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Chart Abuse of the Day

| Sat Jan. 17, 2009 2:53 PM EST

CHART ABUSE OF THE DAY...Matt Taibbi reviews Tom Friedman's Hot, Flat, and Crowded and notes that midway through the book Friedman starts doodling on a napkin and concludes that high oil prices retard the march of freedom in petrostates:

Friedman then draws his napkin-graph, and much to the pundit's surprise, it turns out that there is almost an exact correlation between high oil prices and "unfreedom"! The graph contains two lines, one showing a rising and then descending slope of "freedom," and one showing a descending and then rising course of oil prices.

Friedman plots exactly four points on the graph over the course of those 30 years. In 1989, as oil prices are falling, Friedman writes, "Berlin Wall Torn Down." In 1993, again as oil prices are low, he writes, "Nigeria Privatizes First Oil Field." 1997, oil prices still low, "Iran Calls for Dialogue of Civilizations." Then, finally, 2005, a year of high oil prices: "Iran calls for Israel's destruction."

....If you're going to draw a line that measures the level of "freedom" across the entire world and on that line plot just four randomly-selected points in time over the course of 30 years — and one of your top four "freedom points" in a 30-year period of human history is the privatization of a Nigerian oil field — well, what the fuck? What can't you argue, if that's how you're going to make your point? He could have graphed a line in the opposite direction by replacing Berlin with Tiananmen Square, substituting Iraqi elections for Iran's call for Israel's destruction (incidentally, when in the last half-century or so have Islamic extremists not called for Israel's destruction?), junking Iran's 1997 call for dialogue for the U.S. sanctions against Iran in '95, and so on. It's crazy, a game of Scrabble where the words don't have to connect on the board, or a mathematician coming up with the equation A B -3X = Swedish girls like chocolate.

I think I've mentioned this before, but I sure hope Taibbi never decides to take a sudden dislike to anything I've written.

Via Andrew Sullivan.

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Get Some Sleep!

| Sat Jan. 17, 2009 2:05 PM EST

GET SOME SLEEP!....A new report in the Archives of Internal Medicine says you'll get fewer colds if you get more sleep. A team of researchers interviewed subjects for 14 days about their sleep the night before, then stuck them in hotel rooms and spritzed some rhinoviruses up their noses. The results:

Participants with less than 7 hours of sleep were 2.94 times [] more likely to develop a cold than those with 8 hours or more of sleep....Participants with less than 92% efficiency were 5.50 times [] more likely to develop a cold than those with 98% or more efficiency.

These relationships could not be explained by differences in prechallenge virus-specific antibody titers, demographics, season of the year, body mass, socioeconomic status, psychological variables, or health practices.

"Efficiency" is the percentage of your night that you actually sleep, as opposed to tossing and turning and getting up to pee. So take a hint from our feline friends: sleep early and often.

Nationalization

| Sat Jan. 17, 2009 3:08 AM EST

NATIONALIZATION....Is it time to start nationalizing the U.S. banking industry? Felix Salmon says yes:

Both Citigroup and Bank of America are down more than 20% in early trade today, and I imagine that Hank Paulson and Tim Geithner are starting work on yet another weekend deal of some description....I can't see a solution to this problem short of nationalizing both Citi and BofA, and summarily firing the hapless Vikram Pandit along with the overambitious Ken Lewis.

Matt Yglesias agrees:

"Nationalization," of course, is a dirty word in the United States. We're a very immature country, after all....But it's the right thing to do, and that's been clear for a while now. We can ill-afford to leave the health of the whole financial sector hostage to an ideological distaste for the concept.

The bandwagon for nationalization seems to be getting up a good head of steam, and whenever that happens it's worth slowing down a bit and articulating the opposing case. A lot of the sentiment in favor of nationalization appears to be driven by admiration for Sweden's "quick and decisive" action to clean up its own banking mess in the early 90s, so let's take a look at what Sweden did and didn't do. First off, here's what they didn't do:

  • They didn't act all that quickly. The real estate crash and the resulting credit losses began in late 1990, solvency problems started to become acute in late 1991, and a variety of treasury guarantees and capital injections were tried for another year after that. (Sound familiar?) It wasn't until late 1992 that the Swedish government finally took serious, systemic action.

