2009 - %3, March

Quote of the Day - 3.24.09

| Tue Mar. 24, 2009 1:00 PM EDT
From Marc Ambinder, explaining why he thinks Obama is moving more cautiously than his critics would like:

What's kept the administration from being as bold as its critics want is not a lack of imagination, or a lack of contact with the outside world, or an overreliance on the banks....It's a combination of the knowledge that Obama cannot do big things unless he remains a majority president, that he could make a hash of them if Congress perceives that the administration is pushing too close to the boundary of what's acceptable, and that the administration has accepted that it cannot allow Congress to be a partner in leading the American people towards a solution.  The stimulus package debate in February was dispositive; the administration lost confidence in Congress's maturity fairly quickly.

It's not clear how much of this is just Ambinder's own judgment and how much is informed by his reporting, but presumably he wouldn't say this if he didn't have good reason to believe it.  And that's pretty interesting: Obama no longer trusts Congress.  It's also a wee bit frightening, no?

(Ambinder also has a list of questions he thinks need to be answered before any kind of nationalization plan is possible.  I don't quite understand some of them — why would there be a run on a nationalized bank? — but they're worth taking a look at.)

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The Price of Health

| Tue Mar. 24, 2009 12:45 PM EDT
Ezra Klein has a friend who got airlifted to a small town in Germany after an accident in Sierra Leone.  Now he's stuck:

My friend does not speak German. He does not know anyone in Germany. He wants to come home and receive his care in the states. He wants a doctor he can communicate with and nurses who can understand his requests and friends who can speak to him and calls that aren't subject to international fees. But his insurance is refusing the request. Medical treatment, they're arguing, is simply too expensive in America.

....My friend's insurers are not lying to him. They are not making a capricious decision. They simply have no wish to pay American prices when care can be obtained at German rates. And so my friend and his family must now focus their days and nights worrying over what to do, and how much to spend. As for the rest of us in America, we pay these prices anyway, and never realize how terribly we're being ripped off.

Just keep telling yourself: best healthcare in the world, baby, best healthcare in the world.  Say it often enough and you might even believe it eventually.

Iraqi Refugee Stories

| Tue Mar. 24, 2009 12:41 PM EDT
You've likely heard about the 2 million Iraqi refugees living in Lebanon, Syria, Jordan, Egypt, the Gulf States, Iran, Turkey, and Yemen, but Iraqi Refugee Stories brings those statistics to life with videos of displaced people describing the circumstances that forced them out out of their homeland.

The site has a bunch of interesting information, includine an interactive map showing where the refugees live now.

Some of the most moving stories:

Is America Ready for a Gay Idol?

| Tue Mar. 24, 2009 12:16 PM EDT

In the world of reality TV, the buzziest personality is undoubtedly American Idol contestant Adam Lambert. But it's not his copious eyeliner, gothic black nail polish, or theatrical wails that have generated the most controversy—it's his sexuality. The media's biggest question about the man-kissing drag-performer: Should the singer come out on Idol?

The San Francisco Gay & Lesbian Examiner: "I want Lambert to announce his gayness and still win this year's competition. Is that too much to ask?"

The Huffington Post: "An out Idol contestant would win lot of gay hearts but might lose votes."

The Associated Content: "The purpose of the show is to be entertaining, not ideological."

The Advocate: "He’s not officially 'out,' but that’s not the point. If something as formerly monumental as a public person’s gayness can suddenly be seen as post-mattering, then that’s what really matters now."

Will viewers of family-friendly Idol continue to vote for a gifted performer they know is gay, regardless of their Prop. 8 voting and Milk-watching preferences? As the country speed-dials its way into the weeks ahead, we'll soon find out.

The Swedish Model

| Tue Mar. 24, 2009 12:08 PM EDT
The interview of the day is Benjamin Sarlin's short chat with Bo Lundgren, the finance minister who oversaw Sweden's temporary bank nationalizations in the early 90s:

"There are similarities [to Sweden's case]," Lundgren said. "There are three things any plan must do — the first is to maintain liquidity, that's taken care of by the Fed. The second thing is to restore confidence, and that hasn’t been done so far and obviously the first proposal to buy toxic assets wasn't enough. And then you need capital injections so banks can keep lending at the levels needed for the economy as a whole."

