Blogs

Nationalization

| Fri Feb. 13, 2009 1:07 PM EST
Matthew Richardson and Nouriel Roubini argue in the Washington Post today that the U.S. banking system is insolvent to the tune of $400 billion, and nationalization is the only answer.  Here's their advice:

First, and this is by far the toughest step, determine which banks are insolvent. Geithner's stress test would be helpful here. The government should start with the big banks that have outside debt, and it must determine which are solvent and which aren't in one fell swoop to avoid panic. Otherwise, bringing down one big bank will start an immediate run on the equity and long-term debt of the others. It will be a rough ride, but the regulators must stay strong. Second, immediately nationalize insolvent institutions....Third, once an institution is taken over, separate its assets into good and bad ones....Fourth, merge all the remaining bad assets into one enterprise. ....Basically, we're all Swedes now. We have used all our bullets, and the boogeyman is still coming. Let's pull out the bazooka and be done with it.

I expect this to become a pretty mainstream opinion over the next few weeks, and once Geithner's stress testing is finished he's going to come under tremendous pressure to make the results public and do exactly what Richardson and Roubini suggest.  Pretty soon, even America's bankers will be capitalists, whether they like it or not.

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Finally, Candy Makers Market Directly to Women With Food Issues

| Fri Feb. 13, 2009 1:01 PM EST
The hot pink press packet that arrived at the office promised that "Your boyfriend doesn't need to know." What doesn't your boyfriend need to know? Well, that you eat chocolate, of course. That's between you and your "chocolate finger," as the marketing copy termed the two Twix-like bars being rolled out in the US by Mars under the name "Fling." (The candy's been out in Australia since 2007.)

In addition to tapping into the under-utilized market of paranoid heterosexual women whose eating habits are monitored by their boyfriends (it's a well-documented fact that lesbians hate candy), Mars has shrewdly incorporated sparkles into an advertising campaign that relies heavily on women's love for the color pink. (Fling's website is a tidal wave of the color, punctuated with silhouettes of short-skirted, high-heeled Fling aficionados, one of whom appears to have a handbag falling right out of her vagina.) While it's a given that women are more likely to buy things when they are pink, such as tools and cars, sparkles are oft ignored. It's not just Fling's website that sparkles, but the bar itself. "The shimmer," reads the FAQ on Fling's website, "is actually a [sic] FDA approved mineral called Mica, that shimmers and is used occasionally by specialty chocolatiers to add a unique and attractive sparkle to gourmet chocolate." Popularly known as Vitamin S (for Sparkle), Mica is also used in makeup, and in toothpaste, where it acts as a mild abrasive that helps whiten teeth. Yum!

Predictably, one of the hot selling points for the Fling bar is that "at under 85 calories per finger, it's slim, but not skinny. Indulgent but not greedy. Naughty but nice." In other words, the candy perfectly straddles the contradictions of the angel/whore dilemma in a way its intended female consumers never will. The bars were even promoted in Australia with a 2007 television commercial in which a princess bids a morning adieu to her prince in what can only be read as a post-one-night-stand kiss-off, before shutting the door and gobbling up a Fling. "Forever is overrated," warbles a flock of cartoon birds. While it's tempting to embrace the commercial as a sign of society's acceptance of sexually empowered women, it's even more tempting to wonder why the only reason one ever sees a woman on-screen go unpunished for her libidinous ways is when someone is trying to sell women something. The commercial hasn't been attached to any of the US marketing, but the ad copy is just as suggestive. The PR packages that went out to media outlets contained sheer T-shirts that read "Try It In Public," equating the act of women consuming sweets in front of other people with being as taboo as committing sex acts in front of them. Couple this with the oppressive pinkness of the campaign, and one is left wondering when marketers will figure out that in order to make women buy things, they do not have to, literally, shove sparkles down their throats.

GAO: Pentagon Must Reexamine Its Reliance on Private Contractors

| Fri Feb. 13, 2009 12:35 PM EST
The Department of Defense has come too rely too much on private contractors to fulfill core missions without adequate consideration of which functions are "inherently governmental," Gene Dodaro, GAO's acting comptroller, has told Congress. Testifying Wednesday before the House Appropriations Defense Subcommittee, headed by Pennsylvania Democrat John Murtha, Dodaro reiterated a request from GAO--first made in 2006--that lawmakers compel the Pentagon to consider how it hires and deploys contractors. The amount of defense spending devoted to paying private companies to perform an wide array of tasks (support services, intelligence, translation, security, etc.) has doubled since 2003.