  • They didn't nationalize the banking system. Only one bank, Gota, was taken over, and that happened only after it had collapsed. And aside from Gota, only one bank received a substantial amount of capital injection: the state bank, Nordbanken, which had much bigger problems than most of the private banks.

  • Generally speaking, they didn't fire existing bank management.

So what did the Swedes do? The main thing was simple: in late 1992 the Swedish government guaranteed all bank obligations throughout the system. They did this immediately for Gota after its collapse, and two weeks later for everyone else.

What else? Not too much, actually. An agency was formed to dig into the portfolios of nearly every major bank, and this resulted in a capital requirement guarantee for one bank that was never used. In addition, the shareholders of Gota and Nordbanken were mostly wiped out.

So what are the lessons for us? First, we don't necessarily need to nationalize. If we have to, then we have to, but with the exception of Gota that's not what the Swedes did.

Second, we could consider a systemwide guarantee of all bank obligations, instead of the one-offs we've (partially) applied to Citi and BofA.

Third, we still have to take care of the toxic assets clogging up bank balance sheets. The Swedes did this for Nordbanken and Gota by hiving off "bad banks" to handle the valuation and eventual sale of their bad assets. We could do the same thing here, which is basically what TARP was initially intended to do. But whether you call it "TARP" or a "bad bank," it's pretty much the same thing, and it presents pretty much the same main problem: figuring out how to value and eventually dispose of the toxic waste. Painful or not, though, it needs to be done, and I never entirely understood the mockery that was directed at this idea back when TARP was initially unveiled. Everyone agrees that recapitalization is essential, but one way or another the other side of the balance sheet needs to be addressed too. This mess won't get cleaned up until the toxic waste is cleaned up as well.

So is this what we should do? I don't have the financial chops to say — though certainly government ownership makes the "bad bank" idea a lot easier to implement. But if we think the Swedish model is worth taking guidance from, the path ahead includes systemic debt guarantees, capital injections, a bad bank for toxic waste, and nationalization only as a last resort.

PETA Says: Save the Sea Kittens

| Fri Jan. 16, 2009 7:33 PM EST

lol_seakitten300.jpgDoes this count as Friday cat blogging? Your answer to that question will reveal just how kooky or clever you think PETA's new "Save the Sea Kittens" campaign is. What is a sea kitten, you ask? It's the animal-rights group's cuddly new name for what is commonly known as fish. According to PETA, fish have an image problem: They're scaly, slimy, and, uh, fishy. (And they don't blink. Creepy.) "Who could possibly want to put a hook through a sea kitten?" asks PETA. We've done lots of serious reporting on overfishing and other threats to the animal formerly known as fish, but it's hard to imagine anyone taking those issues more seriously if we'd talked about the plight of the sea kitten. And besides, humans kill lots of animals even though they're cute (baby seals) or feline (tigers). Fish don't have a PR problem, they have an edibility problem. So I propose only using the term sea kitten only for ridiculous seafood news. Like, say, actors claiming to have gotten mercury poisoning from eating too much raw sea kitten.

Saying Goodbye to Bush... Literally

| Fri Jan. 16, 2009 6:55 PM EST

WB_023_9_farewell_bush_bg.gifPut this in the "creative marketing" file. Bliss Spa is offering an inauguration special, 20 percent off Brazilian bikini waxes for ladies who want to say "farewell to Bush" in more ways than one. I think I'll pass on Bliss's "presidential transition savings," but I speak for my uterus and myself when I say that we're truly pleased to see the last of Bush's presidency.

More Details Emerging on Indie 103.1's Demise

| Fri Jan. 16, 2009 4:31 PM EST

Indie 103.1The airwaves around Los Angeles are just a little emptier today, as Indie 103.1 is officially done, with Spanish music where the Buzzcocks used to be. We're getting some more details on what happened. First up, the LA Times had an interview yesterday with Chris Morris, a DJ who was recently let go from the station. He reminded us that Indie had retooled a few months back to be more mainstream in a last-ditch attempt to grab some ratings, but he reminisced about the station's heyday, saying the "amount of liberty I enjoyed was unbelievable." The Daily Swarm has an exclusive chat with Music Director Mark Sovell, who has some very interesting tidbits. First, while the station is currently advertising that it has moved to the web, it turns out that "none of the primary DJs or music programmers at the station are involved in the website and it's not being run by people who ran the station – there may be one person from the station." Maybe that explains why the web site has such screwy grammar: "LISTEN INDIE LIVE NOW!" He reveals that the whole announcement about not playing "the corporate radio game" any more is a farce, since none of the station employees had anything to do with it—the on-air treatise about "corporate radio" was read by the head of sales. However, he teases us a little, offering that "there are people who are making an effort to bring the station back on the air with the same people, but I can't say specifically." Good luck with that…

After the jump: is it the end of radio as we know it, and is that a bad thing?

