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Mexico's Drug War, Fully US Loaded

| Tue Mar. 24, 2009 2:20 PM EDT

Guest blogger Mark Follman writes frequently about current affairs and culture at markfollman.com.

The raging drug war in Mexico is about to command even greater attention inside the United States. It's not just the gruesome tales of drug cartel violence to the south; the US is far more caught up in the maelstrom than many north of the border may care to realize.

Today at the White House, Homeland Security Sec. Janet Napolitano laid out an Obama administration plan to throw additional money and manpower at the problem, amid mounting fears about "spillover" of violence and corruption into the United States. On Wednesday, Napolitano will go to Capitol Hill specifically to address the crisis, while Secretary of State Hillary Clinton is scheduled to arrive in Mexico.

The administration is deploying big guns like Napolitano and Clinton with good reason. As the Wall Street Journal reported recently, "The government is girding for a possible Katrina-style disaster along the 2,000-mile-long Mexican border that would involve thousands of refugees flooding into the US to escape surging violence in northern Mexico, or gun battles beginning to routinely spill across the border." A recent story from international reporting start-up GlobalPost shows how joint US-Mexican operations have been implicated in the spreading violence, on both sides of the border.

Some relatively obscure testimony by senior officials from the ATF and DEA to a Senate subcommittee last week contains stark details about our country's role in the predicament. Simply put, the US is serving as a vast weapons depot for the drug gangs.

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Feminism: What's in a Name?

| Tue Mar. 24, 2009 1:58 PM EDT

Slate's XX Factor has a fascinating discussion about Sandra Day O'Connor's passing on calling herself a feminist even though she totally is one. Need proof?

Do you call yourself a feminist?
I never did. I care very much about women and their progress. I didn’t go march in the streets, but when I was in the Arizona Legislature, one of the things that I did was to examine every single statute in the state of Arizona to pick out the ones that discriminated against women and get them changed.

So, 'feminists' march in the streets (which is bad) but don't fight for a seat in government from which to focus on women's equality? I ain't mad at Sandra. The woman haters have worked very hard to make the word "feminism" synonymous with man- and baby-hating. With—gasp!—lesbianism and everything 'unladylike'. With all that scary protesting and refusing to play nice. Ah well, I much prefer women (and men) who pass on the name but fight the power anyway. Sandra O is just in the closet but active as hell on the feminist down low. Works for me.

As a side note, SDO'C rocks as an interviewee. What a breath of fresh air to hear someone say, essentially, 'Screw you. I'm pushing a majorly important new website and you want to talk about inanities. Shut the frack up (sorry—HUGE Battlestar Galactica fan), and let's talk about what I agreed to talk about.' Here's a taste of that great old-chick no-nonsense:

Although you were nominated to the court by President Reagan, you became known as a centrist who disappointed conservatives and provided relief to liberals.
Look, that's your spiel, not mine. I tried to decide each case based on the law and the Constitution.

Old feminists rock. Whatever they call themselves. BTW: if you're not a feminist, what are you: anti-feminist?

Afraid of Risk?

| Tue Mar. 24, 2009 1:53 PM EDT
Brad DeLong points to a defense of Tim Geithner's toxic waste plan from Christopher Carroll:

Unlike the critics, the Treasury has absorbed the main lesson from the past 30 years of academic finance research: asset price movements mainly reflect changes in investors’ collective attitude toward risk.

....The details [of the Geithner plan] flow from an overarching view that the markets for the “toxic assets” that are corroding banks’ balance sheets have shut down in part because in those markets the degree of risk aversion has become not just problematic but pathological. The different parts of the plan reflect different approaches to trying to coax private investors back into the market by reducing their perceived degree of risk to levels that even a skittish risk-shy hedge fund manager might find tempting.

I don't want to disagree with this, but I think it's worth looking at it from a slightly different perspective. Obviously risk aversion goes up and down with economic conditions, but one problem with our financial markets is that over the past 30 years they've largely convinced themselves that risk doesn't really exist anymore.  This is especially true on the fixed income side of things, where I think it's been years since the Wall Street crowd really, truly, thought there was any risk left in the market for anyone smart enough to read a yield spread.  You just needed to have the right models and the right hedging strategy.

At the very least, investors should have learned their lesson on this score in 1998, when Long Term Capital Management collapsed.  There were multiple reasons for LTCM's failure, but the biggest one was that they felt comfortable taking enormous leveraged positions because they were convinced that their models had essentially hedged all the risk away.  They hadn't, of course, and they crashed spectacularly.  But in the end the Fed oversaw a rescue, LTCM's investors lost some money, and then they dusted themselves off and convinced each other that this was a once-in-a-century event they didn't really have to worry about.  (The guys responsible for LCTM's implosion went back to Wall Street 12 months later to start a new fund.  They had no trouble raising capital.)

