QUOTE OF THE DAY....From Alan Greenspan, testifying before Congress on the derivatives market:

"Credit default swaps, I think, have serious problems associated with them."

Ya think? The subprime lending market may have been the trigger for our late financial collapse, but the truth is that the trigger could just as easily been mispriced risk (i.e., irrational exuberance) in a variety of other markets. If subprimes had been regulated better, maybe there would have been a bubble in commercial real estate instead. Or arctic oil drilling. Or online pet food companies. Who knows? Regardless of the trigger, however, it was only when the resulting bubble got multiplied tenfold by opaque global chains of credit default swaps that the bursting of an asset bubble went from routine disaster to worldwide financial meltdown. So yeah: there are serious problems there. Here's more from Greenspan:

"I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms," Mr. Greenspan said.

....Mr. Waxman pressed the former Fed chair to clarify his words. "In other words, you found that your view of the world, your ideology, was not right, it was not working," Mr. Waxman said.

"Absolutely, precisely," Mr. Greenspan replied. "You know, that's precisely the reason I was shocked, because I have been going for 40 years or more with very considerable evidence that it was working exceptionally well."

Hmmm. Maybe not quite so well as he thought.

Yummy, Yummy Kool-Aid

YUMMY, YUMMY KOOL-AID....From Mark Krikorian, commenting on Sarah Palin's views on immigration reform:

"What Palin's response shows is that [] she's completely open to whatever kool-aid they want her to drink."

He's quite right, of course. Note, however, that this is coming from neither a liberal nor from a moderate conservative complaining that Palin is too right-wing. It's coming from an immigration hardliner complaining that Palin is too accomodating.

Normally the hardliners don't talk about this because Palin's lack of interest in policy of any kind, along with her resulting willingness to drink Kool-Aid of whatever flavor is put in front of her, is a feature, not a bug. Every once in a while, though, it comes back to bite them.

But don't worry, Mark. I'm sure she'll learn the proper responses before long.

From The Landline comes this quick trio of potential attack ads in the style of famous directors that the McCain campaign might be interested in trying out. There's your standard John Woo action thriller parody, which is cute, and a quick Kevin Smith bit, which is like ten years out of date, but they saved the best for last: a brief take on Wes Anderson's directorial style. Futura titles, quirky old soundtrack, and, well, a penguin: gotta love it. (The Anderson part starts at about 2:20.)

Historians and political writers will for years wonder and write about what moved John McCain to select Sarah Palin as his running mate. But perhaps a newspaper clipping from 1988 offers a bit of insight into how McCain thinks about a veep pick.

Two decades ago, another GOP vice presidential nominee was also something of a puzzling choice: Senator Dan Quayle. Many questioned George H.W. Bush's decision to tap a little-known senator as his running-mate. But some observers thought that Quayle's looks (he was compared to Robert Redford) would help the ticket with the ladies--female voters, that is. Was that a sexist? Whether or not it was, McCain accepted this perspective. According to a Newsday article from that time, McCain said, "A guy that good-looking just has to be attractive to women," said Sen. John McCain (R-Ariz.).

Twenty years later, did McCain take a similar view when searching for his ticket partner?

800px-135494920_1611fcc6c8_o_d.jpg China's greenhouse gas pollution could double or more in two decades. This according to the Chinese Academy of Sciences in a report breaking with official reticence on the subject, reports Reuters. Beijing hasn't released recent official data on emissions from coal, oil and gas. But researchers abroad estimate China's CO2 emissions now surpass the US, the biggest emitter in recent decades.

By 2020 China's could emit 2.9 billion tons of pure carbon annually. By 2030, up to 4.0 billion tons yearly. The Chinese Academy of Sciences estimates China's current CO2 emissions by citing data from the US Department of Energy of 1.4 billion tons in 2004. The new report warns of drastic risks from the forecast growth, yet also warns that economic development must not be hamstrung. Sound familiar?

For more: an interesting study from MIT debunking the widespread notion that outmoded energy technology or the utter absence of government regulation is to blame for China's air pollution problems. It's more complicated than that (think: energy infrastructure and types of coal). However—"To a significant degree, our planet's energy and environmental future is now being written in China," says the study's authors.

Julia Whitty is Mother Jones' environmental correspondent, lecturer, and 2008 winner of the Kiriyama Prize and the John Burroughs Medal Award.

