• A Systemic Failure?


    I’ve been waiting for someone smarter than me to make this point. So here’s Spencer Ackerman on the Christmas bomber:

    Abdulmutallab’s father told embassy officials in Abuja that he didn’t know where his son was, but might be in Yemen. The CIA had that information. NSA has information that a Nigerian might be used for an attack sponsored by al-Qaeda in the Arabian Peninsula. If all of this had gone into the [National Counterterrorism Center], would someone have put two and two together — setting off the process for pulling Abdulmutallab’s visa or putting him on the no-fly? Maybe. And the rationale for the all-source, multi-agency NCTC is all about intelligence sharing. But remember: the inputs are that the guy’s dad says he’s dangerous; he’s Nigerian; he might be in Yemen; and al-Qaeda in Yemen may be looking to use a Nigerian in a forthcoming attack. Is that really enough?

    The answer to that question most certainly requires a policy decision, not an intelligence decision. The intelligence community is drinking from a fire hose of data, a lot of it much more specific than what was acquired on Abdulmutallab. If policymakers decide that these thin reeds will be the standard for stopping someone from entering the United States, then they need to change the process to enshrine that in the no-fly system. But it will make it much harder for people who aren’t threatening to enter, a move that will ripple out to effect diplomacy, security relationships (good luck entering the U.S. for a military-to-military contact program if, say, you’re a member of the Sunni Awakening in Iraq, since you had contacts with known extremists), international business and trade, and so on. Are we prepared for that?

    In retrospect, terrorism dots always look easy to connect, but people rarely think about all the other similar dots. If the information we had on Abdulmutallab should have been enough to keep him off the flight to Detroit, then we’re also saying that that’s the level of information that should be sufficient to keep anyone off a flight to Detroit. Is that what we want?

    Maybe. But it’s far from obvious after just a cursory glance. Public pressure is invaluable to keep the federal government honest, but it can also become a myopic feeding frenzy. The intelligence community plainly needs to account for itself here, and upon investigation we might decide that there really was a systemic breakdown. But it’s way too early to say that with any confidence.

  • Airport Security


    Matt Yglesias says he’s skeptical about the value of ratcheting up security even further in airports, and then adds this:

    The last point I would make, raised by DanVerg on Twitter, is that even if airplanes were completely secure you could always kill people by detonating a bomb in some other crowded place. For example, you could blow something up in a crowded airport security line.

    I’d take something different away from this. The fact that al-Qaeda keeps focusing on airplanes is a sign of how weak they are. Sure, they could detonate a bomb in a security line, but it wouldn’t kill very many people and it certainly wouldn’t have the psychological impact of taking down a jumbo jet. Alternatively, they could try to blow up a chemical plant or something like that, but that’s out of their league. They’d have to get a team of operatives into the country and then they’d have to do all the planning and all the execution within the borders of the United States, where surveillance is far greater than it is in Yemen or Nigeria. They plainly don’t have the resources to do this, and every in-country plot we’ve uncovered since 2001 has been bumbling and amateurish.

    Obviously this could change, but at the moment I think it’s wrong to say al-Qaeda “could always kill people” in a bunch of other ways. In fact, the evidence suggests that they can’t, at least not in any wholesale way. In that sense, then, airport security really does seem like one of the better places to focus our security efforts. I just wish we could do it more sensibly.

  • The Rich Are Different From You and Me


    Thanks to a combination of Republican idiocy (in 2001) and Republican obstinacy (in 2009), the estate tax will go away completely in 2010, only to return in 2011. So if you’re rich, and you’re close to death, you’d do well to hang on for another couple of days before you expire. Or so the story goes:

    “I have two clients on life support, and the families are struggling with whether to continue heroic measures for a few more days,” says Joshua Rubenstein, a lawyer with Katten Muchin Rosenman LLP in New York. “Do they want to live for the rest of their lives having made serious medical decisions based on estate-tax law?”

    ….To make it easier on their heirs, some clients are putting provisions into their health-care proxies allowing whoever makes end-of-life medical decisions to consider changes in estate-tax law. “We have done this at least a dozen times, and have gotten more calls recently,” says Andrew Katzenstein, a lawyer with Proskauer Rose LLP in Los Angeles.

    Of course, plenty of taxpayers themselves are eager to live to see the new year. One wealthy, terminally ill real-estate entrepreneur has told his doctors he is determined to live until the law changes.

