2009 - %3, May

Globe Staffer Not Amused By Size of Tom Friedman's Expense Account

| Thu May 28, 2009 12:49 PM EDT

Sandwiched in the New Yorker's profile of Carlos Helu Slim, the Mexican billionaire who's bailing out the New York Times, is this dreadful item:

Thomas Friedman, the Times’ chief foreign affairs columnist, lauded the efforts that Arthur Sulzberger, Jr., has made to keep the newsroom intact, saying, "I just have a great deal of admiration for him." He told me that since taking his current post, in 1995, he has never been asked by Sulzberger what he was planning to write, or how high his travel expenses would be. "To be able to say what I want to say and go where I want to go—other than a Sulzberger-owned newspaper, you tell me where that exists today." (Of course, star reporters like Friedman live in a special universe, even at the Times.)

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Better Bottle Deposits

| Thu May 28, 2009 12:24 PM EDT

Robert F. Kennedy Jr., who is (no joke!) apparently a water bottler in addition to being an environmental activist, has a good op-ed on bottle redemption laws in Thursday's New York Times. The piece focuses on New York's law, but Kennedy's criticisms apply to similar legislation everywhere:

A good new deposit bill could encourage recycling of new classes of beverage bottles and also provide financing for curbside programs that capture other kinds of recyclable waste, like juice cartons, ketchup bottles and mayonnaise jars. These are all made from the same plastic and glass as soda, beer and water bottles, yet fewer than one in five of them are being recycled. Since such containers are not subject to deposit laws, their recycling is driven only by moral imperative or local ordinances, and these incentives function best when supported by robust curbside recycling programs or other easy recycling options.

Indeed. So what did New York's lawmakers do instead of following Kennedy's suggestions? They applied a new bottle deposit to water alone, exempting water with any sugar added, and effectively incentivizing consumers to prefer sugary drinks like Vitamin Water to good, old-fashioned H2O. Horrible idea, New York legislature!

Tough Talk on Settlements

| Thu May 28, 2009 11:55 AM EDT

I missed this yesterday:

Rebuffing Israel on a key Mideast negotiating issue, Secretary of State Hillary Rodham Clinton said Wednesday that the Obama administration wants a complete halt in the growth of Jewish settlements in Palestinian territory, with no exceptions.

....The administration has communicated its position "very clearly, not only to the Israelis, but to the Palestinians and others, and we intend to press that point," Clinton said in an appearance at the State Department with Egyptian Foreign Minister Ahmed Aboul Gheit.

I don't have a lot to say about this, aside from the fact that it's impressively tough rhetoric coming from an American administration.  I wonder if they can stick to it?

Unreleased Torture Photos "Show Rape." Why No Prosecution?

| Thu May 28, 2009 11:03 AM EDT

Two weeks ago, President Barack Obama abruptly changed course and refused to release photos that allegedly show American servicemen and servicewomen torturing detainees in Iraq and Afghanistan. Now we have a better sense of exactly how horrible those photos might be. Major General Antonio Taguba, who was in charge of investigating the abuses at Abu Ghraib, told the British paper the Telegraph that the photos "show rape" of prisoners by Americans:

At least one picture shows an American soldier apparently raping a female prisoner while another is said to show a male translator raping a male detainee.

Further photographs are said to depict sexual assaults on prisoners with objects including a truncheon, wire and a phosphorescent tube.

Gen. Taguba says he supports President Obama's decision to withold the photos, arguing that "The mere description of these pictures is horrendous enough, take my word for it." Fine—the debate over whether to release the photos is legitimate. I have a more immediate question. If the government is in possession of photographic evidence of an American soldier raping someone, has that soldier been prosecuted? The relevant section of the Uniform Code of Military Justice is here:

(a) Any person subject to this chapter who commits an act of sexual intercourse with a female not his wife, by force and without consent, is guilty of rape and shall be punished by death or such other punishment as a court-martial may direct.

It would take a pretty incompetent prosecution to fail to convict someone of a rape for which there is clear photographic evidence. But I can't find any public reference to such a court martial, let alone a conviction. Earlier this month, ex-soldier Steven Green was convicted for raping and killing an Iraqi girl and killing her family, but that pretty clearly didn't happen in prison, and there's no mention of photographic evidence of it. So either the photos don't show what Taguba says they show, or there's something else going on here. People not identifiable in the photos, maybe? I'm looking into this.

Regulatory Reform

| Thu May 28, 2009 12:27 AM EDT

The Washington Post reports on the Obama administration's plans for regulatory reform of the financial industry:

Senior administration officials are considering the creation of a single agency to regulate the banking industry, replacing a patchwork of agencies that failed to prevent banks from falling into the worst financial crisis since the Great Depression, sources said.

....Senior officials [also] favor vesting the Federal Reserve with new powers as a systemic risk regulator, with broad responsibility for detecting threats to the financial system. The powers would include oversight of previously unregulated markets, such as the derivatives trade, and of market participants such as hedge funds.

....The new [bank] regulator would assume responsibility for the safety and soundness of banks, currently divided among the Fed and three other agencies: the Office of the Comptroller of the Currency, the Office of Thrift Supervision and the Federal Deposit Insurance Corp. The OCC and the OTS would probably disappear, while the Fed and the FDIC would retain other responsibilities.

