Word has it that environmental advocate Van Jones is going to be offered a position in Obama's cabinet. Not sure yet exactly what it'll be; some say green jobs czar, but Grist's source says that's "an overstatement."

Title aside, Jones has the necessary chops: He founded the green jobs nonprofit Green for All, and what with all his recent speaking gigs, book tours, and buzz, he's got the connections. When we interviewed Jones last year, he talked about government's role in creating a green economy:

MJ: How do we get to the tipping point where the rules change. Does it have to come from the very highest levels?

Yet More on AIG

Here's an odd new twist on the AIG situation.  ABC News has gotten hold of a memo AIG wrote a few days ago arguing that the Treasury needed to provide it with additional bailout funds because a failure of the company "would cause turmoil in the U.S. economy and global markets, and have multiple and potentially catastrophic unforeseen consequences."

No surprise there.  It might even be true.  But what's odd is where they say the problem is centered.  Not in AIG's high-flying CDS business, with all those counterparties demanding their billions of dollars in payouts, but in the stodgy old life insurance business:

The systemic risk is principally centered in the “life insurance” business because it is this subsector that has the greatest variety of investments and obligations that are subject to loss of value of the underlying investments....Over the past decade, the voluntary termination rate on individual policies declined remarkably (to six percent by 2007) as consumers could obtain liquidity from numerous other sources.

A significant rise in surrender rates — inspired by consumers’ needs for cash or because of rumored or real failure of insurance companies — could be disastrous. Because of widespread loss of liquidity, the industry would struggle to raise adequate cash to meet surrender requests. A “run on the bank” in the life and retirement business would have sweeping impacts across the economy in the U.S....State insurance guarantee funds would be quickly dissipated, leading to even greater runs on the insurance industry.

The claim here is that a weak economy has already left strapped consumers with fewer places to obtain traditional loans, which in turn means that people are increasingly likely to cash in their life insurance policies in order to scrounge up a bit of ready cash.  That's bad enough, but if AIG were to fail — or if there were even a rumor of failure — everyone would start lining up to cash in their policies at once.  This would cause a panic and customers of other insurance companies would start lining up too.  Since reserves aren't big enough to pay off everyone at once, this would cause massive, cascading failures in the entire life insurance business.

There's plenty more in the memo about the global catastrophe that would accompany an AIG failure, but it's mainly in bullet points and doesn't provide much backup for their claims.  So I don't have any good way to judge whether or not it's true.

But the life insurance claim is a new one on me, so I thought it was worth passing along.  I'll be very interested indeed to hear the reaction to AIG's "run on the bank" claim from people with experience in the business.

As we all know by now, AIG wrote hundreds of billions of dollars worth of credit default swaps that it now has to make good on.  And since the U.S. government has bailed out AIG to the tune of $150 billion or so, that means that taxpayer cash is being used to pay off a lot of those bad bets.

But do we really want our money being used to pay off AIG's clients?  Maybe not, says Noam Scheiber:

As the Journal notes, the payments arise because AIG has to post collateral every time the bonds it insured take a hit....That's scary, because as the economy continues to deteriorate, all those bonds AIG insured are going to keep deteriorating, too, and AIG will have to keep posting collateral. Which means the taxpayer, assuming we don't let AIG collapse, is going to have to keep forking over cash.

It does seem like it's time to start triaging here. That is, the government needs to start figuring out which financial institutions can afford to get stiffed by AIG (by which I mean which ones won't go under if they get stiffed), and start stiffing them. You obviously want to do it in a careful and orderly way so as not to freak out the financial markets.

I'm open to persuasion here, but this actually sounds like the worst possible way to address the counterparty problem.  Our dilemma, as Scheiber implies, is that if AIG's counterparties don't get paid, some of them might go under themselves, and then we end up with a cascade of bankruptcies.  But his solution is a cure worse than the disease.  Do we really want the U.S. government deciding that certain counterparties get paid and others don't, and doing it on the fairly arbitrary basis of stiffing the ones it thinks can best afford to be stiffed?

Not only does this send precisely the wrong signal — if you managed your investments well you're first in line to get shafted — but it's practically guaranteed to be unfair.  Do U.S. counterparties get preference over foreign counterparties?  Does payment depend on who fibs the best about their financial condition?  Do we really want to prop up our worst banks in such an opaque fashion?  If we're going to do that, shouldn't we just do it honestly and either give them money outright or else nationalize them?

A better way, surely, would be to figure out a way to pay off creditors based on class.  The most senior can expect 90 cents on the dollar, others will get 80 cents, and some will get nothing.  Or maybe everyone gets paid off in full.  But in any case, everyone in each class gets the same deal.  This is a system everyone is used to from ordinary bankruptcy proceedings, and it's generally viewed as fair and equitable.  Surely that's the way to go if you don't want to freak out the financial markets.

I think it's fair to say we're going to see some really bad editorial cartoons in the next few years. Rampaging chimpanzees that may or may not be stand-ins for President Obama are just the start. The latest attempt to lower the bar comes from Mike Lester of Rome, Georgia's News Tribune, who has spent the last few weeks in a Santelli-like state, depicting Obama as a Marxist Colonel Sanders and a redistributionist soup Nazi. Now he's gone and created this doozy:



Wow. Lester seems familiar enough with the corollaries of Godwin's Law and the New York Post episode to have avoided drawing a direct Hitler-Obama analogy. See, he drew some Nazi who doesn't even look like Hitler—maybe it's Goebbels in sunglasses! And the Donkey Supreme Leader whipping up subprime mortgage holders into a frenzy of genocidal, expansionist bloodlust? That must be Harry Reid. Besides, a pro like Lester would never intentionally compare Obama to a crazy, megalomaniac mass murderer...

