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Yum Yum

| Thu Dec. 18, 2008 3:36 PM EST

YUM YUM....Entertaining news from the gnomes of Zurich:

Credit Suisse Group said Thursday it will use up to $5 billion of its own illiquid assets such as mortgage securities to pay senior staff year-end bonuses at its investment bank, a move meant to spread risk more evenly between the bank and its employees.

The Zurich-based bank plans to pool commercial mortgage-backed securities and leveraged loans it can't sell because demand has seized up, then dole out units in the entity to managing directors and directors as part of this year's pay, according to a memo made available by a spokesman.

There's certainly an appeal to this, isn't there? Eating their own dog food, so to speak. Or their own toxic waste, as the case may be. I wonder if this idea will spread to Wall Street?

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Bailout Update

| Thu Dec. 18, 2008 2:57 PM EST

BAILOUT UPDATE....The latest on the auto front:

The White House said on Thursday that an "orderly" bankruptcy was one option being considered to try to rescue General Motors and Chrysler, which are seeking billions of dollars to avoid a shutdown.

....Under one possibility that has been discussed, the government would give G.M. and Chrysler enough financing to operate for several months. Then a government-selected overseer would bring together company executives and other representatives to map out steps that would be taken once the two companies file for Chapter 11 protection.

This is the "prepackaged bankruptcy" option that's been mooted a few times before. It actually sounds like a decent compromise to me: it keeps the companies from imploding in the middle of a huge recession, but at the same time it gives a bankruptcy court considerable leeway to impose serious restructuring of the kind that a political process probably can't. The end result — if it's done right — is a pair of companies that will end up smaller but still viable in the long term, and an economy that takes only a moderate hit instead of a killing blow. Call me tentatively in favor of this approach.

Clinton Foundation Donor Info: Playing Hard To Get?

| Thu Dec. 18, 2008 2:47 PM EST

When Barack Obama and Hillary Clinton decided to work together--with her becoming secretary of state--part of the deal was that the William J. Clinton Foundation, which funds the former president's globetrotting do-gooding and his presidential library, would release all of its donors going back to 1997. For years, Bill Clinton had declined to reveal who was backing his foundation. But the point, as a foundation press release noted, was "to ensure that not even the appearance of a conflict of interest existed between the Clinton Foundation's operations and Senator Clinton's anticpated service as Secretary of State."

On Thursday, the foundation posted the names of those donors on its website--all 2922 pages of them. The list includes a host of foreign governments (Norway, Kuwait, Qatar, Taiwan), Stephen Speilberg's foundation, the Bill and Melinda Gates Foundation, Blackwater, General Motors, Freddie Mac, and Citigroup's foundation.

Beyond the specific contributions, what's notable is that this list is damn hard to navigate. To review the contributors, a visitor--say, a journalist--has to click through nearly 3000 pages. As of today, it was not searchable. And the names are provided without addresses or any identifying information. (Political campaigns have to provide the Federal Elections Commission addresses and employment information for their donors.) So who's this Nasser Al-Rashid, who gave between $1 million and $5 million. Cut to Google: he's a Saudi Arabian businessman, supposedly an influential adviser to the Saudi royal family, and owner of one of the largest yachts in the world. Saudis have been especially generous to the Clinton Foundation.

My Dysfunctional State

| Thu Dec. 18, 2008 2:36 PM EST

MY DYSFUNCTIONAL STATE....After reading last night's post about the bizarre lengths California Democrats have to go through just to pass a budget, Matt Yglesias says:

Not to tell the good people of California how to run their business, but from reading stuff like this it's clearer and clearer that the state desperately needs a new constitution. You never meet anyoen who thinks the institutions of governance in California are well-designed, or even who denies that the existing institutional configuration makes it impossible to solve any of the state's problems. But nobody quite seems to want to do anything about it. And yet surely it can't be impossible to change this stuff — state constitutions used to be re-written all the time.

Well, no, it's not impossible or anything. But here's the thing. Talk of calling a constitutional convention has been banging around California for at least the last few decades — maybe since 1851, for all I know — and it's gotten a lot louder recently. Here, however, is the rule for calling a convention:

The Legislature by rollcall vote entered in the journal, two-thirds of the membership of each house concurring, may submit at a general election the question whether to call a convention to revise the Constitution. If the majority vote yes on that question, within 6 months the Legislature shall provide for the convention. Delegates to a constitutional convention shall be voters elected from districts as nearly equal in population as may be practicable.

In plain English: you need a two-thirds vote of the legislature to put an initiative on the ballot and then you have to get it approved by the voters. The problem is that no matter how sweetly liberals might croon about what a convention could do, conservatives all know the truth: the whole point of the thing would be to get rid of our insane two-thirds requirements for passing budgets and raising taxes. Unfortunately, our whole problem is that Republicans control (slightly more than) one-third of the legislature. And if we can't get them to vote for a tax increase in the first place, what are the odds we could get them to vote for a constitutional convention called for the express purpose of making it easier to increase taxes? About zero.

