Kevin Drum

When His Lips Are Moving

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| Fri Dec. 5, 2008 10:03 AM PST

WHEN HIS LIPS ARE MOVING....In a mere few months, Henry Kissinger has gone from lying about Barack Obama to sucking up to him. Helluva guy. And that's not unreliable lefty blogger me saying that Kissinger was lying, it's sober, mainstream Time reporter Karen Tumulty saying it. So don't fall for it, Mr. President-Elect.

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Quote of the Day - 12.05.08

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| Fri Dec. 5, 2008 9:38 AM PST

QUOTE OF THE DAY....From Matt Yglesias, on the argument that the collapse of Wall Street was a systemic problem, not a personal one:

If nothing the CEOs and top fund managers are doing makes them worthy of taking the blame when the crash hits, then they also don't deserve nearly the share of the credit — and money — that they got while things were going up.

Quite so. Street crime might be a systemic problem caused by drugs or poverty or whatnot, and that means that it makes sense to attack those root causes. But we still put muggers in jail while we're working on the other stuff.

Parking Meter Hell

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| Thu Dec. 4, 2008 4:07 PM PST

PARKING METER HELL....One of the favorite topics of the urbanist bloc in the liberal blogosphere is the bane of cheap parking. Their complaint is that by underpricing the scarce resource of parking, we encourage the overuse of cars and discourage drivers from switching to mass transit. This could be (partially) addressed by charging market rates for parking, but how do we get cities to do this?

Answer: do what Chicago is doing and turn over your parking meters to the rapacious private sector:

At most meters, where a single quarter now buys 60 minutes, the charge will spike to $1 per hour. And by 2013, it will cost $2 an hour to park at those same spaces.

The most expensive spots downtown will increase from $3 an hour to $6.50 the next five years under a lease deal Mayor Richard Daley announced Tuesday.

Despite the rate hikes, Daley hailed the parking meter plan as an innovative approach to surviving the city's deepening budget woes. A private company has agreed to give City Hall an upfront payment of almost $1.2 billion to run Chicago's parking meter system for the next 75 years.

75 years seems a wee bit excessive to me, and will almost certainly bite Daley in the ass when Morgan Stanley, which put together the winning consortium, packages up the parking meter revenue, securitizes it, rolls it into an asset-backed CPMO (collateralized parking meter obligation), puts the super-senior tranche into an off-balance-sheet vehicle, hedges the rest via a CDS-backed synthetic CDO, and then resells the whole thing within 12 months to a sovereign wealth fund in Dubai for $5 billion.

(I'm joking. I think. But not about the 75-year part, which really is ridiculous. Chicago should do a shorter term deal for less money and then let it out for new bids in a decade or so. They're almost certainly paying a hefty discount to account for the fact that Morgan Stanley has no real idea what this revenue stream will be worth 75 years from now.)

This all comes via Barbara Kiviat, and the urbanist folks should also check out this dude, who is seriously pissed off at Daley's evident hatred for Chicago drivers and provides chapter and verse of Daley's malefactions. He may be incensed, but the urbanists will find plenty to like.

Cap and Trade

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| Thu Dec. 4, 2008 3:07 PM PST

CAP AND TRADE....During the campaign, Barack Obama committed himself to supporting a cap-and-trade program to reduce carbon emissions. It'll be tough getting that through Congress, though, so how about just ordering the EPA to put together a program on its own under the aegis of the Clean Air Act and skipping legislation entirely? David Roberts runs down the pros and cons over at Gristmill, but I want to skip immediately down to his last point:

Real disadvantage: public deliberation

One doesn't want to be sentimental, but there is something to the argument that shift of this significance should be discussed in public and shaped by the public's elected representatives. It would be nice, in an ideal world, if reasoned debate and discussion and interest-balancing yielded the perfect program.

But in this world, we're perilously late getting underway and Obama must weigh America's procedural ideals against what a wise man once called the "fierce urgency of now." Whatever it's other merits, the Clean Air Act is now.

