain-Palin camp has been saying that Palin didn't fire Walt Monegan but that he quit as Alaska's public safety commissioner. But now they claim that the "investigative report" the campaign itself released last night "will prove Walt Monegan's dismissal was a result of his insubordination and budgetary clashes."

Which is it? Did he quit or was he dismissed?

Heading below 8000...

• The Dow just keeps sinking, and this morning dropped below 8000 for the first time since 2003 before rebounding a bit to the 8200-range around noon. What does this mean? For one, it means folks want the bailout to happen sooner than next month. Duh. But it also means that the "confidence crisis" is still happening, and Bush's speech wasn't much of a roadblock.
• To illustrate just how stupid people have been: While the rest of the country is waving their arms, running in circles and shrieking "Fire!", Warren Buffet made $8 Billion last month and overtook Bill Gates as the world's richest man. Intelligence, patience, foresight. And he supports Obama.
• Paul Krugman, meanwhile, continues to assure us that we've booked passage on the bus to Beelzebub. His solution? The Soros Plan I highlighted here last week - though we can't call it "The Soros Plan," because "Soros" is a toxic name in reep political circles, and this is going to require bipartisan agreement to get done. I have an idea: Let's call it The Buffet Plan! Anyway, here's Krugman:

  What he should have proposed instead, many economists agree, was direct injection of capital into financial firms: The U.S. government would provide financial institutions with the capital they need to do business, thereby halting the downward spiral, in return for partial ownership. When Congress modified the Paulson plan, it introduced provisions that made such a capital injection possible, but not mandatory. And until two days ago, Mr. Paulson remained resolutely opposed to doing the right thing.

  But on Wednesday the British government, showing the kind of clear thinking that has been all too scarce on this side of the pond, announced a plan to provide banks with £50 billion in new capital — the equivalent, relative to the size of the economy, of a $500 billion program here — together with extensive guarantees for financial transactions between banks. And U.S. Treasury officials now say that they plan to do something similar, using the authority they didn’t want but Congress gave them anyway.

• And lastly on the economic front, Sammy Brittan at the Financial Times begs and pleads for John Maynard Keynes to rise from the dead and save us all from our own stupidity. TOO LITTLE TOO LATE, SAMMY! You've been spouting laissez-faire deregulatory corporatist nonsense for years, and this is the natural end product. This is what you get when you remove oversight and transparency in the name of big, bigger and biggest business and put the fox in charge of the henhouse. Let me say it in no uncertain terms: This crisis must be the end of Friedmanite economists being taken seriously in the financial world. Anyone with a Chicago School or Berkeley Mafia resume has to become persona non grata, or we'll just end up in the same place yet again. And Sammy, you can shove this quote up your ass:

  May I end on a personal note? Some friends and colleagues ask if I have not been guilty of trying to dethrone Keynes in favour of Friedman. Not so.

And in other news, I'm happy to report that the state of my birth has become the third, after Massachusettes and California, to legalize gay marriage. It's about time.

Angry old man

Debate Prep

No summary today, just some musings about tonight's debate. I suspect the tone is going to vary from "nasty" to "homicidal," if yesterday's McCain and Palin campaign stops are any indication. The GOP ticket has grown increasingly negative over the past week, and the crowds at yesterdays appearances have taken the tone and run with it.

During McCain's speech yesterday in Albuquerque, he trotted out his campaign's new theme: Who is Barack Obama? It's meant to be a rhetorical question, but one supporter decided to answer. Barack Obama is "a terrorist!" McCain, just as he took the cowardly route of saying nothing when Hillary Clinton was called "the bitch" back during the primaries, again stays true to form and keeps his trap shut.

(TalkingPointsMemo has the video on their Youtube channel*. And honestly, it would be funny if it weren't borderline criminal.**)

Remember, this is the guy who said he'd run a campaign that would elevate the discourse. Yet another lie, as it turns out.