But this time it's different.  It's pretty obvious that all the credit derivatives in the world, no matter how cleverly they're constructed, don't genuinely hedge away risk.  It's still there, and all the guys who thought they'd discovered a magical way to insure high returns forever discovered that they were wrong.

So, yes: risk aversion is sky high right now.  But this is more than just the normal ebb and flow of animal spirits.  It's sophisticated investors rediscovering the idea that risk really exists at all, even for them.  That's a tough transition.  Tim Geithner's about to find out if Wall Street has made it yet.

Police Deaths Call for Renewed Assault Weapons Ban

| Tue Mar. 24, 2009 1:19 PM EDT
Last month, Attorney General Eric Holder voiced his desire (and his boss') to renew the federal assault weapons ban, which expired in 2004. He said as much in response to questions about cartels and drug wars in Mexico. But after four police were gunned down in northern California this weekend the idea now hits closer to home.

Saturday, when four cops were killed by a parolee, was the deadliest day in the history of the Oakland police department. Lovelle Mixon, a convicted felon jailed for five years for assault with a firearm, shot the first two officers with the handgun he was carrying (illegally) after the police stopped his car for a traffic violation. He then used an AK-47 type assault rifle to gun down two SWAT officers before he was killed in a shootout. True, California has an assault-weapons ban and it didn't keep the rifle out of Mixon's hands, but a federal ban could only strengthen local enforcement efforts. The battle will be hard fought; last week 65 House Dems sent Holder a letter opposing his efforts to enact any sort of federal ban on assault rifles, citing concerns over ownership restrictions. "We will strongly oppose any legislation that will infringe upon the rights of individual gun owners," the letter stated.

The opposition to Holder moving on the ban has all been under the backdrop of the weapons concerns on the border and in Mexico, but will the debate shift now that police officers are getting gunned down here at home? Meaning, once Dianne Feinstein proposes new legislation related to the deaths of these four slain officers, what will the pro-gun Dems, and everyone else, say then?

Quote of the Day - 3.24.09

| Tue Mar. 24, 2009 1:00 PM EDT
From Marc Ambinder, explaining why he thinks Obama is moving more cautiously than his critics would like:

What's kept the administration from being as bold as its critics want is not a lack of imagination, or a lack of contact with the outside world, or an overreliance on the banks....It's a combination of the knowledge that Obama cannot do big things unless he remains a majority president, that he could make a hash of them if Congress perceives that the administration is pushing too close to the boundary of what's acceptable, and that the administration has accepted that it cannot allow Congress to be a partner in leading the American people towards a solution.  The stimulus package debate in February was dispositive; the administration lost confidence in Congress's maturity fairly quickly.

It's not clear how much of this is just Ambinder's own judgment and how much is informed by his reporting, but presumably he wouldn't say this if he didn't have good reason to believe it.  And that's pretty interesting: Obama no longer trusts Congress.  It's also a wee bit frightening, no?

(Ambinder also has a list of questions he thinks need to be answered before any kind of nationalization plan is possible.  I don't quite understand some of them — why would there be a run on a nationalized bank? — but they're worth taking a look at.)

The Price of Health

| Tue Mar. 24, 2009 12:45 PM EDT
Ezra Klein has a friend who got airlifted to a small town in Germany after an accident in Sierra Leone.  Now he's stuck:

My friend does not speak German. He does not know anyone in Germany. He wants to come home and receive his care in the states. He wants a doctor he can communicate with and nurses who can understand his requests and friends who can speak to him and calls that aren't subject to international fees. But his insurance is refusing the request. Medical treatment, they're arguing, is simply too expensive in America.

....My friend's insurers are not lying to him. They are not making a capricious decision. They simply have no wish to pay American prices when care can be obtained at German rates. And so my friend and his family must now focus their days and nights worrying over what to do, and how much to spend. As for the rest of us in America, we pay these prices anyway, and never realize how terribly we're being ripped off.

Just keep telling yourself: best healthcare in the world, baby, best healthcare in the world.  Say it often enough and you might even believe it eventually.

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Iraqi Refugee Stories

| Tue Mar. 24, 2009 12:41 PM EDT
You've likely heard about the 2 million Iraqi refugees living in Lebanon, Syria, Jordan, Egypt, the Gulf States, Iran, Turkey, and Yemen, but Iraqi Refugee Stories brings those statistics to life with videos of displaced people describing the circumstances that forced them out out of their homeland.

The site has a bunch of interesting information, includine an interactive map showing where the refugees live now.

Some of the most moving stories:

Is America Ready for a Gay Idol?

| Tue Mar. 24, 2009 12:16 PM EDT

In the world of reality TV, the buzziest personality is undoubtedly American Idol contestant Adam Lambert. But it's not his copious eyeliner, gothic black nail polish, or theatrical wails that have generated the most controversy—it's his sexuality. The media's biggest question about the man-kissing drag-performer: Should the singer come out on Idol?

The San Francisco Gay & Lesbian Examiner: "I want Lambert to announce his gayness and still win this year's competition. Is that too much to ask?"

