2009 - %3, December

Glass-Steagall Resurrected?

| Thu Dec. 17, 2009 1:29 PM EST

Is the Glass-Steagall Act, the Depression-era law that blocked commercial banks from participating in riskier investment banking, set for a revival? That's what a new piece of legislation, introduced yesterday by Senators Maria Cantwell (D-Wash.) and John McCain (R-Ariz.), would do, forcing major changes to financial titans like JPMorgan Chase, Citigroup, and Bank of America. 

But first, here's McCain on the new legislation on CNBC:

Reestablishing the firewall between commercial and investment banking poses a dilemma for banks such as JPMorgan Chase, which snapped up Bear Stearns' trading operations earlier this year, and massive Citigroup, which includes more staid consumer banking branches as well as riskier trading operations. The already controversial, shotgun-wedded Bank of America and Merrill Lynch relationship wouldn't survive if Glass-Steagall was revived, either. And you can throw Goldman Sachs and Wells Fargo into that mix, too. The McCain-Cantwell legislation would give such institutions a year to break up their different banking arms.

The Depression-era law, you'll remember, was abolished in 1999 by the Gramm-Leach-Bliley Act, one of the most significant pieces of deregulatory legislation in the past few decades, paving the way for the emergence of financial behemoths like Wells Fargo, JPMorgan Chase, and Citigroup (though Citi received somewhat of an exemption to grow even before 1999). It's a long shot at this point, but bringing Glass-Steagall back would be a watershed moment for financial regulation and major step toward scaling back the excesses and ridiculous risk-taking of the past decade or so. At the very least it would protect consumers' savings from use in banks' riskier operations.

And talk about a role reversal for John McCain! McCain voted for Gramm-Leach-Bliley back in 1999—a vote to tear down a law he now wants to restore. And as David Corn wrote last year, one of McCain's closest economic advisers during part of the presidential campaign was the godfather of deregulation himself, former Sen. Phil "Nation of Whiners" Gramm

Rep. Maurice Hinchey (D-N.Y.) is going to introduce similar legislation in the House, the Wall Street Journal reported Wednesday. Hinchey tried to get his bill into the House's big financial-reform package earlier this month, but Democratic leadership blocked him.

Since the Senate probably won't take up financial regulation until early 2010, it's unclear how soon the McCain-Cantwell legislation will get its day in the sun. It could be tucked into the Senate's financial regulation plans, or introduced as an amendment later in the sausage-making process. Either way, it's a promising idea and an encouraging start to the Senate's financial overhaul.

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Divide and Conquer?

| Thu Dec. 17, 2009 1:17 PM EST

Kate Sheppard reports from Copenhagen that the solidarity of the G77 bloc of developing nations is starting to crumble:

Late on Tuesday, the governments of Ethiopia and France announced that Ethiopia, "representing Africa," had agreed to adopt an "ambitious agreement" that would call for limiting the average global temperature rise to 2 degrees Celsius. Previously, the African bloc, along with the G77 coalition of poor countries and the Alliance of Small Island States, had firmly insisted that a 1.5 degree limit was imperative to prevent dire consequences in their regions.

....The major powers welcomed Ethiopia's defection from the 1.5-degree target. British Prime Minister Gordon Brown has endorsed the side deal with France, and on Tuesday, White House officials confirmed to reporters that Obama had placed a call to Zenawi earlier in the day. The US president, they said, had "expressed his appreciation for the leadership role the Prime Minister was playing in work with African countries on climate change."....But developing nations — which appear to have been caught somewhat off guard by the announcement — aren’t applauding. They fear that major powers are trying to pick off key players from the developing bloc via secret pacts. The fact that the agreement was made and announced in Paris — not at the official United Nations negotiations in Copenhagen — has fueled such suspicions.

Hmmm.  "Trying to pick off key players" mostly seems like standard issue negotiating to me, not some nefarious plan to sow discord.  But read the whole thing and decide for yourself.  It's dealmaking time in Copenhagen with only two days of the conference left.

The Strange Spread of Climate Change Denial

| Thu Dec. 17, 2009 1:10 PM EST

George Monbiot, the Guardian columnist and global warming author who combines pugilistic defenses of climate science with Monty Pythonesque levity, is struck by a paradox at the heart of the attempt to achieve action here in Copenhagen. For, as he put it to a full room last night at a panel hosted by the Danish science magazine FORSKERForum, "In the past year, there has been a massive upsurge in climate change denial in the United States, even as the science gets stronger."

Opinion polls certainly support Monbiot’s contention. According to results released in October by the Pew Research Center, considerably fewer Americans now believe the Earth is warming (the decline has been from 71 percent to 57 percent over the space of a year and a half). And as for agreement with scientists about the cause of global warming—human activities, human emissions—that too has sloped downwards, to just 36 percent today.

How is this possible?

Dreamland

| Thu Dec. 17, 2009 1:02 PM EST

A few weeks ago I began taking a blood pressure med, and yesterday my doctor asked if I'd noticed any side effects.  I told her I had a bit of dry mouth at night and that my dreams were a little more vivid than usual.  However, since I normally don't remember my dreams at all, "a little more vivid" didn't really mean much.

But last night was a deluge.  Four dreams that I remember!  Holy cow.  Here they are: (1) I reached an agreement with a contractor to add an innovative new kind of room addition to my house that was half above ground and half underground.  There were allegedly environmental benefits of some kind to this.  (2) I recorded a radio program explaining the differences between a 401(k) and a defined benefit pension.  I kept getting interrupted, and at one point I got distracted and made up a cockamamie explanation for what "401" stood for.  Then I remembered it referred to a section of the tax code and tried to pass off my previous explanation as a joke. (3) I was in the oceanside apartment of a pair of blogger friends.  They were pointing out the window to a dock, showing me where the press boat was going tie up so that I knew the sightlines for taking pictures. (4) I was part of a group that had just caught some terrible virus and was being herded into a van for transportation to an army quarantine center.  Sirens were blaring and lights were flashing when I suddenly woke up.

WTF?  I normally remember maybe one dream a month, and even then only momentarily.  And now four in one night?  Because I'm taking a diuretic to lower my blood pressure?  And one of them is about 401(k)s?  Come on.

Adventures in Stenography

| Thu Dec. 17, 2009 12:46 PM EST

Some articles make you less informed after you read them. Exhibit A is today's New York Times story on the federal debt limit, which was raised last night. Here's one paragraph that illustrates the problem:

Lawmakers quickly returned to partisan sniping before voting 218 to 214 to raise the federal debt limit, with each party blaming the other for running up the national debt over the last decade.

The article then continues on for another thirteen paragraphs without even attempting to inform the reader about anything other than the two parties' talking points. At no point does the Times let readers know that which party is mostly to blame for running up the national debt is an empirically verifiable fact. It's not a matter of partisan opinion. The Times could have even gone to its own reporting on this subject. In June, the Times ran an article by David Leonhardt explaining that most of the deficit is due to the recession and the Bush tax cuts—not overspending by Democrats in Congress, President Obama's budget, or even the bank bailouts. If the author wanted some partisan balance, he could have mentioned Leonhardt's conclusion that Obama doesn't have much of a plan for closing the gap.

The article could also have referred to this study by the Center on Budget and Policy Priorities, which was conveniently released just yesterday. It's called "President Obama Largely Inherited Today’s Huge Deficits: Economic Downturn, Financial Rescues, and Bush-Era Policies Drive the Numbers." It even comes with a pretty chart, which you can see to the right.

Times readers who relied on this failbag of an article are now less informed than they were before they read it. For all those readers know, President Al Gore and Speaker of the House Dick Gephardt were the ones running up the deficit after Clinton left office.

Why even bother writing the article if you're not going to try to adjudicate a factual dispute? Next time, the Times should simply republish the Democrats' and Republicans' press releases and be done with it. FAIL.

Kennedy and Healthcare Reform

| Thu Dec. 17, 2009 11:59 AM EST

Matt Yglesias misses Ted Kennedy's presence in the healthcare reform debate:

I’m confident that were he still alive, he’d be saying what Sherrod Brown and Jay Rockefeller are saying — namely that when a deal like this is on the table, you say yes, pretend to like Joe Lieberman, get the thing done, do some good for the American people, and move on to other priorities. But he’s not alive. And I can’t prove that’s what he’d say. So we’re left instead with other folks like Brown and Rockefeller or just don’t have the same high profile or credibility needed to help sell people on this arrangement.

One of Kennedy's great regrets in life was not figuring out a way to cut a deal with Richard Nixon over his proposal to provide universal healthcare in 1971.  He changed his mind in 1973 and came close to reaching agreement with Nixon, but by then AMA opposition combined with the distraction of Watergate took it off the table, not to return for another two decades.  Steven Pearlstein provides a capsule summary here.

So you really hardly have to guess here.  Kennedy had vivid personal memories of rejecting a healthcare deal because it wasn't good enough, and then watching the moment pass and having reform die utterly. If he were alive today, there's no question that he'd be fighting to pass the current bill, warts and all.

UPDATE: Greg Sargent provides a different take from Kennedy historian Adam Clymer:

Rather, Clymer says, Kennedy’s regret was that the differences between both parties were unbridgeable, making agreement impossible and losing a historic opportunity — not that his side had failed to give up enough to get that agreement.

“Kennedy was sorry that they didn’t reach an agreement” and that both sides “never reached closure,” Clymer told our reporter, Amanda Erickson. He dismissed the idea that Kennedy regretted not giving up enough: “That’s not the same thing at all.”

Duly noted, though this is actually a fairly nuanced difference of interpretation.  In any case, the differences Kennedy had with Nixon were far greater than the gaps we're trying to bridge today.  I don't think there's any doubt he would have supported the current deal.

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James Inhofe's One-Man Truth Squad

| Thu Dec. 17, 2009 9:41 AM EST

James Inhofe swooped into Copenhagen on Thursday for very important meetings ... with the media.

The Oklahoma Republcan and strident climate change denier made himself available to the thousands of reporters gathered at the Bella Center in an attempt to "make sure that nobody is laboring under the misconception that the US Senate is going to do something" about climate change, he said. "There's not a chance in the world" that the Senate is going to pass a bill, the upper chamber's self-appointed spokesperson added. "I believe that we in the United States owe it to the other countries to be well informed, to know what the intentions of the United States are," he said. "I just want you guys to have a shot at the truth, because you're not getting it from other people."

The former chairman of the Environment and Public Works Committeee (he said he "probably will be again after the next mid-term election") had previously planned to bring an entire "Truth Squad" of GOP lawmakers to the climate summit. But in the end all he brought was himself and a gaggle of press handlers who told each reporter in the room that the senator was in town and later delivered a printed copy of his talking points. Inhofe thoughtfully gave his remarks in the press filing center, so that plenty of reporters would be able to cover his talk.

Unfortunately, delegates at Copenhagen will not get a chance to hear him. Inhofe only spent two hours on the scene—and at least a quarter of that time in the press room. He has to get back for votes in the Senate he said, as well as a debate on climate on CNN's "Situation Room" with Rep. Ed Markey (D-Mass.), co-author of the House cap-and-trade bill.

With more than 45,000 people gathered in Copenhage for a summit on how to address a problem he doesn't think is real, one wonders exactly who he thinks is responsible for this grand hoax. "It started in the United Nations," he said, but "the ones who really grab a hold of this in the United States are the Hollywood elite." If that's true, I've missed all the celebs—other than California Republican Governor Arnold Schwarzenegger, who made an appearance here earlier this week. Mostly the conference is filled with diplomats, policy wonks, earnest activists, and tired reporters.

Surrounded by a giant scrum of international reporters, the senator mostly used the forum to repeat his assertions that climate change is a huge hoax, and that the recent "ClimateGate" flap is proof that he has been right all along about this. (No one outside the ranks of climate change denialists seems to have reached that conclusion). Inhofe made multiple references to a speech he gave on the Senate floor in 2003, urging reporters to revisit it.

Questioned about his schedule for his two-hour visit, Inhofe mentioned that he had "already had a couple meetings with some people here." But when asked who those meetings were with, he replied, "It's not significant."

The Ripple Effects of Unemployment in America

| Thu Dec. 17, 2009 7:37 AM EST

Almost half of unemployed workers in the United States experience mental-health problems. Some 40 percent of those with children say their kids show “behavioral changes.” One-quarter have lost their homes or are close to it. One-quarter receive food stamps. What Tuesday’s New York Times poll didn’t mention are the social implications. Here's what your neighborhood can expect if the job situation isn't addressed:

More homeless — 19 out of 25 cities saw an average 12 percent rise in homelessness from November 2008 through this past October. "We're seeing a new trend and I would expect the number to rise substantially," Nan Roman, president of the Washington-based National Alliance to End Homelessness, told Reuters.

More homeless mentally ill — 20 to 25 percent of the 700,000-plus homeless people living on the street are thought to have a serious mental illness. Expect homelessness to exacerbate mental health issues—like severe depression—linked to job losses.

More people on Medicaid — States estimate that Medicaid enrollment will rise 6.6 percent over current level as a result of the recession. Enrollment grew by a state average of 5.4 percent in 2009, the highest rate in six years.

More children on Medicaid receiving antipsychotics for displaying “behavioral changes” — See Drugging the Poor.

More people frequenting predatory payday lenders — See San Francisco's New Spin on Payday Loans.

This vicious poverty cycle may seem too daunting to tackle—where to begin?—but in these writings, Kevin Drum and James Ridgeway offer long-term solutions for some of the problems this new slew of poor and their communities potentially face. Spoiler alert: The remedy involves progressive taxes for social services.
 

We're Still at War: Photo of the Day for December 17, 2009

Thu Dec. 17, 2009 7:33 AM EST

Some 184 evergreen wreaths were placed at the Pentagon Memorial, one for each victim killed there in the Sept. 11, 2001, terrorist attack. (army.mil.)

Need To Read: December 17, 2009

Thu Dec. 17, 2009 7:30 AM EST

Today's must reads:

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