But it doesn't end there, because while McCain was whipping up the hate in New Mexico Caribou Barbie was doing the same down on the Gulf Coast of Florida. Dana Milbank has it at The Post:

Worse, Palin's routine attacks on the media have begun to spill into ugliness. In Clearwater, arriving reporters were greeted with shouts and taunts by the crowd of about 3,000. Palin then went on to blame Katie Couric's questions for her "less-than-successful interview with kinda mainstream media." At that, Palin supporters turned on reporters in the press area, waving thunder sticks and shouting abuse. Others hurled obscenities at a camera crew. One Palin supporter shouted a racial epithet at an African American sound man for a network and told him, "Sit down, boy.

I can't ignore the obvious implications of a scene like that occuring in the Deep South. And I can't ignore the sheer irresponsibility of one of the two great political parties' leaders inciting their supporters to hate speech during a campaign. And I hope the American people don't, either, because even at our most assbackwards we should be made of better stuff than what McCain/Palin are playing on.

I hope that's what we see tonight after the debate. McCain/Palin have already shown they don't want to answer questions, while Obama/Biden have shown the opposite. Xenu willing, there will be a backlash.

* I tried to upload it, but it's being fickle. So you'll just have to give them more hits.
** McCain calling someone else angry? WTF?

Taking the plunge...

• The NYSE dropped below 10,000 for the first time since 2004. We're down almost 600 points, and it's not even noon. Good times. Here the WSJ highlights that this is quickly becoming a global crisis, with the EU seeing a wave of bailouts and the state taking control of private institutions similar to the past month here.
  
• TheHill has news that Obama has launched a website highlighting McCain's involvement with the S&L crisis of 20 years ago. For those of you who don't know, Johnny Mac was censured by the Senate for taking bribes from shady developer Charles Keating in exchange for getting federal regulators to back off. McCain and the other four senators - all democrats, incidently - were known as "The Keating 5." Here's the website and a 13 minute video...
• Obama is winning the ground game, according to the Post:

  In the past year, the rolls have expanded by about 4 million voters in a dozen key states -- 11 Obama targets that were carried by George W. Bush in 2004 (Ohio, Florida, Georgia, North Carolina, Virginia, Indiana, Missouri, Colorado, Iowa, Nevada and New Mexico) plus Pennsylvania, the largest state carried by Sen. John F. Kerry that Sen. John McCain is targeting.

  In Florida, Democratic registration gains this year are more than double those made by Republicans; in Colorado and Nevada the ratio is 4 to 1, and in North Carolina it is 6 to 1. Even in states with nonpartisan registration, the trend is clear -- of the 310,000 new voters in Virginia, a disproportionate share live in Democratic strongholds.

• We're not spending as much as we used to according to the Times. Gonna be a rough winter.
• And in a preview of what's to come, Great Britain is experiencing a bit of a butterfly effect when it comes to the banning of short-selling, which is illustrative of just how much of this crisis is actually on paper as opposed to commodities based. Make no mistake: This is the end product of a 35 year Friedmanite counter-revolution, and we could end up looking very much like Chile sooner than later. Read Naomi Klein's excellent book Shock Doctrine for an in-depth (and prescient - she wrote this thing 18 months ago) look at our economic situation.
• Let's hope that everyone reading this has enough money to take care of their elderly relatives should McCain win, as he's going to be gutting Medicare and Medicaid. Do they really not care about winning Florida? Christ, I could write this campaign ad.
  

Sorry for not bringing the funny, but this shit is depressing.

EDIT: Ok, here's some happy - Obama is winning Georgia right now according to the number-smiths over at 538. Excellent.

Morning run-down

• NPR says that Palin walked away a winner in last night's debate because she didn't come off as a brainless bimbo. I don't think that, long-term, this is going to be a positive newscycle for the reeps. Call it a hunch.
• Peggy Noonan agrees, but for the love of god, it's Peggy Noonan! Let's just move on.
• Same with David Brooks.
  
