Kevin Drum

The Gnomes of Zurich

| Fri Nov. 21, 2008 12:12 PM EST

THE GNOMES OF ZURICH....John Quiggin thinks Switzerland is about to go bankrupt. Just thought I'd mention it.

Advertise on MotherJones.com

Trouble in River Citi

| Fri Nov. 21, 2008 11:27 AM EST

TROUBLE IN RIVER CITI....Back in the hazy days of early 2008, Countrywide failed. But hey — they were hugely exposed to subprime mortgages, so that was hardly a surprise. Don't read too much into it. Then Bear Stearns failed. But they were the weakest of the investment banks and had unusual derivative exposures. The others were probably OK. Then Fannie and Freddie failed. But they were GSAs. And Lehman Brothers went under. But Richard Fuld had really screwed the pooch, and the federal bailout plan would keep the other investment banks OK. But then Merrill got eaten, and Morgan and Goldman turned themselves into bank holding companies. No more investment banks. But at least the big money center banks were basically OK, right?

So tell me: now that Citigroup seems to be on the brink of failure, what are we supposed to think? Is anyone safe? Is Brad DeLong right, and full-scale Swedish style nationalization is the only real option still open to us? Does Congress really want to go into recess without passing some kind of major stimulus package before January 20? Really?

MacBook Update

| Fri Nov. 21, 2008 11:00 AM EST

MACBOOK UPDATE....Thanks to everyone who suggested resetting the SMC controller in my MacBook. It didn't work, but it did cause the white LED on the front of the notebook to start pulsing again, which made me think it was working for a while and allowed me to go to bed happy. When I woke up this morning, though, the battery was still dead after a night of charging and the message on the menu bar was actually more ominous than before. Sigh. Off to the Genius Bar, I guess.

But I'm curious about something. An awful lot of people in yesterday's thread seemed to think that I had committed some kind of technological malpractice by letting the battery discharge completely. Mind you, this wasn't deliberate on my part. I just closed the lid one day (August 29, I think, after using the MacBook to blog about Sarah Palin during a power failure) and then didn't happen to use it for the next two or three months. But frankly, even if I'd known I wasn't going to use it I wouldn't have done anything special. I would have just figured that the battery would discharge completely and I'd have to charge it before I used it next. No big deal.

But that's not so? If you let your battery discharge completely, the entire machine dies and refuses to charge the battery again? Why? Just to teach me a lesson? Or what? I don't understand why completely discharging a battery should have such dire effects. I thirst for knowledge, as always, so can anyone enlighten me?

Sadr's Slump

| Fri Nov. 21, 2008 10:51 AM EST

SADR'S SLUMP....The latest from Baghdad:

More than 10,000 supporters of the radical anti-American Shiite cleric Moktada al-Sadr gathered in Baghdad's Firdos Square on Friday to protest the Iraqi government plan to sign a security agreement which would maintain American troops in the country for up to three years. With powerful symbolism, demonstrators hanged an effigy of President Bush from the plinth that once supported the statue of Saddam Hussein that was toppled after Baghdad fell to U.S. troops on April 9, 2003.

Hmmm. Am I the only one who thinks 10,000 is a pretty puny turnout for one of Sadr's protests? Didn't he used to brag about turning out crowds of nearly a million? Symbolism is nice, but a few hundred thousand marchers would have been a much more impressive show.

Based on this, I predict that the SOFA will pass parliament shortly. You heard it here first.

Car Tax Update

| Thu Nov. 20, 2008 9:49 PM EST

CAR TAX UPDATE....I see that the California legislature is thinking of taking my advice and raising the vehicle license fee back to the same rate (2% of assessed value) that we had for most of our history:

The plan creates a potential political quandary for Gov. Arnold Schwarzenegger. The last governor to triple the vehicle license fee was his predecessor, Gray Davis, and it played a large role in his recall. In his first act in office, Schwarzenegger cut the fee back down to its current rate.

Yeah, that's a quandary all right. Poor Arnold.

Apple Woes

| Thu Nov. 20, 2008 9:22 PM EST

APPLE WOES....So remember how you guys were all over me for years about how bad PCs sucked and how I should get a Mac to solve all my problems etc. etc.? And so I finally got one a few months ago, and it worked fine. (Not really any better than a PC, to be honest, but it was fine.) Remember all that?

Well, guess what? I haven't used my MacBook for a couple of months, but I pulled it out the other day and discovered that Macs don't hibernate in order to extend battery life. They just go into standby mode when you close the lid, and then hibernate right before the battery goes completely dead. So of course my battery was completely dead. No big deal, though: I just plugged in the charger and went away for a few hours.

