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Gallows Humor of the Bailout Variety

| Mon Sep. 22, 2008 10:17 PM EDT

You always want to be on the lookout for these blank check scams:

Dear American:
I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.
I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.
I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transactin is 100% safe.
This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.
Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.
Yours Faithfully Minister of Treasury Paulson

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24 Days and Counting

| Mon Sep. 22, 2008 8:16 PM EDT

24 DAYS AND COUNTING....The Washington Post is miffed:

John McCain selected Alaska Gov. Sarah Palin to be his running mate 23 days ago. Since then, Ms. Palin has not held a single news conference with the national media....Meanwhile, Mr. McCain, who once referred to the media as his base, has himself become inaccessible. He promised to hold weekly news conferences as president but has not held a news conference as a candidate in more than a month. A candidate who stiffs the media on the campaign trail isn't likely to perform better once in office.

It's really pretty amazing. Can they get away with it? Or will the press eventually succumb to Steve Schmidt's comical bleatings about how unfair everyone is being to John and Sarah? Wait and see!

And speaking of comical bleatings, it seems that conservatives are finally coming out of their fetal crouch on the Wall Street mess and going on the offensive, desperately trying out new and innovative ways to convince America that a financial crisis brought on by deregulation is the fault of — yes! — Democrats. Fannie Mae! CRA! Sarbanes-Oxley! They'd probably toss in repeal of Glass-Steagall just for the hell of it if it hadn't been quite so obviously the brainchild of McCain's consensus future secretary of the Treasury. Their campaign to alter reality isn't working so far, which gives me renewed faith in the common sense of the American public, but I don't expect them to stop trying. By this time next week they'll be blaming the fact that FDR screwed around with the price of gold in 1933.

New Study Puts The "Perma" Back In Permafrost

| Mon Sep. 22, 2008 6:38 PM EDT

It's not perfect, but it's something: A new study from researchers at the University of Alberta says that Arctic permafrost may be less vulnerable to global warming than previously thought.

The study, which will be published tomorrow in the journal Science, found that a permafrost ice wedge in Canada's Yukon Territory is more than 700,000 years old, meaning that it withstood two previous cycles of intense warming. Lead researcher Duane Froese said that the findings mean we're further from a widespread thawing—and the catastrophic release of carbon and other gases that would accompany it—than earlier predictions have suggested.

Great, right? Not so fast, says Froese. While deep, ancient frost like the chunk he studied may be safe, the top layers of permafrost, formed much more recently, remain in serious danger. And it's those layers that could cause the most damage.

Still, it's heartening to know that at least some parts of the Earth are more resilient than we think they are. Of course, 700,000 years ago, no one was trying to see how far they could push that resilience.

Emmys Political References: And the Winner Is...

| Mon Sep. 22, 2008 6:12 PM EDT

mojo-photo-emmypolitics.jpgI'm embarrassed to admit I even watched part of the Emmys telecast last night, though in my defense it just happened to be on during dinner, and I was flipping back and forth to Die Hard With a Vengeance, at least. The ceremony managed to exaggerate the most infuriating aspects of awards shows, extending the pointless blather and witless tributes while cutting off speeches after about three seconds. Apparently America agreed, as the broadcast achieved the lowest ratings in the history of the Emmys. Congratulations.

One of the few highlights of the show was waiting to see what sly (or not-so-sly) political reference would come next. There were quite a few, with winners and presenters perhaps inspired by the stultifying boredom of the rest of the ceremony. In any event, please welcome Party Ben to present the five nominees for best political commentary at the Emmys broadcast last night.

Dodd Takes the Lead, Proposes Progressive Bailout

| Mon Sep. 22, 2008 5:39 PM EDT

Politico (totally "in the tank," by the way) has a copy of Chris Dodd's alternative to Treasury Secretary Paulson's bailout plan for Wall Street. While Dodd provides the Treasury Department with the authority it needs to buy up all of Wall Streets "distressed assets" (that's the point of the $700 million), it comes with a bunch of provisions that Paulson neglected. Basically, Dodd is trying to seize this opportunity to achieve progressive goals that would not be manageable in a more market-, deregulation-, and Wall Street-friendly environment.