I think this is more than just sentimental. Cap-and-trade is a very, very big program, and it just flatly shouldn't be implemented via executive fiat. We liberals are already fuming over George Bush's relatively minor last-minute executive orders, after all, and this would be the granddaddy of all executive orders. It deserves public debate, it deserves the permanence of congressional legislation, it deserves to be a genuinely national program (not a kludgy jumble of state initiatives, which is how it would have to work under CAA), and it deserves the chance to get genuine public support in the process. I've long thought that liberals tend to pay too little attention to public opinion, and this is a serious mistake since big, longlasting change never really happens without it. This is no exception. If we really believe in carbon reduction via cap and trade, we need to persuade the American public that it's a good idea. A cap-and-trade bill should be the kind of landmark legislation that our kids talk about, not a furtive agency rule slipped in quietly via the back door.

On a more practical note, I wonder if it would really be any faster doing it via the CAA anyway. Thanks to Bush's stonewalling, the rulemaking process for carbon regulation hasn't really even started yet, and that process doesn't happen overnight. I wouldn't be surprised if congressional legislation could actually happen faster than an EPA initiative.

November Sales

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| Thu Dec. 4, 2008 1:16 PM PST

NOVEMBER SALES....Actual retail sales figures for November are in:

Major retailers such as Macy's, Abercrombie & Fitch and GAP reported sales declines of more than 10% in November....Shops hoped that Black Friday, the day after Thanksgiving and traditionally the biggest shopping day of the year, would jump-start consumer outlay but industry experts were downbeat.

....ShopperTrak, a retail monitoring firm, said total sales at US retailers rose 1% during the Black Friday weekend but analysts believe much of that gain will have been stoked by deep discounts and will hit profits....The International Council of Shopping Centers, which represents stores including GAP and JCPenney, said sales at 37 major retailers fell 2.7% over November — the worst start to the holiday season in 35 years.

Given this, does anyone even remotely believe the National Retail Federation's annual Black Friday estimate, which suggests that retail sales over the Thanksgiving weekend were up 20% this year? Media outlets, as usual, reported the NRF's numbers as gospel, but I'd suggest that in the future they should simply toss them in the waste bin. As near as I can tell, they have no basis in reality at all.

Yet More News From Canada

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| Thu Dec. 4, 2008 12:13 PM PST

YET MORE NEWS FROM CANADA....Unions support card check legislation because they think it will make it easier to organize new industries. Business leaders dislike card check for the same reason. But what they say is that card check is bad because it allows union organizers to intimidate workers into signing cards. Now, business leaders are well-known for their tender sensibilities toward worker rights, but Jonathan Zasloff decided to check up on the intimidation story anyway:

For 50 years, from the 40's to the 90's. the province of Ontario had a card-check organizing system....So what was the record there?

I used advanced research techniques unknown to many reporters, and called up Harry Arthurs of York University, Canada's pre-eminent labour law scholar. Arthurs literally wrote the book on this stuff. And I asked him: what does the evidence show?

Arthurs answered that in all of his research about labour law complaints under card check, he could not find a single case where the employer complained of a union intimidating workers to unionize when they didn't want to.

That's right: zero. Zilch. Nada. Efes. Rien.

....This isn't some obscure jurisdiction. It's Ontario, the largest and richest province in the country. 50 years. A half a century. Zero.

Look: unions aren't perfect. Nothing is perfect. The financial industry, just to pick an example out of my hat, is obviously wildly imperfect, but that doesn't mean we should get rid of the private financial industry. It just means we should regulate it to avoid some of its worst pathologies.

Ditto for unions. If anyone has a better mechanism for giving workers more bargaining clout and therefore higher wages, I'm all ears. Anyone who thinks collective bargaining is a good idea but believes we ought to reform the Wagner Act, I'll listen to them too. But the evidence of the past 30 years makes it pretty clear that productivity growth and improved education aren't nearly enough on their own to keep median wages growing. Neither is unionization, for that matter. But at least it pushes in the right direction. If card check helps that along, I'm all for it.

