Blogs

To the Rescue

| Fri Sep. 19, 2008 12:53 PM EDT

TO THE RESCUE....The feds have finally decided to stop screwing around and rescue Wall Street once and for all:

Treasury Secretary Henry Paulson announced plans Friday to quickly set up a "bold" government program to take over troubled mortgage assets from financial institutions, along with other efforts to step up the purchase of mortgage-backed securities.

....President George W. Bush warned that a "significant" amount of taxpayer funds will be put at risk with the government's plan to bolster shaky markets, but said intervention is necessary to keep the financial system from grinding to a halt.

A year ago (like most people, I imagine) I wouldn't have supported something like this. The credit markets were freezing up because banks had trillions of dollars in assets tied down in complex debt vehicles that, thanks to the tanking subprime market, no one could value. That made every bank suspect and every extension of credit a huge and unknown risk. But eventually, I figured, all the SIVs and CDOs would get unwound, the assets would be slowly and painfully revalued, and life would continue.

Well, it's a year later and that hasn't happened. I still don't understand all the gory details, but the SIVs haven't gotten unwound and no one knows how much the subprime toxic waste they contain is really worth — and there aren't any signs that that's going to end soon. And that in turn means the credit markets are still frozen.

So I'm all in favor of the feds stepping in. Sure, I'd like to keep punishing all the corrupt bankers and boiler room operators who caused this, but I'd like to avoid a global depression even more. In the end, the bankers are going to take a massive hit on this regardless, the feds will probably break even or maybe make a few dollars on the toxic assets, and (I hope) some eyes will be opened about the need to regulate this stuff in the future. For now, though, it's time to unstop the global economy and get things moving again.

I notice that the SEC has also halted short selling in a few hundred financial stocks, just like John McCain wanted. That's maybe not a bad idea, but I wonder if it's really necessary now. With the announcement of the rescue plan, stocks are booming and the short sellers are taking a bath. The rescue is a fundamental solution, and I suspect that's really all we needed. Short selling probably would have taken care of itself.

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Hey Rush Limbaugh: Keep Digging

| Fri Sep. 19, 2008 12:12 PM EDT

rush_limbaugh.jpg I enjoyed this.

Rush Limbaugh is quoted in a new Spanish-language Obama ad that ties John McCain to the nativist fringe of the Republican Party. The ad itself isn't exactly fair — McCain has showed a willingness to kowtow to that nativist fringe, but he's still probably the GOP's leading advocate for a humane approach to immigration reform. But Limbaugh doesn't believe in that humane approach, and in a Wall Street Journal op-ed published today, he isn't standing up for John McCain's record on immigration issues.

Instead, he's arguing that he isn't as big a jerk as the quotes in the Obama ad make him look. Limbaugh notes the quotes and then provides the full paragraphs from which they came, with the mistaken belief that somehow the context proves he isn't a bigot. In fact, the context just reinforces the original point. See for yourself.

Supposedly out-of-context quote:

"...stupid and unskilled Mexicans."

Supposedly exculpatory context:

"If you are unskilled and uneducated, your job is going south. Skilled workers, educated people are going to do fine 'cause those are the kinds of jobs Nafta is going to create. If we are going to start rewarding no skills and stupid people, I'm serious, let the unskilled jobs that take absolutely no knowledge whatsoever to do -- let stupid and unskilled Mexicans do that work."

Second supposedly out-of-context quote:

"You shut your mouth or you get out!"

Supposedly exculpatory context:

"And another thing: You don't have the right to protest. You're allowed no demonstrations, no foreign flag waving, no political organizing, no bad-mouthing our president or his policies. You're a foreigner: shut your mouth or get out! And if you come here illegally, you're going to jail."

Turns out, the full paragraphs are just as xenophobic and hateful as the isolated quotes. Why? Because Rush Limbaugh is xenophobic and hateful. Funny how that works.

