Factlet of the Day

Over at the mothership, James Ridgeway points to a piece at the New Rules Project by Stacy Mitchell about credit card fees.  Not the million and one consumer fees that sting us all like a horde of angry gnats, but the plain vanilla transaction fees that are charged on every single credit card purchase:

Although the exact rate charged on any given transaction varies widely depending on many factors, including the size of the business and the type of card, the average interchange fee in the U.S. is now about 2% of the value of the sale — two to six times the regulated rates imposed on Visa and MasterCard in Australia and much of Europe.

....Interchange fees now comprise a substantial share of the income these companies make on credit cards.  In 2004, card issuers took in $28 billion in interchange.  By 2008, that figure had shot up to $48 billion.  That's more than one-quarter of all credit card revenue and more than the total collected by banks in credit card late fees, over-the-limit fees, and ATM fees combined.

Needless to say, merchants have no bargaining power at all here, since they can hardly stop taking credit cards and rules prohibit them from directly passing along the transaction fees to consumers.  In Europe, transaction fees have been cut to 0.3%, but that took EU-level government action.

This leads James to say that "piecemeal laws to protect consumers from a handful of the most devious practices will never get to the real problems. The answer to the credit card mess is a full fledged investigation by Congress, followed by meaningful regulation that takes in all the powerful players in the credit card business, including the banks that are at the bottom of it all."  Alternatively, there's my proposal: round up all the credit card company CEOs and have them shot at dawn.  Just as a warning to others, you understand.

Local News

Here in Los Angeles, one of the most common media laments is about how poorly the LA Times covers local news.  Matt Yglesias, writing from the other end of the country, wonders if this is inevitable:

While it’s true that the coverage of local issues in DC offered by The Washington Post is not all it could be, the fact of the matter is that most people don’t even know what you could be learning by reading the Post. Not only is it going to be intrinsically difficult to ever find a viable revenue model for paying a reporter to cover the zoning board if people don’t want to read about the zoning board, I’m not actually sure how much social value is created by unread articles about zoning boards. If an article about proposed modifications to the Purple Line falls in the wilderness and nobody’s there to read it, are we really making a difference?

My sense of local news isn't that great, but it's always been a little bit different than this.  The fact is that most communities have a pretty hard core of activists who do go to planning board meetings and city council meetings and so forth.  And 99% of the time, they just do their thing and the local paper does no more than print short blurbs about what's going on.  And the rest of us ignore it.

But every once in a while, something becomes a big deal.  Not because the Times or the Post does or doesn't have a reporter at a board meeting, but because the activists suddenly start screaming louder and the community gets up in arms about something.  Then the local press starts to pay attention.

In other words, it doesn't matter that much if the local paper reports assiduously on local zoning board meetings.  What matters is that the community itself has some minimum level of activist organization and that the local press still exists and can pick up a story when it gets hot.  Unfortunately, the local press can't do even that much if there's no more local press.  That's why they matter.

Strange Bedfellows in the Parent 'Hood: Two New Memoirs

I've mentioned my girl-crushes before, haven't I?

No?

Hmmm...eyelash flutter...stentorian throat clearing.

Ahem.

Well, as Liz Lemon on 30 Rock would say, consider me bi-adjacent/curious where Rebecca Traister is concerned, as well as Heather Havrilesky, Amy Poehler, Samantha Power, Wanda Sykes, Ani DeFranco, Anne Lamott, Dolly Parton, and Bjork. (Or so their attorneys tell mine.)

Awesome as Traister is (and we've Salon-overlapped in person a few times. She rocks in person AND on paper), each week she wows me with her insights. Finally, this week, I had to blog my frickin' heart out over her. She's talking about two bad-mommy/bad-daddy memoirs that just came out. (Mom's here. Dad's here.) Damned if her childless ass doesn't see through to the heart of things:

Like Hillary Clinton, who proposed healthcare reform that made her a pariah in 1993, and 15 years later found herself campaigning against half a dozen candidates using her ideas as a model, Waldman may have found that her outrageous reputation has been eclipsed by a blogosphere drowning in bad mother confessionals. But she is still a true lightning rod, and her new book is generously studded with Ayelet-astic grenades. She writes of aborting a baby at a comparatively late stage because of a genetic abnormality, and in her ensuing grief and guilt, wreaking havoc on other women suffering similarly by joining their online "heartbreaking choice" support group and then insisting that they use the word "abortion" to come to terms with what they had done. Waldman writes about how she gave up her beloved criminal defense job not because she was anxious to slough off her professional responsibilities or because it was a pragmatic necessity, but because she was jealous of her work-at-home husband's days alone with their baby. She writes about her disappointment at the fact that her children are not exceptionally gifted, and the stages of denial, grief and anger upon learning that one of her kids had some learning issues. She confesses her surety that she will one day be jealous of her son's wife, and her fears that her kids will inherit her bipolar disorder.
Waldman remains an invaluable answer to Caitlin Flanagan, the silver-tongued specter of maternal servility. From the first, she admits to escaping the doldrums of her self-determined stay-at-home motherhood by developing her writing career, something Flanagan rarely cops to in her profitably published paeans to opting out. Where Flanagan flogs her formula for marital bliss, which is that if you serve your husband hot meals, keep his house, raise his kids and give him blow jobs, he will repay you by remaining faithful and caring for you through illness, Waldman's considerably more appealing equation is that if your husband cooks a hot meal, does a load of laundry and shoulders his half of the childcare, he will get a blow job.

Take that! Fucking Flanagan.

Lewis (whom I idolized at the dawn of my New Republic-launched career), Traister channels thusly:

Slashing the Budget

The Obama administration released its budget today, and among other things it includes $17 billion in program cuts, which, as the Washington Post reminds us, "would amount to only about one-half of 1 percent of the $3.4 trillion federal budget."  Fair enough, even though I think these exercises are useful anyway.  There's less room for discretionary spending cuts than people think, but just being willing to admit that some programs don't work is a worthwhile signal to send regardless of whether or not the dollar amount ends up being huge. Take this, for example:

Educational attaché, Paris, France ($632,000).  The Department of Education can use e-mail, video conferencing, and modest travel to replace a full-time representative to UNESCO in Paris, France.

Seriously?  A single UNESCO rep costs us $632,000?  Does he live at Versailles?  Nice gig if you can get it, I guess.

UPDATE: Matt Yglesias has the official explanation here.

Note to Young Skinheads

When will bigots come up with slurs our children can relate to? From the Raleigh-Durham News and Observer:

AIPAC on the Run?

Change in Washington? How about AIPAC, the pro-Israel super-lobby, losing its stranglehold on Congress and the White House? The Forward reports:
"You're not going to like my saying this," Vice President Joe Biden told 6,000 delegates from the podium of the American Israel Public Affairs Committee's annual policy conference - a spot that politicians usually vie over vigorously for the privilege of telling the crowd what they want to hear.
But Biden, after sending up his rhetorical warning, used his May 5 keynote speech to the pro-Israel lobby to convey the Obama administration's insistence on a number of policies directly conflicting with those of the new government in Israel - and some policies held by previous Israeli governments, too.
Other speakers, such as Democratic Senator John Kerry of Massachusetts, chairman of the Senate Foreign Relations Committee, underlined Biden's points on the need for Israel to stop expanding settlements in the West Bank and accept the necessity of a two-state solution to resolve the Israeli-Palestinian conflict.
And when they went to lobby on Capitol Hill, AIPAC delegates even found some stalwart supporters in Congress holding back on one of their key legislative initiatives - a full-court press to impose new sanctions on Iran to accompany the Obama administration's drive to engage Tehran diplomatically.
What's next? Obama pushing Israel to acknowledge it has nuclear weapons and to sign the Nonproliferation Treaty? Maybe not. But the dynamic between Washington and AIPAC is shifting, and Bibi Netanyanhu ought to take note.

What Color Is the Sky in GOP-land?

How excruciating it is to be a GOP conservative with any minute strand of integrity or intellectual ability? If you want to see Mike Pence (R-Ind) eviscerated by Chris Matthews for refusing to answer a simple question, watch this.

It's painfully obvious that Pence believes in evolution but has been so Limbaugh-ized, he prefers to babble incoherently rather than say "Yes, I believe in evolution." And global warming, and the need for conservation. By the time it was over, poor Pence was blithering on about belonging to the party of Teddy Roosevelt, who started the national park system and hugged pandas daily. Near as I can tell.

