Quote of the Day #2 - 04.14.09

From Robert Farley, on the problem with the feeding frenzy of pundit bloviating about how to solve the pirate crisis:

Long story short, the super-simple proposal you've developed for ending piracy has probably already been thought of, and probably has a host of problems that you haven't considered.

Actually, that's pretty sound advice for nearly everything more complicated than tying your shoelaces in the morning.

But as long as we're talking about pirates, here's my pet peeve: the endless rounds of joking and snark that they provoke.  I know it's kind of hard to resist, but latter day pirates have actually been around for a long time, and the particular problem with them in the Gulf of Aden has been in the news for over a year now.  We really ought to have the giggling out of our systems by now.

Are Twitter and Facebook Bad for You?

Obsessed with Twitter and Facebook? Then you're probably immoral and stupid.

At least, that's what two new studies claim. USC researchers allege that speed-tweeting leaves no time for compassion. I wonder if this applies to recent-Twitter convert Jesus. (Apparently, Twitter may also have jumped the shark. Poor Biz Stone.)

Meanwhile, a survey by Ohio doctoral students reveals that Facebook users get inferior grades in school. Because stalking ex-boyfriends online totally cuts into study time.

Somehow, I doubt these studies will stop anybody from social networking. Which reminds me: Did you know MoJo has its own Twitter feed and Facebook page? Check them out!

Coachella Preview: Hip-Hop

This year, while most of the Coachella headliners are as white as the driven snow (sorry, Robert Smith, but it's true) there is actually a strong lineup of hip-hop performers around the middle of the bill. So, hip-hop fans, get your butts out of the pool and get over to the venue early. After the jump, check out my selected list of beat purveyors and MCs you might want to try and catch.

Obama Is the Pirate-Killingest President Ever

This may not be the most accurate chart floating around the tubes today (after all, TR might have choked out an environmentally-friendly pirate or two in his day) but it is certainly the most awesome. I think it's from Big Crush. Found via Mottram.

Charts, FTW.

I was asked to go on Hardball on Tuesday night to discuss the news that Spanish prosecutors are likely to recommend a full investigation be conducted to determine if six former Bush administration officials—including ex-Attorney General Alberto Gonzales—ought to be indicted for having sanctioned torture at Guantanamo. So I thought I'd ask White House press secretary Robert Gibbs about the matter.

This could become a true headache for the White House—a high-profile case in which Spanish prosecutors bring charges against Gonzales; Douglas Feith, former undersecretary of defense; David Addington, former counsel to Vice President Dick Cheney; William Haynes, a former Pentagon lawyer; and John Yoo and Jay Bybee, two former Justice Department officials. Several steps must occur before any prosecution proceeds. If the prosecutors determine a full criminal investigation is warranted--as is expected--it will be up to a Spanish judge to open a full-fledged inquiry that could produce indictments. He could decide not to accept the recommendation. And, of course, it's possible that an investigation could end without indictments. The Spanish hook for the case is a simple one: Five Guantanamo detainees were either Spanish citizens or residents. And, by the way, Spanish courts claim jurisdiction that extends to other nations when it comes to torture and war crimes.

What would the Obama administration do, if the Spanish judge currently overseeing the Bush Six case, Baltasar Garzon (who is famous for pursuing terrorists and for having chased after Chilean dictator Augusto Pinochet), greenlights the investigation? At the Tuesday afternoon White House daily briefing, I asked Gibbs if the administration would cooperate with any requests from the Spaniards for information and documents. He had a predictable response: "I don't want to get involved in hypotheticals." He quickly pivoted to point out that Obama has moved to prohibit torture at Gitmo and elsewhere.

I posed a follow-up: Have you spoken to the Spanish government about this case? He seized on my use of the word "you" and, with a broad smile, said, "I have not spoken with the Spanish." Reporters in the room laughed. I obviously did not mean him personally; the "you" had referred to the Obama administration. Nor did I mean, I added, Bill Burton, the deputy press secretary, or any of the other press aides in the room. The point was whether the administration had been in contact with the Spanish government about the Bush Six investigation. "The Justice Department?" I asked. Gibbs, though, essentially brushed off the question: "I would send you to Justice. Like I said, I've not spoken" to the Spanish government.

That, too, was to be expected. Often White House press secretaries say, take your query elsewhere. Yet moments later, when a reporter asked Gibbs if Obama had any reaction to the conservative groups organizing "tea parties" of protest on tax day, he replied, "I've never monitored them nor spoken with the Spanish about them." People in the room laughed. And when the questioning in the room turned to the all-important subject of the Obama's new Portuguese water dog, Gibbs continued the joke. Noting that the dog might be spotted on the White House lawn later in the day or that it might not, he added that "the dog has also not talked to the Spanish about impending torture cases." More laughter. But I wondered, had the press secretary just made a joke about a torture investigation? Gibbs, like other press secretaries, uses humor to disarm, deflect, or dodge. But was this untoward?

