In Los Angeles County, cities are buying federal stimulus funds from each other at deep discounts, turning what was supposed to be a targeted infusion of cash into a huge auction.

It all started when the county's Metropolitan Transportation Agency decided to hand out $44 million from the federal stimulus package in the form of $500,000 transportation grants to each of the county's 88 cities. But some cities didn't have any shovel-ready transportation projects. So with MTA's blessing, they're selling the grants to the highest bidder:

 

La Habra Heights, a city of 6,000, has sold its $500,000 in federal funds to the city of Westlake Village for $310,000 cash. Irwindale, population 1,500, also sold its $500,000 to Westlake Village, for $325,000 cash.

 

The city of Rolling Hills, population 1,900, sold its $500,000 share to the city of Rancho Palos Verdes for $305,000 cash. The city of Avalon has reached an agreement to swap its $500,000 with L.A. County.

This is Southern California that we're talking about--the land of eternal gridlock. MTA could have redirected the money to a nearly infinite list of other transportation projects. But chief planning officer Carol Inge told the Pasadena Star-News that the agency didn't want to do that because "our board wanted to give every city at least a chance to benefit from the stimulus package."

I'm sure many cities have higher priorities than transportation. And I would have liked to have seen more direct aid to ailing local governments in the stimulus bill. Still, MTA's approach strikes me as a bit too creative. What's next, stimuls money credit default swaps?

UPDATE: After this post appeared, MTA reversed course and invalidated these sales. It now says that the stimulus funds can only be swapped for other county money targeted for transit projects. But this probably won't end the controversy. MTA is still handing out a half million bucks to all 88 cities in the county, including the tiny Irwindale, population 1,446. That's $345 per Irwindalian, just for transportation. With that they could hire a worker to dig through the yellow pages and dial up free limos for everyone. H/T to TotalCapitol in the comments.

In a recent interview with The New York Times, President Barack Obama said the United States was not winning the war in Afghanistan–but did not use the word "losing"–and he raised the possibility of talking to Taliban and Islamist factions in order to separate them from al Qaeda. The point: to isolate Osama bin Laden's murderous gang, both geographically and politically. Obama's remarks have generated much discussion about his policy on Afghanistan, though he does not yet have one. His national security team is in the middle of a review that is due to be completed by the end of the month. Obama has said he will send 17,000 additional US troops to Afghanistan in the spring and summer. But he has not yet said what the overall mission is there. While foreign policy experts and others await the results of the review, there's still plenty to discuss and ponder, and I did so Tuesday night on Hardball:

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Oh, Amy Winehouse. No matter what sort of stupid crap you get up to, the hypnotic, neo-soul melody of "You Know I'm No Good" still haunts me, and of course I know that your actually being no good is part of the whole package, even though it makes me feel like as a consumer of your musical product I'm part of the problem, an "enabler;" but still, if you're so "no good" that you can't get a freakin' visa to come over here and perform, then that's too "no good," although it's clearly a difficult line to walk: you have to be bad enough to be scary, not bad enough to be, you know, dead, or permanently removed from society, or something, so I'm sympathetic, and also not. In simpler terms, it was announced yesterday that Winehouse was forced to cancel her appearance at the Coachella music festival in April, although spokeman Chris Goodman denied that any official visa-rejection happened, calling the problem "legal issues." He's likely talking about the assault charges the singer faces in the UK over a scuffle back in September of 2008, although I suppose it could be any combination of 80 gazillion other things: arms smuggling, baby seal torture, hastening the heat death of the universe. We know she's no good! But don't fret, Coachella-bound hipsters: will some freak-folk, electro, punk rock, and avant-hip-hop make up for Winehouse's absence? Organizers announced yesterday that longtime festival favorites the Chemical Brothers have been added to the lineup, along with beardy hippie Devendra Banhart, stoner-raver hero the Orb, oh-so-French disco-dance producer Etienne de Crecy, and they're-so-bad-they've-got-a-crime-in-their-name punk rockers Murder City Devils. Plus, the little DJ dome that I never go into because it seems like it must be stiflingly hot will play host to hip-hop boundary-pushers Flying Lotus, Kode 9, Daedelus and more. Maybe I'll stop by this time. Okay, it all sounds good; now, if we could only find a freakin' house to rent...

There is a serious feud ongoing between Jon Stewart and Jim Cramer.

Stewart, as you probably know, used the Daily Show and other venues to slam the financial TV networks in general and CNBC specifically. The Mad Money host, who has become famous by instructing viewers to buy and sell individual stocks in a carnival barker style, came under especially harsh criticism.

Cramer then did a media tour to defend himself; you can see a video summarizing that here and read a column Cramer wrote on the subject here. Stewart responded; you can see that here. Cramer's primary argument in all this is that Stewart is taking video snippets out of context to make him look bad -- something a comedian or a blogger could do to any pundit. Cramer points out that Stewart never mentions the fact that he urged people to withdraw their money from the stock market October 2008, when the Dow was still around 10,000. He did do that, it's true.