    “Whenever he wakes up,” says his lawyer, “He says: ‘What day is it? Is it Jan. 1 yet?'”

    This seems crazy to me. Congress has long had the power to retroactively change tax rates, and they’ll almost certainly reinstate the estate tax sometime in 2010. The Journal says that the odds of a successful court challenge to a retroactive increase “is a subject of debate in the estate-planning world,” but it’s hard to believe that anyone really takes that seriously.

    But who knows? Maybe this is all a clever plan on the part of Democrats. Maybe they’re just waiting for some rich and unsympathetic person to die (think Leona Helmsley or someone like that) and then they plan to use this person as a poster child for Republican greed and pandering to the rich. The ads write themselves: “You pay taxes on everything you earn. But conservative mogul Richard Mellon Scaife just left $1.2 billion to his kids and they don’t have to pay a single cent on it. Today’s Republican Party: protecting billionaire contributors while you keep the country running.”

    Eh. Probably not. But you never know. Someone might be able to make hay out of this.

  • Full Body Scanning


    As much as I hate both the partisan screeching and the inane rush to pin blame in the underwear bombing case before we really have any idea what happened, I also confess that I don’t understand the (bipartisan! international!) hysteria that’s prevented full body screening machines from being put in use on a wider basis. They perform “virtual strip searches that see through your clothing and reveal the size and shape of your body,” says the ACLU, and earlier this year the House voted to prohibit their use for primary screening. Both Democrats and Republicans voted for the ban by wide margins.

    I’ll defer to the experts on how and where these devices are best used, but privacy concerns strike me as daft. Yes, the machines show the shape of your body under your clothes. Big deal. That strikes me as way less intrusive than pat-downs, wands, bomb-sniffing dogs, hand inspections, and no-fly lists. If we put up with that stuff, why on earth would we suddenly draw the line at a full body scanner?

    We go nuts whenever a terrorist tries to set off a bomb, but we also go nuts over an effective, noninvasive technology just because it gives TSA screeners a brief glimpse of our body fat level? That’s crazy.

  • The End of Health Insurance


    “Community rating” is wonkspeak for a requirement that health insurers cover everyone at the same price, regardless of preexisting conditions or health status. James Surowiecki says it makes private health insurance unnecessary:

    Congress’s support for community rating and universal access doesn’t fit well with its insistence that health-care reform must rely on private insurance companies. After all, measuring risk, and setting prices accordingly, is the raison d’être of a health-insurance company….Congress is effectively making private insurers unnecessary, yet continuing to insist that we can’t do without them.

    The truth is that we could do just fine without them: an insurance system with community rating and universal access has no need of private insurers.

    I agree, and it’s one of the reasons that, warts and all, I support the current healthcare reform legislation so strongly. My take is that community rating at the national level can eventually lead to only two outcomes: (a) the end of private health insurance completely1 or (b) the transformation of private insurers into regulated public utilities. Roughly speaking, Option A is what you see in Canada or Sweden, Option B is what you see in Germany and the Netherlands. I’d prefer the former, but the regulated utility model works OK too, and it’s hard to see how you avoid one or the other in the long run.

    It would be nice to have a public option in the current legislation since it would probably speed up the process I’m talking about. But Surowiecki is right: community rating plus universal access makes private insurers obsolete. Soon they’ll be doing nothing but basic administrative work, and within a few years this will become too obvious to ignore. At that point, Congress will either enact a public option that eventually grows large enough to put private insurance out of business, or else regulation of the private industry will grow to the point where it becomes a nonissue. It’s too bad we’ll have to wait so long for this to happen, but today’s healthcare legislation puts it on the road to inevitability.

    1That is, its end as a primary health insurer. Private insurers will likely stay around to provide supplementary or specialized coverage.

  • Midterms are Coming


    On Monday I twittered:

    Why haven’t we heard yet from Dick Cheney re: NW 253 bombing? Really feel like we could use his perspective.

    Ha ha. Just kidding, of course. But I guess Cheney took me seriously. Here he is yesterday:

    As I’ve watched the events of the last few days it is clear once again that President Obama is trying to pretend we are not at war. He seems to think if he has a low key response to an attempt to blow up an airliner and kill hundreds of people, we won’t be at war.

    What a loathsome human being. As for the more general calculated Republican freakout over this, credit where it’s due to Politico for pointing it out. The GOP is really mining new lows these days.

    More here. Or a million other places as well. It’s nothing new that Republicans are doing everything they can to exploit terrorism for political advantage, but they sure are stepping up the crassness level these days.

  • The Financial Lobby at Work


    Ryan Grim and Arthur Delaney write today about the House Committee on Financial Services — aka the banking committee — and how Democrats decided to populate it when they won control of Congress in 2006:

    The banking committee […] is known as a “money committee” because joining it makes fundraising, especially from donors with financial interests litigated by the panel, significantly easier. The Democratic leadership chose to embrace this concept, setting up the committee as an ATM for vulnerable rookies. Eleven freshman representatives from conservative-leaning districts, designated as “frontline” members, have been given precious spots on the committee. They have individually raised an average of $1.09 million for their 2010 campaigns, according to the Center for Responsive Politics; by contrast, the average House member has raised less than half of that amount.

    ….Because the frontline members face the possible end of their careers in November and may be beholden to the whims of powerful donors, the Democrats’ 13-seat advantage on the committee is weaker than it appears. If seven members break with the party on a vote, the GOP wins. Rep. Luis Gutierrez (D-Ill.) refers to them as “the unreliable bottom row.” (The second row is little better, populated by the Democrats from red-leaning areas who first took office after the 2006 election.)

    In short, by setting up the committee as a place for shaky Democrats from red districts to pad their campaign coffers, leadership made a choice to prioritize fundraising over the passage of strong legislation. “It makes it difficult to corral consensus,” says Rep. Stephen Lynch (D-Mass.), a subcommittee chairman, of the unwieldy panel.

    The whole piece is worth a read, including the explanation of how financial interests these days tend to get local frontmen — realtors, car dealers, farmers, small credit unions — to push for loopholes that would be hard to pass if it were obvious that Wall Street firms were behind them. And for sheer entertainment, don’t miss the description of senior members of the banking committee twisting themselves into knots to change their votes on legislation in order to curry favor with industry lobbyists once they’ve decided they were supporting a lost cause. It’s politics at its finest.

    But of course, keep one other thing in mind too: Democrats may cave on some of this stuff — and shame on them for doing so — but at least there’s still a core group of them willing to do what’s right. On the Republican side, the number of committee members willing to what’s right is precisely zero.

  • Quote of the Day: Grandstanding Watch


    From Chris Hayes, responding to the mindless blathering of Rep. Peter King (R–Hysteristan) about Obama’s response to the underwear bomber:

    It sounds like you’re saying they’ve been insufficiently grandstanding on the issue.

    “I don’t know why you’d say that,” King said. And you know what? He probably really doesn’t.

  • Repealing Reform


    Apparently the conservative base is demanding that all good Republicans campaign next year on repeal of healthcare reform. This is probably a good strategy since it (a) makes for good rabble rousing but (b) will never have to be followed up on.  Republicans will never get either the 60 votes they’d need for repeal or the two-thirds they’d need to override an Obama veto, so why not promise the moon?

    But since there’s not a lot to blog about this week, I guess I’m curious about how exactly they’re going to do this. The problem, as other people have also pointed out, is that the current bill has basically been stripped down to the bare minimum you can have once you start from the point that everyone agrees about: reforming the insurance industry. Crudely speaking, the moving parts go together like this:

    • Insurance companies are required to take all comers, regardless of preexisting conditions.
    • This requires regulation of pricing, since taking all comers is meaningless if they’re priced out of the market.
    • Regulation of pricing would destroy the private insurance market, since sick people would all buy cheap insurance and bankrupt the companies. So you have to ensure that everyone buys insurance, even the young and healthy. Thus, an individual mandate.
    • But if you’re going to have an individual mandate, then you have to include subsidies so that poor people can afford it.
    • And that’s the ball game.

    Now, there’s more to healthcare reform than just this. There’s Medicaid expansion for example, which I suppose Republicans could fight against. But Medicaid is cheaper than subsidies, so costs would go up if they did that. There are also all the cost cutting measures and pilot projects in the bill, and some of them are unpopular. But again, they’d basically be surrendering completely on even the idea of reining in healthcare costs if they attacked that.

    So what do they have left to campaign against? Maybe the specific funding sources, but that would be a pretty raw bit of pandering to the rich. The fact is that at any level of real detail, Republicans just don’t have much of an argument.

    I suppose this doesn’t matter, though. It sort of reminds me of the too-clever liberal response whenever conservatives start railing about cutting the deficit without raising taxes. It goes something like this: “OK, fine. But two-thirds of the federal budget is taken up by Social Security, Medicare, national defense, and interest on the debt. You don’t want to cut that stuff, so to eliminate the deficit you’d have to slash about half of the remaining stuff. So what are you going to cut?”

    Liberals always ask that question, conservatives never answer it since they know perfectly well it would piss off practically every registered voter in the country, and it makes no difference. They just keep saying it anyway, and lots of voters buy it. Probably it would be the same with healthcare reform. They’d refuse to say just exactly what they’d cut, and it wouldn’t really make any difference. It’s the thought that counts, after all.

  • More Drama Please, Obama


    “I’m not sure you can get more beltway than this article,” writes a friend.  Here’s the article:

    There is a sense of déjà vu in the Obama administration’s response to the attempted terrorist attack on Christmas Day. A by-now familiar pattern has been established for dealing with unexpected problems.

    First, White House aides downplay the notion that something may have gone wrong on their part. While staying out of the spotlight, the president conveys his efforts to address the situation and his feelings about it through administration officials. After a few days, the White House concedes on the issue, and perhaps Barack Obama even steps out to address it.

    ….By the time Obama addressed the public with a brief televised statement, his critics had made such headway that the White House was left with this lede in the New York Times: “President Obama emerged from Hawaiian seclusion on Monday to try to quell gathering criticism of his administration’s handling of the thwarted Christmas Day bombing of an American airliner as a branch of Al Qaeda claimed responsibility.”

    It’s the kind of story the White House might have avoided if Obama hadn’t waited so long to forcefully react to the incident.

    That’s right: if only Obama insisted on immediately grabbing the spotlight and relentlessly overhyping events for his own political gain, maybe the right would leave him alone. Sounds like a solid plan to me.

  • A Bold Stand from the Journal


    As a wise man once said, you could devote your entire life to debunking inane Wall Street Journal editorials once you let yourself get sucked into their gaping maw. But via Ezra Klein, today’s editorial is a gem, not pretending to even a germ of reason or sanity:

    The White House is now floating a bipartisan commission to reduce federal borrowing, and much of the political class is all for it. We only hope Republicans aren’t foolish enough to fall down this trap door….Republicans should respond with their own choice: They’ll agree to a deficit commission only if it takes tax increases off the table….

    Yeah, I’m sure Democrats will jump at that deal. And I can’t wait for the Journal’s detailed fiscal plan for cutting federal spending by 30% — especially since they simultaneously seem to think that Medicare should be cut and that it should be preserved as is. Should be a crowd pleaser.

    In fairness, plenty of liberals agree with the Journal in a mirror image sort of way: a commission would be nothing but a facade for Pete Peterson to gut Social Security and Medicare and probably throw in a few tax cuts for the rich for good measure. It looks like bipartisanship has as bleak a future in 2010 as it did in 2009.

  • Miscellany


    Three quick items:

    • Yes, the filibuster sucks, but I agree with both Ezra Klein and Bruce Bartlett that the tradition of Senate holds is even more odious. But if it’s not possible even to do away with holds, I’ll reiterate my suggestion that the Senate scale way, way back on the number of officials that it has to confirm. Maybe the top two officers in each executive department, appellate judges and above, and a few others of similar rank. The rest should just be straight presidential appointments.
    • Can we all, please, chill out about the failed plane bombing, chill out about Janet Napolitano’s “the system worked” gaffe, and chill out about Obama remaining in Hawaii? Just. Chill. Out. We don’t have to go completely cuckoo every time something like this happens. Instead, let’s find out where the system failed instead of hysterically guessing about it, and then figure out what we ought to do about it.
    • For decades now, the initiative process in California has primarily been a tool of the rich and powerful, not the grassroots. Here’s the latest outrage.

    That is all. You may now return to Monday Night Football.

  • Iran’s Economy


    Conventional wisdom says that the Democratic Party’s chances in next year’s midterm election will mostly depend not on terrorism, not on healthcare, but on simple economics. If the economy is improving, they’ll do OK.  If it’s not, they’ll get hammered.