OK, but how about a simple initiative? We could get rid of the two-thirds rule just by collecting signatures and getting a majority vote, right?

Right. And we tried that just a few years ago. Prop 56 was supported by all the usual good government groups and would have reduced the majority needed to pass budget and tax measure from two-thirds to 55%. A bunch of other fluff was added to make it more popular ("rainy day" funds, no pay for legislators if they don't pass a budget, etc.), and in the end.....

....it got whomped 66%-34%. No one was fooled for a second. Everyone knew the whole point was to make it easier to raise taxes, and so it lost in a landslide.

So what to do? It's true that our legislature is dysfunctional. As George Skelton put it today, "Modern-era Republicans adamantly refuse to vote for any tax increase. They took a campaign pledge not to and seem to regard it as some cult-like blood oath." That's true. The solution is a little less obvious. Unfortunately, our electorate is dysfunctional too.

Hilda Solis: A Nominee To Get Excited About

| Thu Dec. 18, 2008 2:23 PM EST

hilda_solis.jpg Quit yur bellyaching! Obama's pick for Secretary of Labor is reportedly California Rep. Hilda Solis, the proud daughter of a union mom and union dad. In addition to a background as a management analyst at the Office of Management and Budget and a 100 percent rating from the AFL-CIO in 2007, Solis brings a reputation as one of Washington's leading proponents of green jobs. Check out her commitment to working people, courtesy of Harold Meyerson:

In 1996, when she was a back-bencher (and the first Latina) in the California State Senate, Hilda Solis did something that no other political figure I known of had done before, or has done since: She took money out of her own political account to fund a social justice campaign. Under California law, the state minimum wage is set by the gubernatorially-appointed Industrial Welfare Commission, and California's governors for the preceding 14 years, Republicans George Deukmejian and Pete Wilson, hadn't exactly appointed members inclined to raise that wage. So Solis dipped into her own campaign treasury and came up with the money to fund the signature-gatherers to put a minimum wage hike initiative on the California ballot. The signature gatherers gathered the signatures, the measure was placed on the ballot, it passed handily in the next election, and California's low-wage janitors and gardeners and fry and taco cooks, and millions like them, got a significant raise.

If you were to sketch an ideal Labor Secretary, you could hardly do much better. (Another example of how Obama has found diversity without sacrificing an ounce of expertise .)

Update: The Economist notes that with the Solis pick, the white-male quotient in Obama's cabinet is under 50 percent.

Pay Cuts are Coming

| Thu Dec. 18, 2008 1:22 PM EST

PAY CUTS ARE COMING....Felix Salmon, after noting that FedEx has announced across-the-board pay cuts for just about everyone:

There's been a huge shift in power in recent years from labor to capital: corporate profits have been rising much faster than wages for some time now. It makes sense that capital would make use of its newfound power to reduce labor costs in a deflationary environment of rising unemployment. During the boom, companies laid off workers because those workers demanded, and cost, too much money. Now that workers have lost their negotiating leverage, we might start seeing more across-the-board pay cuts.

Heads I win, tails you lose! In boom times you get laid off, in slack times you get your pay cut. That's certainly one way to run an economy, I guess.

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Eat Your Almonds

| Thu Dec. 18, 2008 1:08 PM EST

EAT YOUR ALMONDS....A new blog called On the Public Record is written by a "low level civil servant who reads a lot of government reports." My kind of blogger! Today, LLCS brings to our attention the California Almond Board:

The good prices for almonds are the result of excellent work by the California Almond Board. The Almond Board has done magic and created demand for more than a billion pounds of California almonds in the past fifteen years. They have run marketing campaigns to get Americans to buy more almonds ("A can a day, that's all we ask." Do any of you really want a can of almonds a day?). They have created new almond drinks. They've introduced almonds into breakfast cereals. (Think back to the mid-nineties. Don't you remember that breakfast cereals rarely had almonds in them?) California almonds have replaced and destroyed every other major source of almonds in the world. Right now on the Almond Board front page, they report happily that almonds are the number one nut ingredient in food.

This really is superior work by the Almond Board and I can only imagine that the walnut and cashew boards look on in envy.

Later, after a persual of their website:

They're doing amazingly consistent high quality work and I wonder how that came about. Did they just happen to hire someone good, who built a good organization? Did that person love almonds or just doing good work? Coincidence that it was the Almond Board and not the Walnut Board or Citrus Board? Does everyone talk about almonds as the shining light of California agriculture because of some quirk of hiring and personality? Anyway, I don't know what almond growers pay for the board (I assume some small percent of their price/piece), but they're getting stellar value for it.