French Pique-Nique Update

| Fri Sep. 19, 2008 1:41 AM EDT

Flash: The French are dropping plans for a picnic tax (per earlier blog). It's elitist. Apparently the rich don't pique-nique and the pollution of the non-rich isn't important.

Julia Whitty is Mother Jones' environmental correspondent, lecturer, and 2008 winner of the Kiriyama Prize and the John Burroughs Medal Award.

Vote Your Fears

| Fri Sep. 19, 2008 1:15 AM EDT

711px-Menschliches_Auge.jpg People who react strongly to bumps in the night, spiders, or the sight of a victims are more likely to support more defense spending, more government resources for fighting terrorism, and tighter immigration controls. This according to a new study from the University of Nebraska-Lincoln published in the current issue of Science.

The study was funded by the National Science Foundation and tested 46 people who identified themselves as having strong political opinions. The subjects were shown threatening visual images—pictures of a spider on a person's eyeball, a dazed person with a bloody face, an open wound with maggots in it. The subjects' skin was monitored for electrical conductivity—an indicator of emotion, arousal, and attention. As a separate physiological measure, the subjects were surprised by a sudden, jarring noise, while measurements were taken of their blink reflex.

Those with the strongest eye or skin reactions to unexpected noises or threatening pictures tended to endorse political positions emphasizing protecting society over preserving individual privacy. These people were found to be more willing to sacrifice their privacy in return for what they perceived as government protection. Conversely, the subjects who reacted less strongly were more likely to favor policies that protect privacy and encourage gun control. . . It's all in the biology. Even for disbelievers of biology.

Julia Whitty is Mother Jones' environmental correspondent, lecturer, and 2008 winner of the Kiriyama Prize and the John Burroughs Medal Award.

Palin Without a Prompter....Part 7

| Fri Sep. 19, 2008 12:39 AM EDT

PALIN WITHOUT A PROMPTER....PART 7....Have I used up my quota of two Sarah Palin references today? No? Then check out this phenomenal answer she offered up at a townhall meeting today about — well, I'm not sure what it's about. But it's energy related in some way:

"Of course, it's a fungible commodity and they don't flag, you know, the molecules, where it's going and where it's not. But in the sense of the Congress today, they know that there are very, very hungry domestic markets that need that oil first. So, I believe that what Congress is going to do also, is not to allow the export bans to such a degree that it's Americans who get stuck holding the bag without the energy source that is produced here, pumped here. It's got to flow into our domestic markets first."

Be sure to click on the video to see the whole thing. It's priceless watching Wolf Blitzer tactfully admit that it's "not exactly easy to understand what she was saying" before he tries to tease out the "nuggets" in her answer. You almost feel sorry for him.

Rev Run's Affirmations

| Thu Sep. 18, 2008 10:04 PM EDT

reverend-run.jpgWords of Wisdom, a recently published book from Rev Run of Run DMC, is part Stuart Smalley, part Russell Simmons; sort of a pocket-sized, bathroom-reading, Christian alternative to Robert Greene's 48 Laws of Power, a book that made rounds in hip hop circles a few years ago.

I was reluctant to pick the book up because I prefer to think of Run as he used to be: an MC for one of the most influential and popular New York hip hop acts of the 80s. It's Run, after all, who convinced me that I needed to wear white hi-top sneakers with bright, fat laces to my middle school every day. Today, it's safe to say he's convincing folks to do a lot more than just wear cool kicks:

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Construction Bonds Revisited

| Thu Sep. 18, 2008 6:55 PM EDT

CONSTRUCTION BONDS REVISITED....This is not exactly a critical issue, but over at Washington Wire Easha Anand takes a stab at defending Sarah Palin's contention that the AIG bailout was necessary because of its involvement with "construction bonds," concluding that "Palin's answer wasn't as outrageous as some have claimed."