    Juan Cole suggests this dynamic may be playing out in Iran as well, where this weekend’s demonstrations have grown ever bigger and more violent. Ideology may seem to be at the forefront, but the economy is probably playing a big role in the background:

    Richard Spencer of the Independent reports from Dubai on the darker side of Sunday’s events, as crowds went on rampages, setting fire to banks, government buildings and even a local police station….

    The report of attacks on banks makes me think that there is an economic dimension to this uprising. President Mahmoud Ahmadinejad’s profligate spending had provoked very high inflation last year, up to nearly 30%. Although the government maintains that inflation is now running 15%, that is still a hit that average families are taking, on top of the high prices of last year.

    ….Moreover, as as Robert Worth recently reported, the government has been threatening to remove subsidies from staples. I was in Egypt in January of 1977 when President Anwar El Sadat stopped subsidies under pressure from the IMF, and it threw the country into 3 days of turmoil from Aswan to Alexandria. Iranians have been upset by this talk of no more subsidies and it may have fed economic anxieties already inflamed by the high inflation (in fact, removal of subsidies is essentially a form of price inflation for consumers).

    More at the link.

  • Modern Conservativism


    Here’s the last two weeks in a nutshell:

    Conservative response to a guy setting his underwear on fire on an airplane: It’s Obama’s fault! We should declare war on Yemen! We should stop allowing Muslims on our airplanes! We need to connect the dots! We’re all going to die!

    Conservative response to providing healthcare to 30 million Americans: It’s socialism! It’s going to bankrupt America! It’s Chicago thug politics! It’s going to kill grandma! It’s going to turn our healthcare system into an abattoir!

    Conservative response to regulating the financial industry that almost destroyed America’s banking system: It’s Marxism! It’s going to cause hyperinflation! It’s Uncle Sam’s jackboot on the commerce of the country! It’s the end of innovation! Buy gold!

    Conservative response to catastrophic climate change: It’s a hoax from the liberal media. Pay no attention to it.

    Feel free to add your own observations in comments.

  • Quote of the Day: Fiscal Conservatism


    From Sen Orrin Hatch (R-Utah), on his dedication to fiscal prudence:

    Six years ago, “it was standard practice not to pay for things,” said Sen. Orrin Hatch, R-Utah. “We were concerned about it, because it certainly added to the deficit, no question.”

    Note to Hatch: It has never been “standard practice” not to pay for things. It was a short-lived innovation of the Bush/Rove White House not to pay for things. And no, you showed no serious concern about it at the time. Other than that, you’re right.

  • No Drama Obama


    Adam Nagourney yesterday:

    As much as Mr. Obama presented himself as an outsider during his campaign, a lesson of this battle is that this is a president who would rather work within the system than seek to upend it. He is not the ideologue ready to stage a symbolic fight that could end in defeat; he is a former senator comfortable in dealing with the arcane rules of the Senate and prepared to accept compromise in search of a larger goal. For the most part, Democrats on Capitol Hill have stuck with him.

    And Ross Douthat:

    Obama baffles observers, I suspect, because he’s an ideologue and a pragmatist all at once. He’s a doctrinaire liberal who’s always willing to cut a deal and grab for half the loaf. He has the policy preferences of a progressive blogger, but the governing style of a seasoned Beltway wheeler-dealer.

    ….In hindsight, the most prescient sentence penned during the presidential campaign belongs to Ryan Lizza of The New Yorker. “Perhaps the greatest misconception about Barack Obama,” he wrote in July 2008, “is that he is some sort of anti-establishment revolutionary. Rather, every stage of his political career has been marked by an eagerness to accommodate himself to existing institutions rather than tear them down or replace them.”

    I think the thing that surprises me is that anyone ever thought otherwise. Among low-information voters I understand the disconnect: they heard hopey-changiness, haven’t really gotten it, and are disappointed. But even some very high-information voters seem to be disappointed the same way, and it’s baffling. Obama’s entire career has been one of low-key, pragmatic leadership. He’s clearly a mainstream liberal, but during the Democratic primaries he was famously the least progressive (by a small margin) of the three major candidates on domestic issues. He did everything he could to avoid taking dangerously inflammatory stands on hot-button social issues. His advisors during the campaign were nearly all members in good standing of the center left. His nickname was “No Drama Obama,” and his temperament was plainly cautious, sober, and businesslike.

