Legacy of Lies: The Great Economic Cover-Up

Remember back in February, when Bill Clinton urged Obama to be more “upbeat” about the economy? Clinton actually implied that the new president could be making the financial crisis worse by being honest about how bad it was, thereby rattling public confidence—and with it, the market. You’d have thought the primary campaign would be enough to convince Obama that nothing good could come from Clinton homme. But the president has clearly taken a page from Clinton’s playbook. He now largely avoids statements that might frighten the horses in favor of cheerful declarations that we are at “a turning point in our pursuit of global economic recovery,” while at the same time promoting the latest bank bailout plan, which he says will get us there.

There are plenty of reasons why its wrong to try to buoy up a sinking economy on a raft of positive rhetoric—among them, the fact that it obscures what actually happened in the past, and clouds our judgment about what should be done to “fix” it. In the current issue of Newsweek, Daniel Gross comments on the Orwellian linguistic feat by which the government seeks to rebrand the piles of worthless crap created by our financial system.

Remember those toxic assets? The poorly performing mortgages and collateralized debt obligations festering on the books of banks that made truly execrable lending decisions? In the latest federal bank-rescue plan, they’ve been transformed into “legacy loans” and “legacy securities”--safe for professional investors to purchase, provided, of course, they get lots of cheap government credit. It’s as if some thoughtful person had amassed, through decades of careful husbandry, a valuable collection that’s now being left as a blessing for posterity.

According to this morning’s New York Times, the administration is now taking things a step further by promoting a plan that would let us ordinary folks buy what are being called “bailout bonds”—shares in mutual fund-type bundles of lousy mortgage securities. These are supposed to eventually become profitable, thereby allowing us to share in the wealth. But of course, they could also go the other way. As the Times notes: “If, as some analysts suspect, the banks’ assets are worth even less than believed, the funds’ investors could suffer significant losses.” In other words, having been screwed once by Wall Street, we’re now being asked to bend over for a twofer—which some people just might do, if they believe the rhetoric that happy days are about to be here again.

Another point of view came from William K. Black, who was the chief federal regulator during the S&L crisis, in a long interview with Bill Moyers on Friday. Black calls Bernie Madoff a “piker” in comparison with the Wall Street giants that committed mass fraud, and are now nonetheless raking in government funds. When Moyers asks Black “why the bankers who created this mess are still calling the shots” instead of being fired like the auto executives, Black mentions the close relationships between Washington and Wall Street, which applies to Tim Geithner and Larry Summers as much as to Henry Paulson. Then he talks about what he doesn’t hesitate to call a “cover-up”:

Video: Anti-Gay Marriage Ad Audition Tapes

The National Organization for Marriage, which probably called you Vermonters recently during dinner about keeping holy wedlock away from The Gays, has a video for you. Why are the people in it more concerned about gay marriage than the lightning bolts falling around them? Never mind, watch people flub their homophobic lines on these audition tapes instead:

UPDATE: The audition tapes are already inspiring YouTube parodies.

The Circular Firing Squad

We liberals are our own worst enemies sometimes.  Take climate change.  For over a decade we've been promoting the idea of cap-and-trade as a way of dealing with carbon emissions, partly for technical reasons (unlike a carbon tax, it imposes firm caps) but also — in fact, mostly — for pragmatic and political reasons.  A carbon tax, even if it has some theoretical advantages, is unlikely ever to happen.  We all know why.  Cap-and-trade, because it uses market mechanisms, has a proven track record with acid rain control, and raises money via auctions rather than taxes, has at least a fighting chance.

So now that liberals are in control of Congress and the White House and have an actual chance to pass legislation, what happens?  Everyone starts talking about carbon taxes instead.  Because, you know, in some theoretical economic sense you can argue that they're more efficient.  It's enough to make you scream sometimes.  At least, that's what it did to David Roberts, who must have been reading my mind after digesting Tom Friedman's most recent column:

So now, on the cusp of an enormous fight against dishonest and well-funded proponents of doing nothing, Friedman decides it’s time for “an alternative strategy, message and messenger”? Are you f*cking kidding me?! The only conceivable effect Friedman’s endorsement of an alternative bill can have is to divide support and distract attention from the best chance for a serious energy/climate bill in 30 years. His timing could not possibly be worse.

I’m sure Friedman would respond that hey, he’s not a Democratic operative. He’s an independent thinker. He’s under no obligation to stump for a bill that doesn’t make his mustache tingle. And in this he’s like all progressives. They all want to be the Smartest One in the Room. None of them want to sully their purity by compromising or rowing in the same direction. They all want to show how you clever they are, how their pony plan, their messaging, their strategy is the one those silly legislators ought to be using. Meanwhile, the coordinated opposition kicks their ass, over and over again. But at least they’re clever!

Be sure to read the rest of the rant.  As David points out, the key part of cap-and-trade is the cap, not the trade.  And contra Friedman, it's not hard to explain a cap on carbon.  In fact, it's a lot easier than trying to explain why a tax will reduce global warming.  Here's the elevator pitch: "We're going to reduce carbon emissions by setting a nationwide cap on carbon emissions."  See?  It's easy!