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Friday Cat Blogging - 16 January 2009

| Fri Jan. 16, 2009 3:50 PM EST

FRIDAY CATBLOGGING....We're entering a cold snap here in Southern California, with temps forecast to plummet to a brisk 75 or so this afternoon. Time to bundle up!

Actually, Inkblot has been shedding for the past few days, as our Santa Ana-induced record warmth has fooled him into thinking that summer has come. Hopefully he'll figure out soon that it's just a trick. I wouldn't want him to lose his lovely winter coat too soon.

In other weather-related cat news (how's that for a smooth segue?), Danish reporter Ole K. sends along "Jörg Kachelmann und Lupin" for your YouTube viewing pleasure. Note hint of action to come at about the 0:17 mark. Very civilized, those German weather forecasters.

TARP Moves Forward With Promises, Not Guarantees, of Improvements

| Fri Jan. 16, 2009 3:41 PM EST

So it's confirmed. Chris Dodd, head of the Senate Banking Committee, will do nothing to ensure that there are oversight and executive compensation provisions in the second half of the TARP rollout. He will not legislate in aid for families in foreclosure, either.

The reason? Larry Summers, writing on behalf of the President-elect, wrote him a letter assuring him that the executive branch could and would police itself. Don't worry, Chris, we got this! As I pointed out before, Dodd is an awfully credulous fellow. Hank Paulson convinced him of the exact same thing. How'd that turn out?

Will Obama and company will do a better job than Paulson? Probably. Should Dodd and the Senate Democrats assume that they can take a hands-off approach to things like TARP because the man in the Oval Office is from their party? Absolutely not.

New U2 Album Cover Art Might Owe the HRC Royalties

| Fri Jan. 16, 2009 3:21 PM EST

mojo-photo-u2horizon.jpgThe new U2 full-length, No Line on the Horizon, isn't out til March 3, but they've just released the cover art, and as Pitchfork put it, it's rather "zen." Even the Fork admits they're intrigued, since U2 are "most interesting when they step out of their comfort zone," although it's getting hard to remember when that last was. In any event, the album cover features a photograph by Hiroshi Sugimoto of a barely-rippling ocean superimposed with a big gray equals sign. No, I didn't just say "big gay equals sign," but the Human Rights Campaign might want to check into doing at least a "cross-promotion" or something. I also see a couple other influences: first up, the haunting video for Joy Division's "Atmosphere" (that features bleak, black & white horizons and the prominent use of "+" and "-" symbols) was directed by Anton Corbijn, who famously took the iconic photographs of U2 for their Joshua Tree album cover. How's that for a connection. The rest of my proposed theory of how the band came up with the cover (in visual form), plus a tracklisting, after the jump.

Small Victory

| Fri Jan. 16, 2009 2:25 PM EST

SMALL VICTORY....Last week Citigroup dropped its opposition to "cramdown" legislation that would allow bankruptcy judges to rewrite mortgage terms for distressed homeowners. Robert Reich thinks they probably did this because they knew they'd need some additional bailout money in the near future:

In other words, the Wall Street bailout has had exactly the same effect for Congress that the proposed bankruptcy provision would have for homeowners — it has increased its bargaining power over those who ordinarily pull the strings. The massive tax-payer financed bailout of Wall Street...seems to be weakening the Street's ability to veto financial legislation it doesn't like. I'm not sure whether this is something we should be celebrating as a small victory for democracy, or condemning as an extortionate price for reducing Wall Street's grip.

I think "small victory" is probably the right way to look at it, with an emphasis on "small." Sure, the price was high, but after all, nationalizing Citi and other big banks would be pretty expensive too. (Sweden's bank nationalization in the early 90s probably resulted in direct costs of around 2% of GDP, equivalent to about $300 billion for the U.S.) Now let's see if we can sqeeze a few somewhat larger victories out of all this.