Authority for bankruptcy judges to restructure mortgages for homeowners facing foreclosure. This was considered a poison pill in a housing bill that passed Congress earlier this summer, but it has gained much more currency now that Washington wants to bail out Wall Street.
A provision that would require the Treasury to take a 65 percent portion of 20 percent any profits [sic] it makes from the newly purchased assets and put it into the federal government's HOPE program, an affordable housing program.
An oversight board that not only includes the chairman of the Federal Reserve and the SEC, but congressionally appointed, non-governmental officials.
Limits on executive compensation. This is a major stumbling point for Paulson in his negotiations with Congress, but cracking down on Wall Street executive salaries will be a major selling point for lawmakers. Dodd and Frank have put in place what's known as a "claw back" provision aimed at revoking compensation that executives received based on fraudulent claims.
An independent inspector general to investigate the Treasury asset program, appointed by the president.

Democrats control the Senate. If they want to, they can play hardball. They can tell the Republicans, "We insist that all or most of these provisions pass. If you block them, your buddies on Wall Street burn. And we tar you as playing obstructionist games during a time of national crisis." The Republicans can respond by holding up the bill and then arguing in the press that any inaction in a Democratic-controlled Congress is the fault of the Democrats. But with the public likely in favor of the common sense measures included in the Dodd bill, that would place the GOP in a very tight spot.

We Said We Wanted Rick's Record Examined? Scratch That

| Mon Sep. 22, 2008 5:19 PM EDT

John McCain, yesterday on CNBC:

My campaign manager [Rick Davis] has stopped [lobbying for Fannie Mae], has had nothing to do with it since, and I'll be glad to have his record examined by anybody who wants to look at it.

The New York Times, today:

Senator John McCain's campaign manager was paid more than $30,000 a month for five years as president of an advocacy group set up by the mortgage giants Fannie Mae and Freddie Mac to defend them against stricter regulations, current and former officials say.

The McCain campaign, today, in response to the Times:

"Whatever the New York Times once was, it is today not by any standard a journalistic organization.... [it is] an organization completely, totally 150-percent in the tank for the Democratic candidate."

H/T Think Progress.

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Top Alaskan GOPer Decries McCain Camp's Interference in Palin-Troopergate Probe

| Mon Sep. 22, 2008 4:25 PM EDT

Republican State Senator Lyda Green, the president of the Alaska Senate, has been no fan of Governor Sarah Palin. After John McCain tapped Palin to be his running mate, Green told the Anchorage Daily News, "She's not prepared to be governor. How can she be prepared to be vice president or president? Look at what she's done to this state. What would she do to the nation?"

For two years, Green feuded with Palin over key policy matters. But in recent days, Green has become even more dismayed with the Palin pick, for she believes the McCain-Palin campaign has undermined the rule of law in the Last Frontier. She says she has watched with outrage as McCain-Palin operatives have flown into her state and interfered with the so-called Troopergate investigation--the official, approved-by-the-legislature inquiry into whether Palin dismissed her public safety commissioner because he refused to fire her ex-brother-in-law, a state trooper who went through a messy divorce with Palin's sister.

Calling herself a "raging Republican," Green says, she is "absolutely disgusted, embarrassed, and ashamed" by the McCain-Palin campaign's intervention in the Troopergate probe. Over a week ago, McCain campaign aides began handling the investigation for Palin. The campaign dispatched Edward O'Callaghan, who recently had been a terrorism prosecutor in the Justice Department, to Alaska to oversee Palin's legal strategy. O'Callaghan then declared she would not cooperate with the inquiry. (Before becoming the GOP vice presidential nominee, Palin had repeatedly vowed to cooperate. At one point, she said, "I'm happy to comply, to cooperate. I have absolutely nothing to hide.") And last Thursday, O'Callaghan announced that Palin's husband, Todd, would not heed a subpoena to appear before a state legislative committee to testify about his role in Troopergate.

How the Rich Are Destroying the Earth Smashes Capitalism

| Mon Sep. 22, 2008 4:24 PM EDT

howtherich.jpg On his way out of the Tokyo G8 summit on climate change last July, President Bush famously punched the air and announced with his trademark grin, "Goodbye from the world's biggest polluter!" At that moment Dubya could have been the mascot for Herve Kempf's How The Rich Are Destroying the Earth, a polemic about the world's wealthiest people, who treat global warming like an inconvenient joke.

The villains of Kempf's book are familiar: an oligarchy that consumes greedily and a capitalist system that inspires others to do the same. The rich insulate themselves from the environmental havoc they wreak, while the poor pay the price, with skyrocketing asthma rates and living quarters near dumps. Kempf, an environmental reporter for the French newspaper Le Monde, navigates this well-worn territory with confidence and clarity. But when it comes to making his main point—that the rich are singularly responsible for environmental downfall—his case falls apart.