However, Lundgren said that Obama was correct in observing that a similar nationalization scheme might be more difficult given America's size and preeminent role in world finance compared to Sweden.

"With Japan and Sweden, the crises we had, even if it was a very long process with Japan, they were crises that we had on our own," Lundgren said. "The rest of the world economy managed to be not perfectly good but still reasonably good. This time it's worse; it's a kind of financial tsunami."

I suppose you could equally make the case that the worldwide nature of this crisis makes dramatic action like bank nationalization more necessary than it was in Sweden's case.  Still, Lundgren is almost certainly right that it would be a lot more difficult.  Nationalizing a $2 trillion institution that's a commercial bank, an investment bank, a hedge fund, an insurance company, a brokerage, and owner of a portfolio of other banks around the world is a lot trickier than nationalizing a midsize regional bank in the era before the explosion of credit derivatives.

In fact, here's an assignment desk job for someone with the background to know the details: What would it take to nationalize an outfit like Citigroup?  What are the likely legal, financial, diplomatic, and operational issues that would have to be resolved?  It would be a real public service if someone with a credible background in this stuff could lay out the details in a way that's understandable for all the rest of us.

Why Bank Rage Is Not Populism

| Tue Mar. 24, 2009 12:01 PM EDT

Does the widespread public fury over AIG bonuses constitute a populist rebellion, and signal a major shift in American political culture? That's what the mainstream media seems to be pondering this week. The Newsweek cover that hit the stands yesterday reads “The Thinking Man’s Guide to Populist Rage.” Eye-catching hyperbole is the stuff of newsweekly covers. (Six weeks ago, Newsweek’s cover line was “We Are All Socialists Now.”) But the issue is filled with serious essays on the subject, by Michael Kazin, Eliot Spitzer, and others. And in yesterday's New York Times, John Harwood makes similar claims, painting people’s anger at Wall Street as part of a populist resurgence. Harwood’s most prominent source is, of all people, Ed Rollins, the Republican strategist whose credentials on the subject consist of working on the campaign of faux-populist Ross Perot.

One person not quoted in these pieces is the original, and still unequaled, historian of populism, Lawrence Goodwyn. He identified the first populist movement—the agrarian revolt of the 1890s—as the greatest mass movement in American history. It posed a genuine challenge to the dominant power structures, especially the banking system. It was also largely an unfulfilled dream. Goodwyn’s 1978 book The Populist Moment is still in print and well worth reading, both for its stirring history and its insights into what is going on today—and what isn’t going on.

Goodwyn traces the Populist Movement to its origins in the rural depression after the Civil War, when Southern and Western farmers formed clubs that fought the monopolistic railroad rates. By the 1870s these clubs had grown in number and size, forming themselves into Farmers Alliances, which engaged in all sorts of cooperative action, from catching horse thieves to buying supplies. By the 1890s, the alliances had a combined membership of more than one million people and were in the thick of politics. Georgia populist leader Tom Watson accused the Democrats of sacrificing “the liberty and prosperity of the country…to Plutocratic greed,” and the Republicans of serving the interests of “monopolists, gamblers, gigantic corporations, bondholders, [and] bankers.” He said that big business didn’t care about ordinary Americans “except as raw material served up for the twin gods of production and profit.”

Most significantly, in relation to today’s economic crisis, they demanded paper money and an end to the gold standard—changes they believed would help wrest control of credit, and of the money supply in general, from the hands of bankers and other blood-sucking plutocrats, and place it in the hands of the farmers and laborers who were the real producers of wealth. As an alternative, the populists proposed what they called the “sub-treasury plan,” under which a new monetary system would be created and operated “in the name of the whole people,” and credit would be freely extended to farmers, small producers, and other ordinary citizens.

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Bounties Offered For Mexican Cartel Leaders

| Tue Mar. 24, 2009 11:31 AM EDT
The drug-fueled violence along the US border with Mexico--the subject of an excellent piece in the New York Times on Monday--has reached fever pitch. Since January 2008, some 7,000 people have been killed (descriptors like dissolved in acid, butchered, burned, or decapitated may be a more apt) across Mexico. There appears to be no end in sight to the violence, despite intervention by the Mexican military, among the only state entities believed to be relatively free of contamination by the cartels.

