Blogs

Safe Haven

| Sat Feb. 21, 2009 1:17 PM EST
Looking for a safe haven for your money?  Beirut probably isn't the first place that comes to mind. But it turns out that back when Wall Street was running wild, Lebanon's central banker, Riad Toufic Salame, was busy keeping his country's banks some of the safest in the world:

In 2005, he defied pressure from the Lebanese business community and bucked international trends to issue what now looks like a prophetic decree: a blanket order barring any bank in his country from investing in mortgage-backed securities, which contributed to the most dramatic collapse of financial institutions since the Great Depression.

....He says the mortgage-backed securities worried him from the start. He watched curiously as investment bankers engaged in what he calls "rituals" to please the credit ratings agencies and got back such safe assessments of their products. He didn't get it. Why were these considered safe investments? They were just too complicated. They went against a major tradition in Lebanese and Middle Eastern banking: Know to whom you're fronting cash and who's going to pay you back.

"We could not really sense who would be responsible in the end to collect these loans," he said. "And we do not perceive banking as being a place to speculate on financial instruments that are not really concrete."

"Know to whom you're fronting cash and who's going to pay you back."  Words to live by.

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Georgian Band to Protest Putin at Eurovision?

| Fri Feb. 20, 2009 7:39 PM EST

God bless the Eurovision Song Contest. It's so, like, Austin Powers-y. Established in 1956, the event invites European countries to each submit a song, and then a winner is selected. It's like the UN meets American Idol, and it's given us ABBA, Bucks Fizz, and, erm, Verka Serduchka! But the latest edition of the contest, set for Moscow in May, has been sullied by the grating melody of politics, as Russia's rivals to the south appear to have taken the opportunity to stick it to the Russian prime minister. Georgia's entry, by a band called Stephane and 3G, is a song entitled "We Don't Wanna Put In," which, in its sung form, sounds a heck of a lot like "We Don't Wanna Putin." Sneaky! Georgians are denying there's a "hidden message" in the track, but gee, it's hard not to hear it (watch the awesome video above). Eurovision specifically bans any lyrics "of a political nature," so it remains to be seen if Stephane and 3G will get away with it, and they better watch out—that guy knows judo! Lucky for them, there's no easily-singable phrase that sounds like "Saakashvili." Actually, "We Don't Wanna Suck His Willy" comes close. Russians, feel free to use that.

Designing Obama

| Fri Feb. 20, 2009 7:20 PM EST
A political campaign is a thinly veiled form of advertising, but logo design—one of the oldest branding techniques of the ad game—has historically been cast aside by political world, which prefer to restrict its bumper stickers and promotional materials to a sea of bland stars and stripes. Until Obama ’08. At once traditional and innovative, the Obama rising sun-logo was a breakthrough in modern campaign design, an iconic image from the moment it was first unveiled.

And the buzz hasn’t ended with the campaign. On Thursday evening a crowd gathered at San Francisco’s Academy of Art University for "Designing Obama," a sold-out lecture given by the men behind the symbol—Sol Sender, the logo designer, and Scott Thomas, the director of new media design. There’s a pretty thorough rundown of Sender’s presentation on his company website, giving a summary of the design process, and a rundown of all the rejected images.

The final Obama logo entered back into public debate when it was ripped off by Pepsi. The company claimed their redesign was completely independent of the campaign's logo, until they began plastering the eerily similar image on billboards reading "Hope" in cities across the nation. However, Sender claims the success of the logo has more to do with the momentum behind its message than the image itself. “One of the really magical aspects was that people just took [the design] and did all these things with it…a brand like Pepsi would kill for that," explains Sender.

The most informative moment of the lecture took place during the Q&A section. The art-student  crowd was anxious to know if Obama’s design aesthetic would usher in a new need for exciting graphic design in the political sphere. Surprisingly both designers were skeptical. “I’m not sure you can do a transformative thing like this unless you have a really transformative candidate,” says Sender. Neither Sender nor Thomas have any plans to continue on with campaign design: Sender has returned to his firm, and Thomas is working on a book about his experience.

And you certainly won’t see Thomas’s mark on the whitehouse.gov sight. According to Thomas, the Bush administration extended their web designer's contract for two years into Obama’s term. So until then, it's just same old.

Phil Gramm's Culpability, Acknowledged

| Fri Feb. 20, 2009 5:25 PM EST

Phil Gramm won't be able to wash this stink off of him.

