2009 - %3, March

Fuel Inefficiency

| Fri Mar. 27, 2009 8:47 AM PDT
Here's an interesting AP dispatch on page A18 of my morning LA Times:

The Obama administration plans to raise fuel efficiency standards by two miles per gallon to a 27.3 average mpg for new cars and trucks in the 2011 model year, marking the first increase in passenger car standards in more than two decades.

Under the changes, which are slightly less stringent than those proposed by the George W. Bush administration, new passenger cars will need to meet 30.2 mpg for the 2011 model year; and pickup trucks, SUVs and minivans will need to reach 24.1 mpg....The Bush administration had proposed regulations last year that would have raised the standards to a combined 27.8 mpg in 2011, requiring passenger cars to meet 31.2 mpg and light trucks to hit 25 mpg that year.

I know that 2011 is only a couple of years away, so nobody expects anything dramatic by then on the auto mileage scene.  But did we really all vote for Obama so that he could set efficiency standards less stringent than George Bush's?

Advertise on MotherJones.com

John Galt vs. Bilbo Baggins

| Fri Mar. 27, 2009 7:53 AM PDT

Killer quote from Kung Fu Monkey:

There are two novels that can change a bookish fourteen-year old's life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs.

My thoughts on Randians here.

Big Banks, Big Banking Industry

| Thu Mar. 26, 2009 10:49 PM PDT
Simon Johnson writes that he's seen a lot of bank crises during his years at the IMF, and eventually problems with the banking sector always roll downhill onto the rest of the economy.  Unsurprisingly, the same thing has happened here:

But there’s a deeper and more disturbing similarity: elite business interests — financiers, in the case of the U.S. — played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The government seems helpless, or unwilling, to act against them.

Top investment bankers and government officials like to lay the blame for the current crisis on the lowering of U.S. interest rates after the dotcom bust or, even better — in a “buck stops somewhere else” sort of way — on the flow of savings out of China. Some on the right like to complain about Fannie Mae or Freddie Mac, or even about longer-standing efforts to promote broader homeownership. And, of course, it is axiomatic to everyone that the regulators responsible for “safety and soundness” were fast asleep at the wheel.

But these various policies — lightweight regulation, cheap money, the unwritten Chinese-American economic alliance, the promotion of homeownership — had something in common. Even though some are traditionally associated with Democrats and some with Republicans, they all benefited the financial sector. Policy changes that might have forestalled the crisis but would have limited the financial sector’s profits — such as Brooksley Born’s now-famous attempts to regulate credit-default swaps at the Commodity Futures Trading Commission, in 1998 — were ignored or swept aside.

Johnson's solution is twofold: nationalize the bad banks and then carve them up into a bunch of small banks so they can never harm us again.  I have my doubts.  Not about nationalization, which I suspect is inevitable, but about the size of individual banks being at the root of our problem.  As Johnson himself suggests, banks would have to get pretty damn small — smaller than Lehman Brothers and Bear Stearns were — before their failure could be tolerated, and I'm just not sure we live in a world where that's practical.

After World War II we eventually rejected the Morgenthau plan to deindustrialize Germany, deciding (wisely, I think) that industrialization per se wasn't the cause of the conflict.  Likewise, I think crude bank size is a red herring for our current financial collapse.  Small banks can become overleveraged just as easily as big ones, hedge funds pay higher salaries than Wall Street behemoths, the interconnectedness of the global financial sector is a bigger cause of systemic worries than size alone, and credit expansions spiral out of control largely due to lack of political will, not because Citigroup is large and clumsy.  Those are the things we should be focused on.

Now, Johnson makes the fair point that the kind of systemic regulation I prefer is impossible to put in place because big banks have so much lobbying power that they can prevent it.  But again, I don't think it's big banks that produce this kind of power, it's a big banking industry.  If we can somehow shrink the overall size and profitability of the industry, their lobbying power will shrink too.  And if we limit their leverage, limit systemic credit expansion, and force more sunlight into Wall Street's trading activity, there's a pretty good chance we can do that.

It won't be easy, of course.  As Johnson says, the finance industry still has enormous sway in Washington and will fight tooth and nail to keep their toys from being taken away.  But hell — if we can't do it now, of all times, then what chance do we have of permanently slashing the size of big banks either?  Not much.  So since it's going to be a fight either way, why not attack the roots instead of the branches?