Several drug lords have been arrested in recent years, but, ironically enough, it has only accelerated the bloodletting as ambitious up-and-comers have vied for control of lucrative smuggling corridors. (This is not a new problem. Read Terrence Poppa's narco-classic Drug Lord for an insider's view of how the Mexican drug business functions.)

But don't let history and the facts get in the way. The Mexican government, in advance of this week's scheduled visit by Secretary of State Hillary Clinton, placed bounties on 24 of the country's most-wanted cartel leaders, offering $2 million for information leading to the capture of any one of them. Additional $1-million rewards were offered for 12 lower-level drug smugglers. It seems doubtful that this will make much difference. First, drug lords are scary guys, and the intimidation factor (something they work hard to achieve) looms large. Second, as scary as they are, historically speaking, they also invest in local communities, give to charity, and are often seen as local heroes.

The $25 million bounty on Osama Bin Laden's head has so far gone uncollected. Should we expect these arguably more powerful and scary guys in Mexico will be sold out for less?

Geithner: Home Alone?

| Tue Mar. 24, 2009 11:27 AM EDT

On Monday, after Treasury Secretary Timothy Geithner finished briefing reporters on the administration's new toxic assets plan, journalists filed out of the Treasury building--which conveniently and symbolically sits next to the White House on Pennsylvania Avenue--and spotted something interesting in the lobby: a case that holds the photographs of the Treasury Department's top officials. And the case looked rather empty.

Under Geithner is Stuart Levey, the under-secretary for terrorism and financial intelligence. He's a holdover from the Bush administration. Below him are Neel Kashkari, an interim assistant secretary in charge of the Office of Financial Stability, which has been overseeing various bailouts. He's another Bush holdover. Next to him are Kennther Carfine and Janice Bradley Gardner, two other assistant secretaries appointed during the Bush years. Below them are Eric Thorson, the department's inspector general. He, too, was named by President George W. Bush. And next to him is Neil Barofsky. He was tapped by Bush last November to be a special inspector general overseeing Treasury's Wall Street bailout.

So it's Geithner and a handful of Bush appointees. Sure, there are aides whom Geithner has brought into the department. He has a chief of staff who once was a lobbyist for Goldman Sachs. Gene Sperling, a top Clinton administration economic policy adviser (and well-known workaholic), is a counselor to Geithner. But a glance at the case does leave the unnerving impression that the guy who is supposed to save the economy is home alone.

Toxic Waste for All

| Tue Mar. 24, 2009 11:09 AM EDT
Will ordinary citizens be able to invest their hard-earned shekels in Tim Geithner's sweetheart deal to buy up toxic waste legacy assets from distressed banks?  Here's a quick followup:

Two of the country's biggest money managers — Newport Beach-based Pacific Investment Management Co., known as Pimco, and New York-based BlackRock Inc. — say they may launch funds that would allow individuals to have a stake in some of the bad assets to be purchased from banks.

....Bill Gross, co-chief investment officer at Pimco, said his firm was looking into the idea of creating mutual funds that would tap into the program. BlackRock is doing the same, said Curtis Arledge, co-head of fixed income at the firm.

The story goes on to suggest that the funds may be closed-end with a minimum buy-in of $25,000.  If that's how it turns out, it wouldn't exactly allow Joe Sixpack to get in on this deal.  Still, it's a step in the right direction.  It'll be interesting to see if Treasury encourages other retail funds get in on this action.

Yet Another Scandal

| Tue Mar. 24, 2009 10:25 AM EDT
ABC News reports on the sordid past of Obama's Chief Information Officer, Vivek Kundra:

When Kundra was 21 years old, records show, he was caught stealing four shirts from a J.C. Penney store.

...."Thirteen years ago, Vivek committed a youthful indiscretion. He performed community service, and we are satisfied that he fully resolved the matter."

What's going on here? The new administration has a lot of work to do, but it keeps being sideswiped by issues in its appointees' pasts. Police records provided to ABC News show that those shirts from Penney's were worth less than $140. Kundra was fined $100 plus $55 in court costs, and ordered to do 80 hours of community service. He reportedly told the White House about the incident while he was being vetted for his current job.

I thank God daily that we have a vigorous and enterprising free press to look into these critical matters.  It's a source of inspiration to us all.