Don't Bank on It: FDIC Running Out of Money

Driven by a tanking stock market, a lot of people are looking to move their money to a “safe” place. This is especially  true of older people, who don’t have the option to follow the advice that’s being doled out by most money managers, which is to “stick it out” and wait for the market to “come back.” The safest place of all is supposed to be an FDIC-insured bank, where it may earn no more than a pittance, but it will at least be protected, since up to $250,000 in deposits for each individual are backed by the federal government through the Federal Deposit Insurance Corporation.

The problem is, the FDIC is now running out of money itself. According to Bloomberg news:

Federal Deposit Insurance Corp. Chairman Sheila Bair said the fund it uses to protect customer deposits at U.S. banks could dry up amid a surge in bank failures, as she responded to an industry outcry against new fees approved by the agency….

The fund, which lost $33.5 billion in 2008, was drained by 25 bank failures last year. Sixteen banks have failed so far this year, further straining the fund.

Banks are reportedly upset that they are being asked to pay additional fees to the government to shore up the FDIC. They are accustomed to money flowing only in the other direction–from the government's coffers into theirs.

Scaling Up

True confession: as a blogger, I like articles that have a clear takeaway which I can excerpt and comment on.  If there isn't one, I sometimes put the piece aside and then never get back to it.  Bad blogger.

Paul Roberts has a piece like that in our current issue.  It's about food, and it's got way too many moving parts to summarize fairly.  So here's a sort of randomly chosen taste:

When most of us imagine what a sustainable food economy might look like, chances are we picture a variation on something that already exists — such as organic farming, or a network of local farms and farmers markets, or urban pea patches — only on a much larger scale....But that's not the reality. Many of the familiar models don't work well on the scale required to need billions of people.

....Consider what it would take to make our farm system entirely organic. The only reason industrial organic agriculture can get away with replenishing its soils with manure or by planting nitrogen-fixing cover crops is that the industry is so tiny — making up less than 3 percent of the US food supply (and just 5.3 percent even in gung-ho green cultures like Austria's). If we wanted to rid the world of synthetic fertilizer use — and assuming dietary habits remain constant—the extra land we'd need for cover crops or forage (to feed the animals to make the manure) would more than double, possibly triple, the current area of farmland, according to Vaclav Smil, an environmental scientist at the University of Manitoba. Such an expansion, Smil notes, "would require complete elimination of all tropical rainforests, conversion of a large part of tropical and subtropical grasslands to cropland, and the return of a substantial share of the labor force to field farming — making this clearly only a theoretical notion."

I'm something of a bug about scale problems, so this whole theme appeals to me.  But the rest of the article is really good too.  It's well worth a few minutes of your time.

Choosing a C-Something-O

We don't have a CTO yet, but we do now have a national CIO, a 34-year-old by the name of Vivek Kundra. Early reports suggest that his job portfolio will include a lot of things one would expect a CTO to do, which makes sense since Kundra's previous job was Washington DC's CTO. And by all accounts, he was exceptional it.

Maybe a CTO will be next. He or she will likely be Kundra's close partner. Together, they'll be doing some of the most cutting edge stuff in the administration, like using technology to democratize government information, encourage citizen engagement, and increase transparency across the executive branch.

Oh, and by the way, my favorite part of this WaPo profile of Kundra?

Kundra was born in India and moved to Tanzania at a young age. His family came to Gaithersburg when he was 11. His first language is Swahili.

One of his earliest memories after moving to Maryland is seeing a TV commercial for dog food. "I was shocked," he said. "I was used to seeing people starve in Africa. It was mind-boggling to me that people could afford to feed their dogs!"

Zombie Auto Companies

Megan McArdle argues today that GM's annual report makes it pretty clear that they're doomed to Chapter 11.  Unfortunately, she makes a pretty good case.  And though she doesn't say it, there's probably an equally good case to be made that Chrysler can't even hope for that.  Liquidation may be all that's left for them.  This is bad.

Ban the Laptop!

At the beginning of his Criminal Law class last semester, Eugene Volokh decided to ban laptops as an experiment.  So how did it go?  As the post-class survey summarized below shows, pretty well.  Unsurprisingly, the ban was a net negative for note taking, but it turned out to be a pretty strong net positive on every other scale.  This is mostly of interest to students and professors, but even outside academia it's an intriguing data point for anyone who thinks that the increasing device-driven ADD in modern America might deserve a little more pushback than it usually gets and would like some evidence to back up their instinct.

DA's Link Arms With Sleazy Debt Collectors

It's hard to believe anyone really writes checks anymore, but apparently they do, and lots of bad ones--enough that collecting on them has turned into a big business. And according to ProPublica, one of the biggest beneficiaries of the bad-check collection biz may be your local prosecutor. District attorney offices around the country have outsourced bad check collections work to sleazy debt collectors. Because they are technically working for the local DA (check kiting is a criminal offense) the debt collectors, often pretend to be law enforcement officials when they call up to hound people into paying off their $47 checks (plus hefty fees to the collection agency), even threatening people with arrest. Writes ProPublica:

"Budget data from a dozen of the biggest counties that use ACCS show that DA offices have cashed in. Over the past four years, Los Angeles County received $1 million. In Illinois, Cook County collected more than $160,000 over a 12-month period. Florida's Miami-Dade County raked in $375,000 between April 2005 and September 2008)."

