Guestblogging for Drum

| Thu Nov. 13, 2008 10:02 AM EST

Howdy folks. I'll be guest-blogging for Kevin Drum today, so make sure to check this space and the one next door. (Of course, you should be doing that everyday!) We're off and running with a post about investigations of the Bush Administration and how President Obama will treat them.

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Disappointment Watch

| Thu Nov. 13, 2008 9:28 AM EST

DISAPPOINTMENT WATCH... If you're looking for an indication of what the first schism between the Obama Administration and the Democratic Congress will be, consider the question of investigations.

Congressional Democrats are gearing up for a season of post-Bush inquiries (at least that's what they're saying — remember this?), but Obama has indicated in the past that he isn't excited about the possibility. Earlier this year, he told the press that there needs to be a distinction between "really dumb policies and policies that rise to the level of criminal activity." The latter should be investigated, Obama said, but "I would not want my first term consumed by what was perceived on the part of Republicans as a partisan witch hunt, because I think we've got too many problems we've got to solve."

I side with Congress on this. There is enough evidence to suggest that the Bush Administration may have broken the law and violated the Constitution — investigations, with subpoena power, are the only way to know for sure. No one is suggesting that Congress grill Department of Education bureaucrats about the implementation of No Child Left Behind. Democrats on the Hill aim to examine our torture and detention policies, the wiretapping of American citizens, and the improper firing of US Attorneys — areas where legal experts have already suggested the Bush Administration crossed lines.

Don't get your hopes up, though. Presidents in the past have gone easy on their predecessors. President Bush, for example, blocked a 2001 subpoena by Congressional Republicans seeking to investigate the Clinton administration. I fully expect Obama to embrace the amity that exists between presidents and ex-presidents. And even if Obama gives Pelosi and Co. the green light, history suggests that ex-presidents take with them certain lingering powers that allow them to block investigations. The precedent, established by Truman and outlined by the always excellent Charlie Savage, is flimsy. But if there is one president and vice-president who can be counted upon to stretch executive privilege using dubious legal reasoning, it's our departing duo.

Guest Blogging

| Thu Nov. 13, 2008 1:33 AM EST

GUEST BLOGGING....Having done my national civic duty last week (was it really only last week?), today I'm scheduled to do my local civic duty. The Superior Court of Orange County has requested the pleasure of my company in their jury room for the day, so that's where I'll be. Blogging in my place today will be Jonathan Stein, a reporter and blogger in our Washington bureau who normally writes over at the mother blog.

I'll be back on Friday. Don't let Wall Street collapse again while I'm gone.

One More for the Dems

| Thu Nov. 13, 2008 1:24 AM EST

ONE MORE FOR THE DEMS....It looks like Mark Begich is going to beat Ted Stevens in the Alaska senatorial race after all. Which begs the question: Is there anything that Nate Silver isn't right about?

Southern Ocean Nears Acid Tipping Point

| Wed Nov. 12, 2008 10:53 PM EST

Southern_Ocean.png The Australian Broadcasting Corp reports the tipping point for ocean acidification is much closer than first thought. Here's the problem: As atmospheric CO2 levels rise, the oceans absorb more of it, which cranks their pH to dangerously acidic levels. Beyond a certain tipping point, marine creatures from corals to plankton won't be able to manufacture the calcium carbonate needed to make their shells.

Until now, the tipping point of acidification was forecast when atmospheric CO2 reached 550 parts per million—around the year 2060. But the new research by Ben McNeil of the U of New South Wales, published in the PNAS, reveals what no one knew before—that carbonate levels drop naturally in the Southern Ocean in winter anyway. Which means the tipping point is likely to be reached at around 450 ppm, which is due to arrive around 2030. Or sooner.

The Nobel-winning IPCC has set 450 ppm as the global stabilization target. However new research shows that number is way too high. Bill McKibben's excellent piece in the current Mother Jones explains why. BTW, we're currently at 385 ppm. If we allow ocean acidification to tip, prepare for hellacious repercussions, Earthlings. Jason Grumet, are you listening? Are you briefing the President-Elect? There is no other issue Obama needs to hit the ground running on faster.

Julia Whitty is Mother Jones' environmental correspondent, lecturer, and 2008 winner of the PEN USA Literary Award, the Kiriyama Prize and the John Burroughs Medal.

