• From the Annals of Great Punditry


    Jim Henley explains counterinsurgency in terms even a U.S. senator can understand:

    In a counterinsurgency strategy, America hangs around a foreign country for years and years, occasionally killing people who live there, while pretending it’s for their own good. This takes a lot of people because the military, and the civilian parts of the government that control the military, are very specialized. You need people to do the hanging around, people to do the occasional killing of people that live there, and even more people to do the pretending. As you might imagine, pretending to foreigners that killing them is for their own good is hard! Not just anyone can pull that off with a straight face, and you need a lot of people who can.

    This is part of Jim’s entry in the Washington Post’s “America’s Next Great Pundit” contest — a sort of reality-show-in-print where ten promising entrants get chosen and are then kicked off one by one as they compete with each other over the course of three weeks1.  Think Project Runway for the opinionated but poorly dressed.  It’s an idea so mind-blowingly dimwitted that it could only have come from the same people who brought us Mouthpiece Theater.

    Still, every cloud has its silver lining, and mocking the Posties by writing amusing entries for their contest is one of them.  Get cracking, bloggers.  Jim has set the bar high.  I expect great things.

    1To make this gruesome spectacle even worse, the winner gets to write 13 op-ed pieces but isn’t even guaranteed that the Post will run them.  In fact, the winner isn’t even guaranteed that the columns will be run online.  What the hell kind of contest is this?2

    2Though I admit it might have possibilities if the Post made their current writers compete, with the loser getting a final 13 columns before being booted off the op-ed page for good.  I’d certainly pay to watch the championship round, where Richard Cohen and Robert Samuelson battle each other desperately to avoid the title of America’s Next Laid Off Journalist.

  • Chart of the Day


    Longtime political analyst Charlie Cook thinks there’s a good chance that Democrats could lose control of Congress in next year’s midterm elections.  Independent voters, he says, are “viscerally” worried about the deficit and hyperactive government.

    I wonder.  The deficit is a pretty abstract thing, and “hyperactive government” doesn’t necessarily mean healthcare and the stimulus bill.  When it comes to voter discontent, I think I’d put my money elsewhere.  First, as the chart below, from the Economic Policy Institute, shows, people are pretty strongly convinced that the finance industry has gotten huge amounts of help from Obama and Congress, while ordinary people have gotten squat.  As Ezra Klein says, “The economic logic behind preserving the financial sector was bulletproof. But the electorate is not composed of economists. And all they know is that the banks got a lot of money, and this is the worst recession in memory.”  In other words, “hyperactive” might be a lot more acceptable if all that activity were aimed somewhere other than Wall Street.

    Second, there’s jobs.  John Judis tells the story here: if you want to be a popular president, you’d better be able to demonstrate some job growth.  End of story.  Obama still has some time on that front, but probably not very much.  If the economy is starting to recover by next spring, he and the Democratic Party will probably be in decent shape when the midterms roll around.  If not, not.

  • Catblogging News


    Attention cat fans: We recently redesigned our thrice-weekly email newsletter into three separate newsletters.  One of those newsletters is based around yours truly, and you know what that means: catblogging.  Or, I guess, catlettering.

    Or something.  In any case, we’ve decided that once a week is plenty of exposure for Inkblot and Domino, so we’re soliciting photos of guest cats to appear in the newsletter.  If you want some temporary stardom for your adorable furball, just email a photo to:

    cats@motherjones.com

    Include a couple of sentences of description (names, ages, what they’re up to, favorite tricks, whatever else you feel like) and we’ll select one each week.  Dogs are welcome too!  And if you want to sign up to receive the newsletter, you can do it here.  Sign up for one, two, or all three.

  • Quote of the Day


    From an “industry expert” explaining why Sarah Palin is having trouble booking speeches at $100,000 a pop:

    The big lecture buyers in the US are paralyzed with fear about booking her, basically because they think she is a blithering idiot.

    I don’t understand this.  Since when is being a blithering idiot any kind of drawback for a politician on the lecture circuit?

  • Russia-Georgia Postmortem


    A long-awaited EU report on the causes of the Russia-Georgia war last year has finally been released.  The New York Times reports the reaction from both Russia and Georgia:

    Vladimir Chizhov, Russia’s envoy to the European Union, told reporters in Brussels that the central finding concerned Aug. 7, and that he hoped it would prompt foreign leaders to withdraw their support for Georgia’s president, Mikheil Saakashvili. The report provided “an unequivocal answer to the main question of who started the war, and it says squarely that it was Georgian massive shelling and an artillery attack which marked the beginning of large-scale hostilities.”

    In Tbilisi, the Georgian capital, Temuri Yakobashvili, the minister of reintegration, said the report exonerated Georgia because it emphasized the long-term buildup of tensions. “This report will kill the Russians’ spin that it was Georgia who started the war, and it will finish all these notions and speculations about who started the war,” Mr. Yakobashvili said. “The first line of this report states that the war didn’t start on Aug. 7.”

    That’s my kind of report: one that resolves nothing.  But in fairness, how could it?  Its conclusions were pretty obvious to everyone aside from hardened ideologues long ago: Russia spent years trying to goad Georgia into war, and in August of last year Georgia finally took the bait.  In a situation like that, who you blame is almost entirely a matter of who you feel like blaming.

    So there’s no knockout blow here.  Still, I give it to Russia on points.  Georgia was hardly innocent in all this, but Russia’s goals were pretty clear all along, and they obviously kept escalating tensions until they got the reaction they wanted.  They deserve all the condemnation they got for that.

  • How Crazy Are We?


    Do baseball players make a greater number of spectacular plays than they did 30 years ago?  Of course not.  It just seems like it because ESPN packages them all up for us every evening on SportsCenter.  These days, we get to see every spectacular play, not just the ones in the games we happen to watch.

    David Post calls this the ESPN Effect and wonders if it applies to politics:

    All I hear from my left-leaning friends these days is how crazy people on the right are becoming, and all all I hear from my right-leaning friends is how crazy people on the left are becoming, and everyone, on both sides, seems very eager to provide evidence of the utter lunacy of those on the other side.  “Look how crazy they’re becoming over there, on the other side!” is becoming something of a dominant trope, on left and right.  It is true that we’re seeing more crazy people doing crazy things on the other side (whichever side that may be, for you) coming across our eyeballs these days.   But that’s all filtered reality; it bears no more relationship to reality than the Sportscenter highlights bear to the game of baseball.

    My very, very strong suspicion is that there has never been a time when there weren’t truly crazy people on all sides of the political spectrum doing their truly crazy things. Maybe 1% or so, or even 0.1% — which is a very large number, when you’re talking about a population of, say, 100 million.  They didn’t get through the filters much in the Old Days, but they do now.  All this talk about how extreme “the debate” is becoming — how, exactly, does anyone get a bead on what “the debate” really is?  In reality?

    Is he right?  Are Fox News and Twitter and the blogosphere and talk radio the collective SportsCenter of politics?  Or are people really crazier than they used to be?

    Or is it even worse than that?  SportsCenter mostly just records what happens.  (It might also play an active role in producing more spectacular plays because players are eager to make the night’s highlight reel, but that’s a small effect.)  But in politics it’s worse.  Not only might people act crazier in order to get on the news, but seeing all those crazy people might drive the rest of us crazier too.  So maybe at first this was just the ESPN Effect, but over time it became a vicious circle and now there really are more crazy people around.  I sure feel crazier these days.  How about you?

  • Not Out of the Woods Yet


    Housing prices were up slightly in July, but there’s also this:

    The number of homes lost to foreclosures rose about 17 percent in the second quarter of this year despite the launch of an extensive government program aimed at helping borrowers save their home, according to government data released Wednesday.

    ….The report also reflected the risks still posed by hundreds of thousands of risky home loans known as option adjustable-rate mortgages, which reset to significantly higher payments. With these “option ARMs,” also known as pick-a-pay loans, a borrower chooses how much to pay each month, often less than the interest due. But the payments on these mortgages eventually rise significantly, putting the borrower at risk of losing the home.

    So: rising foreclosures, another wave of ARM resets, the summer home buying season is over, and the $8,000 federal tax credit for first-time home buyers is about to expire.  Buckle your seatbelts.

  • How Not to Deal With a Recession


    Via John Judis, who has more about this, here’s a story I missed a couple of weeks ago from the Boston Globe:

    When the housekeepers at the three Hyatt hotels in the Boston area were asked to train some new workers, they said they were told the trainees would be filling in during vacations.

    On Aug. 31, staffers learned the full story: None of them would be making the beds and cleaning the showers any longer. All of them were losing their jobs. The trainees, it turns out, were employees of a Georgia company, Hospitality Staffing Solutions, who were replacing them that day….”It’s unbelievable,” said Lucine Williams, 41, who has worked at the Hyatt Regency Boston for nearly 22 years and was making $15.32 an hour plus health, dental, and 401(k) benefits when she lost her job. “I don’t know how they can treat people like that.”

    The outsourced workers make $8 per hour with no benefits.  Nice work, Hyatt.  I think I’ll be staying elsewhere in the future.  Now please excuse me while I go throw up.

  • Income Inequality Still Rising


    The Census Bureau reported today that income inequality increased in 2008.  Megan McArdle reacts:

    I’m a little surprised; the work of Piketty and Saez seems to suggest that the incomes of the wealthy are disproportionately affected by crises, because they destroy so much asset value.  This effect may show up in the 2009 numbers, when the full effect of the carnage in the markets will be seen in high-end incomes.

    My guess is that the destruction of asset values disproportionately affects only the very rich.  The top 10% are mostly just like the rest of us, but with a little more money, while the top 1% are quite different, relying for a lot of their income on capital gains and bonuses tied to asset values.  (And demonstrating a lot more income volatility, too.)  When Piketty and Saez produce their numbers for 2008, I wouldn’t be surprised if income inequality has increased a bit if you look at 90/10 comparisons, but decreased a bit if you look at 99/10 or 99.9/10 comparisons.

  • Politics and Art


    The NEA conference call nano-scandal has probably gotten all the attention it deserves already, but Conor Friedersdorf brings up an issue I’m curious about.  Ben Davis says the whole thing was a tempest in a teapot, “essentially a pitch for artists to make glorified PSAs about volunteer work,” and Conor responds:

    That sounds about right to me — the call wasn’t about furthering controversial elements of President Obama’s agenda, but it was about deliberately politicizing art — that is to say, encouraging artists to advance particular public policy goals rather than enabling them to spend their time and energy creating works of truth or beauty to the best of their ability….It is that effort that I find objectionable, as should anyone who values art or the autonomy or creative people.

    So if this conference call had been with, say, a bunch of educator types, urging them to promote public service among schoolkids, would that have been OK?  Or how about law enforcement groups?  Or veterans groups?

    Because I don’t quite see the difference.  Artists don’t exist on some kind of pristine plane of their own and they don’t do their work in a vacuum.  They’re all part of the same culture as the rest of us, and they react to it and try to influence it just like everyone else.  In fact, artists themselves probably view their work as more explicitly political, in the broad sense of the term, than practically any group of people outside of politicians themselves and the professional pundit/lobbyist/think tank industry that hovers around them.  The whole idea of “politicizing” art is as redundant as the idea of militarizing the Pentagon.

    It seems to me that trying to persuade people to promote public service is either a good idea or it’s not.  If it’s too heavy handed, it’s not.  If there are overtones of political payoff, it’s not.  If there are insinuations that people who play along will get more grant money, it’s not.  But I have a hard time buying the idea that it’s affected one way or another by the allegedly delicate artistic sensibilities of the people involved.

  • The Politics of Climate Change


    Did you see prediction guru Bruce Bueno de Mesquita on Jon Stewart last night?  He’s the guy who claims that the CIA says his judgments are accurate 90% of the time.  Fellow forecasting guru Philip Tetlock describes his methodology:

    Bueno de Mesquita declares that, once we have mapped the option space, we simply need to follow his four-step formula for making accurate predictions. First, get the best-possible experts to identify every individual or group with a “meaningful” interest in trying to influence the decision. Second, get the experts to estimate as accurately as possible which options each of the identified players is advocating in private — that is, what they want. Third, get experts to estimate how big an issue this is for each of the players — how motivated they are to prevail. Fourth, get experts to estimate the relative political clout or influence of each player in this issue domain.

    OK then.  So what does Bueno de Mesquita think about the odds of getting any kind of serious global action on climate change?  Our own Michael Mechanic asked him:

    MJ: What’s the outlook for Copenhagen?

    BBdM: Our analysis shows that the Copenhagen setting will be used to put together what I would describe as a feel-good agreement without teeth….The analysis shows that over the first few years there will be improvement, and then commitment will erode steadily and move away from enforcing the agreement. At the same time, technology changes will be pushing in a positive direction. The other thing this shows is that if the US were committed to a fundamental change in greenhouse gas emissions, it doesn’t need Copenhagen; it doesn’t need an international agreement. This could be done unilaterally. If Congress decided that it’s gonna put a fixed tax on gasoline to ensure that gas doesn’t fall below some optimal price, say $5 a gallon, people would change their behavior. There’s nothing stopping the US from doing that.

    MJ: So somebody has to commit political suicide to make this happen?

    BBdM: That’s probably correct. Every sensible politician will be in favor of something happening off of their watch: Yes, we will commit to reducing greenhouse gas emissions starting year X — X being the year they’re no longer in office.

    MJ: Was anything surprising about these results?

    BBdM: What surprised me is that support built a head of steam, but it collapses quite dramatically within 5 to 10 years. I was surprised at how quickly and sharply it erodes.

    Well, that sucks.  The only glimmer of good news here is that Bueno de Mesquita didn’t do this analysis himself.  A bunch of his undergrad students did it.  They were “a particularly smart group of kids,” he says, but still.  Undergrads have been known to be wrong before, haven’t they?

  • Eating Your Own Dog Food


    Wall Street has a demonstrated aptitude for bundling up and securitizing pretty much anything: mortgages, credit card debt, parking meter collections, naked swaps, bundles of bundles, etc. etc.  So why not put this ability to good use as a way of motivating ratings agencies to care about the accuracy of their ratings?  A reader emails with this elegant suggestion:

    Require them to sell collateralized rating obligations. The idea is that they will bundle tranches of ratings together into a form of a put. If the tranche of, say, AAA ratings fail at a rate greater than whatever the published risk of default of the class is, they will be forced to pay a contracted amount to the purchasers.

    I like it!  There’s no income stream associated with ratings, which is a problem, but surely one that Wall Street can solve.  Instead of paying a fee for getting their securities rated, maybe issuers should instead be required to set aside 0.1% of the income stream from each of their products to be bundled into a Ratings Backed Security.  Agencies would be allowed to sell half the RBS immediately, but would have to hold on to the other half for a set period of time related to the maturity period of the underlying securities.

    Or something.  Details are left as an exercise for the reader.  But I like the out-of-the-box thinking here!

  • Chart of the Day


    Republicans took their best shot at sinking healthcare reform over August, but it turns out that public support for their position was sort of a like a convention bounce: sharp but short-lived.  At least, that’s the takeaway from the latest Kaiser poll, which shows that support for healthcare reform has already recovered from the beating it took during the summer townhalls.  This is pretty much what I expected all along, and I wouldn’t be at all surprised to see public support creep back into the low 60s if Obama and the Democrats continue to lower the temperature and work steadily to produce a solid, defensible bill with demonstrable benefits for the average consumer.  With this level of support, healthcare reform is decidedly doable.

  • Warning: Don’t Tease the Prosecutors


    I’ve managed to avoid blogging about Roman Polanski before now, but I have to admit to sharing some curiosity about the timing of this whole affair.  After all, Polanski has been flitting around Europe for decades and owns a home in Switzerland.  So why did prosecutors in Los Angeles suddenly feel the need to go after him now?  The LA Times thinks it has the answer:

    Sources have told The Times that Polanski’s attorneys helped to provoke his arrest by complaining to an appellate court this summer that Los Angeles County prosecutors had made no real effort to capture the filmmaker in his three decades as a fugitive.

    The accusation that the Los Angeles County district attorney’s office was not serious about extraditing Polanski was a minor point in two lengthy July court filings by the director’s attorneys.  But the charge caught the attention of prosecutors, who had made several attempts to apprehend Polanski over the years.

    Lesson of the day: keep an eye on your lawyers.  Sure, they’re clever, but sometimes they can be a little too clever.

  • The Empire Strikes Back


    Apparently the Vatican has finally decided that the best defense is a good offense.  According to a bellicose statement issued Monday, the Catholic Church doesn’t have a paedophilia problem, it has an ephebophilia problem, thankyouverymuch.  Plus this:

    The statement, read out by Archbishop Silvano Tomasi, the Vatican’s permanent observer to the UN, defended its record by claiming that “available research” showed that only 1.5%-5% of Catholic clergy were involved in child sex abuse.

