Blogs

Summers at Brookings

| Fri Mar. 13, 2009 12:56 PM EDT
Tim Fernholz highlights a passage from Larry Summers' speech at Brookings today:

The stress tests now underway will enable a realistic assessment of the position of each different institution and appropriate responses in each case to assure their ability to meet their commitments and lend on a substantial scale. And as the President said in his joint address to Congress, “When we learn that a major bank has serious problems, we will hold accountable those responsible, force the necessary adjustments, provide the support to clean up their balance sheets, and assure the continuity of a strong, viable institution that can serve our people and our economy.”

As Tim says, "That answer, I think, will disappoint almost everyone with it's lack of detail, but at least doesn't rule out the various receivership plans people are discussing. Interesting, there was no mention of the public-private partnership that would supposedly be creating a market for the various toxic assets."

But while it might be wishful thinking on my part, this strikes me as a slightly stronger statement than Tim makes it out to be.  It's possible, of course, that the stress tests are intended to be fig leaves: they'll deliberately be done using scenarios that make the banks look relatively healthy and in no need of dramatic action.  But the other possibility is that they're intended in just the opposite way: as a fig leaf for the president that practically forces him to take dramatic action.  Note, for example, that Summers didn't simply make an anodyne statement about safety and security, he specifically said that the administration's response would be designed to insure that big banks "meet their commitments and lend on a substantial scale."  That's a stiffer metric than simply being able to meet their payroll.

Like I said, I might be reading too much into this.  But we know two things about pronouncements like this: (a) they're usually very, very circumspect in order not to panic the markets, and (b) they're very carefully vetted.  Summers chose his words deliberately here, and it's possible that they really mean something.

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GAO: Pentagon Health Records Don't Compute

| Fri Mar. 13, 2009 12:46 PM EDT

Even though the Veterans Administration and the Pentagon have been working to integrate their electronic medical records systems for over a decade, they still can't fully communicate with each other, according to a report (PDF) by the Government Accountability Office. While the departments have made some progress, the GAO says they "continue to face challenges in managing the activities required to achieve this inherently complex goal." Of the information the departments are able to share, much of it is not readable by computers. Instead, much of the sharing involves what are essentially electronic versions of paper documents, rather than fully sortable and analyzable information databases. Without fully computable data, the DoD and VA are "missing 95 percent of the potential benefits of an integrated system," says Phillip Longman, a senior fellow at the New America Foundation and the author of Best Care Anywhere: Why VA Health Care is Better Than Yours.

Cramer Folds

| Fri Mar. 13, 2009 12:25 PM EDT
Like everyone in the galaxy, I watched Jon Stewart eviscerate Jim Cramer last night. But it was kind of weird. The conventional wisdom is that Stewart ripped Cramer to shreds — and he did — but he only succeeded because Cramer apparently made a preemptive decision not to fight back. He just sat there and took it. Felix Salmon has the right take:

Jim Cramer was craven and highly apologetic on the Daily Show last night [...] and almost never attempted to defend himself, preferring to go the mea culpa route.

....In a sense, it's a shame that Stewart had on his show the most self-loathing of all the CNBC personalities — but then again he, too, had little choice, since Santelli cancelled on him. But the lesson of this interview is that when CNBC is pressed on the way in which it has hurt America, its response is to capitulate and say "well I guess that's true". Which means that the bigger lesson is simpler still: don't watch CNBC. Doing so will do you no good at all, and will quite possibly do you a lot of harm.

There's a real sense in which CNBC is truly a microcosm of the entire financial meltdown.  Sure, they were irresponsible, and they deserve the hits they're taking.  At the same time, they only succeeded because the more irresponsible they got, the more their audience grew.  Their audience deserves a share of the blame in the same way that the voracious buyers of preposterously leveraged and tranched CDOs share some of the blame with the financial engineers who put them together.  None of this works without a willing buy side, does it?

Cramer v. Stewart: What It Means for the MSM

| Fri Mar. 13, 2009 12:11 PM EDT

The world--that is, the world of media, blogs, and the Internet--was buzzing on Friday morning about Jon Stewart's take-down of Jim "Mad Money" Cramer the evening before. The smack-down speaks for itself. But toward the end, Stewart made a point that applies to all media, not just the wildcats of cable finance shows.

Cramer was acknowledging that CNBC had aired oodles of interviews during which corporate execs had not told the truth. He insisted that he had been tough on Bush administration Treasury Secretary Hank Paulson and Fed chairman Ben Bernanke. Referring to Paulson, he said,

I've called him a liar...Should we all call them liars? I'm a commentator....It's difficult to have a reporter say I just came from an interview with Hank Paulson and he lied his darn fool head off. It's difficult. I think it challenges the boundaries.

But Stewart was all for pushing such conventional media boundaries:

I am under the assumption--and maybe this is purely ridiculous--but I'm under the assumption that that we don't just take their word at face value, that you actually then go around and try to figure it out.

Meaning figure out if they are telling the truth or not--and, if they are not, you do call them liars.

What's my interest in this slice of the titanic Cramer v. Stewart battle? Well, I once wrote a book immoderately titled, The Lies of George W. Bush. More recently, I wrote a piece noting that the MSM was far too hesitant after 9/11 to call Bush out on his falsehoods--particular on the misrepresentations (or, lies) that greased the way to the Iraq war. That article noted that some MSMers still recoil from the task of branding a politician or government official a truth-teller or liar. Though Stewart concluded this exchange by quipping that he would prefer to be making fart-noise jokes than to be policing financial news networks, it was heartening to see him advance this simple point: if the media doesn't assail leaders (financial or political) who lie, then those leaders can get away with almost anything.