For what it's worth, I'd say that having a single bank regulator is long overdue.  The current structure not only doesn't make sense, but allows banks to shop around for the most lenient regulator they can find, prompting a race to the regulatory bottom.  It's also a problem for big banks, which end up under the regulatory authority of multiple agencies.

The "systemic risk regulator" I'm less enthused about.  It's not necessarily a bad thing, but it's not clear to me that it would have done much to prevent the asset bubble of the past decade.  After all, the problem there wasn't the lack of a central regulator, but the simple fact that no one felt like there was a lot of risk in the system in the first place.  Regulating derivative markets may be a good idea, but the real issue isn't giving the Fed additional powers, it's getting it to take systemic risk seriously in the first place.

In any case, I'll repeat something I said earlier: specific regulations are all well and good, but I'd sure like to hear first what general principles are guiding these decisions.  My picks are (1) stronger limits on leverage, wherever and however it occurs, (2) a stronger commitment to countercyclical policies, and (3) a little more sand in the gears.  These might be the wrong principles to choose, but if they are, I'd like to hear which ones are right before a tidal wave of regulations comes heading down the pike.

The Banking Crisis Revisited

| Wed May 27, 2009 7:17 PM EDT

In an interview with Peter Baker, Bill Clinton says that although he regrets not regulating derivatives more strictly, he doesn't think that repealing the Glass-Steagall Act and allowing commercial banks to merge with investment banks was a big cause of our financial meltdown:

On the Glass-Steagall, I’ve really thought about that because No. 1, nonbank banking was already a major part of American life at that time. Letting banks take investment positions I don’t think had much to do with this meltdown. And the more diversified institutions in general were better able to handle what happened....I believe if you look at the blurring of the lines which already existed before that bill was signed — the bill arguably gave us a framework, at least, for which this process, which was happening anyway, could be regulated. So I don’t think that’s such a good criticism.

I think actually, if you want to make a criticism on that, it would be an indirect one; you could say that the signing of that legislation sped up what was happening anyway and maybe led some of these institutions to be bigger than they otherwise would have been and the very bigness of some of these groups caused some of this problem because the bigger something is and the newer it is the harder it is to manage.

I think this is roughly right.  And frankly, even the "indirect" criticism that repeal of Glass-Steagall produced a glut of banks too big to fail seems a little hard to swallow.  After all, even if Citi and Bank of America had remained purely commercial banks they still would have been too big to fail.  Hell, Bear Stearns, a modest sized investment bank, was too big to fail.  In the event, I doubt very much that Glass-Steagall had much if anything to do with our banking disaster.

On the other hand, I've also been thinking a lot about the financial meltdown of the past two years and wondering how much of what we think we know is really true anyway.  Structured finance, for example, has gotten a lot of blame for the crisis, but Dean Baker argues persuasively that derivatives and financial engineering didn't really have much to do with it.  It was purely and simply the result of a housing bubble, and the size of the collapse and the ensuing recession are pretty much what years of academic research predicts given the size of the price runup.  You just don't need anything more to explain it.

In a similar vein, Jim Hamilton has suggested that if you model the 2007-08 runup in oil prices you get pretty much the recession that we got.  And James Surowiecki points out that the IMF's estimate of capital shortages in the American banking system isn't actually as large as a lot of us have been thinking — and the market seems to agree.  Bank stocks have been rising since early March, and after the stress test results were announced banks started raising startling amounts of private capital almost immediately.

What else?  John Hempton has argued that the FDIC's takeover of Washington Mutual, which was responsible for at least part of the flight of private capital from the banking sector, was an act of unwarranted panic.  Recent events suggest he was right.  Likewise, it turns out in retrospect that the collapse of Lehman Brothers wasn't quite the catastrophe we thought it was at the time.  Rather, it was panic in the wholesale funding markets caused by Reserve Prime breaking the buck — an event related to the Lehman collapse but by no means the same thing.

None of this is to downplay what happened.  Fannie and Freddie and Bear and Lehman and AIG really did all collapse.  The Fed really was forced to intervene in financial markets in unprecedented ways.  The banking system really did require a lot of recapitalization.  Exports really have dropped like a stone.  The global economy really is shrinking for the first time since the Depression and trade imbalances remain stubbornly high.

But here's the weird thing.  We're at a point where one of two things will happen.  Either we're close to bottoming out, as many people seem to think, which will mean that the pessimists weren't really right.  The biggest asset bubble in the past half century will have caused a bad recession but nothing worse.  Alternatively, the pessimists are right and this is just a short breather.  The worst is yet to come as home loans continue to reset, trade balances stay out of whack, consumption remains sluggish, and the world economy remains sensitive to further disasters — disasters that are almost certain to come sooner or later.

So what's my point?  I'm rambling and I might not even have one.  Except for this: I'm not sure that even the people who have been right about all this stuff have been right.  I'm not sure that anyone has been right.  Something doesn't add up, and I can't quite figure out what it is.  But who knows?  Maybe I'm just doing the equivalent of adding in decimal when I should be adding in octal.  Or something.  All I can say is, things haven't unfolded the way I've expected — or the way a lot of other people have expected — and I'm not sure what that means.  Either the worst has been averted or the worst is yet to come.  You can vote in comments.