You can read the entire post for yourself, but once you cut through the clutter there's not much there. Like me, Anand believes that Palin was referring to surety bonds on construction projects, but it turns out that (a) only government projects require surety bonds, (b) AIG is the 14th largest provider of surety bonds in the U.S., amounting to a paltry $79 million out of an industry total of $5.3 billion, (c) there are about ten other companies that can underwrite even the biggest surety bonds, and (d) surety bonds are written by AIG's regulated commercial subsidiaries, which were in no danger of default and are guaranteed by state funds anyway. In other words, surety bonds played no part whatsoever in the decision to bail out AIG. Palin just pulled them out of nowhere because she happened to be familiar with them from her tenure as mayor and governor.

Basically, I figure that presidential candidates can toss out three kinds of comments during a crisis like this:

  1. Intelligent comments that actually address the issue at hand (which you may or may not agree with, of course).

  2. Random bromides designed to fill up airtime.

  3. Stupid things.

Comments in category 1 are rare, especially in a crisis like this one that has extremely arcane and technical causes. However, Obama's remarks today about the subprime meltdown, maintaining the flow of credit, ensuring liquidity in capital markets, and helping homeowners in trouble, qualifies. He's at least talking about the right things. John McCain's comments about the "casino culture" on Wall Street fall into category 2, as does Joe Biden's complaint about tax cuts for the wealthy. Both are basically harmless political posturing.

But then we have category three, which includes stuff like McCain saying he wants to fire Chris Cox and Sarah Palin claiming that AIG needed to be bailed out because of "construction bonds." These are just actively dumb comments that do nothing but make life more difficult for the folks trying to work on solutions. If they can't do better than that, they should just keep quiet.

UPDATE: Of course, I guess there's also a category 4: bromides so halting and clueless that they just scare the hell out of everyone. As Ezra says about Palin's disjointed reaction, "Meanwhile, McCain's response made Palin's commentary look like a model of analytical clarity." Scary stuff.

Palin Watched SNL Skit With No Sound - And Thought It Was "Hilarious"

| Thu Sep. 18, 2008 6:05 PM EDT

Given that the McCain campaign condemned SNL's portrayal of Sarah Palin last week as sexist, I was surprised to hear Palin's spokeswoman say that the governor actually found the spoof "quite funny."

Wonder how she would have felt if she'd watched with the sound on?

h/t TPM.

Palin Proposes "Google For Government," Unaware Obama Already Created It

| Thu Sep. 18, 2008 6:02 PM EDT

CNN has a lesson for Sarah Palin:

"We're going to do a few new things also," she said at a rally in Cedar Rapids. "For instance, as Alaska's governor, I put the government's checkbook online so that people can see where their money's going. We'll bring that kind of transparency, that responsibility, and accountability back. We're going to bring that back to D.C."
There's just one problem with proposing to put the federal checkbook online – somebody's already done it. His name is Barack Obama.
In 2006 and 2007, Obama teamed up with Republican Sen. Tom Coburn to pass the Federal Funding Accountability and Transparency Act, also known as "Google for Government." The act created a free, searchable web site — USASpending.gov — that discloses to the public all federal grants, contracts, loans and insurance payments.

Mission Creep Dispatch: Steven Metz

| Thu Sep. 18, 2008 5:32 PM EDT

metz.jpgAs part of our special investigation "Mission Creep: US Military Presence Worldwide," we asked a host of military thinkers to contribute their two cents on topics relating to global Pentagon strategy. (You can access the archive here.) The following dispatch comes from Steven K. Metz, a strategic military theorist whose latest book is titled Iraq and the Evolution of American Strategy.

America's Global Military Footprint Is the Lesser Evil

Throughout US history, Americans have periodically reassessed their nation's strategy. We are once again involved in this process, debating tough issues that emerged at the end of the Cold War but remained unresolved. Foremost among these is the militarization of American statecraft. Unfortunately, much of the discussion of the vital topic misleads rather than illuminates. Take the global deployment of US troops: