Wednesday, February 25, 2009
It's on days like this that I miss Alan Greenspan, prepared to dispatch monetary wingnut Ron Paul by looking over his professorial glasses and uttering something indescribably opaque, yet precisely pinching.
Afterall, we have to put up with the GOP hipsters poking fun at every cop-slapping congresswoman.
Why can't we have a laugh, today, at Ron Paul?
He wants to go back to the gold standard or something. Return to a barter economy, maybe? Talk about "dangerous".
Posted by Amicus at 11:04 AM
Andrew Sullivan, on Jindal:
as if he were talking to kindergartners
Nate Silver, on Jindal:
If it sounds like Jindal is targeting his speech to a room full of fourth graders, ...
There are 93 million - million - Americans with "basic" or below literacy levels (pic-link).
If you follow Rove and Limbaugh, they hardly seem to be appealing to the most educated of voters. Yet, the summary statistics on GOP voters suggest that it is the Democratic party that wins a larger share of the least educated voters.
Discuss - because I don't really know how that all sorts out.
I dared to put up this impolitic chart a while back:
The Failing Electorate
Posted by Amicus at 3:18 AM
A "mini-caliphate" is set-up in the SWAT valley.
This is a lose-lose. If it works out, it is a creeping disaster. If it fails, it is a creeping disaster.
Naturally, India is freaking out.
The "good war" in Afghanistan may yet prove more intractable than Iraq, because of the knock-on effects on Pakistan.
Posted by Amicus at 3:05 AM
Tuesday, February 24, 2009
$2 Trillion in line item savings, over 10 years?
THIS I just have to see ...
An increase in the size of the standing army accompanied by yet *another* rise in the structural cost of the forces? Wrong direction, near and long-term.
Coming on the heels of the Republicans' torture Presidency and a day after Rove refuses the peoples' House, yet again, a speech from Jindal called, "Americans can do anything" is ... inappropriate.
Posted by Amicus at 10:43 PM
So if excess cost growth in health care can be brought under control, the entitlement problem is manageable. - Krugman, Feb. 23, 2009
So, what indication is there that any economist has a comprehensive grasp of what the cost drivers in the health care industry really are, over the past 18 years, say?
Apart from some end-of-life studies that were available a dozen years ago, is there really any sense that we have truly decision quality data?
I may be proved wrong by the healthcare economics experts; but, if the data is available, I've yet to see a solid survey of it, say ...
Put another way, if Obama thinks that smart healthcare reform is just a year away, that would be action without measurement. And what did Barlett say? "Get me the facts!", right?
Posted by Amicus at 10:34 PM
uh, oh, step aside Minsky:
While the leading good-government group [in Louisiana], citing [oil] addiction, warned last May against the Legislature’s plan for a $360 million income tax cut, Mr. Jindal called the tax break “terrific news” and happily signed it into law as legislators cheered. Admonitions on fiscal prudence went unheeded, as they have so often here, and the bill is now due. Earlier this year there was an $865 million surplus; now Louisiana has a $341 million shortfall in its current-year budget, and next year the projected deficit is $2 billion.
Jindal used the word "irresponsible" in his speech to characterize others. Heh..heh.
Posted by Amicus at 10:32 PM
No Lincoln-Douglas debates. No thought leadership among elected leaders.
Just a bunch of hacks. Posturing, overpaid hacks.
What if They Held Breakout Sessions and Everyone Broke Out?
Posted by Amicus at 2:00 AM
ORGANIZED FOR SUCCESS?
I'm looking for signs that the Administration is adequately staffed and organized for the massive economic challenges.
Are you feeling it?
I mean, John Harwood is reporting that Geithner doesn't even have many of his deputies confirmed yet. Is that true?
Are there 20 people at Treasury assigned to AIG? If not, why not?
Is the contingency plan for this bankruptcy-event ready? If not, why not?
Has Ben Bernanke "solved" the too-big-to-fail issues, to the point that he is working with Congressional leaders to get new 'authorities' by the end of this month? If not, why not?
Do they really understand - really - that the GOP has already taken out a cheap calling card for getting their fiscal mojo back in four years or more, by voting down the Obama stimulus?
Even more important, do they realize that a radical restructuring of economic life in America is on the table, that the "fierce urgency of now" is now piercing them like a sword, in need of immediate attention? Or will they only understand, in reverse, looking back ...?
MORE EVIDENCE OF ABSENCE
I read Paul Krugman. He says that Treasury spent time going down the wrong path on the 'bank fix' proposal, and that is maybe why the final result lacked detail.
My question is why didn't they have enough staff to produce three or four viable approaches? How can pursuing "one path" be deleterious?
I hear Chris Matthews saying that Obama's team need to generate confidence. Jim Cramer is fine with pushing Obama under a bus, so why listen to him?
