Kevin Drum

Fox and the White House

| Fri Oct. 23, 2009 11:59 AM EDT

Just a few minutes ago I emailed a friend that I thought it was probably a good idea for Obama's folks to take some shots at Fox News, but that "keeping it up would make him look whiny and unpresidential.  He's gotten the conversation kicked off, and that's all he can do.  He should now drop it and let everyone else keep it going."  Then I read this:

In a sign of discomfort with the White House stance, Fox’s television news competitors refused to go along with a Treasury Department effort on Tuesday to exclude Fox from a round of interviews with the executive-pay czar Kenneth R. Feinberg that was to be conducted with a “pool” camera crew shared by all the networks. That followed a pointed question at a White House briefing this week by Jake Tapper, an ABC News correspondent, about the administration’s treatment of “one of our sister organizations.”

This is really inexcusable.  If the White House wants to have a public feud with Fox News, that's fine.  It's a political decision, and they'll either win or lose on a political basis.  But excluding them from the press pool displays an appalling lack of judgment.  Someone in the press office needs to take a deep breath and rethink exactly how far it's appropriate to take this.

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NATO and Afghanistan

| Fri Oct. 23, 2009 11:30 AM EDT

NATO's defense establishment speaks up on Afghanistan:

NATO defense ministers gave their broad endorsement Friday to the counterinsurgency strategy for Afghanistan laid out by Gen. Stanley A. McChrystal, increasing pressure on the Obama administration and on their own governments to commit more military and civilian resources for the mission to succeed.

....Although the broad acceptance by NATO defense ministers of General McChrystal’s strategic review included no decision on new troops....

I guess my first, cynical reaction is: wake me up when anyone in Europe agrees to actually send more troops.  Until then, I'm not sure I care what their defense ministers think.

That's my second reaction too.  But my third reaction is a tiny bit of cautious optimism.  In the end, I don't think Obama can withstand Pentagon pressure to send more troops to Afghanistan, and if that's the case then additional NATO support increases the odds of success.  Even if it's mostly peacekeepers and civilians — hell, maybe especially if it's peacekeepers and civilians — it makes a difference both in terms of raw numbers and legitimacy.  So a bit of pressure from the the European defense establishment is helpful.

On the other hand, to return to my first and second reactions, the Times notes this at the end of the story: "At the same time, though, some allies with forces in Afghanistan are cautiously discussing how and when to end their deployments there."  Big surprise.  Overall, I'd say the odds of Europe having more troops in Afghanistan at the end of 2010 than they do now are pretty slim.

Public Option Finale

| Fri Oct. 23, 2009 10:40 AM EDT

Mike Allen reports on the latest prospects for a public option in the healthcare reform bill:

Speaker Nancy Pelosi counted votes Thursday night and determined she could not pass a “robust public option” — the most aggressive of the three forms of a public option House Democrats have been considering as part of a national overhaul of health care.

Pelosi's decision — coupled with a significant turn of events yesterday during a private White House meeting — points to an increasingly likely compromise for a “trigger” option for a government plan.

....This would clear the way for backers to sneak a limited public option through the Senate by attracting moderate Democrats and then to win President Barack Obama's signature.

Well, I guess that's that.  If Obama says he supports a trigger, and if even the House doesn't support something more robust, then a trigger is what we're going to get.  I think this is one of the worst of the public option compromises, but it's probably the one we're stuck with.

But.....what's this business about liberals "sneaking" a public option through the Senate?  Sneaking?  That's like saying that Eisenhower sneaked a bunch of troops into France on D-Day.  The public option and all its permutations have been the main topic of conversation on Capitol Hill for months now.  It's been yelled about in townhalls, debated on CNN, sliced and diced on blogs, and written about endlessly in the New York Times.  Ain't no "sneaking" about it.

Fixing the Banks

| Thu Oct. 22, 2009 6:15 PM EDT

Martin Wolf explains how he'd fix the banking system:

First, create a set of laws and institutions that make it possible to bankrupt any and all institutions, even in a crisis. Second, make financial institutions safer, with much higher capital requirements, against all activities. Third, prevent off-balance-sheet activities. Fourth, impose dynamic provisioning. Fifth, require huge cushions of contingent capital. Finally, cease to favour debt-finance, throughout the economy.

This is very sensible sounding: the first item is a backstop in case the others don't work, and four of the remaining five items are aimed at reducing leverage throughout the banking system.  (Dynamic provisioning is the exception.  It might be a good idea, but it's not directly related to reducing leverage.)  Now extend this to the rest of the financial system and make sure to write the rules with no wiggle room, and you're done.  Piece of cake, really.  Any other problems you'd like solved?

Third Time's the Charm?

| Thu Oct. 22, 2009 4:56 PM EDT

Back in 1998, Long Term Capital Management, the most famous hedge fund on the planet, blew up and nearly took all of Wall Street down with it.  It was pretty spectacular.  But what was even more spectacular was what happened next: less than a year after LTCM's collapse, its founder, John Meriwether, started up a new fund.  And people invested in it!

Well, fine.  It was a more innocent time, after all, and there were people who really believed that LTCM had just run into a once-in-a-century spell of bad luck.  Can't blame a guy for that.  But last year Meriwether's new fund went belly up too.  So that's twice.  He must really be a pariah now, right?  Right?