Cramer does deserve credit for (1) ending his market boosterism and Wall Street CEO ego-stroking before the rest of TV's financial news community did the same, and (2) apologizing for some horrifically bad stock picks (he endorsed Wachovia stock after then-CEO Bob Steel came on Mad Money and pimped the bank). But ultimately that's all tangential: What Cramer really needs to do is stop making ordinary people believe they can game the stock market on a day to day basis. A massive majority of the buying and selling done on Wall Street is done by banks and massive institutions with all the resources in the world at their disposal. Joe Sixpack and his 1,000 shares of Coca-Cola are just grease for the gears. If Joe invests his money long-term in low-risk index funds and mutual funds, he might ride out the market's fluctuations. If he tries to move that Coca-Cola at just the right time, and buy Johnson & Johnson at just the right time, he's going to get eaten alive.

Jim Cramer can defend himself all he wants. But his modus operandi is still problematic: he sends amateurs hurtling into a professional's game.

It's about damn time. CNN spoke with two one-stars who are doing their part to destigmatize this oh-so-natural consequence of, you know, war and stuff:

Brig. General Gary S. Patton and Gen. Carter Ham have both sought counseling for the emotional trauma of their time in the Iraq war. "One of our soldiers in that unit, Spec. Robert Unruh, took a gunshot wound to the torso, I was involved in medevacing him off the battlefield. And in a short period of time, he died before my eyes," Patton told CNN in an exclusive interview. "That's a memory [that] will stay with me the rest of my life." Ham was the commander in Mosul when a suicide bomber blew up a mess tent. Twenty-two people died.

As bad as all the death and destruction is, imagine being the general whose day-to-day decisions put the rank and file in harm's way.

The interview's a start, but until these generals do a whole lot more to send the message down the chain of command that mental health is as important as physical health, we're going to keep seeing our soldiers come back unsalvageable.

Sticking Together

Without fussing over the details in this particular post (you can go here for that), the Employee Free Choice Act would almost certainly make it easier for unions to organize new workplaces.  That's why unions support it and management doesn't.  Wal-Mart management, for example, especially hates it.  But I sure never expected this, as reported by Ezra Klein:

The more impressive strike came, however, earlier this morning, when Citibank downgraded Wal-Mart's stock from a "buy" to a "hold" on fears that passage of EFCA could force the company to unionize which would in turn decrease shareholder profits as more of the company's worth was distributed to employees.

....It's hard to recall another time when an analyst actually downgraded a stock on fears of legislation that few expect will even pass. Indeed, many on the left are arguing that this is more about creating stock market panic that will convince senators to vote against EFCA than about accurately pricing Wal-Mart's stock. "When I see upgrades to the stocks of Wal-Mart's already-unionized competitors (grocery stores like Safeway who will gain back market share if easier unionization results in higher Wal-Mart labor costs) specifically pegged to the specter of EFCA, then I'll admit that Citi is engaged in good-faith prognosticating here," e-mails Josh Bivens at the Economic Policy Institute. "Otherwise, not so much."

The malefactors of great wealth are really sticking together on this, aren't they?  Considering Citibank's recent record, though, I think we could all be forgiven for taking their view on this with a grain of salt.

Michael Steele, the new chairman of the Republican National Committee, has promised to take his party "beyond cutting edge." But Joe Rospars, the man behind the Obama campaign's incredibly successful new media outreach, said that the RNC's current internet strategy is "all smoke and mirrors marketing."

On Tuesday, Rospars took part in a question-and-answer session about the impact of technology on politics hosted by the left-leaning think tank NDN. Rospars dinged the Republicans' much-criticized request for a proposal (PDF) to redesign its website, laughing that his company, Blue State Digital, certainly won't be competing for the business. (Lefty BSD probably wouldn't respond to the RFP anyway, of course, but Rospars brought it up out of the blue—he was obviously referring to the widespread mockery it had already received.) He criticized the GOP's email list, boasting that the Obama campaign's 13-million-strong list was developed in an "organic" way. "We didn't purchase lists and just add people to our email list," he said. "The point of having a big email list isn't just to say you have a big email list. The RNC says they have a however big email list, but the point is to actually have relationships with people so they open the message, they listen to what you're saying, and they're willing to do something," he said.

Rospars suggested that it's a mistake to see the use of social networking technologies and new media as ends in themselves—in other words, using tools like twitter and facebook are ways of mobilizing a following, but they don't ensure you'll get one. Without adopting "the ethos of building an organization from the bottom-up," the GOP will have trouble catching up, Rospars said.

Meanwhile, Rospars is doing his best to make sure the GOP doesn't catch up. He says that of the 100 best ideas he and his team came up with during the campaign, they only used about 15. He's won't be talking about those in public. He doesn't want to "give anybody any ideas."

Too bad for Michael Steele.

Hey, it was bound to happen sometime.  And of course, I only agree with him halfway.  But he's right when he says this about President Obama's decision to allow much broader federal funding of embryonic stem cell research:

What you think of his policy depends on what you think of the moral status of embryos....That legitimate dispute underlies the stem cell debate. But that is not the ground on which the president made his case yesterday. He argued that to deny free rein to stem cell science is to ignore and reject the promise of science as such. In a barely concealed swipe at his predecessor, he pledged that his administration would "make scientific decisions based on facts, not ideology."

The executive order Obama signed omits any mention of ethical debate....The issue, he suggested, is a matter of science, not politics.

Politics is politics, and presidents always frame their decisions in ways they think will be the most acceptable to the most people.  But this annoyed me when I read Obama's statement yesterday, and I don't blame Levin for being annoyed either.  If you think an embryo is a human life — and lots of people do — then you're going to be opposed to embryo research.  If, like me, you don't, then you're not likely to have any objection.  But although science can inform that debate, it can't resolve it.  Ethics and ideology will always be front and center.

I guess I wouldn't care too much about this except that Obama also issued a memo yesterday about eliminating political interference with science.  That's important, and it applies to important subjects like global warming, habitat protection, GM foods, Plan B, and other things.  But its impact is diluted if we pretend that everything is a scientific issue.  There's nothing wrong with admitting that both Bush's stem cell decision and Obama's have strong moral and ideological dimensions, and denying it tends to reduce our credibility when we insist on the underlying science of other issues that really are mostly scientific.  In this case, honesty really is the best policy.

Today's feminists need to blog less and work more. If women want reproductive choice to remain more than rhetoric, they'd better stop assuming these clinics will be there when they need them. Because like priests and nuns, abortion doctors are not reproducing. From NYT:

"We worry about that a lot," said Sally Burgess, executive director of the Hope clinic, who is also chairwoman of the National Abortion Federation, the main professional support group for abortion providers. "Younger women have always had access to abortion care, they don’t fully appreciate the battle that was fought to have it available to them. And more important, I don’t think they know how precarious the option is at this point, even with Obama's election."..."What I observe for women in their 20s and 30s — there are fewer who really have the fire in the belly for this,” she said. At 50, Ms. Burgess is the youngest member of the Hope clinic’s leadership team, which includes Ms. Baker; Debbie Wiehardt, 57, the office supervisor; and the two doctors performing abortions (the only men on the 30-person staff), who are both in their 60s. A recent survey of 273 abortion clinics published in the journal Contraception found that 64 percent of their doctors were at least 50 years old, and 62 percent were men."

It's dangerous and gloomy. The pay sucks. Lots of people think you're a murderer. And, yeah, you might get shot. But you young chicks maybe need to go the Northern Exposure route, sending folks to med school in exchange for a few years running an abortion clinic. That feminist fire in the belly? I gotta say: Pole-dancing, walking around half-naked, posting drunk photos on Facebook, and blogging about your sex lives ain't exactly what we previous generations thought feminism was. We thought it was about taking it to the streets.

Harsh, you say? Uninformed? OK. Tell me exactly what today's feminists are doing for the struggle. Besides posting disses against old chicks like me. You got that covered.

Bernanke on Leverage

The title of this post is mostly whimsy: in his speech about financial reform today, Ben Bernanke barely even mentioned leverage as a problem.  In fact, his only use of the word (in the financial sense, anyway) came toward the end when he vaguely suggested that a new government agency might be set up to, among other things, assess the potential for "broad-based increases in financial leverage...to increase systemic risks."

Since I think massive abuse of leverage is at the heart of what turned an ordinary asset bubble into a global meltdown, I'm disappointed that he didn't spend more time on this.  But on a related matter, he did say this:

However, there is some evidence that capital standards, accounting rules, and other regulations have made the financial sector excessively procyclical — that is, they lead financial institutions to ease credit in booms and tighten credit in downturns more than is justified by changes in the creditworthiness of borrowers, thereby intensifying cyclical changes.

For example, capital regulations require that banks' capital ratios meet or exceed fixed minimum standards for the bank to be considered safe and sound by regulators. Because banks typically find raising capital to be difficult in economic downturns or periods of financial stress, their best means of boosting their regulatory capital ratios during difficult periods may be to reduce new lending, perhaps more so than is justified by the credit environment. We should review capital regulations to ensure that they are appropriately forward-looking, and that capital is allowed to serve its intended role as a buffer — one built up during good times and drawn down during bad times in a manner consistent with safety and soundness.

Capital ratios basically regulate the amount of leverage a bank is allowed to take on, and what Bernanke is suggesting here is that in good times, when animal spirits are high and anyone with a pulse is offered a no-down loan, capital ratios should be increased, thus reducing bank lending and keeping leverage within reasonable bounds.  In bad times, when animal spirits are moribund and deleveraging shuts down the credit pipeline, capital ratios should be decreased, allowing banks to loan more money.

This has always struck me as a good idea.  But Bernanke doesn't say how he thinks it should be done.  Would a board of some kind make these decisions twice a quarter, the way the Fed does with interest rates?  Or would there be some kind of automatic mechanism involved?  If the former, what confidence do we have that they'd really be willing to take the punch bowl away during boom times?  The Fed sure wasn't willing to do so during the 2002-07 expansion.  Overall, this is a good suggestion, but it could bear some fleshing out.