2012 - %3, December

Obama to Help Screwed Homeowners (Finally)

| Tue Dec. 4, 2012 2:23 PM EST

Remember when Wall Street got $700 billion after destroying the economy, and the tens of millions of people who took out crappy home loans didn't? Well, homeowner problems didn't go away. And though the Obama administration has a pretty abysmal record of assisting homeowners so far, the president could soon make his biggest move yet to help them—by replacing the housing agency head who has blocked attempts to write off some Americans' mortgage debt.

Prominent economists say cutting home loan balances is the single most important thing the administration could do to revive housing, but Obama and Co. only recently began to heed this advice. Treasury Secretary Timothy Geithner regularly blocked efforts to use TARP bank bailout funds for a mortgage relief program that could have had a real impact on the economy. In 2009, Geithner invoked "moral hazard," claiming that reducing Americans' mortgage debts would incentivize delinquency.

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IMF Suggests Lowering Global Financial Speed Limit

| Tue Dec. 4, 2012 1:34 PM EST

The IMF has now officially come around to the belief that capital controls—limits on the global flow of money—are sometimes appropriate, especially for small, volatile, emerging economies. But not only for small, volatile, emerging economies:

19. Indeed, as the recent global financial crisis has shown, large and volatile capital flows can pose risks even for countries that have long been open and drawn benefits from capital flows and that have highly developed financial markets. For example, in several advanced economies, financial supervision and regulation failed to prevent unsustainable asset bubbles and booms in domestic demand from developing that were partly fueled by cheap external financing. Rather than favoring closed capital accounts, these experiences highlight the need for policymakers to remain vigilant to the risks. In particular, there is a constant need for sound prudential frameworks to manage the risks that capital inflows can give rise to, which may be exacerbated by financial innovation.

I'm glad to see this. I'm not an economist, which means that my views are crude and unlettered. But one of the things I've taken away from the past decade is a general belief that an increasingly frictionless global financial system is a bad thing, even for supposedly advanced, sophisticated countries like us. Roughly speaking, that means I think there ought to be a little bit of sand in the gears to slow things down. Modest capital controls can play a role in this, as can small financial transaction taxes, higher capital requirements for banks, and stronger tax treatment of debt. By analogy, we want highways that can whisk you along to your destination at high speeds, but we also understand that when speeds get too high the risk of danger rises exponentially. Right now, the speed limit on our financial highways is about the equivalent of a hundred miles per hour. Getting it down to 70 or 80 would probably be a good idea.

We're Still at War: Photo of the Day for December 4, 2012

Tue Dec. 4, 2012 1:26 PM EST

Marines with Engineer Company, Combat Logistics Battalion 2, Combat Logistics Regiment 15, overlook a work site on Patrol Base Eredvi, Helmand province, Afghanistan, Oct. 23, 2012. U.S. Marine Corps photo by Lance Cpl Alexander Quiles.

VIDEO: Bradley Manning's Lawyer Makes First Public Appearance

| Tue Dec. 4, 2012 1:10 PM EST

David Coombs, the lawyer representing Bradley Manning, the jailed soldier accused of leaking sensitive national security documents to WikiLeaks, spoke publicly about the case for the first time last night. 

The event was held in Washington by Manning-supporters to raise money for the defendant. Other speakers included Jesselyn Radack of the Government Accountability Project, Michael Ratner of the Center for Constitutional Rights, and Marsha Coleman-Adebayo of the National Whistleblower Center.

Coombs spoke about how he doesn't want his client to be tried in the press, Manning's treatment in prison, and why he thinks the court martial system is "by far the fairest." You can see the whole event streamed by C-Span here, or a few excerpts from Coombs in the video below. 

A Supposedly Fun Thing That's Still Really Dirty

| Tue Dec. 4, 2012 1:03 PM EST

Considering hopping aboard a cruise for the holidays? A new report from Friends of the Earth (FOE) might make you rethink your plans.

FOE just released a report card that evaluates 15 major cruise lines on their environmental footprint—and despite being graded on a curve, the class did not do well. Since the release of FOE's last report card in 2010, more than half have not significantly improved, and 11 were given a grade of a "C" or worse, including three who failed.