XM and Sirius Merge (and Cut) Stations

| Wed Nov. 12, 2008 8:06 PM EST

mojo-photo-siriusxmmerger.jpgRolling Stone reports that the long-anticipated union of XM and Sirius' roster of music channels took place today, resulting in the elimination of some stations. The move had been expected since the companies' merger went through back in July, but it still took some listeners by surprise. Flagship stations like Sirius' Howard Stern channel and the Eminem-led "Shade 45" as well as XM's Bob Dylan and Tom Petty stations will remain, unsurprisingly, but say goodbye to Sirius' "Left of Center" (whose college rock playlist is now supposed to be covered by XM's "XMU") and XM's "Fred," "Ethel" and "Lucy," whose variations on the alt-rock theme are all kaput.

After the jump: hear a station die!

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Supreme Court Rules That Navy Can Use Sonar; Refuses To Discuss Impact on Whales

| Wed Nov. 12, 2008 7:35 PM EST

whale.jpgThe Supreme Court ruled today that a lower court overstepped its authority last February when, citing severe harm to whales and other marine mammals, it imposed strict rules on the Navy's use of sonar in the ocean off of Southern California.

The plaintiff in the case was the Natural Resources Defense Council, but it's not just environmental advocacy groups that oppose sonar. In 2006, Mother Jones reported that the International Whaling Commission, the UN, and a number of scientists had all concluded that the widespread use of sonar likely causes organ lesions, brain hemorrhages, and severe decompression sickness, all leading to mass beachings and deaths.

Despite the primacy of these concerns in the NRDC's filing, the court's decision did not directly address the merits of the environmental group's case. Chief Justice John Roberts did argue, however, that regardless of what harm the animals might suffer, the Navy's interests would almost certainly outweigh the whales'.

"For the plaintiffs, the most serious possible injury would be harm to an unknown number of the marine mammals that they study and observe," he wrote. "In contrast, forcing the Navy to deploy an inadequately trained antisubmarine force jeopardizes the safety of the fleet."

Guess no one told him that destroying marine ecosystems will cause bigger problems for the Navy than an enemy submarine.

Photo used under a Creative Commons license from zen.

Top 5: New Music

| Wed Nov. 12, 2008 7:22 PM EST


In this edition, blippy '80s-style electro bemoans unrequited love, swaggering rock offers brutal dishonesty, freaky beats reminisce about sugary treats, Portugal gives us the party jams, and in the biggest shocker of all, a hip-hop producer may enjoy marijuana.

1. Lo-Fi Fnk – "Want U" (from Kitsune Maison 6)
This track from the juggernaut French electro label combines a retro-rave piano line with deadpan neo-80s vocals for a sound that's somewhere between Madonna producer Stuart Price and Cut Copy, then, halfway through, it seems to de- and re-construct itself. Sure, as the lyrics say, "you can't make someone want you," but you can sure make them like your crazy tune. (mp3 from Ohh! Crapp)

2. Eagles of Death Metal – "Anything 'Cept the Truth" (from Heart On on Downtown)
These Eagles have always seemed like a junk-food dalliance compared to Josh Homme's other project, the meat-and-potatoes (and, uh, drugs) Queens of the Stone Age. The new album is a mixed bag and often descends into eye-rolling raunch-camp, but when it gets a little serious, it takes on the strutting groove of the Rolling Stones. (Stream at

3. Tobacco – "Hairy Candy" (from F***ed Up Friends on Anticon)
People call this kind of music "druggy," but to me it just seems awesome, although I've always said I may just be naturally stoned. Tobacco is apparently one guy, a member of Pittsburgh freaks Black Moth Super Rainbow (whose 2007 album Dandelion Gum is also great). Friends was recorded way out in rural Pennsylvania, and while its noodly synth melodies may owe something to Boards of Canada, this is gritty and organic music, a nature walk with a kooky 70s soundtrack. (mp3 from Penned Madness)

Even Yet More on Credit Default Swaps

| Wed Nov. 12, 2008 6:09 PM EST

EVEN YET MORE ON CREDIT DEFAULT SWAPS....Admit it: you can't get enough of credit default swaps, can you? Well, after yesterday's post on the subject, a bunch of people insisted that I needed to read Michael Lewis's latest piece in Portfolio right away, and since I'm a big Michael Lewis fan I got right on it. As usual, it's great, so do yourself a favor and drink in the whole thing sometime soon.

