2009 - %3, March

Geithner: Home Alone?

| Tue Mar. 24, 2009 9:27 AM PDT

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.

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Toxic Waste for All

| Tue Mar. 24, 2009 9:09 AM PDT
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 8:25 AM PDT
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.

WSJ: Bankers Admit to Holding Economy Hostage

| Tue Mar. 24, 2009 7:32 AM PDT

If you have a chance, read this Wall Street Journal piece (via Hilzoy) about how bankers' feelings are really hurt because some people said some really mean things about them and how the Obama Administration is trying to make nice so everyone can work together to save the economy. If you look closely, you'll find all the evidence you need to indefinitely detain these Wall Street clowns on an extrajudicial island in the Caribbean.

Treasury Secretary Timothy Geithner and his colleagues worked the phones to try to line up support on Wall Street for the plan announced Monday.... Some bankers say they turned the conversations into complaints about the antibonus crusade consuming Capitol Hill. Some have begun "slow-walking" the information previously sought by Treasury for stress-testing financial institutions, three bankers say, and considered seeking capital from hedge funds and private-equity funds so they could return federal bailout money, thereby escaping federal restrictions....

And later on:

Bankers were shell-shocked, especially when Congress moved to heavily tax bonuses. When administration officials began calling them to talk about the next phase of the bailout, the bankers turned the tables. They used the calls to lobby against the antibonus legislation, Wall Street executives say. Several big firms called Treasury and White House officials to urge a more reasonable approach, both sides say. The banks' message: If you want our help to get credit flowing again to consumers and businesses, stop the rush to penalize our bonuses.

You probably don't need anyone to interpret that for you, but here's what it says: bankers are holding the economy hostage until they're promised their six-figure bonuses won't be touched. Hundreds of thousands of jobs are being lost every month because rich jerks can't figure out how they'd live without things like $87,000 area rugs.

Hilzoy calls it shameful. Ezra calls it unpatriotic. I think it ought to be criminal. I know "rank populism" is considered gauche in this country, but at times like these I wish I owned a pitchfork and the right to use it.

Why Do Women Get Their Asses Kicked? Feminism, Of Course

| Tue Mar. 24, 2009 5:32 AM PDT

OK, the tsunami of getting the kids up, cleansed, fed, and off to school has me all muddled. Is that why I can make neither heads nor tails of this NRO piece (courtesy of Salon's Broadsheet)?

If I understand this correctly (re: Chris Brown and Rihanna), the 'argument' is that feminism has deprived women of their supposed 'special status' in society (cuz pre-bra burning, women were never brutalized), such that men don't know how to behave (i.e. maybe hitting women is ok?)

According to Kathryn Jean Lopez, the editor of NRO, "There's something off when so many people blame the victim, not the aggressor."

Hmmm. Might that 'something' be sexism? As Theodoric of York would conclude: Naaaaah.

If you want to understand how people who have sold their souls to a particular way of making a living live with themselves, read those links.

Another Mile Down the Road

| Mon Mar. 23, 2009 10:54 PM PDT
Yesterday I wrote that one problem with nationalizing big financial corporations is that the government probably doesn't have the legal authority to do it even if it wants to. They can seize banks, but they can't necessarily seize all the other components of big financial institutions. The Washington Post reports that the White House is about to ask Congress to change that:

The Obama administration is considering asking Congress to give the Treasury secretary unprecedented powers to initiate the seizure of non-bank financial companies, such as large insurers, investment firms and hedge funds, whose collapse would damage the broader economy, according to an administration document

....Besides seizing a company outright, the document states, the Treasury Secretary could use a range of tools to prevent its collapse, such as guaranteeing losses, buying assets or taking a partial ownership stake. Such authority also would allow the government to break contracts, such as the agreements to pay $165 million in bonuses to employees of AIG's most troubled unit.

The Treasury secretary could act only after consulting with the president and getting a recommendation from two-thirds of the Federal Reserve Board, according to the plan.

If, several weeks ago, you had charged a task force with figuring out how to successfully nationalize a big bank, what do you think they'd say you had to do? Three things, at least: (1) you have to figure out a widely acceptable way to value the toxic assets on bank balance sheets, (2) you have to set up a fair and consistent test for evaluating bank solvency based on those values, and (3) you need to make sure you have the legal authority to take over a huge, multinational financial conglomerate in an orderly way.  Is it just a coincidence that these are precisely the things Tim Geithner has set in motion over the past month?  I wonder.