    He also quoted statistics from the Christian Scientist Monitor newspaper to show that most US churches being hit by child sex abuse allegations were Protestant and that sexual abuse within Jewish communities was common.

    Only 1.5-5%!  Not bad!  And anyway, Protestants and Jews are doing it too.  So there.

    Admittedly, I’m not a theological expert, but to my ears this sounds only slightly more sophisticated than something you might hear from a red-faced five-year-old.  Augustine must be spinning in his grave.

  • Fixing the Ratings Agencies


    Matt Yglesias comments on the packaging of crappy loans back in the heyday of the credit bubble:

    The mysterious thing isn’t that people made bad loans that they were able to package and sell off, the mysterious thing is that they found buyers for the securities.

    Ultimately this looks to me to go back to the ratings agencies, an issue [Barney] Frank sort of dodged. But the ratings agencies are private for-profit companies that also enjoy a kind of government-sponsored monopoly status. In theory their behavior should be subject to market discipline, but in practice it’s not. They screwed up badly. But while lots of companies have gone bankrupt and lots of people have lost their jobs, the ratings agencies are all still in business. And no new competitors are coming to the fore and there’s no real way for anyone to break into the industry.

    No question about it: over the past decade ratings agencies were, at best, negligent, and at worst, perpetrators of outright fraud.  “It could be structured by cows and we would rate it” is surely one of the all-time great quotes of the bubble era.  And the fact that agencies shared their models with issuers so they’d have an easier time tweaking their products to get high ratings is prima facie evidence of corruption.  Slapping a AAA rating on every cobbled-together junkpile that slithered its way out of a Wall Street structured finance group certainly helped fuel the fantastic expansion of risky investments that all came crashing down in 2008.

    Still, I have to admit that over the past year ratings agencies have moved down my personal league table of bad actors.  If you take a look at the list of possible causes for our recent financial meltdown here, I probably would have put the ratings agencies in the top five a year ago, while today I’m not sure I’d even put them in the top ten.

    Partly this is because I’ve become more sympathetic to fundamental macroeconomic explanations for the bubble: easy money, current account imbalances, massive abuse of leverage, and huge increases in both debt and risk that were masked by ever more baroque credit derivatives.  Partly it’s because widely accepted1 risk models based on CDS spreads mostly produced the same results as the ratings agencies.  Partly it’s because the negligence/fraud involved in producing high ratings was pretty clearly a two-way street: buyers and sellers of structured investments were every bit as anxious to get them as the ratings agencies were to provide them.

    Beyond that, I’m also a bit flummoxed about what the answer to the ratings agency problem might be.  There’s probably a reasonable regulatory solution for fraud and negligence, but there seems to be wide agreement that the real problem is incentives: since issuers are the ones paying for ratings, it’s inevitable that agencies are going to lean into the wind to provide ratings the issuers like.  I’ve read dozens of proposals for ratings agency reform, but the only one that really gets at this fundamental conflict-of-interest problem is to simply do away with them and turn debt rating into a government function.  I’m a little skeptical of that, though, since it’s not at all clear to me that a government agency could hire the kind of talent it takes to keep up with Wall Street’s rocket scientists.  What’s more, it’s not at all clear to me that anyone — Fed regulators included — would have rated SIVs much differently during the boom years than the ratings agencies did.

    So….I’m not sure what the answer is.  Tighter regulation would obviously be welcome, but how do we get rid of the underlying conflict-of-interest problem?  How do we align agency incentives in favor of long-term accuracy?  How do we encourage real competition between the agencies, rather than a race to the bottom?  None of the regulatory reforms I’ve seen really get at this in a fundamental way.  Does that mean that a government takeover is the only real answer?  Or does it mean that there is no real answer and we’ve collectively decided to shrug our shoulders and allow this to happen all over again in a few years?  Somebody should ask Barney Frank.

    1Whether they should have been widely accepted is a different question.  But they were.

  • 800 Years of Financial Folly


    Carmen Reinhart and Kenneth Rogoff have done something that, apparently, no one has done before: rigorously collect data on debt and risk management (or lack thereof) over the past 800 years, rather than only since 1980.  Their conclusion: excessive debt accumulation is always and everywhere a very, very bad thing.