And nothing happened. The notebook no longer recognizes the battery and declines to charge it even a tiny bit. Reinstalled the battery, but that didn't do any good. So now what? Take it into an Apple store and find out what's wrong, I guess. What a pain. Why can't Apple make decent hardware, anyway?

Advertise on MotherJones.com

Blog Bleg

| Thu Nov. 20, 2008 3:36 PM EST

BLOG BLEG....I need more blogs to read. Who do you recommend? All subject areas and political affiliations welcome as long as they have interesting things to say. Leave your top picks in comments.

More CDS Chatter

| Thu Nov. 20, 2008 2:33 PM EST

MORE CDS CHATTER....Megan McArdle, who has been skeptical of the role of credit default swaps in the financial meltdown, publishes an email today from a reader that, I think, gets it about right:

As someone with a front-row seat to this crisis, let me say that there are people who trade CDS and do not understand crucial details of contract terms and bond seniority....Moreover, street-side participants in CDS have realized that they are counterparties to obligations they often don't understand, and this has certainly played a role in both a) their unwillingness to extend credit and b) their inability to get credit from lenders who are uncertain of what their CDS obligations mean. THAT is why Buffett called them "financial weapons of mass destruction" — not because they START a war, but because they have immense capacity to radically ESCALATE it.

....[After the fall of Lehman Brothers] everyone started worrying about collateral, and then discovered that they were not able to properly worry about collateral, since they did not fully understand derivative collateral requirements. All they knew is that they were facing something big and scary, and so — once again collectively and naively — we all stopped lending just to be safe.

This is, roughly speaking, my understanding of what happened too. The CDS market is a highly useful one, but it's too opaque; it's too hard to truly know what your CDS counterparty risk really is; and collateral requirements can amplify a downward spiral and cause bank failures that otherwise wouldn't have happened. There are regulatory answers for all these things, and although they probably wouldn't eliminate problems in the future (nothing can do that, I imagine), they might reduce them considerably.

On another note, Megan has apparently cast her vote for "CDSs" as the plural of CDS. I'd opt for "CDSes" myself, but I'm open to anything that's an actual, rather than an implied, plural. Perhaps this will start a trend.

Nonconventional Warfare

| Thu Nov. 20, 2008 2:07 PM EST

NONCONVENTIONAL WARFARE....Speculating on what might happen if Robert Gates stays on for a while as Secretary of Defense seems a little frivolous when we don't even know if Gates is truly in contention for the job, but let's do a bit of it anyway. Gates has taken the position that the Army should focus almost exclusively on counterinsurgency and irregular warfare in the future, something that Michele Flournoy, who's heading Obama's defense transition team, has criticized:

She said the document appropriately emphasizes irregular warfare — focused on terrorists and rogue regimes bent on using insurgency or weapons of mass destruction — but might go too far. "I think irregular warfare is very important, particularly in contrast to preparing solely for conventional warfighting, but it shouldn't be our only focus," Flournoy said, adding that countries such as China likely are preparing for "high-end" warfare and attacks involving anti-satellite technologies and cyberspace.

Barron YoungSmith thinks this is going to cause some tension:

If Gates ends up staying on at the Pentagon, he and Petraeus will almost certainly be able to impose these counterinsurgency-oriented priorities on what Flournoy, who has long-standing plans to revamp DoD, hoped would be a top-down review starting from scratch.

I'll take the other side of this issue. My guess is that the Army's institutional culture is so dedicated to conventional warfare that even a massive push from Gates and Petraeus in the other direction will turn the battleship only a few degrees. Especially if all this stuff is part of a top-down review (which it will be, since the QDR process will be starting up in 2009), a clear and concentrated focus from the start on nonconventional warfare is probably the only way we'll make any progress at all. I think I might be on Gates's side on this.

You Are What You Blog

| Thu Nov. 20, 2008 1:27 PM EST

YOU ARE WHAT YOU BLOG....Via Andrew Sullivan, this is just scary. The Typealyzer sucks in the contents of your blog and spits out your Myers-Briggs personality type about two seconds later. Like pretty much everyone of a certain age who's worked in the business world, I've taken the Myers-Briggs test a couple of times, and the typealyzer got my personality type exactly right. (Though my recollection is that it was a close call on the Sensing/Intuition scale.) This is especially impressive considering that upwards of a third of the text on the blog is excerpts from news articles and other blogs.

Methinks the web is getting too smart for its own good. Granted, my personality type probably isn't too hard to figure out even from a 30-second conversation, but it's a little unnerving that some heap of silicon can do it. If they can already do this, how long will it be before our robot overlords take over completely?