It's true that the trade part of cap-and-trade makes things more complicated, but it's not all that complicated.  It's just designed to lower the cost of complying with the cap and make everything a little more efficient.  Still, the cap is the key.  And as for complexity, anyone who thinks that a carbon tax — an actual, real-world carbon tax, not the chalkboard variety — would be nice and simple, hasn't been paying attention to the way Congress has been making tax policy for the past 200 years.  "Simple" is not a word that usually gets used in the same sentence.

The Anti-Gay Commercial, Plus 'Talking Points'

By now, some of you have surely seen the National Organization for Marriage's anti-gay marriage commercials being aired across the nation in response to recent developments in Vermont and Iowa. If not, you can see them online here. The Human Rights Campaign has already rebutted the commercial's claims very well, so I won't go into that except to say Mother Jones wrote extensively about the case involving the "California doctor" who says she's forced to choose "between my faith and my job."

Like others in the blogosphere, I thought the commercial was pretty heinous, not to mention factually inaccurate. But my jaw really dropped when I went to NOM's site and read the suggested "talking points" supporters can use when confronted by pro-gay marriage folks. Here's one gem: "We need a marriage amendment to settle the gay marriage issue once and for all, so we don’t have it in our face every day for the next ten years." That's right: they said "in our face." I'm taking this to mean, "Why can't you people just go back in the closet and stop asking for rights?" That said, I agree with NOM. We do need a marriage amendment. But if this map is any indication, I don't think it'll be the amendment NOM is hoping for.

Another online amusement: NOM lists answers supporters can give to common, but uncomfortable, questions such as "Are you a bigot?" and "Isn't the ban on gay marriage like bans on interracial marriage?" The suggested answers really speak for themselves. Apparently banning interracial marriage was about "keeping two races apart so one race could oppress the other." And gay marriage has absolutely nothing to with keeping two kinds of people apart or oppressing one of them, right? Right. Seriously, the rest of the questions and answers are pretty priceless. You can check them out here

 

Tar Sands Bad for Caribou

If health problems and polluted rivers weren't enough reason to worry aboout Canada's energy boom, here's another red flag: Declining caribou. According to a report scheduled to be released today by the Canadian government, herds of woodland caribou are struggling to survive in the boreal forests of southern Canada:

Parts of the highly technical, 300-page report show caribou herds are likeliest to decline in northern Alberta, northern Saskatchewan and the Northwest Territories.

A boom in natural resources such as oil and gas has spurred industrial development in those parts of the country, disturbing the caribou's habitat.

Of 57 recognized herds, 29 are are "not self sustaining," says the report. If the current trend continues, woodland caribou could be gone by the end of the century. For a great visual, check out National Geographic's photo essay on the tar sands. Doesn't exactly look like caribou paradise.

Are Nazis Funny? Even in Berlin?

Mel Brooks' "The Producers" is set to open in Berlin in May. It's even being performed in a theater that used to have a luxurious "Führer's Box" for Hitler. But how will Brooks' musical, with its 20-foot swastikas and singing stormtroopers, be received? As Der Spiegel points out, the musical has already had runs in Vienna (modestly successful) and Tel Aviv. So it was really only a matter of time before it came to the Fatherland. According to the Berlin theater's manager, advance ticket sales are doing well. Still, what a strange experience to see a fey, dancing, Hitler sing "Heil Myself" in the same theater where the real Hitler once watched "The Merry Widow."

 

What Does "Pass" Mean to You?

This is a peculiar story from the New York Times:

For the last eight weeks, nearly 200 federal examiners have labored inside some of the nation’s biggest banks to determine how those institutions would hold up if the recession deepened.

....Regulators say all 19 banks undergoing the exams will pass them. Indeed, they say this is a test that a bank simply will not fail: if the examiners determine that a bank needs “exceptional assistance,” the government, that is, taxpayers, will provide it.

....Regulators recognize that for the tests to be credible, not all of the banks can be winners. And it is becoming increasingly clear, industry insiders say, that the government will use its findings to press certain banks to sell troubled assets. The hope is that by cleansing their balance sheets, banks will be able to lure private capital, stabilizing the entire industry.

So what have we learned here?  First: all 19 banks will pass.  Second: not all the banks can be winners.  Third: the ones that pass — but aren't winners! — will be propped up by taxpayers.  Fourth: no, they won't be propped up by taxpayers, they'll be forced to sell assets and raise private capital.

Huh?  Which is it?  If by "pass," regulators merely mean that a bank won't be instantly seized and its management defenestrated, then I guess this makes sense.  Awards for all!  On the other hand, the prospect of a bank getting a "needs improvement" grade and then successfully selling a big stock issue to raise private capital is just fanciful.  Even banks that pass with flying colors will have trouble doing that.

So what's going on here?  Why are Treasury officials privately telling reporters that everyone is going to pass but that some banks will receive a pass-minus and may be required to do things that are almost certainly impossible?  Are they just trying to lay the groundwork for failure and temporary nationalization later on?  Or what?