This is kinda magical, I'm not going to lie. It's a story a reader emailed to Ben Smith after voting early in Cincinnati:

It's hard to believe that most Americans aren't re-thinking their lifestyle choices in the wake of the economic meltdown we're navigating. I know I have, and what I've mostly been thinking about is how to stay out of debt, slash expenses, build up my savings (now that I live in an economic banana republic), and downsize without sacrificing more comfort than I can sustainably live without. If you thought you were thinking outside the box on insulating yourself from economic turmoil and simplifying your life, check these folks out:

Bill and Sharon Kastrinos practice the ultimate in minimalism. They've squeezed into a 154-square-foot home that looks more like a kid's playhouse than their previous 1,800-square-foot home....
The house cost them $15,000, and the utilities are a mere $15 a month. The couple now live on property owned by their daughter in California wine country, where the average home in 2007 cost $725,000. If they want to leave, the home has wheels and can be pulled behind their vehicle and plugged into any RV park in the nation.

Turns out, there's a boomlet growing among homebuilders developing this new specialty: dollhouses for people.

EU lawmakers and its civil liberties' group, along with our own ACLU, are up in arms over a new airport scanner recently authorized there. From CNN:

The new system, which the European Union plans to authorize at the bloc's airports, allows guards to see an outline of passengers' bodies beneath their clothes, making it easier to detect any concealed objects.

When I read the comments here on MoJo, I often wonder what the hell most of them are doing reading (or trying to read) our liberal musings. Now, I'm going to end up dragging some knuckles of my own. Unless the small photo accompanying the article is misleading, it looks like the screeners (of whom I am no fan) aren't seeing much. Mostly skeletons and clothing seams. I'm also noticing that many travelers approve of the new technology since it makes the post-9/11 Death March lines move much faster.

OK. Now I'll wait for the links in the comments showing exactly how invasive and revealing the scans are in real life. I can admit I'm wrong since I so rarely am.

Even so, though, given that strange women have repeatedly felt me up IN PUBLIC for no reason whatsoever, I'm not so sure I care about being just one more walking skeleton some TSA drone is none too happy to be looking at.

Perhaps, though, it's not being seen sorta naked that is bothering civil libertarians, but rather that the search is invasive merely by virtue of going beneath the clothing. Point taken. In these post-Gitmo, post-wiretapping, post-any sort of personal sovereignty world we're increasingly living in, maybe this is a stand worth taking (however miniscule the actual loss of privacy) just to oppose the mission creep of this administration's assault on our rights.

Maybe I'm becoming de-sensitized (first they came for the Jews...), but until I see some better photos, I'm going to wait this one out. I find the hand searches so loathesome at this point, I might just prefer the scan.

pirateflag.jpg

According to a new report from the Kuala Lumpur-based International Maritime Bureau, which tracks piracy on the high seas, instances of piracy this year are on par with the last—199 worldwide between January and September 2008 versus 198 during the same period last year. But bucking the trend are the waters off the coast of Somalia, where attacks have grown 75 percent, numbering 63 since last January, almost a third of the world total.

IMB Director Pottengal Mukandan characterized Somalia's piracy epidemic as "unprecedented" and said "it is clear that pirates in the Gulf of Aden believe that they can operate with impunity in attacking vessels." Indeed, men in speedboats armed with AK-47s and RPGs have raked in some $30 million ransom so far this year, seizing over 30 merchant ships, including the MV Faina, a Ukrainian vessel carrying 33 T-72 battle tanks, allegedly bound for the government of South Sudan.

WANTED: FINANCE INDUSTRY A TEAM....One of the things that makes our current financial crisis even scarier than it might otherwise be (at least to me) is that no one really, truly, seems to be entirely sure of what's going on. Even genuine experts appear to be sort of baffled by the whole thing — though that hasn't stopped them from producing hundreds of different theories. Ezra Klein points out one of the causes of this problem, which has been at the back of my mind as well:

One sidenote of the past few months is that folks turned to economists when what they needed were finance experts. But there are relatively few finance experts who aren't affiliated with financial institutions, and so much of their commentary is tainted.

....Asking folks who have a general education in matters of macroeconomy to evince a complete knowledge of opaque financial instruments developed in the past few years is a bit odd. But asking the folks who developed and traded those instruments to give unbiased commentary on them is little better. It's a weird situation, and it's why, I'd argue, you've had a lot more commentary on things like the bailout bill, which are fairly general in nature and can be understood using tools from traditional economics, than the specifics of the financial crisis.

I second that motion. More finance experts, please. And mortgage and securitization experts. And ratings agency experts. And central banking experts. All stirred together with a bunch of top notch macroeconomists. Unfortunately, I suppose we'd probably all have to chip in and guarantee these guys $10 million bonuses to do real analysis for us, wouldn't we? Maybe George Soros could bankroll them.

UPDATE: Speaking of finance analysis, I wrote yesterday about a Fed paper suggesting that there was, in reality, no credit crisis at all. In fact, banks are lending like crazy! I was skeptical, but said, "Even if it turns out to be wrong, reading the explanation of why it's wrong should be instructive."

Mark Thoma and friends oblige with an explanation here. It's not conclusive, I think, but it certainly suggests that the original paper I linked to was woefully simplistic.