Perhaps just another good reason to pay with cash...

Screwing the Poor

Karen Tumulty writes in Time this week about her brother, Pat, who was diagnosed with kidney failure and then learned that the private insurance he'd been paying for for years wouldn't cover him.  That's bad enough, but then there's this:

A paradox of medical costs is that people who can least afford them — the uninsured — end up being charged the most. Insurance companies, with large numbers of customers, have the financial muscle to negotiate low rates from health-care providers; individuals do not. Whereas insured patients would have been charged about $900 by the hospital that performed Pat's biopsy (and pay only a small fraction of that out of their own pocket), Pat's bill was $7,756. For lab work — and there was a lot of it — he was being charged as much as six times the price an insurance company would pay.

There are lots of things to hate about our current medical system, and all of us have our own favorite things to hate.  This is mine: the fact that the system massively overcharges you if you're uninsured, and they do it just because they can.  If you're uninsured, you've got no leverage, no alternatives, no nothing.  So you get screwed.  It's like the shopkeepers who charge twenty bucks for a pair of flashlight batteries after hurricanes.  Maybe it's the free market at work, but if so, that's all the worse for the free market.  In the healthcare biz, it just doesn't work.

Are Journalists Running the Obama Administration?

Right-wingers are always complaining that journalists are hopelessly biased liberals, but lately they seem to think they have new evidence to support the old beef. The latest edition of "Obama-Biden Watch," a newsletter published by the rabidly conservative group Citizens United, contains a short feature on all of the mainstream reporters who've recently joined the Obama administration.

Among those singled out by CU: Chicago Tribune reporter Jill Zuckerman, who's headed to the Transportation Department; former Time magazine Washington bureau chief Jay Carney, who's gone to work in Biden's office; Peter Gosselin, a former Los Angeles Times reporter, who's now a speechwriter for Treasury Secretary Timothy Geithner; and former ABC News correspondent Linda Douglass, who worked on the Obama campaign and is rumored to be slated for a job at Health and Human Services. The newsletter came out before the news of Obama's appointment of Nancy Ann DeParle to a senior post at HHS, but no doubt her marriage to New York Times poverty reporter Jason DeParle might have rated a mention as well.
 
Of course plenty of journalists also went to work in the Bush administration (think Tony Snow and Karen Hughes), so the liberal bias connection is still, as always, pretty weak. But it's even weaker if you consider that this latest flight of reporters into government is happening at the same time the newspaper industry is imploding. It's not entirely surprising to find reporters from the bankrupt Tribune Company papers on the list of new Obama administration officials. In this economic climate, the government is one of the few places that's hiring!

Quagmire

Matt Yglesias reads Time magazine and writes:

Joe Klein’s article on the situation in Pakistan and Afghanistan is informative, but doesn’t inspire a ton of confidence. It seems that military planners want the Obama administration to dispatch further additional troops to Afghanistan over and above the plus-up that’s already been announced. But nobody really knows what the mission of these troops would be.

.... Just about everyone seems to agree that the more serious problems are actually in Pakistan...and they’re ultimately political in nature — related to the willingness and capability of the Pakistani government to take on Taliban groups in border areas and, importantly, related to public opinion in Pakistan regarding priorities.

He's right.  Klein's article is here, and it's dismal reading.  I never really thought the Vietnam analogy was apt in the case of the Iraq war, but in the case of Afghanistan it seems to fit all too well: troop increases every year, diminishing success rates, no real strategy in place, and major problems with neighboring countries.  Unlike Iraq, destroying al-Qaeda's ability to wage war is obviously in our national interest.  But until someone produces a credible plan for accomplishing this, it's difficult to see what we're doing there.

French Toast

Roger Cohen is scared that Barack Obama wants to turn American into France:

The $3.6 trillion Obama budget made me a little queasy. There is a touch of France in its "étatisme"....For everyone from the oil and gas industry to drug companies, the message was clear: Off with their heads!....I’d thought of Obama as less Robespierre than Talleyrand....The former French President François Mitterrand....manifold sensual, aesthetic and gastronomic pleasures offered by French savoir-vivre....High French unemployment ....French frontiers have not shifted much in centuries....careful to steer clear of his French temptation....The United States is in full post-Bush nemesis. In its core values, un-Gallicized, lies the long road to redemption.

Is there something about having a New York Times column that makes you lose your mind?  Obama wants to push taxes on the super wealthy back up to 2001 levels.  He wants to move in the direction of carbon pricing and universal healthcare, just like he promised repeatedly during the campaign.  He wants to increase defense spending, but increase it slightly less than the Pentagon would like.  Stimulus outlays aside, the budget as a whole is up only moderately compared to two years ago.

If you object to this, fine.  But Cohen doesn't. "After the excesses of Reagan-inspired deregulation and the disaster that unfettered markets have delivered, the pendulum had to swing."  But how much less could Obama swing it and still be making any noticeable difference at all?  What, exactly, has Cohen so worried?  He never says.  He just loses himself in a paroxysm of stammering cliches.  Has he been taking lessons from Maureen Dowd?