The president and his aides do not seem eager to investigate the alleged misdeeds of the Bush-Cheney administration. The political calculation is obvious and not without justification: There's a lot of hard stuff to get done these days and probing former Bush officials could be seen as a distraction and possibly undermine political support for the administration and Democrats in Congress. But such political figuring may not influence the independent Spanish judicial system and Judge Garzon (who has been asked by Spanish prosecutors not to continue handling the Bush Six case because he is already overseeing terrorist prosecutions against these ex-Gitmo detainees). If an investigation proceeds, Obama could well have to decide whether or not to comply with Spanish requests for US government documents--that is, to help or hinder the investigation. Later in the process, Obama could even conceivably have to contend with extradition requests. If any of this comes to pass, it won't then be a laughing matter.

It does not matter to me that the Solaren Corp denies that their space-based solar farm, designed to take advantage of sunlight unfiltered by our dingy atmosphere, could be used to blow up buildings like in Independence Day, even if they try and make it explicitly clear:

[Solaren’s director of energy services Cal Boerman] also dismissed fears, raised in the past, that the transmission beam could hurt birds or airline passengers who stray into its path. The beam would be too diffuse for that. "This isn't a laser death ray," Boerman said. "With an airplane flying at altitude, the sun is putting about four or five times more energy on the airplane than we would be."

Sure it isn't a laser death ray... until I focus its stellar energy beam using the lenses secretly hidden in my fashionable spectacles and aim it directly at downtown Canada! Just a note: my plans to rule your puny little planet may interrupt Pacific Gas and Electric power service, as the company has agreed to buy enough electricity from it to power 150,000 homes once the array comes online in 2016, but that just helps my evil scheme, since not only will I be able to blow up your grocery stores and cinemas with my laser death ray, but you will also be prevented from watching TV. …But wait a minute. If you can't watch my reign of blazing cosmic destruction on CNN, how will you know about my demands for all humans to relocate to the donut factories and start producing dozens more maple logs which shall then be shot in rockets to my space lair, where I'll still be manning the aforementioned laser death ray? Curses! Well, you win this time, environmentally-conscious humans and your overlords PG&E, but I'll be waiting.

Amazon Gay Book Screwup An Honest Mistake?

We weren’t quite fast enough here on the Riff to get on this story when it first broke, but it was all over the Twitter. Shoppers (and authors) had started noticing that gay- and lesbian-themed books were getting stuck on the virtual bottom shelf at Amazon.com recently, with titles from Giovanni’s Room to Brokeback Mountain getting slapped with an "adult" label. This apparently made them harder to find in searches and stripped them of their all-important Amazon sales rankings. Well, as queers are well aware, having any mention of our existence deemed Not Safe For Kids is one of the most troubling aspects of homophobia, so this understandably ticked a lot of people off. But Amazon’s explanation is calming things down a bit, and proves the maxim, “When in doubt, blame France”:

Amazon managers found that an employee who happened to work in France had filled out a field incorrectly and more than 50,000 items got flipped over to be flagged as "adult," the source said. (Technically, the flag for adult content was flipped from 'false' to 'true.')

Mais pourquoi?!! Now, one of course wishes to give the online retailer and its clearly drunk French employees the benefit of the doubt, and it turns out many other not-exactly-adult titles were stuck in the back room, including, as Amazon put it, titles in "Mind & Body, Reproductive & Sexual Medicine, and Erotica." But, uh, Erotica seems like it might actually deserve to be called "adult," doesn't it? And it still doesn’t answer why so many queer-themed titles got called naughty, and not, say, American Psycho (which, as the New York Times pointed out, had no problem keeping its sales rank). All I know is, Amazon better get this figured out quick, because they do not want to lose my Christmas present business. I have seven nieces and nephews!

It's the eve of Tax Day, so let's discuss the topic for a minute. I know that when politicians talk about taxes, they are essentially walking a minefield. They can't say that corporations and the super rich should pay more; they can't say that in some instances, the government is better suited to distribute funds than the market; they can't say that corporations have a tendency to cheat on their taxes. Nevertheless, I'd love to hear someone in power acknowledge the (apparently) uncomfortable truth that the Internets and some think tanks have been trying to attract attention to: the fact that the highest tax rates in this country are simply not that high, by historical standards.

Here's the Center on Budget and Policy Priorities:

While federal tax burdens have risen very slightly from their nadir in 2003 and 2004, most income groups paid a smaller share of their income in federal taxes in 2006 than in every year prior to 2003 for which data are available, according to Congressional Budget Office data that cover the period 1979 to 2006.

Tax burdens on middle-income households remain near their lowest levels in decades.  Households in the middle fifth of the income spectrum paid an average of 14.2 percent of their income in federal taxes in 2006.  By contrast, since 1979, the average federal tax burden on these households has equaled 17 percent of income.

Even in 2000, before the 2001 and 2003 tax cuts, households in the middle fifth of the income scale paid a smaller share of their income in federal taxes than in any year since 1979, and tax burdens for most income groups were lower than their average for the 1979-1999 period.

As for the wealthy, the ones supposedly set to get soaked by our new socialist president, here's what CBPP found: "For the top 1 percent of households, federal individual income tax burdens were at their lowest level since 1986." Ah, but you are going to point out that the wealthy often pay a signficant share of their taxes not in income tax, but in capital gains, estate taxes, etc. CBPP is one step ahead of you: "Overall federal tax burdens on the top 1 percent of households were at their lowest level since 1992." The point here is that if President Obama follows through on his promise to raise the top tax rate from 36 percent to 39 percent, it won't crush the rich or incentivize them to not work hard. It will bring our current tax rates more in line with historical ones. (For more proof, see the chart here.)

PS -- Also, keep in mind that corporations and the super rich have devised highly sophisticated ways to get around paying their full taxes (lots on that here), meaning that their tax rate and their effective tax rate are often very different.

PPS -- For a short primer on why it's important to understand the meaning of marginal tax rates, see the comments section of this MoJoBlog post.

Those Toxic Assets

Valuing mortgage-backed toxic assets is hard.  They've been sliced and diced and synthesized and swapped so thoroughly that by now no one knows quite what's in them or what they're worth.  So Tim Geithner has a plan to jump start the sale of these assets and try to get the market to value them.

Fair enough.  Maybe it will work, maybe it won't.  But Zach Carter wants to know why so much of Geithner's plan isn't aimed at toxic securities at all.  It's aimed at toxic loans, and those aren't nearly so hard to value.  Banks do it all the time.  So what's going on?

A bank that trades heavily in mortgage-backed securities is in trouble if the market for those assets dries up — and it has, and they are — but regular loans are different. So long as a bank intends to sit on them and collect the interest rather than sell them to another company, the government lets that bank use its own secret financial formula to determine the loan values. In short, banks have carte blanche to claim their assets are worth far more than they really are....

Given this long leash, banking executives have naturally inflated the book value of their mortgages. And even as more and more of their customers fail to make payments, bankers have proved reluctant to admit their hubris and take a hit on the balance sheet. Why is that? Well, the government says banks have to keep enough assets on hand to cover their behinds if things go south. So if a bank that has foolishly overextended itself admits it was overvaluing its loan assets all along, it will fall short of this critical regulatory requirement. And when that happens, under the "prompt corrective action" laws enacted after the savings and loan crisis of the 1980s, federal regulators are obliged to invoke the N-word: nationalization.

But Geithner's plan is voluntary, meaning that if the naughty banks don't like the price that hedge fund investors are offering, they can simply turn the deal down. And no bank on the precipice of nationalization is going to voluntarily sell loans to Wall Street for less than it has been claiming they're worth. Doing so would be corporate suicide. Instead, the only way a troubled bank will likely participate is if it receives an absurdly generous price for its dubious assets — a full-fledged bailout, in other words.

Carter's basic thesis here is that while the Geithner plan in general is likely to subsidize the price of toxic assets, thus propping up insolvent banks, this subsidy is at least fairly subtle — and maybe even defensible — in the case of complex mortgage-back securities.  But in the case of ordinary loans, the subsidy is blatant and entirely indefensible.  Its only purpose is to keep banks out of receivership by literally shoveling money into their laps.

My first thought when I read this was skepticism.  The Geithner plan has come under a ton of criticism, but this particular criticism is one I haven't really heard before.  That seems odd, since there are plenty of smart people who'd be happy to jump on this bandwagon if it's really as bad as Carter says.

So here's the deal: hopefully some smart critics of Geithner's plan will read this piece and talk about it.  Is there something missing here?  Or is Geithner's plan worse than even its critics think?

The Bailout We Owe to the Developing World

One outcome of the G-20 meeting (as I wrote yesterday) was an agreement to earmark as much as $1 trillion for developing countries, where the economic crisis is having a life-threatening impact. This figure is in line with what the United Nations estimates is needed to “buffer the blows of the global downturn on the most vulnerable.” 

In fact, $1 trillion is the least the rich countries owe to the poor, considering the chaos and suffering our own economic policies and practices have brought upon them. In part, the additional hardships now being experienced by the developing nations result from the recession trickling down in a way that wealth never seems to do. But there’s more to the story than this.

Some of the heightened suffering in the developing world can be traced back to the Clinton and Bush administrations, when a series of legislative and regulatory changes paved the way for rampant speculation on the commodities market. What happened next is explained in a report by the Minneapolis-based Institute for Agriculture and Trade Policy (IATP), the most comprehensive source of information on this subject.

Wall Street went to work and bundled together groups of commodities futures–everything from oil to copper to basic staples like corn, wheat, rice, and soybeans–into commodity index funds, similar to what you find in the mutual fund business. The subsequent explosion of buying and selling by a handful of Wall Street firms (led by Goldman Sachs and AIG) ran the prices of different commodities up and down with little relation to any actual market or to the so-called laws of supply and demand. (James Galbraith describes the process in detail here.)