For now, though, let's focus just on the CDS part of Lewis's piece. Here's the backstory: a hedge fund manager named Steve Eisman, who believed the entire subprime house of cards was due to implode, wanted a way to bet against the market. So he shorted the stocks of subprime originators like New Century and Indy Mac and then looked around for even more targeted ways to make money on the coming collapse. The Holy Grail came from Greg Lippman, a mortgage-bond trader at Deutsche Bank:

The smart trade, Lippman argued, was to sell short not New Century's stock but its bonds that were backed by the subprime loans it had made. Eisman hadn't known this was even possible — because until recently, it hadn't been. But Lippman, along with traders at other Wall Street investment banks, had created a way to short the subprime bond market with precision....Instead of shorting the actual BBB bond, you could now enter into an agreement for a credit-default swap with Deutsche Bank or Goldman Sachs. It cost money to make this side bet, but nothing like what it cost to short the stocks, and the upside was far greater.

But why was a bond trader recommending that Eisman short bonds in his own market? The answer came after Eisman had a conversation at an industry dinner:

His dinner companion in Las Vegas ran a fund of about $15 billion and managed C.D.O.'s backed by the BBB tranche of a mortgage bond, or as Eisman puts it, "the equivalent of three levels of dog shit lower than the original bonds."....[But] not only did he not mind that Eisman took a dim view of his C.D.O.'s; he saw it as a basis for friendship. "Then he said something that blew my mind," Eisman tells me. "He says, 'I love guys like you who short my market. Without you, I don't have anything to buy.' "

That's when Eisman finally got it. Here he'd been making these side bets with Goldman Sachs and Deutsche Bank on the fate of the BBB tranche without fully understanding why those firms were so eager to make the bets. Now he saw. There weren't enough Americans with shitty credit taking out loans to satisfy investors' appetite for the end product. The firms used Eisman's bet to synthesize more of them....The only assets backing the bonds were the side bets Eisman and others made with firms like Goldman Sachs. Eisman, in effect, was paying to Goldman the interest on a subprime mortgage. In fact, there was no mortgage at all. "They weren't satisfied getting lots of unqualified borrowers to borrow money to buy a house they couldn't afford," Eisman says. "They were creating them out of whole cloth. One hundred times over! That's why the losses are so much greater than the loans. But that's when I realized they needed us to keep the machine running. I was like, This is allowed?"

I still won't pretend that I fully understand this. In fact, every time I read a story like this, it seems to get right up to the good stuff — "They were creating them out of whole cloth. One hundred times over!" — and then suddenly moves on. But I want more! I want an entire 10,000 word piece on how the combination of CDOs and CDS allowed Wall Street to magnify their underlying subprime losses so catastrophically. Instead, I just get a teaser and then the story meanders off in a more colorful direction.

Better than nothing, I suppose. And you should read Lewis's entire piece regardless. But I still wish someone could explain in layman's terms what this all means.

UPDATE: Further explanation here on what Eisman was doing and how the swaps he bought "synthesized" subprime mortgages. It doesn't explain exactly how big CDS losses are or which sectors of the financial industry lost most of the money from them, but it does explain the mechanics a bit better.

Elton John, Tegan & Sara Weigh In on Prop 8

| Wed Nov. 12, 2008 5:30 PM EST

mojo-photo-tegansaraelton.jpgThe passage of California's Proposition 8, re-banning same-sex marriage, has inspired a variety of responses from music's out gays. While most have reacted with anger, some even threatening to withhold taxes, Sir Elton John is more practical. Gays and lesbians have often made peace with our lack of marriage rights by rejecting the institution itself, and John has taken this side, blaming Prop 8's win on "the word marriage" freaking people out:

"What is wrong with Proposition 8 is that they went for marriage… I don't want to be married. I'm very happy with a civil partnership. If gay people want to get married, or get together, they should have a civil partnership," said John. "The word marriage, I think, puts a lot of people off. You get the same equal rights that we do when we have a civil partnership. Heterosexual people get married. We can have civil partnerships."

Okay, Elton, let me introduce you to Tegan & Sara.