• Over at the WaPo, Tom Shales is less impressed. He makes the salient point that Palin was really up there to debate her own public image moreso than Biden, and that she failed miserably in that regard since she wasn't able to answer anything with specifics. Even the talking heads noticed.
• Early snap-polls show that Biden won convincingly, but that the debate wasn't a "game-changer," which is how the hip kids say "it didn't mean shit."
  
• DailyKos diarist adennak seems to have the most accurate take on what actually went down:

• TheHill does the pregame show on today's House vote on the bailout after the market dropped 348 points yesterday.
• Paul Krugman drops some doom on all of us in his Op-Ed Edge of the Abyss.
  

  How bad is it? Normally sober people are sounding apocalyptic. On Thursday, the bond trader and blogger John Jansen declared that current conditions are “the financial equivalent of the Reign of Terror during the French Revolution,” while Joel Prakken of Macroeconomic Advisers says that the economy seems to be on “the edge of the abyss.”

  And the people who should be steering us away from that abyss are out to lunch.

• Just found this courtesy of TMTGM: A "No Bailouts Bill" proposed by Rep. Peter DeFazio (D-Ore). Worth a read.
  

Happy Friday.

Fact Check

Both candidates are liars. But only Palin's pants are on fire.

China is watching

Earlier in the day I mentioned the closing technology gap between the US and China. And while it's not inherently bad for technology to spread to every corner of the globe (in fact it's pretty damn good on balance), it's a bit scary to see a regime as morally flexible as the ChiComs with the power to, say, monitor all of your communications.

BoingBoing has it here.

Skype, the online text messaging and voice service, said Thursday it was "extremely concerned" by monitoring of Internet chat by its Chinese partner reported by Canadian researchers.

Skype said it learned just Wednesday that a previously disclosed text filter operated by TOM-Skype, a joint venture between Chinese mobile firm TOM Online and Skype, had been altered.

This is something only one candidate even approached last week, and I'm sure it won't surprise you to learn it wasn't John "I don't know how to use an email machine" McCain. Now, that doesn't mean Obama will address it correctly when the time comes, but at least when briefs cross his desk he won't respond "WTF is a skype?"

And yes, this is something that needs to be brought to the president's attention. The whole point of opening trade with China was to prevent stuff like this from happening, using the leverage of our market to pressure them into behaving with a shred of civility. If they can't manage as much, shouldn't we rethink our trade policy?

Obama winning because "Life isn't fair"

Don't even know what to say about this.

(CNN) — Sen. John McCain said Thursday that Sen. Barack Obama’s poll numbers are rising as the economy seems to sink “because life isn’t fair.”

“He certainly did nothing for the first few days,” McCain said Thursday on Fox News. “I suspended my campaign, took our ads down, came back to Washington, met with the House folks and got on the phone, and also had face-to-face meetings.”

What's his strategy gonna be when Putin parks a destroyer off Key West? Tell his mommy?

I wanted a real election between two qualified candidates, but McCain inspires about as much confidence as the Mets bullpen. And right now, the results are looking about the same.

VP Debate Drinking Game

Borrowed from our friends at the BigSoccer.com politics forum, and modified a bit:

Drink when the following words are mentioned:

'George Bush'
'Alaska'
'Scranton'
'Bailout'
'Middle Class'
'Experience'
'Maverick'
'POW'
'God'
'Bridge to Nowhere'
'Troopergate'
'Plagiarism'
'Bush Doctrine'


Bonus Drinking: (If you really want to get drunk)

Drink whenever the name of a foreign leader is misspronounced.
Drink if there is a reference to Palin saying she was able to see Russia from Alaska.
Drink if there is a reference to Biden saying Roosevelt spoke on TV during the great depression.
Drink if there is a reference to Biden saying Hillary is a better VP choice than he is.
Drink if Biden mentins that John McCain is his close friend.
Drink if there is a reference to the number of people living in Wazilla, Alaska

Extra Bonus:

If there is any reference to Joe Biden's role in presiding over the Clarence Thomas Supreme Court confirmation hearings, drink the whole ********ing bottle!