Current Values

| Mon Sep. 22, 2008 4:08 PM EDT

CURRENT VALUES....Paul Krugman says the Paulson bailout will only work if it recapitalizes banks by overpaying for the toxic waste that the Treasury takes off their hands. Brad DeLong begs to differ:

Financial institutions will be grossly undercapitalized if bond prices don't recover and will be well capitalized if bond prices do recover. The way to make bond prices recover — and housing prices as well — is to boost the economy's risk tolerance by raising demand for risky assets and reducing the burden of risk that the private sector needs to hold by reducing the supply of risky assets on the private market. You reduce the supply of risky assets by having the government buy them up. You expand the demand for risky assets by restoring confidence and by providing capital injections. You do both of these at fair prices — at current values — and you find that values have changed without the governent having to overpay for anything.

I followed this all the way up to the last sentence. In particular, this part:

at fair prices — at current values —

But isn't that the rub? You can't simply declare that current value and fair value are the same thing and then walk away. That's the whole argument. After all, there are already plenty of vulture funds who are prepared to buy toxic mortgage securities at current prices — which are close to zero — but banks aren't willing to sell it off at those prices because (a) it would make them insolvent and (b) they think that once the panic subsides everyone will realize that this stuff is worth a bit more than we currently think.

Who's right? Nobody knows. But I will say this: many liberals, myself included, think the Fed should be more aggressive about fighting asset bubbles. However, that implicitly suggests that we don't think the market always values assets properly, and that occasionally the government needs to step in to keep everyone on an even keel. But if that's true for bubbles, it's also true for panics. So maybe the banks are right: maybe this stuff is being misvalued by the market, and maybe the government should step in to keep everyone on an even keel. But that means buying toxic waste at higher than current values, right?

Needless to say, the feds ought to get equity stakes or senior debt or something to protect against the possibility that all this toxic waste really is worthless. But given that plenty of people are already willing to buy distressed assets at their current, fire sale values, there's no point in the feds getting involved in a bailout in the first place unless they're planning to buy at higher than market prices. Right?

The Wages of Egalitarianism

| Mon Sep. 22, 2008 3:14 PM EDT

THE WAGES OF EGALITARIANISM....We all know that men earn more than women. Is this due to sex discrimination? Or is it caused by differences in educational levels? Or different job preferences? Or average experience levels? Or number of hours worked?

Or, just maybe, none of the above. In a new study by Timothy Judge and Beth Livingston, which attempts to control for gender, age, race, marital status, education, hours worked, number of children, initial earnings, job complexity, and occupational segregation (i.e., the possibility that men on average simply choose more lucrative professions), the authors found that men and women actually earned almost exactly the same amount of money — but only if you compared men and women who had egalitarian notions of gender roles. Under the same circumstances, if you compared men and women with traditional views of gender roles, the men earned a stunning $14,404 more.

What's more, the big difference isn't that traditionally minded women, who might be expected to have spent less time in the work force, make all that much less. The big difference is that traditionally minded men make way more money than any of the other three groups — including other men. Shankar Vedantam talks to the authors in the Washington Post today:

Livingston said she was taken aback by the results. "We actually thought maybe men with traditional attitudes work in more complex jobs that pay more or select higher-paying occupations," she said. "Regardless of the jobs people chose, or how long they worked at them, there was still a significant effect of gender role attitudes on income."

....Livingston and Judge said there are two possible explanations: Traditional-minded men might negotiate much harder for better salaries, especially when compared with traditional-minded women. Alternatively, it could also be that employers discriminate against women and men who do not subscribe to traditional gender roles.

"It could be that traditional men are hypercompetitive salary negotiators — the Donald Trump prototype, perhaps," Judge said. "It could be on the employer side that, subconsciously, the men who are egalitarian are seen as effete."

The standard caveat applies here: it's really, really hard to control for everything. The controls in this study might not be perfect, and in addition there might be important factors that weren't included in the controls at all. Livingston and Judge, for example, didn't directly control for number of years in the workforce. It's not clear why traditionally-minded men might have more average years in the workforce than egalitarian men, but who knows? They might.

Still, the effect is monstrously huge. Since it turns some of our usual notions of wage disparity upside down, it's certainly worth some attention.