Kevin Drum

Where the Banking Things Are

| Wed Nov. 4, 2009 3:39 PM EST

In a column about something else entirely, Brad DeLong says in passing:

The Economic Policy Institute reports a poll showing that Americans overwhelmingly believe that the economic policies of the past year have greatly enriched the bankers of Midtown Manhattan and London’s Canary Wharf (they really aren’t concentrated on Wall Street or in the City of London anymore).

True, but "Wall Street" and "the City" are very handy labels for referring to the financial industry in, respectively, the United States and Great Britain.  Anyone who writes about finance should therefore be eager to keep them around.  In fact, I think we need more of them for other countries.

But do we have them?  Are the bankers of Frankfurt, Zurich, and Tokyo concentrated in some part of the city that's since become a synonym for, respectively, the German, Swiss, and Japanese financial industry?  If so, what are they?  If not, why not?  I remember wanting such a word for the Japanese financial sector once, but I couldn't find it.  But I also couldn't figure out whether that was because it doesn't exist, or because I just didn't know where to look.  Can any jet setting financiers help me out here?

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Italy's Rendition Trial

| Wed Nov. 4, 2009 3:12 PM EST

An Italian court has convicted 23 American CIA agents in absentia for their role in kidnapping a Muslim cleric from the streets of Milan and then flying him off to Egypt to be tortured.  "Here, Italian law rules, not American law or any other law," the Italian prosecutor said.

Well, maybe.  Here are the details:

Judge Oscar Magi handed an 8-year sentence to Robert Seldon Lady, a former C.I.A. station chief in Milan, and 5-year sentences to 22 other Americans. Three of the other high-ranking Americans were given diplomatic immunity, including Jeffrey Castelli, a former C.I.A. station chief in Rome.

The judge did not convict three high-ranking Italians charged in the abduction, citing state secrecy, and a former head of Italian military intelligence, Nicolò Pollari, also received diplomatic immunity. All the Americans were tried in absentia and are considered fugitives.

Let me get this straight: the Italian judge was happy to convict a bunch of Americans who he knew would never pay a price since they'll never be extradited, but he wasn't willing to convict the Italians involved in all this, who would have paid a price.  You'll excuse me, I hope, if I don't exactly see this as a triumph of judicial independence.  Convicting a bunch of foreigners is easy.  It's holding your own people to account that's hard.  Wake me up when either of our countries starts doing that.

Off-Off Yakking

| Wed Nov. 4, 2009 2:52 PM EST

I understand that everyone wants to spin yesterday's election results in the best possible light for their side, but the sheer volume of yak is astonishing.  Was there this much postgame analysis after the off-off-year elections in 2005 or 2007?  I don't remember it, but maybe I'm just forgetful these days.

In any case, jeez, can we all get a grip?  Democrats lost races in two states.  That's a bummer for them, but hardly a referendum on the future of the party.  Republicans lost one House seat after a stupid primary squawl.  That's a bummer for them, but hardly a referendum on the future of conservatism.  Everyone needs to turn down the dial before this election becomes the balloon boy of politics.

Quote of the Day

| Wed Nov. 4, 2009 2:32 PM EST

From Ezra Klein, explaining modern romance:

Old modes of courtship are giving way to a faster, freer, fairer market, where transaction costs have fallen and participants have better information and competition is fiercer. In this market, supposedly rational actors make supposedly rational decisions and then reap the rewards or bear the consequences. New technologies such as cellphones and online dating are helping the market overwhelm older, less "efficient" norms.

Sounds exciting!

California's Democrats

| Wed Nov. 4, 2009 1:15 PM EST

In a column about Michael Bloomberg's slow but steady takeover of New York City politics, Michael Tomasky notes that Bloomberg was aided and abetted by the slow but steady deterioration of the city's Democratic Party:

I covered its demise as well as Bloomberg's ascent. The former was far more gruesome to watch. In a city that's six-to-one Democratic in voter enrolment, there isn't really a plausible mayor among the dozens of elected Democrats who represent the city or some portion of it at the federal, state and local levels.

This sounds eerily familiar.  Here in the great state of California, there are something like 10 million registered Democrats.  It's one of the bluest states in the country.  And yet, when it comes time to find someone to run for governor, there's no one to choose from.  When San Francisco mayor Gavin Newsom dropped out of the race a few days ago, my first thought wasn't about Newsom at all.  My first thought was, "Jerry Brown?  Seriously?"  But yes: Jerry Brown, a 70-year-old guy who's already been governor twice is now the only Democrat running for governor.  That's the best we could do.

The GOP isn't in much better shape, either.  Their leading candidate right now is eBay zillionaire Meg Whitman, who barely seemed to know the Republican Party even existed until a couple of years ago.  But hey — at least they have two other candidates as well, even if they aren't exactly household names.

Jeez.  Jerry Brown. A guy who almost literally won't tell you what he thinks about anything or what he'd like to do as governor.  That's it.  That's all that California's Democratic Party can produce for the 2010 election.  Yikes.

Throwing the Bums Out

| Wed Nov. 4, 2009 1:55 AM EST

The electorate was pretty tough on incumbents tonight.  Democrats got kicked out in Virginia and New Jersey, Republicans got kicked out in NY-23, and Michael Bloomberg, who was expected to win reelection in a rout, only barely squeaked by.  John Garamendi won in CA-10, but that was hardly a race in the first place.

