Kevin Drum

Chart of the Day - 4.10.2009

| Fri Apr. 10, 2009 9:01 AM PDT

Via Felix Salmon, this chart shows how much overdraft charges cost you.  The bar on the left (labeled POS) is from point-of-sale debit card overdrafts.  Here are the numbers: the average overdraft is $17, it's paid back in an average of five days, and the average charge is $35.  Result: you're paying $1.94 for every dollar "borrowed."  You'd probably need scientific notation to figure out the APR.

But here's the kicker:

When debit cards first came into common use, they promised the convenience of a credit card without the cost, because debit card users were required to have the funds in their account to cover their purchase or withdraw cash. As recently as 2004, 80 percent of banks still declined ATM and debit card transactions without charging a fee when account holders did not have sufficient funds in their account. But banks now routinely authorize payments or cash withdrawals when customers do not have enough money in their account to cover the transaction, so debit cards end up being very costly for many account holders.

Italics mine.  This is just so you understand how deliberate this strategy is.  The banks could easily decline NSF transactions.  They used to.  But they don't anymore because the fees from inadvertant overdrafts are so lucrative.  Alternatively, they could charge reasonable fees, since the actual administrative cost of overdrafts is minuscule these days.  But they don't.

And who pays these fees?  Small account holders with modest incomes, of course.  That's the modern banking industry for you.

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The Decline of Fearmongering

| Fri Apr. 10, 2009 8:11 AM PDT

In 1950 Joe McCarthy had in his hands a list of 205 communists.  In 2009 Rep. Spencer Bachus (R-Ala.) has in his hands a list of 17 socialists.  Conservatives really have lowered their sights over the past half century, haven't they?  It's kind of sad.

Goldman's Capital

| Thu Apr. 9, 2009 9:30 PM PDT

From the Wall Street Journal:

Goldman Sachs Group Inc., riding a rising market, is considering making a multibillion-dollar offering of its shares to investors as part of an effort to repay a $10 billion government loan, according to people familiar with the matter.

...In October, the Treasury Department forced the nation's largest banks, including those that didn't need additional capital, to take government funds. Goldman received $10 billion....Goldman executives privately say the firm doesn't need new capital to pay back the loan but doing so would signal its financial health.

Let's not shilly shally here: I don't believe a word of this.  If Goldman could pay back the loan, which they only received six months ago, they'd just do it.  Conversely, there's simply no way they'd try to raise private capital in the worst environment for stock offerings since the Depression unless they really needed the money.  What they say "privately" to the contrary isn't worth the paper it's not written on.

Documenting Hypocrisy

| Thu Apr. 9, 2009 7:21 PM PDT

In the Washington Post today, Paul Kane and Shailagh Murray wrote this:

Democrats are sure to incite Republicans if they adopt a shortcut that would allow them to pass major health-care and education bills with just 51 votes in the Senate, where Democrats are two seats shy of the filibuster-proof margin of 60 seats. The rule, known as "reconciliation," would fuel GOP charges that Obama has ditched bipartisanship.

"If they exercise that tool, it's going to be infinitely more difficult to bridge the partisan divide," said  Sen. Olympia J. Snowe (Maine), who was one of three Republicans to support the economic stimulus plan.

Media Matters took them to task for failing to note that Republicans themselves — including Snowe — have used reconciliation in the past, most notably to pass George Bush's 2001 tax cuts.  The lefty blogosphere piled on, and this afternoon, in an online chat, someone asked Kane if he wanted to defend himself.  He replied:

Paul Kane: I'm sorry, what's to defend?

Someone tell Media Matters to get over themselves and their overblown ego of righteousness. We reported what Olympia Snowe said. That's what she said. That's what Republicans are saying. I really don't know what you want of us. We are not opinion writers whose job is to play some sorta gotcha game with lawmakers.

That's what columns and blogs are for. Look, Republcians will take reconciliation as a serious poison pill to Obama's so-called bipartisan/post-partisan era. The Republicans did this, in the most direct correlation, with welfare in the mid-90s. And Democrats took it as a vicious partisan maneuver.