...or would he? Answer after the jump.


Commenters raked me over the coals last week for daring to give a lukewarm review to the new Yeah Yeah Yeahs album, the electro-inflected It's Blitz, so I figured I'd make it up to them by posting the just-released video for lead single "Zero." The driving, new wave-y track is a highlight of the album, for sure, and the video is worth watching just to see Karen O get all spiffied up in her spiked gloves, plastic dress and leather jacket and then go all Chrissie Hynde on top of a car. By the way, apparently due to the wide availability of the album's early internet leak, the official digital release of It's Blitz has been moved up from April 13 to tomorrow. Other reviews, by the way, have been slightly more positive than mine: while I was kind of in the 6/10 zone, Paste gives the album 72/100, and The Observer hopes it will catapult the band into "the big leagues." I'm totally down with that.

The tireless Andrew Cuomo, current attorney general (and perhaps future governor) of New York, is still very upset with Bank of America. Last month, Cuomo sent a sternly-worded letter to the troubled banking giant, asking why Merrill Lynch, which it bought last year with the help of $20 billion in taxpayer money, doled out $3.6 billion in bonuses before revealing that it lost $15.31 billion in the fourth quarter of 2008. (Bank of America later received a further $25 billion in TARP funds.) Since his last letter didn't get the results he wanted, Cuomo and Rep. Barney Frank (D-Mass.) have written a new one (PDF) demanding the names of the 700 employees that Merrill made into millionaires just weeks before announcing some of the worst corporate results in history. They write:

A while back, I placed my tongue squarely in cheek and suggested that people buy second homes in Detroit, where the average price of a house is now just $7,500.

Well, it's actually happening. In fact, opportunistic couples are buying up entire blocks and turning them into little urban oases. From the New York Times, via Ryan Avent:

A local couple, Mitch Cope and Gina Reichert, started the ball rolling. An artist and an architect, they recently became the proud owners of a one-bedroom house in East Detroit for just $1,900. Buying it wasn’t the craziest idea. The neighborhood is almost, sort of, half-decent. Yes, the occasional crack addict still commutes in from the suburbs but a large, stable Bangladeshi community has also been moving in.

So what did $1,900 buy? The run-down bungalow had already been stripped of its appliances and wiring by the city’s voracious scrappers. But for Mitch that only added to its appeal, because he now had the opportunity to renovate it with solar heating, solar electricity and low-cost, high-efficiency appliances.

Buying that first house had a snowball effect. Almost immediately, Mitch and Gina bought two adjacent lots for even less and, with the help of friends and local youngsters, dug in a garden. Then they bought the house next door for $500, reselling it to a pair of local artists for a $50 profit. When they heard about the $100 place down the street, they called their friends Jon and Sarah.

"Detroit right now is just this vast, enormous canvas where anything imaginable can be accomplished," says the Times author, Toby Barlow. "In a way, a strange, new American dream can be found here, amid the crumbling, semi-majestic ruins of a half-century’s industrial decline." I find this fascinating. Politicians talk all the time about the ingenuity and resilience of the American people. We all know that rhetoric can feel empty at times. But as this country begins its climb out of this recession, real life examples of that fighting spirit will abound. And the places that were hit the hardest will and already are seeing them first.

The skeptics are coming to town! As the NY Times reports today, 600 climate-change deniers are currently holed up in a hotel in New York City for the International Conference on Climate Change. The conference's organizers? None other than the conservative Chicago-based think tank The Heartland Institute, of Exxon-Mobil funding fame (as Mother Jones reported in 2005.)

Heartland Institute president Joseph L. Bast has posted his opening remarks on the institute's website. The basic message? We ARE NOT a fringe movement:
These scientists and economists have been published thousands of times in the world’s leading scientific journals and have written hundreds of books. If you call this the fringe, where’s the center?
Hey Jim Martin, does this look like a phone booth to you?
Hey RealClimate, can you hear us now?
The skeptic doth protest too much, methinks.

Seriously, folks, get your shotguns. Chimpanzees, which are like humans but way more willing to rip out your throat, reportedly have the ability to create and stockpile weapons. It's only a matter of time until Dr. Zaius rules us all.

Chimps have long been known to stockpile food, but a 30-year-old chimp named Santino is making news because he does far more: he finds stones in his Swedish zoo home, smashes them into throwable size, and then stores them in caches that face the viewing area on the edge of his enclosure. When tourists show up, he lets fly, throwing up to 20 rocks in rapid succession and sometimes hitting visitors standing 30 feet away across a water-filled moat. When no rocks are available for his villainy, Santino hacks chunks of concrete off the artificial boulders in his pen and assaults humans using those.

We have a super-ape on our hands, people. And frankly, I don't think this is going to help:

In order to decrease his agitation, which was fueled in part by high testosterone levels characteristic of dominant males, the animal was castrated last fall.

No video of Santino's (premeditated) war on mankind appears to be available, despite the fact that it would be the most successful YouTube video of all time.

Army Times, always a fascinating read, has a beguiling little item today on face transplants, a medical procedure well on its way to becoming military sci-fact. This quote's from Col. Robert Vandre, project director at the Armed Forces Institute for Regenerative Medicine:
"You wouldn’t want like a black person to have a white person's hands, that would look weird. You wouldn’t want really hairy hands on a non-hairy person or vice versa. I guess you could wear long sleeves. The face, if you just get the skin and muscles you won’t look like the person who donated, but if you get the bones and the muscles and the skin, essentially you’re going to look like the donor," Vandre said.

Kudos for candor, but how many face and hand donors are they expecting to choose from, exactly?

Read the article, then read this one, then go here for a creepy robot video chaser.