While we are all to eager to blame contractors for fraud and corruption, Dodaro emphasized that a large part of the problem stems from a shortage of Pentagon contract specialists and incompetence among those already on the job.

Thimerosal Update

| Fri Feb. 13, 2009 12:22 PM EST
THIMEROSAL UPDATE....The vaccine/autism community has made great hay out of a single case last year in which the government conceded that a child with a pre-existing mitochondrial disorder may have been "aggravated" by a series of shots.  It was only one of thousands of cases in federal court, though, so how will they react now that the main test cases have been decided?

In a major setback for the fight to link autism to vaccines, a special federal court ruled Thursday that the measles-mumps-rubella vaccine and vaccines that contained a mercury-based preservative were not connected to the autism that developed in three children. The decisions in the cases [] could potentially sink the claims of several hundred other families in an omnibus proceeding that believe the MMR vaccine alone or in combination with vaccines containing the preservative thimerosal caused their children's autism, said Curtis Webb, a lawyer for the Hazlehurst family. ...."I concluded the evidence was overwhelmingly contrary to the petitioners' contentions," George Hastings Jr. wrote in the Cedillo opinion, similar to the others. "The expert witnesses presented by the respondent were far better qualified, far more experienced and far more persuasive than the petitioners' experts."

Needless to say, this won't convince anyone who doesn't want to be convinced.  "There's no denying what happens to your child when you see it firsthand," said Rick Rollens, who has an autistic son and co-founded the UC Davis MIND Institute.  And: "Rollens and others said these verdicts wouldn't make parents stop questioning the safety of vaccines, especially when the parents see changes in their children right after vaccination."

No doubt.  Time for the rest of us to move on, though.

Safe Havens

| Fri Feb. 13, 2009 11:49 AM EST
SAFE HAVENS....Via Felix Salmon, here's some interesting news: Moody's has decided that not all AAA sovereign debt is created equal.    Here's how things shake out:
  • AAA-Worst: Ireland, Spain
  • AAA-Middle: United States, UK
  • AAA-Best: Germany, France, Canada, Scandinavia

I wonder what it would take for the United States to be downgraded into the Ireland/Spain category?

Vatican Brings Back Indulgences

| Thu Feb. 12, 2009 9:24 PM EST

From the New York Times comes news that the Roman Catholic Church is allowing indulgences again. The revelation compelled the Times to write this improbable paragraph:

There are partial indulgences, which reduce purgatorial time by a certain number of days or years, and plenary indulgences, which eliminate all of it, until another sin is committed. You can get one for yourself, or for someone who is dead. You cannot buy one — the church outlawed the sale of indulgences in 1567 — but charitable contributions, combined with other acts, can help you earn one. There is a limit of one plenary indulgence per sinner per day.

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The Tipping Point

| Thu Feb. 12, 2009 8:19 PM EST
THE TIPPING POINT....Should the stimulus bill have been even bigger?  Tyler Cowen lists several reasons to be cautious on this score, including this:
5. Many on the left are boasting that the U.S. government could borrow lots more (look at the current T-Bill rate), forgetting they used to warn us that international capital flows, as amplified through noise traders and speculators, mean that crises can arrive in a single, whiplash moment, bringing countries from riches to rags virtually overnight.  Somehow those old narratives are being forgotten, I wonder why.

We have essentially replaced a risk bubble with a safety bubble.  And there are lots of good reasons to think that this bubble, which manifests itself as an almost bottomless demand for U.S. treasuries, will continue for a long time.  But a long time isn't forever, and we're planning to sell upwards of $3 trillion in treasuries over the next 30 months.  So when will the tipping point come?  After $1 trillion?  $2 trillion?  Never?  I hope the answer is never, but if the past couple of years has taught us anything, it's that we don't know — and that never is probably the least likely answer.  And when the market does turn on us, it's going to turn ferociously and without notice.  I sure hope Geithner and Summers and the rest of the crew are prepared for this, because the odds are that we're going to be paying for the profligacy of the Bush administration for a long time to come.