It sure seems to me that mixed nuts have a higher percentage of almonds (pronounced aamins, by the way, rhymes with famines) than they used to. Or is that my imagination? In any case, maybe the tofu folks need to hire away the guru behind the Almond Board's success. It would make Ezra Klein happy, anyway.

Keeping Power in Iraq

| Thu Dec. 18, 2008 11:47 AM EST

KEEPING POWER IN IRAQ....Matt Yglesias comments on the news that "elite" forces working for Iraqi prime minister Nouri al-Maliki have arrested several dozen officials in the Ministry of the Interior:

Maybe I'm just cynical, but this "elite counterterrorism force" sounds to me like a security organization whose primary purpose has more to do with bolstering Maliki vis-à-vis internal enemies than with counterterrorism as such. Not that I blame him, all kinds of other factions have their own armed wings and no loyalty to Maliki or the Iraqi state, so to stay in office he'll need friends with guns of his own.

That's a coincidence, isn't it? That's pretty much what it sounded like to me too. And who knows? Maybe these Interior officials really were trying to reconstitute the Baath Party. Seems pretty stupid to me, but stranger things have happened. The big question is, does "Baath Party" in this context really mean "Baath Party," or does it just mean "Sunni guys I don't like much"? Juan Cole is wondering too:

This cover story makes no sense, and it seems more likely that al-Maliki is continuing to clean house and is purging Interior of people placed there by previous governments or by the US CIA and Department of Defense. The Interior Ministry was set up by Naqib al-Falah, an ex-Baathist Sunni whose father had been a Baathist general who defected in the 1970s.

....When the Shiite United Iraqi Alliance won the 2005 elections, PM Ibrahim Jaafari gave interior to Bayan Jabr, a Turkmen member of the pro-Iran Supreme Council for Islamic Revolution in Iraq. Jabr reconfigured the special police commandos as a hard line Shiite unit. But neither Jaafari nor al-Maliki has had complete control of the bureaucracy, and many of Falah's ex-Baathists, whether Sunni or Shiite, managed to hold on to their jobs. Until now. Anyway, that is my guess.

Otherwise, it is not plausible at this late date that 28 people in Interior could make a neo-Baath coup.

Agreed. If this was a coup attempt, it was a pretty half-assed effort.

Should We Get Hot and Bothered By Obama's Personnel Choices?

| Thu Dec. 18, 2008 10:53 AM EST

The man giving the invocation at Obama's inauguration doesn't like gays, his pick for Secretary of Agriculture is a supporter of corn-based ethanol with only incipient reformist tendencies, his choice for Interior seems to have big fans in the oil and mining community, and his next Transportation Secretary is a Republican lacking any serious record on transit issues. In short, the trepidation that Obama's early cabinet picks triggered in parts of the left continues as he fills in the few remaining spots.

So should those of us on the left get all hot and bothered? There are three ways to think about Obama's frequently uninspiring and occasionally troubling appointments.

(1) These appointees are bad symbolism in the service of good policy. Because Obama is picking people who occupy the center, center-left, and center-right, he can count on the support of huge swaths of the people from all ideological backgrounds when he tries to push genuinely progressive policy initiatives.

Unfortunately, we simply cannot accept this as true. Not yet, anyway. We don't know that Obama wants to push genuinely progressive policy initiatives. There are reasons to suggest that he does, of course. But Democrats who take it as a matter of faith that Obama is tapping people like Warren to co-opt the right and get them behind him for when he passes wonderfully liberal policy are projecting their hopes onto Obama's future policy agenda. We don't know the policy yet. All we know is the symbolism.

Besides, Rahm Emmanuel puts the lie to this idea somewhat. Rahm isn't just willing to use bad symbolism in service of good policy. His career in the House leadership involved several episodes where he used bad policy in service of keeping Democrats in power.

Clinton Foundation Releases Donors

| Thu Dec. 18, 2008 10:42 AM EST

The William J. Clinton Foundation, which funds or funded the Clinton HIV/AIDS Initiative, the Clinton Global Initiative, the Clinton Climate Initiative, the Clinton Economic Opportunity Initiative, the Alliance for a Healthier Generation, and, importantly, the Clinton Presidential Library in Little Rock, Arkansas, has released all of its donors dating back to 1997. This move was necessitated by Hillary Clinton's move to the State Department, and as the Clinton Foundation explains in its press release, is meant "to ensure that not even the appearance of a conflict of interest existed between the Clinton Foundation's operations and Senator Clinton's anticipated service as Secretary of State."

We plan on digging in, to see if any shady characters have funded the Clintons' (very noble) post-presidency activities as part of some kind of quid pro quo, but at the moment it seems like the rush of journalists with the same intentions has knocked the site on its rear end. You can check in on the contributor list after it gets back up here.