Time magazine has published a list called "25 People to Blame for the Financial Crisis" and second on the list is our buddy Phil, the man who headed the Senate Banking Committee during the federal government's deregulatory bonanza in the late '90s. Gramm passed or affected two key pieces of legislation that eventually helped create the financial meltdown we are experiencing today. The first of the two was the 1999 Gramm-Leach-Bliley Financial Services Modernization Act, which repealed the Depression-era Glass-Steagall Act and allowed financial institutions to merge like crazy and ignore longtime regulations and limitations. The second was something that Mother Jones uncovered in summer 2008. Here's Time:

[Gramm] also inserted a key provision into the 2000 Commodity Futures Modernization Act that exempted over-the-counter derivatives like credit-default swaps from regulation by the Commodity Futures Trading Commission. Credit-default swaps took down AIG, which has cost the U.S. $150 billion thus far.

Right. As David Corn reported for Mother Jones, Gramm's sly move gave rise to an entire industry of financial products, like credit default swaps, that acted like insurance for the toxic mortgage-backed securities that got passed around Wall Street. Investors who thought they were protected made more and more and worse and worse financial bets, all away from regulatory oversight. Eventually, it caught up with them.

The result is the mess we're in today. And it appears the public is able to trace culpability all the way back to Gramm, because in voting on Time's website, Gramm has been fingered by readers as the most guilty party in this disaster. To read more about credit default swaps and how "Foreclosure Phil" created our crisis, see David's article here.

Stream New U2 Album at MySpace

| Fri Feb. 20, 2009 5:12 PM EST

It's becoming de rigueur: a few weeks before the release of your highly-anticipated new album, post the whole thing to your MySpace page, and hope that discourages early leaks & downloads. [Edit: Oops, they were too late.] Irish combo U2 is the latest to jump on board, posting their upcoming album No Line On the Horizon in its entirety right over here (click on the "playlist" drop-down menu in the player and select the album). 

I've already said lead single "Get On Your Boots" is kind of a pale imitation of Queens of the Stone Age, so how's the rest of the album? Well, also kind of aimless, although it's hard to tell through MySpace's crappy 96kbps filter. The title track opens the set, and it sounds a little like Coldplay trying to rough things up a little. There's a standard mid-tempo beat, a big fuzzy guitar, a not-so-memorable chorus, then an unearned epic bridge of big Bono "ohs." Track two, "Magnificent," intrigues with its plucky synth opening and wide-open Edge guitar riffs, but that word is embarrassingly cheesy when you sing it. Just try it. "Magniiiii-fi-cent." Yuck, right? "I was born to sing for you," claims Bono, but these lazy lyrics make "It's a beautiful day" seem like Shakespeare.

It's a little odd to remember that U2 was one of my favorite bands, for a really long time, from October through The Joshua Tree. Rattle and Hum lost me, like it lost everybody, but the redemptive masterpiece Achtung Baby won me back. I look at 2000's All That You Can't Leave Behind and 2004's How to Dismantle an Atomic Bomb as "post-U2" albums, which I judge by an easier standard than the band's first 20 years, and in that context, they succeed: "Elevation," "City of Blinding Lights," and "Beautiful Day" are grand, sweet, pretty pop songs; they dissolve into nothing if you look too closely, so just don't do that. But even by that generous standard, Horizon fails: it willfully avoids hooks, but its lyrics are ridiculous—"Stop helping God across the road like a little old lady"?—and its riffs crib Led Zeppelin shamelessly. Despite its edgy, minimalist cover art, Horizon makes the same mistakes as Rattle and Hum, aping the bombast and ego of classic rock without the creativity or soul. No wonder Rolling Stone liked it. I will say it ends on a slight "up" note, with a few thoughtful ballads, and it's like a tiny glimmer of hope: maybe their next album will be another Achtung Baby?

Friday Cat Blogging - 20 February 2009

| Fri Feb. 20, 2009 3:52 PM EST | Scheduled to publish Fri Feb. 20, 2009 4:07 PM EST
Today's theme is "Looking Skyward."  On the left, Inkblot is reacting to a bird flying overhead.  On the right, Domino is bonding with a potted plant.

And speaking of birds flying overhead, the Guardian reports that 200 British cats are being outfitted with a device called "catnav" to track their predatory habits.  "Some experts believe Britain's 9m cats could be killing more than 150m birds, mice, rabbits, moles and other creatures every year," they warn us.  "We know what cats do in our homes — they sleep," says one of the researchers, "But we have virtually no idea of what they get up to outdoors, particularly at night. Now we can find out."

Well.  I'd just like to take this opportunity to quantify Inkblot and Domino's contribution to this bird and mole carnage.  That would be zero.  Jasmine once dragged in an already wounded bird and allowed Inkblot to play with it, but neither Inkblot himself, nor our pudgy little Domino, is capable of anything more than dreaming about such things.  Domino, in fact, can barely find her own food bowl at times.  (Inkblot has no such difficulty.)  The Irvine pest population may rest easy.

