Kevin Drum

The Federal Teat Revisited

| Mon Oct. 19, 2009 11:06 AM EDT

Jim Henley sends me a birthday card:

Happy Mutual Birthday to Kevin Drum, elder statesman of the October-19th cohort of bloggers. To make this one special, I’ll attack him from the left. It isn’t possible to get the banksters “off the federal teat immediately” or otherwise. There is simply no guarantee we make today that can bind the politicians of tomorrow. That’s not even necessarily a nebulous “tomorrow” either.

Nor can we guarantee that, when the time comes, it would even make sense for tomorrow’s politicians to honor today’s future refusal. We have to figure out how to organize a political economy predicated on massive if implicit subsidies to the finance industry and its owners and executives so as to minimize the harm they can do and so it works tolerably for the rest of us. Am I optimistic that we can do this? Not so much. But since we can’t cut ‘em off, all we can hope to do is keep ‘em in line.

Hold on a second there, pardner.  I didn't say we should get bankers off the federal teat forever, I just said we should get them off the federal teat immediately.  And even at that, I was only talking about the rock jawed capitalists who have paid back their TARP funds and therefore want us all to believe that they are off the federal teat.

Bollocks.  If Goldman Sachs is in good enough shape to pay back their TARP funds and earn billions in highly leveraged trading profits, they're in good enough shape to give up their financial holding company status, their FDIC guarantees, and the $12 billion in taxpayer dough that got funneled their way via AIG.  This seems like a subject that can unite everyone from Rush Limbaugh to Michael Moore.

But I agree with all the other stuff.  And it is our mutual birthday, #51 for me.  To celebrate, here's a photo of #5.  That's my sister on the right.  I don't remember the whole Indian costume thing, but pictures don't lie, do they?  Not in 1963, anyway.  I'd like to see Jim post something similar to prove he's not actually a killer robot from the Andromeda galaxy who's merely posing as a mild-mannered blogger until the time is ripe to enslave us all.  Because that's a real possibility, you know.  I think I heard it on the Glenn Beck show.

UPDATE: And for a birthday present, I'd like someone to explain why it is that every year the BCS computers hate USC so much.  I mean, we play pretty good nonconference teams and haven't lost to one in the last eight years.  (Yeah, yeah, except for that one.)  What's the deal with silicon hatred of the Trojans?

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Common Sense on Medical Pot

| Mon Oct. 19, 2009 10:40 AM EDT

I'm sort of constitutionally inclined not to make too big a deal out of things like this, but it's still welcome news:

The Obama administration will not seek to arrest medical marijuana users and suppliers as long as they conform to state laws, under new policy guidelines to be sent to federal prosecutors today....The policy is a significant departure from the Bush administration, which insisted it would continue to enforce federal anti-pot laws regardless of state codes. Fourteen states allow some use of marijuana for medical purposes: Alaska, California, Colorado, Hawaii, Maine, Maryland, Michigan, Montana, Nevada, New Mexico, Oregon, Rhode Island, Vermont and Washington.

Of course, here in California this comes hot on the heels of the announcment by LA's district attorney announcing that he was planning to crack down on pot dispensaries, so it's not as if our medical (wink wink) marijuana community is out of the woods yet.  Still and all, it's always nice to see federal resources being used non-insanely, and choosing not to bust medical marijuana users is distinctly non-insane.

Paying the Piper

| Sun Oct. 18, 2009 10:05 PM EDT

Robert Reich writes today about the deals that have been cut to get healthcare reform legislation passed:

Big Pharma is on the road to getting its deal: not only 25 to 30 million more paying customers, but also a continued ban on Medicare using its bargaining clout to reduce drug prices, a bar on genetic drug manufacturers introducing similar biologic drugs until the originals have been on the market at least twelve years, and no public insurance option to negotiate low drug prices.

....Big insurance is well on the way to getting what it wants: 25 to 30 million more paying customers (many of them young and healthy), a requirement that almost all businesses "pay or play," and no competition from a public option.

....Doctors (that is, the American Medical Association) are on the way to getting what they want: Instead of a temporary patch on scheduled decreases in Medicare reimbursements to them, a permanent fix that would change the reimbursement formula altogether and reward them $240 billion over the next ten years.

Think that's bad?  Consider this: even with all these giveaways in place, healthcare reform still might not pass.  And if it does, it will pass only barely.  Are you feeling better yet?

Paying for the Bailout

| Sun Oct. 18, 2009 12:47 AM EDT

Here's the reaction over in Britain to news about the banking sector's recent return to outsize profitability:

Ministers are drawing up plans for a tax raid on Britain’s banks worth hundreds of millions of pounds, The Sunday Telegraph has learned.

The radical move, being considered as a way of forcing banks to pay a price for the taxpayer-funded bail-out of the financial system, could include a one-off “windfall” tax on profits.

