Kevin Drum - November 2008

Super Senior

| Fri Nov. 28, 2008 5:58 PM EST

SUPER SENIOR....Felix Salmon explains the synthetic CDO market:

Let's start with a simple single-credit synthetic bond....

[Explanation follows, ending with a little bit about the size of the synthetic mortgage backed security market.]

....In fact, most of the synthetic MBS issued were issued by banks which kept the underlying mortgages on their own balance sheet. Rather than put the mortgages directly into a CDO and sell that to investors, they kept the mortgages themselves and bought protection from the CDO. Why did they do that? That's the story of the super-senior tranche, and will have to wait for another day.

What!?! For pity's sake, man, don't keep us in suspense. I want to hear about the super-senior tranche. It's one of those things that I think I understand in a technical sense — sort of the way a blind man understands a sunset — but not in the real-world sense of what people were doing with them and how they got abused so badly. So let's hear it!

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Comments!

| Fri Nov. 28, 2008 2:38 PM EST

COMMENTS!....Jacob Levy talks about evolution of the blogosphere:

I'm one of the last of the oldline blogluddists who thinks that the decline of civility and decency the blogosphere can be traced to two events, one of which I won't tell you but one of which was the creation of comments sections. In particular, I remember thinking that the opening of comments at Kevin Drum's then-site, CalPundit, changed things rather a lot.

This deserves explication. Does Jacob think that opening a comment section changed my actual blogging? Or did the blogging remain the same but the mere existence of raucous commenters changed things? If the latter, why not just ignore the comments? If the former, how?

I've heard this general complaint many times, and I've never really understood it. My own view of comments is that they don't exist mainly for my benefit, or even for my readers' benefit, but for my commenters' benefit. In the same way that blogging gave me a platform to mouth off in public that I otherwise wouldn't have gotten, I figure that comment sections give an entirely different group of people the same opportunity. So I'm happy to provide it, even if it often gets out of hand. It's not like anyone's holding a gun to our heads and forcing us to read them, after all. (And anyway, the comment section here has improved considerably over the past couple of years thanks to my steely and implacable moderators. Thanks guys!)

On a more general note, Jacob's post reminds me that I've always been a little puzzled by the number of times readers have told me that I've "changed" thanks to something or other. When I opened comments. When I started accepting ads. When I moved to the Washington Monthly. When I moved to MoJo. Etc. For a variety of reasons, it's unlikely in the extreme that any of these events changed anything about my writing at all, but people sure think they do with fair regularity. I don't doubt that my writing has evolved since I started doing this six years ago, but I very much doubt that there was any particular event that's been responsible for it. More likely it was just six years of writing and learning and getting progressively more annoyed with the modern Republican Party.

But let's combine both these topics into one. Old timers: what do you say? Has my blogging changed substantially since the early days? How? Naturally, I urge you to leave your observations in comments.

UPDATE: Jacob responds.

Bagels!

| Fri Nov. 28, 2008 2:07 PM EST

BAGELS!....One of these days I guess I'm going to have to try a bagel when I'm in New York City. My crappy taste buds being what they are, I suppose my reaction is going to be the usual (i.e., "they just taste like bagels to me"), but I'm still curious. It hardly seems plausible that transplanted New Yorkers can't make good bagels elsewhere in the country, and insufficiently developed consumer taste doesn't seem like a good explanation for this lack, as it often is for ethnic food of other varieties.

(Can you order a New York City bagel over the internet? I mean, I'm sure you can, but do they survive the shipping process tasting as good as if they were bought locally? Or do I really have to get on a plane and head east to perform this experiment?)

Anyway, this spate of bagel blogging was inspired by a David Bernstein post about bagels over at the Volokh Conspiracy, and what really amused me wasn't the bagel stuff itself, but Bernstein's being annoyed that the book he was reading, The Bagel: The Surprising History of a Modest Bread, "relies on union sources, the story is completely one-sided; the reader doesn't get the perspective of any of the bagel bakery owners, just the workers." We all have our pet peeves, so I guess I shouldn't laugh, but Bernstein seems constitutionally incapable of ever letting a positive mention of unions pass unnoticed, insisting that every advance in worker rights would have happened anyway due solely to rising union standards. I say: tell it to the janitors, pal. Rising living standards don't really seem to have helped their cause a helluva lot. In fact, tell it to the median worker in general, who's made virtually no gains at all over the past three decades despite a near doubling in per capita GDP during the period.

Eh. I guess that just shows that I have some pet peeves too. I still need to try a real NYC bagel one of these days, though. If and when I do, which shop should I try, O commenters?

Wingers and the Economy

| Fri Nov. 28, 2008 1:47 PM EST

WINGERS AND THE ECONOMY....I read Charles Krauthammer's column this morning — yet more proof, if more were needed, that people with very high IQs can also be very, very stupid — and I got to wondering. A developing meme on the right suggests that our recent economic meltdown isn't really the fault of the free market having a heart attack at all, but rather the fault of the government performing triple bypass surgery in response to what was really no more than some free market heartburn. And so I wonder: Is this really going to be the National Review/WSJ editorial page/Grover Norquist line going forward? And if it is, what's the right response? Sober op-eds explaining why they're wrong? Or dismissive laughter? I'm thinking the latter.

Thanksgiving Catblogging

| Thu Nov. 27, 2008 1:49 PM EST

THANKSGIVING CATBLOGGING....The stars of this year's traditional Thanksgiving clipart extravaganza are Ditto and Tillamook, my mother's two new kittens. I was over the other day visiting, and let me tell you: these are definitely not a shy pair of kittens. Ditto practically knocks down the furniture running over to greet visitors, and starts purring like a motorboat if you so much as look at him crosseyed. Tillie was in nap mode most of the time I was there, but is also friendly and adorable, as all kittens should be.