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On Hold in Canada

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| Thu Dec. 4, 2008 11:21 AM PST

ON HOLD IN CANADA....The "Canadian coup" has been put on hold. After the three minority parties in the Canadian parliament banded together to challenge the ruling Conservative Party, one of Prime Minister Stephen Harper's options was to ask the governor general for a suspension, or prorogue, of parliament. Michael Stickings reports:

Well, he did so this morning, and she granted his request — meaning that there will be no no-confidence vote until, at the earliest, Parliament resumes sitting late next month. The government may then lose a no-confidence vote on the Throne Speech or the budget, but, in the meantime, both sides (and the Conservatives even more so because they have more money) will campaign aggressively to woo public opinion.

More here.

Piracy Update

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| Thu Dec. 4, 2008 11:06 AM PST

PIRACY UPDATE....Following a failed pirate attack on a cruise liner in the Gulf of Aden a few days ago, there were reports yesterday of yet another pirate attack on a cruise ship, the MV Athena en route to the Seychelles. But apparently not:

Grant Hunter, Australian managing director of Classic International Cruises, which operates the ship, today told ABC radio that no pirates had tried to board.

Mr Hunter acknowledged that as the Athena pulled up to the southern end of the Gulf of Aden, several tuna fishing skiffs loomed "some half a kilometre to three kilometres away" as the ship queued to enter a secure port area.

...."Under normal international security regulations, all the ships in that particular grouping put their fire hoses on board (and) activated those," Mr Hunter said.

"The crew were spraying water off the side of the ship but at no stage did any of the skiffs attempt to get near the vessel, board the vessel. "They weren't aggressive to the vessel."

....He said that it was difficult to understand how the reports emanated, because passengers had been eyeing the tuna boats from afar with binoculars — and vice versa.

Tuna boats, eh?

The GM Bailout

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| Thu Dec. 4, 2008 10:24 AM PST

THE GM BAILOUT....Jim Manzi comments on the restructuring plan that GM is submitting to Congress today:

I guess somebody who's never read a real business plan might mistake this document for one, but it's a joke. It's basically a list of assertions of amazing improvements, entirely discontinuous with actual performance to date, that they will achieve. What's missing is any real indication of how they will go about accomplishing this.

Hmmm. Sounds pretty normal for a business plan to me. List of assertions? Check. Unrelated to past performance? Check. Lots of handwaving about how goals will be accomplished? Check. Back in 1999 some venture fund on Sand Hill Road would have funded it in a minute.

Kidding aside, though, Manzi is probably right: this is meant as a political document, not a real business plan. And after GM blows through the $18 billion they're asking for by next spring, they'll be back asking for more. And who will have the guts to turn them down after already investing so much taxpayer dough in the first place?

I'm just very skeptical of this. Bailing out the financial industry is one thing because the financial industry is different. When it goes down, we all go down. But there really is a slippery slope problem here: once we go beyond the financial industry to the auto industry, what stops us from bailing out farmers and house builders and shipbuilders too? There just has to be a better way of handling this than forking over giant wads of cash with very few strings attached. GM doesn't need surgery, it needs to be rebuilt. That won't happen if they get an $18 billion bailout from Uncle Sam.

Bonuses

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| Thu Dec. 4, 2008 9:48 AM PST

BONUSES....Robert Rubin has apparently told the Citigroup board that all of them should forego their bonuses this year. Ezra Klein asks, what bonuses?

Am I missing the point of bonuses? I always understood them to be tied to performance, either that of the individuals or that of the company. But the company almost went bankrupt this year and the executives demonstrated themselves almost cosmically hapless. If they were going to get bonuses, then what could the term possibly mean? Bonus for what? A working cardiovascular system?

Silly boy. You expect these titans of risk to take an actual risk with their own pay? That's not how it works in corporate America. When the stock market is skyrocketing, everyone gets stock options. When it's tanking, suddenly everyone gets religion and takes their comp in cash and perks. As for bonuses, the range of payout is almost never the theoretical 0-100%. In reality, it's more like 70-95% for the range of reasonably conceivable outcomes. If your company goes completely bankrupt, that might go down to 60%. Welcome to Wall Street.