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Legalizing Marijuana Now More Popular than the Republican Party

| Fri Feb. 20, 2009 3:25 PM EST
It's true. Percentage of Americans who believe marijuana ought to be legalized: 41 percent. Percentage of Americans who approve of the Republican Party: 31 percent.

Other things that are less popular than legalizing weed, according to Open Left: Congress, the war in Iraq, privatizing Social Security, and John Boehner.

Smoke and Mirrors

| Fri Feb. 20, 2009 3:15 PM EST | Scheduled to publish Fri Feb. 20, 2009 3:24 PM EST
No more smoke and mirrors for the Obama administration!

For his first annual budget next week, President Obama has banned four accounting gimmicks that President George W. Bush used to make deficit projections look smaller. The price of more honest bookkeeping: A budget that is $2.7 trillion deeper in the red over the next decade than it would otherwise appear, according to administration officials.

The new accounting involves spending on the wars in Iraq and Afghanistan, Medicare reimbursements to physicians and the cost of disaster responses. But the biggest adjustment will deal with revenues from the alternative minimum tax, a parallel tax system enacted in 1969 to prevent the wealthy from using tax shelters to avoid paying any income tax.

....“The president prefers to tell the truth,” said [Peter R. Orszag, director of the Office of Management and Budget], “rather than make the numbers look better by pretending.”

This is good.  Seriously.  It really is.  The cynical among us, however, might note that highballing the current deficit also makes it a lot easier to show progress in reducing it in the future.  Not that that ever occurred to them, I'm sure.

Eric Holder Thinks Barack Obama Is Kidding Himself

| Fri Feb. 20, 2009 2:45 PM EST

I'm glad Dayo Olopade wrote about Eric Holder's speech to his staff at the Department of Justice. Holder tackles race in America in a remarkably straight-forward and clear-eyed way. Dayo calls it "confrontational," and indeed, it's hard to read sentences like these -- "in things racial we have always been and continue to be, in too many ways, essentially a nation of cowards" -- without thinking that perhaps Eric Holder has been holding something inside that he's wanted to yell at the top of his lungs for a long time.

These lines from Holder --

"On Saturdays and Sundays, America in the year 2009 does not, in some ways, differ significantly from the country that existed some 50 years ago."

"The history of the United States in the nineteenth century revolves around a resolution of the question of how America was going to deal with its black inhabitants."

"This nation has still not come to grips with its racial past nor has it been willing to contemplate, in a truly meaningful way, the diverse future it is fated to have..."

-- are so clearly at odds with Obama's re-telling of American history as a shared journey and his vision of America's future as one of shared sacrifice (and a resulting shared success) that it almost feels as though Holder is very slyly calling his boss a liar.

But we always knew that Obama's vision of race in this country, and his implied suggestion that different races could come together because of his election, was a bit too fanciful, didn't we? I think a lot of liberals knew that Eric Holder's America is the real America, but chose to believe instead in Barack Obama's America. And maybe that's not a politician using the self-deception of millions of Americans for his own gain. Maybe that's a leader inspiring people to see a better and more just alternative.

Inflating Your Troubles Away

| Fri Feb. 20, 2009 2:43 PM EST
Michael Kinsley is understandably skeptical that once we've stimulated our way out of the recession we'll all suddenly see the light and begin saving more and consuming less.  So what will happen instead?

There is another way. If it's not the actual, secret plan, it will be an overwhelming temptation: Don't pay the money back. So far, even as one piggy bank after another astounds us with its emptiness, there have been only the faintest whispers about the possibility of an actual default by the U.S. government. Somewhat louder whispers can be heard, though, about the gradual default known as inflation. Just three or four years of currency erosion at, say, 10 percent a year would slice the real value of our debt — public and private, U.S. bonds and jumbo mortgages — in half.

Inflating away debts is a time honored tradition, but hasn't its time passed in the developed world?  Most domestic debts (adjustable mortgages, credit card rates, etc.) are tied to LIBOR or the prime rate, which generally follow the inflation rate.  So if inflation goes up, so do your payments.  No help there.  As for foreign debt, inflation would weaken the dollar — assuming arguendo that other countries all kept their inflation in check at the same time — but that would cause interest rates to rise in response.  A weaker dollar would help exports and reduce domestic consumption, which is good, but higher interest rates on treasury bonds would make our fiscal situation worse, not better.  So there's no help there either.

Do I have this right?  Or is Kinsley right to be concerned?  Isn't inflation hedging too built in to our current economic system to offer the kind of benefit he suggests?