"I think the cruise industry for many, many years has really flown under the radar when it comes to environmental regulations," said Marcie Keever, oceans and vessels project director at FOE. "They travel to some of the most pristine places on the planet, and they should improve their practices to ensure those places remain pristine."

Report: Elizabeth Warren Gets a Banking Committee Seat

| Tue Dec. 4, 2012 1:00 PM EST
Sen.-elect Elizabeth Warren.

Sen.-elect Elizabeth Warren (D-Mass.)—the visionary behind the Consumer Financial Protection Bureau, the former bailout watchdog, and no friend of Wall Street—has reportedly snagged a seat on the powerful Senate banking committee, which writes the regulations for the banking industry.

The Huffington Post, citing four sources "familiar with the situation," says Warren has locked up a seat on the committee. Politico confirmed the news soon after. Warren's spot on the committee must still be approved by the Senate Democratic caucus, which is expected to happen. The news comes after Mother Jones reported last month that big banks and their lobbyists in Washington were pushing to keep Warren off the committee.

Senate Democrats had two open seats to fill on the banking committee, with the upcoming retirements of Sens. Daniel Akaka (D-Hawaii) and Herb Kohl (D-Wisc.). Warren will get one of those seats. The other, the Huffington Post reports, will go Sen. Joe Manchin (D-W.Va.).

Warren's appointment tees up a potentially vicious battle between her and the big banks. (She has a better relationship with smaller, non-New York banks, as I've reported in the past.) Multiple Senate aides said last month that Wall Street had been lobbying hard to deny Warren a seat on the committee; one aide told me, "Downtown"—shorthand for Washington's lobbying corridor—"has been going nuts" to keep Warren off.

Going nuts clearly wasn't enough.

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Florida Tea Party Still Fighting Obamacare

| Tue Dec. 4, 2012 12:20 PM EST

Ever since Congress passed the Affordable Care Act in 2010, the state of Florida has done everything it can to fight the law. It filed suit to block the law's implementation, leading to the dramatic Supreme Court decision this summer in which the court upheld most of the law but allowed the states to decide whether to accept the expansion of Medicaid contained in the bill. The state legislature in 2011 passed a constitutional amendment trying to block the individual mandate, which was rejected by voters last month in a ballot initiative.

State leaders, among them Republican governor Rick Scott, seemed so sure that they’d prevail in their legal cases that they never took any steps to begin preparing for the law's implementation, namely the creation of an online "exchange," that will serve as a regulated marketplace for individual insurance policies that can be bought by people eligible for federal subsidies. The state has to tell the US Department of Health and Human Services by December 14 whether it will set up its own exchange or punt and let the feds do it for them. The decision is proving contentious.

On Monday, the state Senate held the first public hearing on the ACA implementation, which drew a rowdy crowd of tea partiers intent on getting the state to simply defy federal authority and refuse to implement the law. CBS Tampa Bay reports:

A rowdy conservative crowd commandeered a nearly hour-long public comment section, stressing that the constitution does not grant the federal government the authority to make health care decisions, despite a U.S. Supreme Court ruling that upheld most of the health care law. All but one spoke against "Obamacare".

"We will not comply with this unlawful mandate," Pastor James Hall of the Baptist Coalition of North Florida said to rousing applause.

Constitutional attorney Krisanne Hall said she travels the country talking to citizens and religious groups who echo that sentiment. She asked the Senate committee to consider how it will deal with citizens "when they lawfully and constitutionally stand and say we will not comply."

Democratic Senate Minority leader Chris Smith was booed when he reminded the crowd that the federal government stepped in to uphold justice in civil rights cases.

Consumer advocates are worried about the state's ability to get the job done and to create an effective exchange. Last week, they appealed to Health and Human Services Secretary Kathleen Sebelius to conduct a "reality-based assessment" of any state exchange proposal, and asked federal officials to force Florida to default to a federal exchange if there was even the slightest indication that the state's plans looked subpar. They note that the state has not created any mechanism for input from consumers in the development of the exchange, and that its history with a Medicaid privatization plan does not give much confidence that the state will be looking out for citizens' best interests.

"Our hope is that eventually Florida will be in the position to develop its own high quality health insurance exchange with consumer input—but we are in no way ready for that now," said Laura Goodhue, of FL CHAIN, a nonprofit advocacy group that focuses on access to health care. "Florida just waited too long to make this happen by the deadline. Now we ask the state to fully cooperate with the feds to make sure Floridians have access to affordable coverage as the law intended."

Chart of the Day: Public Blames GOP for Fiscal Cliff by 2:1 Margin

| Tue Dec. 4, 2012 11:58 AM EST

A new Pew-Washington Post poll puts the GOP's fiscal cliff problem in stark terms:

The Post site has a tool that lets you look at various demographic subgroups, and it turns out that everyone would blame Republicans. I figured maybe old people would blame Obama instead. Nope. Southerners? Nope. White people? Nope? High-income people? Nope. Literally the only group that didn't blame Republicans was....Republicans.

Politically speaking, President Obama's main job is to keep things this way. Republicans pay a price for their anti-tax jihad only if the public blames them for the ensuing catastrophe. But if Obama sticks to reasonable asks—modest tax increases, modest spending cuts, and a debt ceiling increase—and pounds away at Republican intransigence, these numbers aren't likely to shift much.

More Trolling on White House Petitions Site: Death Star Edition

| Tue Dec. 4, 2012 11:21 AM EST

That didn't take long.

Last month, "John D" of Longmont, Colorado created a petition on the White House webpage "We the People" titled, "Secure resources and funding, and begin construction of a Death Star by 2016."

The nature of the petition is fairly self-explanatory. Someone reportedly living in a city in Colorado wants Barack Obama to build a real-life version of the Death Star from Star Wars—the gargantuan spacestation officially named the DS-1 Orbital Battle Station, the construction of which Darth Vader himself oversaw:

As of Tuesday morning, the petition has upwards of 1,300 signatures (if a "We the People" petition reaches 25,000 signatures within 30 days, it merits an official response from the White House). It reads:

Those who sign here petition the United States government to secure funding and resources, and begin construction on a Death Star by 2016. By focusing our defense resources into a space-superiority platform and weapon system such as a Death Star, the government can spur job creation in the fields of construction, engineering, space exploration, and more, and strengthen our national defense.

The unfortunately fictional Death Star, the Galactic Empire's moon-sized base capable of obliterating whole planets with a single beam of energy, would be a substantial stimulus project indeed: Students at Lehigh University estimated that the steel alone (assuming the Death Star's mass/volume ratio is roughly equal to that of an aircraft carrier) would cost $852 quadrillion—13,000 times the world economy's GDP. My colleague/Star Wars buff Kevin Drum puts steel costs closer to 1.3 million times world GDP.

So, yes, such a massive, unprecedented project would almost certainly "spur job creation," and the Obama administration's development of a planet-destroying spacestation would likely guarantee an invincible national-security apparatus (save for certain circumstances).

Climate Activist DeChristopher Barred From "Social Justice" Work

| Tue Dec. 4, 2012 7:08 AM EST
Climate activist Tim DeChristopher at a February 2011 protest in Salt Lake City

Blue Marble readers will recall the story of Tim DeChristopher, a Utah climate activist who posed as a bidder at a December 2008 Bureau of Land Management auction. DeChristopher was the highest bidder on thousands of acres of public land, much of which bordered national parks and monuments. The 27-year-old bid $1.79 million on more than 22,000 acres that he had no intention of actually buying. The government took a hard line on his act of protest, bringing him up on felony charges for mucking up the auction. DeChristopher ended up with a two-year prison sentence and a $10,000 fine.

After serving 15 months in federal prison, DeChristopher is now living in a halfway house. (He's eligible for parole in April.) He's also allowed to work and intended to take a job with the social justice program at the local First Unitarian Church. But the feds intervened, the Deseret News reports:

DeChristopher had been offered a job with the church's social justice ministry, which would include working with cases of race discrimination, sex discrimination or other injustices that fall contrary to Unitarian beliefs.
"The Bureau of Prisons official who interviewed Tim indicated he would not be allowed to work at the Unitarian church because it involved social justice and that was what part of what his crime was," [DeChristopher's attorney Patrick] Shea said.

Yes, that's right—DeChristopher is barred from doing anything that might be construed as acting against injustice, because that's the whole reason they put him in jail in the first place. The newspaper reports that he's taken a job as a clerk at bookstore instead.

See our review of a new documentary about DeChristopher and our 2009 interview with him.