    This was all pretty obvious during the campaign, and everybody understood it perfectly well when Republicans went crazy and started tarring him a radical socialist and a bomb-throwing revolutionary. Remember how we mocked all that stuff? But I guess that deep down, an awful lot of people were hoping that he was just play acting during the campaign, pretending to be a solid citizen while the real Obama was plotting to turn us into Sweden.

    Personally, I wish Obama would articulate the liberal agenda more full-throatedly, and I wish he’d take a few more risks and push his own caucus a little harder. I’ve thought that ever since the 2008 campaign. But the fact that he hasn’t hardly comes as a surprise. He’s as liberal a president as we’ve had in 40 years, but he’s no starry-eyed idealist. Why would anyone ever have thought differently?

  • Security Madness


    You have got to be kidding me. Here’s the reaction to our latest Osama wannabe’s ludicrously failed terrorist plot:

    According to a statement posted Saturday morning on Air Canada’s Web site, the Transportation Security Administration will severely limit the behavior of both passengers and crew during flights in United States airspace — restricting movement in the final hour of flight. Late Saturday morning, the T.S.A. had not yet included this new information on its own Web site.

    “Among other things,” the statement in Air Canada’s Web site read, “during the final hour of flight customers must remain seated, will not be allowed to access carry-on baggage, or have personal belongings or other items on their laps.”

    I’ll refrain from further comment until TSA makes this official. Hopefully Air Canada just jumped the gun here. Because if this is true, it means our government has finally and irrevocably gone insane.

    UPDATE: Plus there’s this from an accompanying story:

    In effect, that means passengers on flights of about 90 minutes or less will not be able to get out of their seats, since they are not allowed to move about while an airplane is climbing to its cruising altitude.

    Air Canada also told its United States bound customers that they would be limited to a single carry-on item and that they would be subjected to personal and baggage searches at security check points and in the gate area. It said this would result in significant delays, canceled flights and missed connections. Air Canada said it would waive the baggage fee for the first checked bag as a result of the new policy.

    Aaron Potter comments:If this is true, So much for flying with kids.” And it means the end of carry-on baggage entirely for anyone who also has a purse or a briefcase.

    Apparently al-Qaeda doesn’t need to bother with real terrorism anymore: just light off a firecracker on a plane and the U.S. government will react as if a major city had been leveled. Why not just ban air flight entirely and be done with it?

  • The Pink Pussycat


    Alice Schiller, once the owner (with her husband Harry) of the Pink Pussycat nightclub on Santa Monica Boulevard, has died. This is from the LA Times obituary:

    Opened in 1961, it was pink through and through, just like the inside of Schiller’s house and her entire wardrobe….Schiller and her husband drove a pink Cadillac and a pink Rolls-Royce, which bore the words “Follow Us to the Pink Pussycat.

    I thought you might all like to see a picture of that Rolls before it was painted pink. That’s it, parked in front of our little stucco house in Orange County around 1960 or so. That’s my sister standing in front of it, ever so fashionable in her yellow raingear and red boots.

    Somewhere I have a picture of the Rolls being unloaded off a ship in Long Beach before my father took possession of it. As you can imagine, this purchase was a boondoggle of the highest order, the car’s chief claim to fame being the fact that my brother was almost born in its back seat in 1961. But say this for it: it got everyone to St. Mary’s hospital just in time for a happy ending. The next year, we sold it to the Schillers, who painted it pink and eventually installed it in front of the nightclub.

    At least, that’s my recollection of the story. My mother isn’t home right now, so I can’t swear to every detail. But that’s my connection to today’s news. Just thought I’d share.

  • Real Financial Regulation


    Nicole Gelinas writes in the LA Times that the proposed new Financial Services Oversight Council wouldn’t work:

    Such an “omniscient” regulator could not have prevented our current crisis. Five years ago, such a regulator likely would have declared triple-A-rated mortgage-related securities safe, allowing financial firms to borrow more liberally against them than they could against seemingly riskier securities. The bankrupting losses that eventually occurred from such borrowing seemed impossible back then.

    Well, she’s got a point. They probably would have looked kindly on financial “innovation” back in 2004. Still, it’s possible that a regulator independent from the Fed would have at least a fighting chance of not being completely captured by the banking industry and therefore applying a little bit of pushback against the swelling tide of the finance lobby. Besides, does Gelinas have a better idea?

    Oh wait, she does:

    Congress should instead follow the regulatory philosophy that served the nation well for 50 years after the Depression: Set consistent limits on borrowing across similar financial instruments, no matter what their perceived risks.