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Letting the Little Guy Invest

| Mon Mar. 23, 2009 10:10 PM PDT
One of the persistent criticisms of the Geithner plan is that it's a sweetheart deal for investors.  The government puts up most of the money, downside risk is limited thanks to the non-recourse funding, and there are probably lots of ways the auctions can be gamed.  Matt Yglesias points to a comment at The Baseline Scenario that suggests a way to deal with this:

If Geithner’s taxpayer subsidized toxic public/private plan goes forward, I think it would be fair if the federal government allow non-institutional investors to participate via a no-fee investment vehicle.  I think if Americans had the option of investing in this program (without having to pay the egregious fees to the investment advisors/PE shops), it would be much easier to swallow since they would at least get the same deal the sharks are getting.

Like James Kwak, I think this is a brilliant idea, and one that Treasury should not merely allow, but actively encourage.  At least one of the fund managers chosen to participate in the program should be one that agrees to allow investment by retail customers.  In the end, Geithner's plan may or may not turn out to be a sweetheart deal, but surely us little guys should have the same chance to find out as the well-heeled crowd.

Listen Up, Grown-Ups

| Mon Mar. 23, 2009 8:06 PM PDT
Okay, there's been a ton of venting on my baby boom post. I still feel like people are missing the point I was trying to make. So let me try again.

Eoin O'Carroll of the Christian Science Monitor's bright green blog suggests that assigning responsibility for emissions across generations is inherently faulty since we'd have to trace it all that ways backwards to our original progenitor, "a clump of self-replicating molecules some four billion years ago."

Huh? We can't go backwards in time (well, not until the Large Hadron Collider goes online, anyway). So all we actually can do at this point in time to affect any change is to think of the future as we take actions and make choices today. So, yes, we must (not assign) but assume responsibility for emissions across generations.

Second, O'Carroll questions whether it's "a wise strategy to deploy environmental stewardship to urge people to voluntarily stop having kids?" He continues:

Even if such a strategy worked (a big if), the only people to heed this advice be those who care about the environment, while those who don’t care about the environment would continue breeding as usual. Given that children generally tend to share the social beliefs of their parents, this starts to looks like a recipe for eliminating environmentalism from the gene pool.

Okay, so those of us who know having more kids will screw up the world faster than it already is getting screwed up should go ahead and have those kids anyway because the screwed-up anti-greenies are going to take over the world? Sounds like a South Park episode to me. This is a classic Tragedy of the Commons approach akin to burying our heads in the diapers. The truth is we all own equal shares in the future of our planet and each one of us needs to protect the shares in any way we can.

Third, O'Carroll's cites Alex Steffen's "alternative" vision of how we can protect the climate by curbing population growth: that is, by empowering women.

That means increasing their access to reproductive health choices, education, jobs, loans, and protection against violence.  Everywhere this has happened, the birthrate has declined.

This is hardly a new approach to population control and is clearly the only one that has worked so far. So we're in agreement here. But I would add that part of the education that empowers women is providing access to scientific studies buried in obscure journals. Even telling them things they may not want to hear. In my case, I wanted to let women and men know that the cost of their next child is 10,000 to 13,000 extra metric tons of CO2. Is that not educational?

Deploying environmental stewardship is educational.

As for the photo I posted—and a lot of the readers took umbrage at it—apparently I violated a secret social contract that requires we publish only pictures of cute happy babies.

What's wrong with angry babies?

Which leads me to my final point. I do not hate babies, even when they're little monsters.

I'm just trying to talk about their future.

Acorn

| Mon Mar. 23, 2009 7:43 PM PDT
I thought that "Going Galt" was pretty much as stupid as conservatives could possibly get, but I was wrong. This has it beat.  Jeebus.

Suckitude

| Mon Mar. 23, 2009 6:48 PM PDT
Have I mentioned lately that computers suck? Well, they do.

And what's the deal with everyone wanting super-widescreen monitors these days? It's practically impossible to get a native 1280x1024 monitor when your old one breaks. Like mine just did. Blecch.