The pod they're sleeping in was a housewarming gift from me. Ten bucks at Walgreens. Isn't it cute? When I got it home, though, it turned out that Domino and Inkblot both thought it was for them, with Domino eventually claiming it as her permanent nighttime bed. What could I do? Back to Walgreens for another one, that's what. As you can see, the dynamic duo love it too when they've decided they've had enough dynamism for the time being.

Like them, I'm dreaming of turkey right now. In fact, I can almost taste it already. Happy Thanksgiving, everyone!

SOFA Approved

| Thu Nov. 27, 2008 12:26 PM EST

SOFA APPROVED....In the neverending soap opera that is Iraq, the SOFA agreement has finally passed. Sort of:

Iraqi lawmakers today approved a pact allowing U.S. forces to stay in the country through 2011 after winning support from skeptics by promising a public referendum on the plan.

Of the 198 parliamentarians attending today's session, more than 140 held up their hands in favor of the Status of Forces Agreement, or SOFA....The lawmakers separately approved a resolution calling for a referendum in July 2009, during which the public will get to endorse, reject, or demand amendments to the SOFA. The referendum was the key demand of Sunni Muslim legislators who had refused to join the parliament's ruling Shiite and Kurdish blocs in approving SOFA without the referendum promise.

So, once again, we don't have a firm approval for withdrawal. The Iraqi public has a longstanding desire for American troops to leave, which suggests the SOFA will be approved, but a lot can happen in six months. If I had to bet, I'd say it passes in July, but I sure wouldn't bet the farm on it.

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Georgia and Ukraine

| Wed Nov. 26, 2008 10:07 PM EST

GEORGIA AND UKRAINE....This is just weird:

The United States has started an unexpected diplomatic initiative in Europe, urging NATO allies to offer Georgia and Ukraine membership in the alliance without going through a lengthy process and fulfilling a long list of requirements, NATO diplomats said.

Secretary of State Condoleezza Rice has had long telephone conversations with French, German and other senior European envoys, asking them to agree to bypass the formal application process, the diplomats said.

Just a few months ago the U.S. couldn't even persuade NATO to offer Georgia and Ukraine a roadmap for membership, let alone membership itself. Now, after a war in Georgia and a government collapse in Ukraine, and with the Bush administration on its last legs, Rice thinks she can somehow talk the rest of the alliance into offering them expedited entry? Am I missing something here?

The Mystery Man

| Wed Nov. 26, 2008 9:29 PM EST

THE MYSTERY MAN....So who was the anonymous Republican senator who told Politico's Roger Simon that McCain ran a lousy campaign, Bush has been a lousy president, the GOP needs to pay more attention to Hispanics and less to Sarah Palin, and the era of small government is over? The betting line here is Mel Martinez. Anybody have a better guess?

Via Eric Alterman.

Holbrooke to Islamabad?

| Wed Nov. 26, 2008 9:11 PM EST

HOLBROOKE TO ISLAMABAD?....Spencer Ackerman thinks Barack Obama ought to ask Richard Holbrooke to be his ambassador to Iraq:

Is there any U.S. diplomat more qualified than Holbrooke — a former U.N. ambassador, among other things — to preside over and cajole the creation of a national sectarian political compact in Iraq? Unlike anyone else in the U.S. foreign policy community, Holbrooke actually did this before, in the middle of a Balkan shooting war, and he's given a lot of thought to the ways in which his Balkan experience is relevant to Iraq. If we're to take seriously the idea that the U.S. needs energetic diplomatic action to broker a political settlement in Iraq to accompany withdrawal, there isn't really anyone else for the job.

Sure, but here's another thought. If he's willing to stay on, why not keep Ryan Crocker in the job and ask Holbrooke to go to Pakistan? Crocker gets pretty good marks from everyone and he already knows the lay of the land in Baghdad, while Pakistan is really ground zero these days for a hard ass diplomat who can figure out a way to get people who hate each other's guts to somehow work together. For my money, it's the most important diplomatic post in the world right now.

How Bad Is It?

| Wed Nov. 26, 2008 1:57 PM EST

HOW BAD IS IT?....Andy McCarthy asks:

The Worst Economic Crisis Since the Great Depression?

That's the Obamanomics mantra. Should be we really be letting that slide by without a response? Going to high school in the Carter Seventies, I remember sitting in the gas lines. Toward the end of Carter's tenure, interest rates were around 20%, inflation was at close to 14%, and unemployment was just over 7% (it soared over 10% before the Reagan recovery kicked in).

I don't mean to minimize the straits we're in, and I appreciate that things are likely to get worse — maybe a lot worse — before they get better. But aren't Democrats skipping over a pretty awful bit of history when they say this is as bad as it's been in 75 years?

Well, look: interest rates hit 20% because Paul Volcker put them there in order to fight inflation. But it's not inflation that that's the measure of a recession, it's output growth and employment. And at least at the moment, the projections for output and employment over the next year are about as bad as they were in 1980-82 — and that's even without an oil shock to kick things off. Add to that the fact that the financial system is collapsing worldwide, entire countries are going bankrupt, a couple of dozen really big banks have gone bust, and credit markets are still frozen despite trillions of dollar in various interventions from national governments, and yeah, I'd say this is the worst financial crisis since the Depression. Does anybody really want to take the other side of that debate?