Hedge fund manager and arbitrageur, John Meriwether, is setting up his third fund, The Financial Times reported. The man behind Long-Term Capital Management is making the move just three months after he chose to close his second fund manager, JWM Partners.

I guess you saw that coming, didn't you?  But it's even worse than you think:

JWM Partners closed last year after losing 44% amidst the market turmoil of 2008. Hedge funds typically have "high water marks" which means that investors don't pay performance fees to the fund manager in subsequent years unless the fund surpasses its highest point. Thus, the solution for fund managers whenever they have a bad year is to liquidate, wait a bit, and form a new fund?!?! Anyone who was invested in the old fund and the new fund thus pays fees twice: you paid when JWM Partners reached its high water mark, and now you'll pay again if/when Meriweather Cubed (not the real name) manages to make money — the same money JWM Partners effectively lost after reaching its high water mark.

Damn.  Words fail.  Via Felix Salmon.

Bonus Chart of the Day

| Thu Oct. 22, 2009 12:32 PM EDT

This is a cool chart.   Using a fairly slick technique, Boris Shor and Nolan McCarty have come up with a way of comparing state parties on a common ideological scale.  Andrew Gelman explains:

The estimates are based on state legislative voting, which might make you wonder how you could possibly compare legislators in one state with those in another. The trick is that some state representatives (for example, Barack Obama) also end up in Congress. There are enough of these overlap cases that you can put legislators from all 50 states on a common scale.

It's not clear how the states are ranked, but if you look hard enough you'll see that California is at the bottom.  This is appropriate.  In fact, the chart goes a long way toward explaining why the Golden State sucks so bad these days: we have both the most liberal Democratic Party and the most conservative Republican Party.  The state GOP, in particular, is way more conservative than any of its peers, beating out even Texas and Oklahoma by a sizable margin.

The error bars are pretty big here, so take all of this with a grain of salt.  Still, it demonstrates pretty vividly that California really is two states.  Not North/South, but Coastal/Inland.  They're practically different countries.

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Stopping the Trials

| Thu Oct. 22, 2009 11:58 AM EDT

Via Andrew Sullivan, the Washington Independent has a story by Daphne Eviatar about attempts to bring five of the 9/11 conspirators to trial in federal court.  Naturally, there's opposition:

The administration has promised to make its final decision on where to try the 9/11 suspects by Nov. 16. Fearing that the administration is inching toward bringing them to New York City or the Washington, D.C., area, opponents of trying high-level terrorists in U.S. federal courts are stepping up their efforts to keep the five men out of the United States for any purpose. On Oct. 9, Sen. Lindsey Graham said he’d attached an amendment to an appropriations bill that would prohibit the Obama administration from spending money on prosecuting and trying these five alleged terrorists in U.S. civilian federal courts.

Hmmm.  Would this even be constitutional?  Congress can do a lot through its appropriations power, but can it use that power to deny someone a trial in federal court?  Any lawyer types care to chime in on this?

Chart of the Day

| Thu Oct. 22, 2009 11:34 AM EDT

In yet another triumph of Science™, a remarkably large group of researchers has discovered that it's a bummer when your candidate loses a presidential election:

While past studies have shown that men's testosterone levels differentially change in response to winning or losing an interpersonal dominance contest, the present study provides novel evidence showing that vicarious victory and defeat via democratic elections has similar physiological consequences for male voters as do interpersonal dominance contests.

Basically, the researchers asked a bunch of undergrads to collect saliva samples throughout the evening of November 4 ("participants used a stick of sugar-free chewing gum to facilitate collecting up to 7.5 mL of saliva in a sterile polypropylene vial and discarded the gum," in case you're interested).  The chart on the right shows what happened: after 8 pm, when John McCain's fate was sealed, testosterone levels among men who supported him plummeted.  Among women, nothing happened.

Put this together with the capuchin monkey experiment (which, sadly, yielded no interesting charts to post) and then ask yourself just how much difference a few million years of evolution makes.  Answer: not nearly as much as we'd like to think.

Smoke and Mirrors Wins Another Round

| Thu Oct. 22, 2009 10:35 AM EDT

I see today that the legislation to do away with the annual ritual of pretending to cut doctors' pay has failed.  So instead we'll just keep on pretending.  Ain't politics grand?

They're Back....

| Thu Oct. 22, 2009 1:10 AM EDT

And now, in news that should surprise precisely no one:

Some of the biggest Wall Street firms are back in the political-spending game after hunkering down while they were getting government bailout funds.

Goldman Sachs Group Inc., Bank of America Corp., Morgan Stanley and other large financial-services firms stepped up their political donations in September to members of Congress, for many the first time this year they have joined the fray.

....The renewed assault on Washington comes as the Capitol Hill debate begins on a broad overhaul of financial-services regulations that is strongly backed by President Barack Obama and opposed by large swaths of the finance industry. The spending could also heighten tensions with Mr. Obama, who as recently as Tuesday called on Wall Street to stop lobbying against the proposed regulations.

The battle to pass financial regulatory reform is going to be like trench warfare: a grinding, bloody struggle that's won a single subparagraph at a time against a relentless barrage of money, lawyers, and lunches at Tosca.  And that's the optimistic view.  Strap on your flak jackets, folks.