I'm having a harder and harder time figuring out what's going on as time goes by.  If everything is on the up and up, it doesn't make sense.  If there are hidden wheels, though, I'm not sure they make sense either.  Just what is Treasury up to?

How to Make Farm Subsidy Reform a Reality

Make sure to check out Grist's long take on this NYT article on the Obama Administration's botched attempt to reform farm subsidies. Basically, the issue is this: the parts of Congress that oversee food and farm policy are completely beholden to large farm producers (aka Big Agribusiness). Big Ag gets rich off the current system and fights any reform. Obama didn't make a big deal about overhauling farm policy -- he simply slipped a couple key farm subsidy reforms into the budget bill from earlier this month. Naturally, they were spiked by Congress, which, though craven on a number of issues, is particularly craven on this issue. There was no reason to expect otherwise.

(For all the reasons why farm policy in this country sucks, see here and here.)

I know the Obama White House doesn't have the bandwidth for this right now, but the only thing that is going to really change America's food policy -- so that it benefits small farmers, eaters, and the environment, instead of big agricultural producers -- is an organized campaign with grassroots support behind it. It will take commitment, money, and energy on a scale that is close to what Obama and his allies are soon going to put into universal health care and comprehensive climate change legislation. This is unlikely for a number of reasons, not least that the public is largely unaware of the problems with food and farm policy. But it's hard to see how anything short of that is going to be effective. Does Obama have the political courage and the political capital to make that happen? Doubtful. Would any president?

One last note -- if you haven't already, check out Grist's hot new site.

Gay Marriage Leads To Mass Murder?

Is there a connection between same-sex marriage and mass murder?

That's what one religious right outfit is suggesting. This week, Morality in Media disseminated a statement noting that the Iowa Supreme Court had legalized gay marriage on the same day that a gunman murdered 13 people in Binghamton, New York. The headline on the release: "Connecting the Dots: The Line Between Gay Marriage and Mass Murders." The group's president, Bob Peters, notes that the "underlying problem is that increasingly we live in a 'post-Christian' society, where Judeo-Christian faith and values have less and less influence." And, he continues, this "secular value system is also reflected in the 'sexual revolution,' which is the driving force behind the push for 'gay marriage.'"

Here's the punch line:

It most certainly is not my intention to blame the epidemic of mass murders on the gay rights movement! It is my intention to point out that the success of the sexual revolution is inversely proportional to the decline in morality; and it is the decline of morality (and the faith that so often under girds it) that is the underlying cause of our modern day epidemic of mass murders. 

That is, he's not saying that gay rights activists are directly responsible for the murderous actions of gun-toting madmen. But Peters maintains that those who champion gay rights are undermining the moral fiber of society and that this assault on traditional values creates an environment in which killing sprees can more easily occur. These acts of gun violence, he insists, are the poisoned fruit of the push for gay marriage.

Talk about exploiting tragedy to advance an agenda. It might be tempting to dismiss Peters and Morality in Media as marginal, but this group did receive federal funding from 2005 through 2007. The money supported a Morality in Media project, ObscenityCrimes.org, which paid two retired law enforcement officers to review citizen complaints about obscenity on the Internet and to forward the best leads to the US Justice Department for possible prosecution. A total of $300,000 was provided to Morality in Media through two earmarks Rep. Frank Wolf (R-Va.) placed into spending bills, according to Peters. And a portion of that money went to cover Peters' salary. As The New York Times reported in 2007, no obscenity prosecutions had resulted from the Morality in Media's obscenity-tracking work.

Peters tells me that since 2007--thanks to the fuss about earmarks--he has received no more funds from the US government. After the earmarked grants ran out in 2007, he did apply directly to the Justice Department and was turned down. Since then, he has raised private funds to keep ObscenityCrimes.org going. That may be for the best--particularly for Morality in Media. Peters has recently attacked President Barack Obama's pick for deputy attorney general, David Ogden, as an "ACLU-minded" sort who would "likely weaken" government efforts "to curb sexual trafficking and sexual exploitation of children." It would be difficult--or, at least, awkward--for Peters to blast a Justice Department that was funding his own work.

In his statement on gay marriage and mass murder, Peters notes that Christianity and Judaism teach "that we are to love our neighbors as ourselves and to forgive others." But on the subject of gay marriage, he does seem to have a rather unforgiving approach.

Tradecraft Update

A new entry in the annals of epic fails:

Bob Quick, Britain's most senior counterterrorism officer, was forced to stand down today after an embarrassing security leak resulted in a major anti-terror operation, designed to foil an alleged al-Qaida plot to bomb Britain, being rushed forward.

....Police were forced to carry out raids on addresses in the north-west of England in broad daylight yesterday, earlier than planned, after Quick, the Metropolitan police's assistant commissioner, was photographed carrying sensitive documents as he arrived for a meeting in Downing Street.

A white document marked "secret", which carried details of the operation being planned by MI5 and several police forces, was clearly visible to press photographers equipped with telephoto lenses.

The Guardian helpfully reproduces an enlarged, rotated, redacted version of the document here.