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Love Your Snuggie? Consider the Scrunchie.

| Wed May 27, 2009 7:14 PM EDT

In a world where post-grunge bands sell Snuggies, people prance around the beach in Wearable Towels, and mop up battered faces with ShamWows, we have to ask: Where will all these products be when our fickle-consumer preferences take a turn? You don't have to be a Freegan to come up with the answer.

3.5 Floppy Disc

Then: 1998 was the heyday of the cheerfully colored floppy disk. More than 2 billion were sold worldwide.

Now: External drives and CDs have usurped the 3.5. In 2007, PC World stopped selling the disks, and now the only place you can find a 3.5 drive is on Mother Jones intern computers.

Neither Gone Nor Forgotten: Turn boxes of old disks into handbags, pen holders, coasters, or spacey, Cubist artwork.

Pagers

Then: Invented in 1949 for the New York City Jewish Hospital, beepers didn't achieve popularity until 1974 with the release of Motorola's Pageboy. Popularized by doctors, drug dealers, and pimps, 61 million pagers were beeping in the U.S. in 1994.

Now: The cellular telephone killed the pager. In 2008, four billion cell phones were in use worldwide, connecting more than 60% of the world population to American Idol ringtones and creating fodder for the Texts From Last Night.

Neither Gone Nor Forgotten: Beepers still buzz for emergency personnel and doctors . In Britian, pages are popular with "twitchers," who pay for up-to-the-minute tips on where to spot rare birds.

 

 

 

 

National Fist Bump Day, 2009

| Wed May 27, 2009 5:41 PM EDT

Nearly a year ago (June 3, 2008) in Minneapolis Denver, Illinois junior senator Barack Obama captured the Democratic nomination for president of the United States of America. Obama celebrated the event by bumping knuckles with his wife, a brief physical gesture whose public discussion would quickly become overwhelming. Well, it's time to celebrate that gesture again: next Wednesday, June 3, will be National Fist Bump Day. According to organizers of the event:

A group of like-minded people have gotten together to commemorate Obama's grand gesture, but also to take the fist bump to a higher level, one above partisan politics and social divides. For one day we are calling for Americans, and perhaps even all global citizens, to put aside their differences -- be they class, race, religion or values -- and show their respect with a little bump.

 

Great Acts of Student Activism

| Wed May 27, 2009 4:30 PM EDT

Recently, Harvard students protested the university's decision to stop offering anonymous HIV testing. According to the Harvard Crimson, the students staged their demonstration with  signs bearing slogans like "My right to privacy includes my right to anonymity."

But the signs were Plan B. Plan A would have been really cool:

Protestors had originally planned to request HIV tests en masse in order to demonstrate the demand for anonymous testing. But a majority of protesters were turned away by UHS because they did not have an appointment or an actual medical ailment, according to Craig B. Colbeck, a Graduate School of Arts and Sciences student.

It's a great idea—and we know today's students activists have plenty more where that one came from. MoJo, Campus Progress, and WireTap would like to hear about all feats of student activism (the more creative the better) from the past school year in time for the Hellraisers, our first annual student activism awards.

Here's how it works: You tell us about your favorite activism antics. Selected nominees will be featured in the September/October 2009 issue of Mother Jones.

Anyone can nominate any current student activists (and we're not just talking college here! High schoolers, grad students, kindergartners—all okay).

Nominating is quick and easy. Do it here.

When Jeff Sessions Voted for Sonia Sotomayor

| Wed May 27, 2009 4:12 PM EDT

On October 2, 1998, the full Senate voted on Sonia Sotomayor's nomination to the Second Circuit Court of Appeals and confirmed her nomination 67-29; all of the nay votes came from Republicans. That's not much of a surprise.

But just a few months earlier, in March 1998, the Senate Judiciary Committee voted 16-2 in favor of Sotomayor's nomination, with only Jon Kyl and John Ashcroft, both Republicans, voting against her. The Republican committee members who voted for Sotomayor included Strom Thurmond, Orrin Hatch and Jeff Sessions, but each of whom flipped his vote when Sotomayor's nomination went to the full Senate. (And when President George H.W. Bush nominated her for an open distict court spot in 1992, the Judiciary Committee—then chaired by Joe Biden—and the full Senate unanimously approved her nomination.)

So what happened between March and October 1998?

Republican senators have been blocking Judge Sotomayor's elevation to the appeals court for a highly unusual reason: to make her less likely to be picked by Mr. Clinton for the Supreme Court, senior Republican Congressional aides said in interviews.

[...]

Senate Republican staff aides said Trent Lott of Mississippi, the majority leader, has agreed to hold up a vote on the nomination as part of an elaborate political calculus; if she were easily confirmed to the appeals court, they said, that would put her in a position to be named to the Supreme Court. And Senate Republicans think that they would then have a difficult time opposing a Hispanic woman who had just been confirmed by the full Senate.

In other words, politics happened.