    ….In 2000, for example, the Federal Reserve counseled Congress to prohibit borrowing limits and requirements to disclose trading activity on some new financial instruments, including credit-default swaps. Regulators believed that they, and financial industry executives, had already done what today’s proposed systemic risk regulator would do: identify and erase the potential for error.

    What if regulators had instead allowed innovation to flourish within some reasonable rules? AIG, for example, would have had to put a consistent cash percentage down behind the $500 billion in promises — a form of borrowing — that it made through credit-default swaps. And it would have had to execute those promises on public exchanges, making them transparent.

    AIG might have gone under anyway — failure is a healthy part of capitalism — but it would not have threatened to take the economy with it, necessitating a government bailout that set a dangerous precedent….Borrowing limits in the housing market would have protected the economy too. As the bubble expanded, people would not have been able to keep up with a requirement for, say, a consistent 20% down payment, thus dampening demand. And when the bubble burst, it would not have left behind so much unpaid debt.

    I’d make that trade. In fact, with a few exceptions, I’d trade virtually all of the proposed financial regulations for a single set of new standards that placed clear, simple, and direct limits on financial leverage everywhere in the system. Banks, hedge funds, consumers, you name it. If it’s leverage, there’s a limit to it.

    Anyway, it’s the day after Christmas and I don’t suppose anyone cares about this. But I do! And besides, Nicole Gelinas had the misfortune to have her op-ed run on Christmas Day itself, probably the single most ignored day of the year on the op-ed pages. (There are no ads for after-Christmas sales on the editorial pages, after all.) So I figured she could use a little break.

  • Holiday Catblogging Extravaganza


    I asked for festive cats, I got festive cats.  So here they are.  Here on the front page we have the usual suspects: Domino on the left, sporting a festive Yuletide ribbon, and Inkblot on the right, hanging out under the Christmas tree waiting for Santa to deliver a case of cat food. But there are loads more cats below the fold. Just click here to see them all.

    Left: Luna. “He was not thrilled, but tolerated the interruption to his long, long nap.” Right: Pudgy Mewler. “She really does have eyes.”

    Left: Gately Claus says “Lots of Kibble to All and to All a Good Nap!” Right: Sam puts up with his holiday bow tie. 

    Left: Spitfire. Right: Fiona.  “When I bought the basket, a marital debate ensued about whether she’d actually use it.  Good kitty.  She came through.”

    Left: Oliver My Heart Throb. Goes by Ollie. Right: Arod. “It’s complicated.” Both are from the author of Cat Tales: A Love Story.

    Left: Lily Right: Ditto. These are two of my mother’s cats. I assume you can all figure out how Ditto got his name?

    Left: Maybelle, aka Butterball. Right: Leo, “parking himself in the middle of the Christmas village we set up around the tree every year.”

    Left: Tiggy Winkle, Lucie and Woody. Right: Pluto.

    Left: Milo (in the tree) and Otis (watching). Right: Nikki.

    Left: Kellie. Right: Donna. “They are sisters and littermates; I got them at the San Francisco SPCA a year and  a half ago, when they were three years old.”

    Left: A photo taken nineteen years ago. “The kittens are two of three born to a stray who temporarily adopted us, just to give birth and leave.  Wusslet, had a short, but happy life, and Ginger, the black cat lived until just a few weeks ago.  Sadly, she didn’t quite make it long enough to enjoy the tree this year.” Right: From the same family, Schroedinger, “who adopted us between Christmas and New Year’s Day seven years ago.  It was right before a major cold snap, and she was so skinny at the time we didn’t think she would make it in the outside weather.  The whole house smelled like the Christmas tree when she moved in with us, so every year when we set up the tree, she sticks her nose into the tree and inhales deeply for the first hour or so, and beds down under the tree whenever she can.”

    And finally, two last minute entrants. Left: Magic, “an overly intelligent (and slightly pudgy) character who’s been hanging out with me for over 9 years. I’m not sure that she’s aware of your blog, but she’s certainly been on my lap (and my keyboard) plenty of times while I’ve been reading it. As you can see, every Christmas brings her a new exciting waterbowl (tree stand) and many new play toys (bags, ribbon, and wrapping paper).” Right: “the imperial Coco,” captured among the Christmas lights by an iPhone.