That's what is happening, that's what we reported.

Feisty little devil, isn't he?  But here's the question: are Post reporters obligated to mention past Republican support for reconciliation every single time they quote a Republican who now opposes it?  Here's the Post's history over the past couple of weeks: they ran a roundtable on the subject in March that gave space to all sides; Shailagh and Kane themselves wrote a feature about reconciliation last week which dutifully pointed out that Republicans have used it in the past; and over the same period there have been several other pieces in the Post that mentioned reconciliation in passing, some of which brought up previous Republican support and some of which didn't.

Is that kosher?  Or does it need to be included in every single story?  I'm hard pressed to believe that it does, any more than, say, Barack Obama's primary opposition to a healthcare mandate needs to be religiously brought up every time a healthcare story mentions the subject.  Or, more to the point, the fact that Democratic opposition to reconciliation when Republicans were running the show has now morphed into support.  Let's face it: if reporters are required to spotlight every single instance of hypocrisy whenever they quote a politician, there won't be room in their stories for anything else.

So, sure, reporters ought to hold Republicans like Snowe accountable.  But I'm not sure I see the case for insisting that they have to do it in every single piece they write.  It's a history of one-sidedness that's a problem, not the fact that some stories contain more detail and context than others.

By the way, Kane's entire online chat is worth a read.  His answer to the reconciliation question wasn't a sudden outburst of spleen against liberals.  He gives as good as he gets with everyone.  Besides, anyone who refers to Alberto Gonzales as "Fredo" can't be all bad.

(On the other hand, his answer to the question about defense spending was pretty incoherent. He definitely seemed a little unclear on the concept.)

Miscellany

| Thu Apr. 9, 2009 2:49 PM PDT

Here are two miscellaneous factlets that have caught my eye recently.  First up is On The Public Record, who is reading The Resilient City: How Modern Cities Recover From Disaster:

DAMN!  Cities NEVER give up.  Like, ever.  You cannot raze a city so bad that it goes away.  Like, some study showed that between 1100 and 1800, only forty cities stopped existing.   I suppose that makes sense.  I mean, the fact of a city not existing is so powerful that we remember it forever: Atlantis, Babylon, whatever that one was that got volcanoed.  I’ve been wondering if New Orleans and Galveston will be the leading edge of a new era of cities vanishing.  We’ll know in a generation, I guess.

Well, there's always Carthage.  It can be done as long as you're single-minded enough about the project.  Next up is Mark Kleiman, exploding an urban myth about marijuana cultivation:

Cannabis is not "the largest cash crop in California." That zombie statistic has a history: during the collapse of the lumbering industry in the early 1980s, the Ag Department county extension agent in Humboldt County, which grows timber and pot, was so angry about the suffering he saw around him due to unemployment among loggers that when he filled out his annual estimates of crop-by-crop revenues for his county he listed pot as #1, using a completely made-up number. Dale Gieringer of California NORML then projected that out nationally to show that cannabis was the nation's #2 cash crop, ahead of soybeans but behind corn (or maybe it was the other way around.) Since then, another NORMALista named Michael Gettman has produced even more fantastic numbers. In fact, the Abt Associates estimate put the total retail value of the cannabis trade at about $10b, about 15% of the total illicit-drug trade. That's retail price, not farmgate price. And not all of that is grown domestically; some of it comes from Mexico, from Canada, and from Jamaica.

No special axe to grind on either one of these things.  Just thought I'd share.

UPDATE: Jeez, bust one urban legend and propagate another.  Bad blogger.  In comments, coyote says:

The myth about salting the earth, etc, for Carthage is just that — a myth. Yes, the Romans trashed it, but it was such a logical trading spot that it was rebuilt, and by 400 or 500 AD it was a wealthy city again.

OK, so Carthage doesn't count.  Or does it?  If you destroy a city, drive out all the people, reduce everything to rubble, and then repopulate it a few decades later with your own people, is it really the same city?  Or is it a different city of the same name in the same place?  Hmmm.  Is there a philosopher in the house?  Did Shakespeare really write all those plays?  Or some other guy named Shakespeare?