....Last night, in his weekly podcast , Gordon Brown, the Prime Minister, said his government would be “taking extensive action to reform the whole culture of the financial sector”. Any action is likely to hit all UK banks — even those which have not been part-nationalised, or given access to hundreds of billions of pounds worth of taxpayer-funded collateral.

There is understood to be “considerable anger”, both inside No 10 and among Cabinet ministers, over recent signs that banks are once again ready to unveil huge profits and bonus payments.

I don't know if a one-off windfall profits tax is the right approach to this, and I don't think it should be motivated by anger in any case.  The rescue plan put in place last year was bound to make the banking sector pretty profitable in the short run, so it's hardly a surprise that that's what happened.  Nonetheless, there's no reason the industry as a whole shouldn't be expected to help pay for its own rescue one way or another.  There's certainly no reason the taxpayers should do it all.

Autofocus Blues

| Sat Oct. 17, 2009 2:02 PM EDT

The world's digital camera manufacturers are driving me crazy.  As longtime readers may recall, I'm an obsessive fan of the articulated LCD viewfinder.  I use mine constantly.  I use it when I want to shoot from waist level or ground level.  I use it when I want to shoot over a crowd.  I use it when I have to hold the camera at a weird angle to get the shot I want.  I use it when I have to steady the camera on some handy rock (or whatnot) and can't crane my neck to look through the viewfinder.  I use it when I'm photographing documents and have to point the camera downward while steadying myself on my elbows.  I use it when the sun is washing out the screen and tilting it a bit helps me see better.

Given all that, I find it odd that articulating LCDs aren't really all that popular.  To me, they're really, really useful, not just some dumb gadget that only a hopeless newbie would seriously think of using.  But apparently the world's serious photographers aren't buying this, and as a result there aren't very many cameras that have them.  I bought a Canon S5 (shown above) a couple of years ago because it was the best I could find with an articulating LCD, but overall it's only so-so.  I'd love to get something better.

So then: why aren't there any DSLRs with articulating LCDs?  Well, there are.  Over the past year three or four have been introduced.  They tend to have weird ideas about how exactly the LCD should move around, but obviously they're getting the idea.  The Nikon D5000 is one of the latest entrants.

But it turns out there's a weird problem with these cameras that I can't find an explanation for.  Maybe someone can help me out.  There are two ways of implementing autofocus on a digital camera: phase detection, which is very fast and is used on high-end cameras, and contrast detection, which is used on everything else.  As I understand it, phase detection requires a mirror, which is why it's available only on SLRs.

Unfortunately, it's apparently hard (impossible?) to implement phase detection in a camera that also has a live-view LCD — that is, one in which the LCD displays the scene continuously.  Needless to say, that's something I want.  But I don't understand why live-view is incompatible with high-performance phase detection autofocus.  Is it a cost issue?  A technical problem?  Or what?

Every time I read about this, things get very fuzzy (no pun intended) when the subject comes up, and I've never really found a good explanation of what's going on.  But the D5000, for example, which has excellent shutter lag and AF acquisition specs when live-view is off, apparently turns into a horrible focusing slug when live-view is activated.  It not only uses contrast detection, but evidently uses a really slow, crappy version of contrast detection that makes the camera almost useless.

This is obviously annoying personally, since I'd love to hand over vast sums of money to Nikon to buy one of their cameras if it actually worked decently.  But at this point, it's mostly technical curiosity on my part.  Anyone know what the deal is here?

Fixed Income Madness

| Sat Oct. 17, 2009 11:52 AM EDT

Anyone who's been paying attention for the past year shouldn't be surprised by this, but it's something that's always worth re-emphasizing: the federal bailout of the banking industry last year has allowed banks to rebound and make enormous amounts of money this year.  Without the bailout, many of them wouldn't even be around today, and they certainly wouldn't be making vast sums of money:

Many of the steps that policy makers took last year to stabilize the financial system — reducing interest rates to near zero, bolstering big banks with taxpayer money, guaranteeing billions of dollars of financial institutions’ debts — helped set the stage for this new era of Wall Street wealth.

....With interest rates so low, banks can borrow money cheaply and put those funds to work in lucrative ways, whether using the money to make loans to companies at higher rates, or to speculate in the markets. Fixed-income trading — an area that includes bonds and currencies — has been particularly profitable.

....Goldman Sachs and its perennial rival Morgan Stanley were allowed to transform themselves into old-fashioned bank holding companies. That switch gave them access to cheap funding from the Federal Reserve, which had been unavailable to them.

Those two banks and others like JPMorgan were also allowed to issue tens of billions of dollars of bonds that are guaranteed by the Federal Deposit Insurance Corporation, which insures bank deposits. With the F.D.I.C. standing behind them, the banks could borrow the money on highly advantageous terms. While some have since issued bonds on their own, they nonetheless enjoy the benefits of their cheap financing.