Madonna, Bon Jovi, Springsteen Made Big Bucks in '08

| Thu Feb. 12, 2009 6:38 PM EST
Billboard magazine has ranked the top 20 biggest money-makers in music this year, and I assume they don't mean, um, the body part one is supposed to shake. No, no, they mean musicians who've made the most dollars, or, more likely, euros, and maybe even rubles, in 2008. Madonna topped the list by a wide margin, earning a total of over $242 million, with rockers Bon Jovi and Bruce Springsteen just about tied at $157 and $156 million, respectively. Not surprisingly, says Billboard, touring is your best bet for the big cash these days, and every performer on their top 20 list had major tours this year. But perhaps more surprising is the apparent gap between album sales and tour income: Madonna's 2008 album, Hard Candy, was only the 50th-best-selling of the year in the US. But that didn't stop concert-goers, as her continuing "Sticky & Sweet" tour grossed nearly $230 million, not including the $18 million worth of tour merchandise sold. Jeez, and I'm stoked when I get 50 bucks for DJing. Anyway, the full list of the most immune-to-economic-woes musicians after the jump.

Gregg Withdraws

| Thu Feb. 12, 2009 6:13 PM EST
GREGG WITHDRAWS....I sure didn't see this one coming:

President Obama’s choice for Commerce Secretary, Senator Judd Gregg, withdrew his nomination on Thursday. He said there were “irresolvable conflicts” between him and the administration.
“It has become apparent during this process that this will not work for me as I have found that on issues such as the stimulus package and the Census, there are irresolvable conflicts for me,” Mr. Gregg said in a statement. “Prior to accepting this post, we had discussed these and other potential differences, but unfortunately we did not adequately focus on these concerns. We are functioning from a different set of views on many critical items of policy.”
Irresolvable conflicts on the stimulus package?  That's crazy.  There's simply no way Gregg didn't understand Obama's stimulus priorities when he accepted the job offer.

So that leaves the census.  Obama has decided to remove it from the Commerce Department and put it directly under the White House, something that's recently become a right wing  cause célèbre"This isn't a small or innocent change," says Rep. Marsha Blackburn (R–Tenn.), and I suspect we're going to be hearing a lot more about this soon from Limbaugh and Drudge and the rest of the usual suspects.  I hope Obama has a pretty good explanation for doing this.

UPDATE: Marc Ambinder says here that the census director still reports to Commerce and that the whole thing is a "BS issue."  So I'm not quite sure what's going on.  Fox News frames it this way:
White House officials have announced that the census will technically remain part of the Commerce Department, but that Chief of Staff Rahm Emanuel will oversee it at the White House, raising eyebrows among critics who say he can't be expected to be neutral in the task.

More later as I figure out what's really going on here.

"Diaper Dave" Vitter Says Obama Adopts Judicial Standards of a "Dictatorship"

| Thu Feb. 12, 2009 6:11 PM EST
Republican Louisiana Sen. David Vitter made a trip to DC's Chinatown on Thursday to nibble on kung pao chicken and rally the conservative troops. Addressing the DC lawyers chapter of the conservative legal group, the Federalist Society, Vitter got right down to red meat. After quoting comments from President Obama suggesting that he'd like his judicial nominees to be able to empathize with the downtrodden, Vitter declared that demanding empathy in a judge was something you'd expect in a "dictatorship." How empathy equates with repressive rule, Vitter didn't really explain, except to say that it had little to do with ensuring checks and balances on an imperial government. (Vitter also claimed--and it was hard to tell if he was joking or not--that he routinely walks from the Senate to the House of Representatives to use the apparently more populist House water fountains, instead of imbibing the stuff the Senate is drinking these days.)

But Vitter didn't really come to Tony Cheng's to discuss judges or the Constitution. His talk, entitled "Defending Conservative Principles in the Senate," was mostly a complaint about the economic stimulus bill that his Senate colleagues were poised to pass without his vote or the votes of most Republicans. According to Vitter, his party was having a come-to-Jesus moment over the stimulus package, which had provided the minority party an opportunity to rediscover its mantra of smaller government and lower taxes.