    Also: credit booms and busts happen over and over throughout history, with only the details changing; public sector debt crises are common and devastating; banking crises hit every country, rich and poor alike; and when credit bubble pop, everything pops along with it.  And finally, a fifth lesson, as summarized by Martin Wolf:

    The final lesson is that financial liberalisation and financial crises go together like a horse and carriage. It is no surprise, therefore, that the last 30 years have seen waves of financial crises, of which the latest one is merely the biggest. The current crisis is the worst since the Great Depression. Yet, argue the authors, no one should have been surprised by this outcome. The US showed all the classic symptoms of a country heading for crisis: a huge current account deficit; soaring house prices; headlong credit growth; and, let us not forget, excessively complacent regulators.

    It always comes back to debt and leverage, doesn’t it?  There are lots of other things to watch out for too, but the bottom line is that if you keep leverage at reasonable levels, your financial crises are likely to be manageable.  If not, not.  Tim Geithner, please take note.

  • Assignment Desk Watch


    If the New York Times is serious about its shiny new plan to cover the conservative noise machine more thoroughly, they better jump on this one right away.  By tomorrow it will probably be gone, yet another important story missed by the mainstream media.  Get cracking, guys.

  • The Case of the Missing Documents


    Two years ago the ACLU filed a request for records about torture and detainee abuse.  Part of what they got was a list of 181 documents the government considered exempt from release.  But when the feds took another look this year, they couldn’t find ten of the documents on the original list.  What happened?  Nick Baumann speculates:

    “It was impossible to ascertain whether the discrepancy was the result of an error by the prior administration when it created the original…index or whether the prior administration misplaced the documents in question,” Tracy Schmaler, a Justice Department spokeswoman, told Mother Jones. In other words, CIA and Justice Department lawyers might have mistakenly listed documents that never existed in the first place.

    But is it plausible that the inconsistency could be merely a clerical error? After the Bush administration created the index, a CIA official swore under oath that she had reviewed the documents on the original list. And one of the disputed documents was listed on the original index as a 46-page memo “providing legal advice,” classified as top secret and dated 25 July 2002. Schmaler says the Obama administration’s search never found a document matching that description. Could the CIA and Justice Department lawyers who composed the original list have mistakenly included a non-existent memo — complete with a date and precise page count?

    Well, maybe there were two 46-page memos written on 25 Jul 2002.  Or, um, maybe it was actually a memo about restraining booze, not detainee abuse.  Or something.  I’m sure it will all be cleared up soon.  Move along folks.  Nothing to see here.

  • The Third Rail


    Conor Friedersdorf comments on Glenn Beck’s recent heresy that a McCain presidency might have been even worse than an Obama presidency:

    It is therefore no surprise that Comrade Beck is now being turned on by Comrade Limbaugh and Comrade Levin (the one among the trio who actually believes most of what he says)….

    Well, Levin might believe most of what he says, but I was at Blockbuster the other day and found myself thumbing through a copy of his recent bestseller, Liberty and Tyranny(Why does Blockbuster now sell books?  That’s a question for another time.)  To my surprise, it turns out that for all his bombast, Levin is a wimp.

    The end of his book is taken up by a “conservative manifesto,” and it’s chock full of fire-breathing stuff.  Eliminate the income tax, eliminate corporate taxes, put a hard cap on the size of the federal government, eliminate tax-exempt status for all environmental groups, rein in judicial review, insist on originalism as the only proper way to interpret the constitution, make governments pay property owners for all zoning changes that affect them, wipe out all teachers unions, no national healthcare, crank up military spending, put God back in government, etc. etc.  I’m paraphrasing a bit, but you get the idea.  It’s hardcore right-wingerism.

    Obviously, then, a guy like this wants to do away with Social Security and Medicare, right?  Well, hold on there, pardner.  Let’s not go off half-cocked.  Sure, they’re “poisonous snake oil,” but all Levin can bring himself to suggest is that young people be educated about the intergenerational “trap” of entitlements so that they can be “contained, limited, and reformed.”  Educated!  Limited and reformed!  That’s it.

    Pretty weak tea for a firebreather.  Even among the wingers, it turns out, Social Security is a third rail.  After all, I guess Levin wants old people to buy his book too.