As the piece points out, banks aren't using all this cheap money to increase lending.  They're using it to fund bigger and bigger bets in the fixed-income sector — the same sector that brought us junk bonds, credit default swaps, subprime loan securitization, interest rate carries, collateralized debt obligations, and all the rest of Warren Buffett's "financial weapons of mass destruction."  Fixed income was a sleepy backwater until about 30 years ago, and if we had any brains we'd apply a massive dose of regulatory narcotics to make it that way again.  Instead, we're actually egging it on.  It's like giving Nero a new barbecue lighter for Christmas because his last one got burned up in that big fire.

Anyway, in the absence of any will to seriously regulate these guys, at the very least we should demand that they get themselves off the federal teat immediately.  They're all fond of the fiction that they're rugged individualists now that they've paid back their TARP money, but it ain't so.  Taxpayers saved them last year, and taxpayers are underwriting their profits this year.  I can think of better things for taxpayers to be doing.

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Today's Mystery Guest Cat: Shinobi

| Fri Oct. 16, 2009 6:10 PM EDT

It's Laura, dropping off Kevin and David's Friday Week-in-Review podcast, the latest mystery guest cat pic, and a public service announcement on marriage from MoJo blogger Kate Sheppard.

First, the podcast: Where is the GOP hiding all the other Olympia Snowes? What made Kevin decide (thus far) not to get a flu shot this year? And why does David think Glenn Beck still has his work cut out for him in Laura's home state of Tennessee? Listen to the latest Week-In-Review here.

PSA: If you're planning a wedding in Louisiana, here a few things to remember about the state marriage laws: Marriage at age 16? Ok! Interracial marriage to first cousin once removed? Maybe!

And congrats to Guest Cat #3, appearing balloon boy-free in Kevin's Drum Beat newsletter today and below. [For Kevin's newsletter-exclusive weekly bonus post and mystery cat news, sign up here.]

Reader MNPundit: Meet Shinobi, 6, and a total moron. He loves to run up to people and rub them or play fetch with bottle caps and hair ties. He also is addicted to licking plastic bags until he throws up, then running back to lick them again until we have to hide them. I did win the chess match against him though.

Laura McClure hosts weekly podcasts and is a writer, editor, and sometime geek for Mother Jones. Read her recent investigative feature on lifehacking gurus here.

Friday Cat Blogging - 16 October 2009

| Fri Oct. 16, 2009 2:09 PM EDT

I think I posted one picture from this sequence a couple of weeks ago, but I figured today it would be fun to post the whole thing.  This is standard behavior around here when everyone wakes up from their naps and wants to play.  If I'd had my wits about me, I would have put the camera into movie mode so you could enjoy the whole thing in real time, but I didn't.  So here it is in photos instead: Inkblot and Domino, playing in the sunshine.  As usual, by the time it's all over Inkblot isn't quite sure what happened.

Clinton and Obama

| Fri Oct. 16, 2009 1:35 PM EDT

Is Hillary Clinton an also-ran in the Obama power structure?  John Heilemann says no.  She's just adopting the same “workhorse, not a showhorse” attitude that served her well when she first entered the Senate:

To the outside world, all this laying low has made Clinton look like less of a player. But the reality is almost exactly the opposite. From the outset, Hillary recognized that she could only exercise influence inside the administration if she were trusted by Obama and the people close to him. And although the president himself and Emanuel never had much doubt that she could be a team player, many others in the Obamasphere were supremely skeptical. But no longer. “In terms of loyalty, discretion, and collegiality,” says a senior White House official, “she’s been everything we could have asked or hoped for.”

The unfolding debate over Afghanistan is maybe the most conspicuous example of Hillary’s adroitness at working the inside game. Compared with Joe Biden and General Stanley McChrystal, her position has been opaque. But now comes word that Clinton and Gates are lining up on the same side in favor of a middle course in the region — not the full-blown troop surge that the general advocates nor the bare-bones approach that the V.P. favors. By all accounts, the likeliest outcome is that Obama will wind up pursuing the Gates-Clinton split-the-difference. And while no one will ever call it the Hillary doctrine, it will be the kind of quiet win that leads to greater internal power for her in the future.

I think Hillary has another edge as well: staying power.  My guess is that a few years from now Jim Jones will be gone, Robert Gates will be gone, and McChrystal will be gone.  But Hillary Clinton will be Secretary of State until the day Obama leaves office, and she'll accumulate influence and intimacy the entire time.  By the time it's all over, my guess is that she'll be widely regarded as one of the most consequential secretaries of state in the postwar era.

Playing the Rush Card

| Fri Oct. 16, 2009 12:56 PM EDT

Is Rush Limbaugh a race hustler?  Conor Friedersdorf makes the case.