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!

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