The Huffington Post: "An out Idol contestant would win lot of gay hearts but might lose votes."

The Associated Content: "The purpose of the show is to be entertaining, not ideological."

The Advocate: "He’s not officially 'out,' but that’s not the point. If something as formerly monumental as a public person’s gayness can suddenly be seen as post-mattering, then that’s what really matters now."

Will viewers of family-friendly Idol continue to vote for a gifted performer they know is gay, regardless of their Prop. 8 voting and Milk-watching preferences? As the country speed-dials its way into the weeks ahead, we'll soon find out.

The Swedish Model

| Tue Mar. 24, 2009 12:08 PM EDT
The interview of the day is Benjamin Sarlin's short chat with Bo Lundgren, the finance minister who oversaw Sweden's temporary bank nationalizations in the early 90s:

"There are similarities [to Sweden's case]," Lundgren said. "There are three things any plan must do — the first is to maintain liquidity, that's taken care of by the Fed. The second thing is to restore confidence, and that hasn’t been done so far and obviously the first proposal to buy toxic assets wasn't enough. And then you need capital injections so banks can keep lending at the levels needed for the economy as a whole."

However, Lundgren said that Obama was correct in observing that a similar nationalization scheme might be more difficult given America's size and preeminent role in world finance compared to Sweden.

"With Japan and Sweden, the crises we had, even if it was a very long process with Japan, they were crises that we had on our own," Lundgren said. "The rest of the world economy managed to be not perfectly good but still reasonably good. This time it's worse; it's a kind of financial tsunami."

I suppose you could equally make the case that the worldwide nature of this crisis makes dramatic action like bank nationalization more necessary than it was in Sweden's case.  Still, Lundgren is almost certainly right that it would be a lot more difficult.  Nationalizing a $2 trillion institution that's a commercial bank, an investment bank, a hedge fund, an insurance company, a brokerage, and owner of a portfolio of other banks around the world is a lot trickier than nationalizing a midsize regional bank in the era before the explosion of credit derivatives.

In fact, here's an assignment desk job for someone with the background to know the details: What would it take to nationalize an outfit like Citigroup?  What are the likely legal, financial, diplomatic, and operational issues that would have to be resolved?  It would be a real public service if someone with a credible background in this stuff could lay out the details in a way that's understandable for all the rest of us.

Why Bank Rage Is Not Populism

| Tue Mar. 24, 2009 12:01 PM EDT

Does the widespread public fury over AIG bonuses constitute a populist rebellion, and signal a major shift in American political culture? That's what the mainstream media seems to be pondering this week. The Newsweek cover that hit the stands yesterday reads “The Thinking Man’s Guide to Populist Rage.” Eye-catching hyperbole is the stuff of newsweekly covers. (Six weeks ago, Newsweek’s cover line was “We Are All Socialists Now.”) But the issue is filled with serious essays on the subject, by Michael Kazin, Eliot Spitzer, and others. And in yesterday's New York Times, John Harwood makes similar claims, painting people’s anger at Wall Street as part of a populist resurgence. Harwood’s most prominent source is, of all people, Ed Rollins, the Republican strategist whose credentials on the subject consist of working on the campaign of faux-populist Ross Perot.

One person not quoted in these pieces is the original, and still unequaled, historian of populism, Lawrence Goodwyn. He identified the first populist movement—the agrarian revolt of the 1890s—as the greatest mass movement in American history. It posed a genuine challenge to the dominant power structures, especially the banking system. It was also largely an unfulfilled dream. Goodwyn’s 1978 book The Populist Moment is still in print and well worth reading, both for its stirring history and its insights into what is going on today—and what isn’t going on.

Goodwyn traces the Populist Movement to its origins in the rural depression after the Civil War, when Southern and Western farmers formed clubs that fought the monopolistic railroad rates. By the 1870s these clubs had grown in number and size, forming themselves into Farmers Alliances, which engaged in all sorts of cooperative action, from catching horse thieves to buying supplies. By the 1890s, the alliances had a combined membership of more than one million people and were in the thick of politics. Georgia populist leader Tom Watson accused the Democrats of sacrificing “the liberty and prosperity of the country…to Plutocratic greed,” and the Republicans of serving the interests of “monopolists, gamblers, gigantic corporations, bondholders, [and] bankers.” He said that big business didn’t care about ordinary Americans “except as raw material served up for the twin gods of production and profit.”

Most significantly, in relation to today’s economic crisis, they demanded paper money and an end to the gold standard—changes they believed would help wrest control of credit, and of the money supply in general, from the hands of bankers and other blood-sucking plutocrats, and place it in the hands of the farmers and laborers who were the real producers of wealth. As an alternative, the populists proposed what they called the “sub-treasury plan,” under which a new monetary system would be created and operated “in the name of the whole people,” and credit would be freely extended to farmers, small producers, and other ordinary citizens.