POSTSCRIPT: Just in case it's not clear, Johnson's article is terrific reading, well worth a few minutes of your time.  I happen to disagree with his technical approach to reducing the size and power of the finance sector, but his description of the problem is top notch.

Plus, of course, he might be right and I might be wrong.  So go read it.

Corn on "Hardball": Palin Attacks with Prayer

| Thu Mar. 26, 2009 5:54 PM PDT

At a recent speech in Alaska before a Republican crowd, Governor Sarah Palin complained that during the presidential race last year she had no one on the McCain campaign with whom she could pray at a crucial moment. (And in a big shocker, she slammed the media for treating her unfairly.) Then there's GOP chairman Michael Steele, who says he might consider running for president--that is, if God gives him a sign. What's with all this God-talk from GOPers with less-than-impressive track records as political leaders? On Thursday night, we hashed it out on Hardball:

You can follow David Corn's postings and media appearances via Twitter by clicking here.

Want to Help Us Follow Up on Indonesian Biofuels?

| Thu Mar. 26, 2009 4:52 PM PDT

Want to help MoJo link investigative reporters to global activists in the field via mobile tech? Well, here's your chance.

We've submitted a prototype project idea to the NetSquared/UC Berkeley Human Rights Center Mobile Challenge, but we need our community (that's you, dear reader) to vote us up before 3 pm PDT Friday if we're to make it to the next round. (Don't worry, the NetSquared crew encourages entrants to ask for community voting support.)

This particular project would follow up with the Indonesian local groups most directly affected by multinational corporate misbehavior uncovered during this investigation into why biofuels are wrecking the Indonesian rainforest. Cool idea, right? We thought you'd say that.

If you're ready to vote, it'll only take 15 minutes. But be prepared for those 15 minutes to be a little challenging. Here’s a step-by-step how to:

1. Register or Login here.

2. Go to the HRC-UCB Project Gallery.

3. Sort through projects here to find those that interest you. The Mother Jones project is titled: Mother Jones Human Rights Citizen Investigation: Indonesia Biofuels

4. Click on a specific project to add to your ballot.

5. Click on the "Add Project to Your Ballot" link on the top of each profile.

6. To add more projects to your ballot, click on the link to "Return to the HRC-UCB Project Gallery." (You’ll need to vote for 3-5 projects.)

Editing Your Ballot

1. To view or edit your ballot at any time click on the ballot icon in the upper right hand corner of the screen.

2. To Remove a Project from your ballot, either click on the ballot icon or the specific project link and select "Remove Project from Your Ballot."

Reviewing and Casting your Ballot

1. Once you have chosen the Projects you want to vote for, please review your selections by clicking on the ballot Icon or the "View / Cast Ballot" link.

2. Review and hit "Cast Ballot" at the bottom followed by a FINAL "Submit Ballot."

That's it. Much appreciated, good hellraisers of the world! We'll keep you posted if we make it to the final round March 31.

The Front Lines of Climate Change

| Thu Mar. 26, 2009 4:48 PM PDT

I had the good fortune just over a year ago to travel with Oceanites researchers Ron Naveen and Heather Lynch to Antarctica aboard the National Geographic Endeavour;. My article talked about climate change and tourism and science. Here's a gorgeously-filmed update on Oceanites' findings from the front lines of climate change: the rapidly changing realm of ice and penguins.

Advertise on MotherJones.com

Heat Stroke: Are We Ready?

| Thu Mar. 26, 2009 3:28 PM PDT
There's no vaccination against climate change. And a lot of diseases are on the move because of it. So have you ever wondered how much our federal government spends on health research related to climate change? You know, all those problems coming our way—some already here—like heat-related mortality, diarrheal diseases, diseases associated with exposure to ozone and airborne  allergens, plus all the health effects from altered air, water, agriculture, and ecosystems services. How about less than $3 million a year?

Kind of hard to believe. Multiply that number by 33 and you get the amount in bonuses AIG is planning to pay its executives for destroying their company. Bonuses paid for with federally funded bailout money.

A new study in Environmental Health Perspectives says that even though climate change will seriously impact public health, the US has yet to allocate anywhere near adequate funding to prepare for these impacts. So what's needed? A measly $200 million or so. Enough to shift research priorities at the National Institutes of Health, Centers for Disease Control and Prevention, and U.S. Environmental Protection Agency.

The report points out that funding research on the effects of climate change on human health is a wise investment, consistent with the goals of restoring economic stability, justice, environmental quality, and reducing healthcare costs. So can't we just beg, borrow, or print a little more money to do that?

Post Office Bailout?

| Thu Mar. 26, 2009 2:34 PM PDT
If you're like most people, you've probably given up a few extravagances in recent months. Vacations? Fancy dinners? Mailing a letter?

Yes, we're onto you. You've been cutting corners by denying your great aunt her birthday card. And because of your penny pinching ways, the USPS is about to run out of money. According to Postmaster General John Potter, the postal service is on track to be bankrupt before the end of the year.
Potter told a House subcommittee Wednesday the lingering question is: Which bills will get paid and which will not.
He said he will make sure that salaries are paid, but also said other bills might have to wait. Potter is seeking permission to reduce mail delivery to five days a week and wants to reduce other costs.
Nice one.



Regulator Says Banks Pressured him to Avoid Oversight of Derivatives

| Thu Mar. 26, 2009 12:53 PM PDT
For the first time, the former chief regulator of the $2.69 trillion municipal bond market has come out swinging at the banks, alleging that they prevented him from regulating the swaps and derivative deals that ultimately cost municipal governments more than a billion in losses.

Until 2007 Christopher "Kit" Taylor was the executive director of the Municipal Securities Rulemaking Board, a body set up by Congress in 1975 to make rules for firms that underwrite, trade, and sell municipal debt. The board is basically run by Wall Street firms, which control 10 of its 15 seats. “The big firms didn’t want us touching derivatives,” Taylor, told Bloomberg yesterday. “They said, ‘Don’t talk about it, Kit.”

Taylor went on to condemn the banks for stalling his efforts to close revolving doors and increase transparency in the bond market, and generally being less concerned about the health of the overall economy than their balance sheets.“I saw more bankers looking out for their self interest in my last years at the MSRB,” he told Bloomberg. “The attitude had changed from, ‘What can we do for the good of the market,’ to, ‘What can we do to ensure the future of my business.’ The profit wasn’t in the underwriting, it was in the swap.”

This story should be put into the fat file called "Why Self Regulation Doesn't Work." When that question is answered by the guy who was supposedly in charge, the need for real regulations seems pretty damn obvious.

H/T tpmmuckracker

Public Financing Bill on the Horizon

| Thu Mar. 26, 2009 12:24 PM PDT

OpenSecrets.org's Capital Eye blog reports that a bill establishing public financing for House and Senate campaigns will be introduced next week. Similar bills have failed in the past, but good government advocates are committed to trying again and again. The hope is that by providing candidates with federal money with which to campaign, two things will happen: (1) incumbents will be able to spend their time governing instead of dialing for dollars; and (2) special interests will have a much harder time buying influence with politicians. Here are the details, if you're a campaign finance nerd (and if you are, high five!).

According to materials on the Fair Elections Now Coalition's website, candidates for House races would need to collect at least 1,500 contributions from residents of their state and raise a sum of $50,000 to qualify for public financing monies. Senate candidates would be required to raise a number of contributions in a manner that correlates to the state's population according to the formula 2,000 + (500 x CD's), where "CD's" equals the number of congressional districts in their state--an attempt to provide more money to candidates in large states, where campaigning is pricier.

According to the proponents' website, House candidates who qualify would receive an initial grant of $900,000 to be split between the primary and general elections. Senate candidates would receive $1.25 million, plus another $250,000 per congressional district, to be split between the primary and general elections. Additional public monies could be tapped into through a provision that allows for the matching of additional home-state, small-donor fundraising done by the candidate, up to three times the initial amount. Supporters say this would provide enough money to run a "competitive campaign"--even if a candidate participating in the public financing system is facing a well-financed or self-financed opponent who is not participating in the system...

The money for public campaigns would be provided for by a small fee on large federal contracts, according to OpenSecrets. I'm all for it. The good government community is all for it. President Obama is all for it. And yet the bill faces opposition from not just one specific special interest, but from all special interests -- anyone who wants to continue to buy influence with America's politicians. We'll see where it goes.