The Circular Firing Squad

| Thu Apr. 9, 2009 12:45 PM PDT

We liberals are our own worst enemies sometimes.  Take climate change.  For over a decade we've been promoting the idea of cap-and-trade as a way of dealing with carbon emissions, partly for technical reasons (unlike a carbon tax, it imposes firm caps) but also — in fact, mostly — for pragmatic and political reasons.  A carbon tax, even if it has some theoretical advantages, is unlikely ever to happen.  We all know why.  Cap-and-trade, because it uses market mechanisms, has a proven track record with acid rain control, and raises money via auctions rather than taxes, has at least a fighting chance.

So now that liberals are in control of Congress and the White House and have an actual chance to pass legislation, what happens?  Everyone starts talking about carbon taxes instead.  Because, you know, in some theoretical economic sense you can argue that they're more efficient.  It's enough to make you scream sometimes.  At least, that's what it did to David Roberts, who must have been reading my mind after digesting Tom Friedman's most recent column:

So now, on the cusp of an enormous fight against dishonest and well-funded proponents of doing nothing, Friedman decides it’s time for “an alternative strategy, message and messenger”? Are you f*cking kidding me?! The only conceivable effect Friedman’s endorsement of an alternative bill can have is to divide support and distract attention from the best chance for a serious energy/climate bill in 30 years. His timing could not possibly be worse.

I’m sure Friedman would respond that hey, he’s not a Democratic operative. He’s an independent thinker. He’s under no obligation to stump for a bill that doesn’t make his mustache tingle. And in this he’s like all progressives. They all want to be the Smartest One in the Room. None of them want to sully their purity by compromising or rowing in the same direction. They all want to show how you clever they are, how their pony plan, their messaging, their strategy is the one those silly legislators ought to be using. Meanwhile, the coordinated opposition kicks their ass, over and over again. But at least they’re clever!

Be sure to read the rest of the rant.  As David points out, the key part of cap-and-trade is the cap, not the trade.  And contra Friedman, it's not hard to explain a cap on carbon.  In fact, it's a lot easier than trying to explain why a tax will reduce global warming.  Here's the elevator pitch: "We're going to reduce carbon emissions by setting a nationwide cap on carbon emissions."  See?  It's easy!

It's true that the trade part of cap-and-trade makes things more complicated, but it's not all that complicated.  It's just designed to lower the cost of complying with the cap and make everything a little more efficient.  Still, the cap is the key.  And as for complexity, anyone who thinks that a carbon tax — an actual, real-world carbon tax, not the chalkboard variety — would be nice and simple, hasn't been paying attention to the way Congress has been making tax policy for the past 200 years.  "Simple" is not a word that usually gets used in the same sentence.

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What Does "Pass" Mean to You?

| Thu Apr. 9, 2009 9:37 AM PDT

This is a peculiar story from the New York Times:

For the last eight weeks, nearly 200 federal examiners have labored inside some of the nation’s biggest banks to determine how those institutions would hold up if the recession deepened.

....Regulators say all 19 banks undergoing the exams will pass them. Indeed, they say this is a test that a bank simply will not fail: if the examiners determine that a bank needs “exceptional assistance,” the government, that is, taxpayers, will provide it.

....Regulators recognize that for the tests to be credible, not all of the banks can be winners. And it is becoming increasingly clear, industry insiders say, that the government will use its findings to press certain banks to sell troubled assets. The hope is that by cleansing their balance sheets, banks will be able to lure private capital, stabilizing the entire industry.

So what have we learned here?  First: all 19 banks will pass.  Second: not all the banks can be winners.  Third: the ones that pass — but aren't winners! — will be propped up by taxpayers.  Fourth: no, they won't be propped up by taxpayers, they'll be forced to sell assets and raise private capital.