Here's a snippet from HuffPo:

Stress Test Finale

The Wall Street Journal reports on the results of the stress tests:

The Federal Reserve directed at least seven of the nation's biggest banks to bolster their capital levels by $65 billion while effectively blessing the stability of six others, marking for the first time a bold line between some of the nation's stronger and weaker banks.

All I can say at this point is that I'm baffled.  If Geithner is right, then everything is fine and the banking system was never really in very big trouble.  $65 billion is nothing.  But if the IMF is right, American banks are nearly $300 billion short.  If Nouriel Roubini is right, the shortfall might be even greater.

So who is right?  I have no idea.  "All Americans should be confident that these institutions are going to be viable institutions going forward," Geithner said tonight, and I sure hope that's the straight dope.  But these discrepancies are simply too large to wave away.  Somebody is way, way off base, and I'd sure like to know who it is.

Too Good to Check

In the current issue of the New Yorker, Malcolm Gladwell has an article about how scrappy underdogs using insurgent tactics can beat the big guys, and the whole piece is wrapped around the story of a kids' basketball team that did really well using a full court press against better teams.  So why doesn't every underdog basketball team use a full court press?  Huh?

Reading this, I got sort of interested because I've wondered more or less the same thing from time to time.  It seems to me that the full court press is pretty effective.  On the other hand, I don't know squat about basketball, and I sort of vaguely figured that professional basketball coaches do, which means there's probably a pretty good reason that the press isn't ubiquitous.  Chad Orzel provides the answer:

The press works, as long as the other team isn't ready for it. The idea of a full-court press is to force the opponent into a rushed and frenetic game and get them out of their routine. A team that's ready for it, though, and has skilled and disciplined players, won't get rattled by the press, and can pick the press apart for lots of easy baskets. You can use the full-court press to rattle a superior team that isn't expecting it, but if they know it's coming, there are a lot of ways that pressure defense can fall apart — missed traps in the back court lead to two- or three-on-one breaks, over-aggressive defense leads to fouls, etc. The teams that have won titles using pressure basketball have also had lots of talent, because you need something to fall back on if the press doesn't work.

Like Chad, it's stuff like this that makes me wonder about Gladwell.  He's an engaging writer and he picks interesting subjects, but there are really only two alternatives here.  Either (a) he wrote this piece without bothering to learn enough about basketball to understand why the press isn't used much above the kiddie league level or (b) he knew the answer but chose not to share it with his readers because it would wreck his story.  Unfortunately, I suspect the answer is (b).  He seems like a guy who sometimes decides not to let the facts get in his way once he's settled on a good narrative.

Plus, as Chad says, Gladwell seems oddly insensitive to the criticism that "playing '40 Minutes of Hell' is kind of a dick move in a league of twelve-year-old girls."  But, really, it is.  The coach who did this isn't a brilliant innovator, he's kind of a dick.

In a move the AP described as “riding a crest of populist anger,” the House last week passed a credit card reform bill that goes after some of the industry's most predatory practices. But even if it makes its way into law, the new legislation will still leave the people plenty to be angry about. Credit card issuers have been furiously jacking up interest rates (even as the Fed cuts them), lowering credit limits, and generally scrambling to take another pound of flesh from an already battered American public.

Credit cards have yet another perverse effect on the overall economy, as well: They force up consumer prices. “Little attention has been given to the $48 billion in fees that credit card companies extracted from merchants last year,’’ writes Stacy Mitchell of the New Rules Project. “Largely invisible to the public, these fees, which amount to $427 per household, are ultimately passed on as higher prices to all consumers, whether they use plastic or not.’’ Most of these transaction fees are collected by Visa, MasterCard, and American Express, which together control 93 percent of credit card transactions in the United States.

While Visa and MasterCard set the rates--now averaging about 2 percent--it's the big banks issuing the credit cards that collect the fees. "Issuing credit cards has become a highly concentrated industry," Mitchell notes. "The top four card issuers— Citigroup, Bank of America, JP Morgan Chase, and Capital One— account for more than 70% of all cards in circulation.” Following the release of the "stress test" results, at least two of these four banks are expected to line up for a new round of bailouts from the federal government. Yet they will continue simultaneously dipping into the narrow margins of America’s business owners.