Glenn Beck

| Fri Mar. 13, 2009 11:28 AM EDT
It's more and more obvious that Glenn Beck has decided that becoming a male Ann Coulter is good for his ratings.  So his show is now dedicated to saying increasingly outrageous things solely in an attempt to get liberals to denounce him and drive his ratings yet higher.  Conclusion: it's time to start ignoring him, right?

Conservative Think Tank Thinking Less

| Fri Mar. 13, 2009 10:54 AM EDT
Oh how sad. The venerable conservative think tank, the American Enterprise Institute--so flush during the go-go years of the Bush administration--is having a budget crisis, reports the Washington Independent. The group that launched so many of the worst neoconservative ideas of the Bush era (remember those guys who wanted to privatize Social Security and bring democracy to Iraq?) has watched helplessly as its long-time corporate benefactors have hit the skids and no longer have the luxury of funding loony political "scholars." Perhaps we should consider this one of the few upsides of the nation's grim economic crisis: a few conservatives are actually going to have to work for a living, or discover the pitfalls of retiring during a bear market!

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10 Winners of the Global Economic Meltdown

| Fri Mar. 13, 2009 10:43 AM EDT

"Everyone is suffering," President Obama said in his speech to a joint session of Congress in late February. He was referring to the global financial and economic crisis, but he didn't have it exactly right. There are some people who are doing well: dollar-store owners, bankruptcy lawyers, gun manufacturers (sales are up!), short-sellers of stock, foreclosure experts, and so on. But some who are doing well are doing really well. You've heard of some of them: John Paulson, the hedge fund guru; Andrew Lahde, the hemp enthusiast; Meredith Whitney, the super-prescient analyst. But what about the guy from New Zealand who got a 236 percent return last year? He's on the list, too. Here's a rundown of 10 of the financial crisis' biggest winners.

Obama's Choice

| Fri Mar. 13, 2009 1:47 AM EDT
The New York Times reports that President Obama has a decision to make:

In separate, strongly worded orders, two judges of the federal appeals court in California said that employees of their court were entitled to health benefits for their same-sex partners under the program that insures millions of federal workers. But the federal Office of Personnel Management has instructed insurers not to provide the benefits ordered by the judges, citing a 1996 law, the Defense of Marriage Act.

....Now, Mr. Obama is in a tough spot. If he supports the personnel office on denying benefits to the San Francisco court employees, he risks agitating liberal groups that helped him win election. If he supports the judges and challenges the marriage act, he risks alienating Republicans with whom he is seeking to work on economic, health care and numerous other matters.

Look: this isn't so tough.  Just do the right thing.  How hard is that?

Corn on "Hardball": Still Debunking the Saddam-9/11 Connection

| Thu Mar. 12, 2009 11:57 PM EDT

On Wednesday night, Chris Matthews interviewed--make that, skewered--Ari Fleischer on Hardball, grilling him on George W. Bush's legacy: a lousy war in Iraq sold to the public with false information and a lousy economy. At the end of the long segment, Fleischer said

But after September 11, having been hit once, how could we take a chance that Saddam might not strike again?

Strike again? Was Fleischer pushing the canard that Saddam Hussein had been involved in the 9/11 attacks? Matthews was busy closing out the segment and didn't focus on this remark. But after watching the interview later, he decided this comment deserved attention.

Enter former Reagan Pentagon official Frank Gaffney and me. We were invited on Thursday's show to discuss Fleischer's comment and the claim--to which some neocons still cling--that Saddam was in cahoots with the 9/11 mass-murderers. The 9/11 commission said there was no link between Saddam and 9/11, but, yes, Gaffney still contends that Saddam was behind al Qaeda's attack. His evidence? Gaffney cited circumstantial reports, a book by discredited neocon Douglas Feith, and, essentially, his own hunch. Here's what happened:

Testing Our Kids

| Thu Mar. 12, 2009 5:38 PM EDT
In his big education speech on Tuesday, President Obama said this:

Today’s system of fifty different sets of benchmarks for academic success means fourth-grade readers in Mississippi are scoring nearly 70 points lower than students in Wyoming—and getting the same grade.

Bob Somerby wants to know what he's talking about:

According to Obama, fourth-grade readers in Mississippi “are scoring nearly 70 points lower than students in Wyoming—and getting the same grade.” Does anyone know what that actually means? Mississippi kids are scoring “seventy points lower” on what? (Seventy points can represent a very large or very small difference in achievement, depending on the measure in question.) And what “same grade” are both groups of kids getting? This was a very important speech—and this was a central contention within it. And yet, this statement makes no sense at all. (The spectacularly unhelpful White House “fact sheet” makes no attempt to explain it.)

I'll take a guess.  Obama was talking about state testing regimes, and a couple of years ago the Department of Education released a study (here) that tried to convert passing scores on the various state tests to more standardized NAEP scores.  In fourth grade reading, they found that the passing score in Wyoming was equivalent to an NAEP score of 228, while in Mississippi it was equivalent to an NAEP score of 161.  That's a difference of 67 points.

This was a poorly worded passage in Obama's speech, but my guess is that "getting the same grade" was supposed to mean something like "meeting the minimum state requirement."  As Bob says, there are some pretty obvious explanations for all this, but still, the difference between the highest and lowest state standards really is an astonishing 70 points or so (very roughly equivalent to seven grade levels).  That's probably what Obama was getting at.