Huh?  Which is it?  If by "pass," regulators merely mean that a bank won't be instantly seized and its management defenestrated, then I guess this makes sense.  Awards for all!  On the other hand, the prospect of a bank getting a "needs improvement" grade and then successfully selling a big stock issue to raise private capital is just fanciful.  Even banks that pass with flying colors will have trouble doing that.

So what's going on here?  Why are Treasury officials privately telling reporters that everyone is going to pass but that some banks will receive a pass-minus and may be required to do things that are almost certainly impossible?  Are they just trying to lay the groundwork for failure and temporary nationalization later on?  Or what?

I'm having a harder and harder time figuring out what's going on as time goes by.  If everything is on the up and up, it doesn't make sense.  If there are hidden wheels, though, I'm not sure they make sense either.  Just what is Treasury up to?

Tradecraft Update

| Thu Apr. 9, 2009 8:57 AM PDT

A new entry in the annals of epic fails:

Bob Quick, Britain's most senior counterterrorism officer, was forced to stand down today after an embarrassing security leak resulted in a major anti-terror operation, designed to foil an alleged al-Qaida plot to bomb Britain, being rushed forward.

....Police were forced to carry out raids on addresses in the north-west of England in broad daylight yesterday, earlier than planned, after Quick, the Metropolitan police's assistant commissioner, was photographed carrying sensitive documents as he arrived for a meeting in Downing Street.

A white document marked "secret", which carried details of the operation being planned by MI5 and several police forces, was clearly visible to press photographers equipped with telephoto lenses.

The Guardian helpfully reproduces an enlarged, rotated, redacted version of the document here.

Tweet!

| Thu Apr. 9, 2009 8:16 AM PDT

Tom Lee is unhappy about journo-twittering:

As a cheap and fun SMS interface for media outlets I have no beef with it; as a means of personal marketing for journalists, the pretense and lack of honesty is dismaying....I'd say the median journotweet is something like "getting ready to sit down for an i/v w @spalin. the lady is a tough cookie!" when in fact it should be closer to "complaining abt blogs in line to pick up kids @ sidwell frnds. no poor people around!"

Peter Suderman concurs that journo-tweeting is "almost universally vapid and uninforming."  No argument from me on that score, but I suppose there's nothing really all that wrong with journalistic self-promotion either.  Having watched their demographics grow ever more AARP-ish for years, and having missed several boats already to get younger readers/viewers interested in their product, I suppose the news industry really, really doesn't want to miss yet another one.  They probably figure that Twitter is helping them capture the news consumers of the future.

Plus there's the fact that every once in a great while, a reporter puts something useful up.  And even if it happens only once in a thousand tweets, that still means you'd better be participating so you don't miss out.  There's nothing worse in DC than having someone ask "Have you heard about ______?" and being forced to admit that you haven't.  Especially if the reason you haven't heard it is simply because you're too neanderthal and out of touch to have the right technology.  Thus are boomlets born.

(But is Twitter a bubble?  For those of you who think bubbles are easy to spot while they're happening, you need to answer Right Now.  And show your work, please.  In a couple of years we'll find out which of you was right.)

Connecting the Taliban

| Wed Apr. 8, 2009 11:00 PM PDT

The Washington Post reports on the propensity of Islamic extremist groups to host their internet presence on American servers:

The Taliban's account was pulled last week when a blogger noticed the connection and called attention to it. But the odd pairing of violently anti-American extremists and U.S. technology companies continues elsewhere and appears to be growing. Intelligence officials and private experts cite dozens of instances in which Islamist militants sought out U.S. Internet firms — known for their reliable service and easy terms that allow virtual anonymity — and used them to incite attacks on Americans.

"The relatively cheap expense and high quality of U.S. servers seems to attract jihadists," said Rita Katz, co-founder of the Site Intelligence Group, a private company that monitors the communications of Muslim extremist groups. Even al-Qaeda has sometimes paid American companies to serve as conduits for its hate-filled messages, said Katz, who has tracked such activity since 2003.

We may be infidels, but at least we're technically adept infidels.