I guess that's not too big a surprise considering the lousy economy and the generally sour mood of the voters.  Unfortunately, it looks like the Maine referendum on same-sex marriage got caught up in the sour mood too, losing by 52-48, the same as California last year.  From a purely practical political perspective it's easy to understand why Obama didn't want to get involved in this, but it might have made a difference.  I don't have any doubt that California and Maine will both flip within a few years anyway, but sooner sure would have been better than later.

UPDATE: More here on the NY-23 race from David Corn.

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More on the Next Bubble

| Wed Nov. 4, 2009 12:26 AM EST

The housing bubble may be over in America, but all the money that fueled it still has to go somewhere.  The Wall Street Journal reports today on the same resurgent bubble-iciousness that Nouriel Roubini was warning about yesterday:

Concerns are mounting that efforts by governments and central banks to stoke a recovery will create a nasty side effect: asset bubbles in real-estate, stock and currency markets, especially in Asia.

....Behind the trend are measures such as cutting interest rates and pumping money into the financial system, which have left parts of the world awash in cash and at risk of bubbles, or run-ups in asset prices beyond what economic fundamentals suggest are reasonable.

....The symptoms of a frenzy are most evident in Asia and the Pacific, where economies are recovering most quickly....Over the summer, a Singapore condominium developer raised prices 5% the day before units went on sale. After dozens of would-be buyers lined up on a steamy night, the developer — a joint venture of Hong Leong Group and Japan's Mitsui Fudosan — held a lottery for a chance to bid on the units. Singapore home prices rose 15.8% in the third quarter, the fastest rate in 28 years.

....The Australian dollar has jumped about 35% over the past 12 months as investors borrow in U.S. dollars to purchase Australian currency. The practice is propelling stock and bond markets faster than in the U.S. and Europe. Currency traders are betting that the Australian central bank, which raised interest rates by 0.25% on Tuesday, the second rise in two months, will continue tightening.

There should be better uses for this money.  Why aren't there?

In Which I Listen to Lou Dobbs for 60 Seconds

| Tue Nov. 3, 2009 8:44 PM EST

So I thought maybe I should turn on the TV and see if there were any election results available.  I clicked over to CNN and Lou Dobbs was on.  Literally the first words I heard were a question from Dobbs about whether the fact that there were 180,000 absentee ballots cast in New Jersey meant there was some kind of "skullduggery" going on.  First panelist says, hey, who knows?  Maybe.  Second guy says let's not jump to conclusions.  Finally the third guy reminds us that New Jersey has a new law this year making it easier to apply for an absentee ballot.  Uh huh.

So within 60 seconds of turning on the TV my head hurt.  I know, I know, I could have chosen some other channel.  But still.  Jesus.

Quote of the Day

| Tue Nov. 3, 2009 3:01 PM EST

From Paul Shoop, a retired attorney who lives in "an enclave of multimillion-dollar homes off curving Malibu Canyon Road," on the LA water board's proposal to ban septic tanks and install a modern sewer system in Malibu:

It's like living in a Third World country not to have sewers. But nobody wants to pay that sort of exorbitant fee. If we need a sewer system, you expect government to provide that service.

Quite so.  Municipal services should appear magically for wealthy communities like Malibu.

Of course, the proposed fee for the new sewer system really is pretty exorbitant.  But a big part of the reason for that is because Malibu is so sparsely settled, which means the cost of the system gets divided up among a small number of homeowners.  And why is Malibu so sparsely settled?  Because the current wealthy homeowners like it that way.  Apparently they just don't like paying the price.

Shutting 'Em Up

| Tue Nov. 3, 2009 2:34 PM EST

The folks at Law Enforcement Against Prohibition emailed this morning to highlight an amendment that Chuck Grassley is offering to a bill that would create a National Criminal Justice Commission.  Here's the amendment:

The Commission shall have no authority to make findings....that involve, support, or otherwise discuss the decriminalization of any offense under the Controlled Substances Act or the legalization of any controlled substance listed under the Controlled Substances Act.

See?  If you want to make sure your experts don't come to conclusions you dislike, just prohibit them from talking about those conclusions.  Then they don't really exist.  That's the American way of science.

And it's becoming the British way of science too, at least when it comes to drug policy.  The Brits used to at least pretend to listen to their experts, but, as Mark Kleiman explains:

That has changed under the New Labour government, which has also taken a number of other steps to “Americanize” British governmental practice, for example by building up the power of the Prime Minister’s office vis-a-vis the ministries, in which the ministers are famously captives of their civil-service officials.  In some ways, this is a “democratizing” step, elevating the importance of the beliefs and values of elected politicians over those of unelected experts.  But that doesn’t mean that those of us in the business of being, and training, experts have to like it, and insofar as expert beliefs track objective reality more closely than do voters’ prejudices, it also means making decisions with a weaker connection to the actual phenomena.

When the head of the Advisory Committee on the Misuse of Drugs gave a careful, analytic lecture arguing that cannabis and LSD were over-controlled compared to more harmful drugs such as alcohol, the Home Secretary promptly sacked him on the grounds that for a scientific advisor to express an opinion touching policy made it impossible to have confidence in the adviser’s objectivity.   This is, not to put too fine a point on it, bullsh*t.  What the Home Secretary clearly means is that the Government is committed to the War on Drugs and isn’t interested in any advice that might get in the way.

More here on the British dustup.