The truth is they are not going to have confidence. At this late stage in the crisis, only facts-on-the-ground will work.
They need to define plans with sound economic and progressive values and push them through.
OBAMA SHOULD GO NUCLEAR
If Obama had the kind of legislative foresight and insight that FDR had, I'd suggest he "go nuclear", in order to set a firm, clear direction.
As the situation continues to deteriorate - and it will - people will increasingly be looking for a strong leader, not someone who is getting used to the fine food at the White House, joking about helicopters, and continuing to talk about a bi-partisanship that doesn't exist in this country.
Posted by Amicus at 1:16 AM
Monday, February 23, 2009
Very glad for the slumdogs and chai-wallahs of old Bombay!
Although, I never thought I'd live long enough to see 'bollywood' go mainstream:
Has to rank as one of the best produced Oscar shows in a long time, I thought. The actor-to-actor set-up for the top awards was spot on. Hugh Jackman was ... dare I say it, fabulous.
Posted by Amicus at 9:46 AM
Thursday, February 19, 2009
The first pass of the foreclosure mitigation proposal is that I didn't see the key words of real-estate, "treble damages".
They need a carrot AND a stick to apply to servicers, so that public exhortations are 'backed-up' and there are not individual 'horror cases'.
How the "refinancing" will work I don't know yet. Paying a cash-subsidy to a bank, however, is not the first, best option. Someone should make an argument, at least, why subsidizing debt-holders during a debt-deflation is a good idea. Otherwise, the banks that cannot handle re-financing to lower interest rates need to be rolled up into those with the capital sufficient to handle the changes/charges.
The devil-in-the-details loan modification guidelines are not done yet. Why it takes even more time for the Democrats to come up with them, I don't know. This need has been on the table for well over a year.
The market needs to know that bankruptcy judges will be given guidelines as well, even if they hate them as much as, say, sentencing guidelines. Put them in.
'Judicial modification' should come alongside a broad re-thinking of the entire Bush-era bankruptcy change law.
Last, there seems to be little or no creative thinking. We are not refinancing people into innovative new kinds of loans, as some people have suggested. There is no 'transformation of the mortgage' market risk-sharing, envisioned, apart from 'judicial modification'. Therefore, we will go through this all over again, when housing prices fall the next time around, perhaps.
Posted by Amicus at 8:57 AM
Saturday, February 14, 2009
This week in politics was kinda like a ride home from the dentist, in so many ways, which in turn is like a night after the ... Roxy (?) or something:
Me, most of this week, when I could bear to listen:
Funny, though, as bizarrely larger than life it all was, it still didn't quite have that ring of Night on Bald Mountain, which Dick Cheney brought along with him during his visits to Capitol Hill ...
Posted by Amicus at 2:54 PM
Friday, February 13, 2009
Wednesday, February 11, 2009
Wall Streeters and the incredibly biased financial media all piled on today. Ignore this, for the most part.
First, it is important the the Treasury has now made some decisions. This reduces uncertainty.
Now, they need to execute.
Geithner ought to sit with people who are skilled at helping him to sell the plan to ordinary Americans, to render it less complex (including some media skills people, to soften his ... visage/image). He needs a media schedule (and well-disciplined lips at the same time - it's a really though job).
What do they need the most? Geithner is right on, here:
Now that they've got a plan, they can start to rally support for it, including no longer apologizing for putting taxpayer money at risk, for the obvious public good.
What are they going to do?
Well, they are going to squeeze the big banks, using a more rigorous and forward-looking stress test, and provide two ways for banks to clean-up their balance sheets. (Small banks won't be squeezed the same way, but they can get help if they submit to the squeeze test).
This is partly why bank stocks sold off. The push is going to be for shareholders/companies to recognize losses sooner, rather than later. Make no mistake, that is GOOD NEWS for the economy long-term, if it can be done thoroughly and comprehensively. Bank stocks, of course, may not be the best barometer that. It is much better than the other choices on the table, like let's pretend accounting... In my best guesstimate, we haven't bought enough time, even with $850 billion, for "let's pretend", especially if the large banks continue to make losses.
They are going to try to do public-private capital, before something like outright socialization. Perhaps more than anything, this is what will require the "unprecedented cooperation".
There are state pension funds and others that might be "lighthouse" partners. The Republican-controlled money may well balk, but shopping bad-loan portfolios will add transparency and is good in so many ways. Lehman was reportedly trying to do this with its commercial real-estate loans, so it's not like Wall Street doesn't itself think that's a way to go. If the government can grease the skids for these deals, that's a good thing.
Private investors are always looking for better returns than the next guy, not generic investment "pools"; but there may be a way for that to occur in a bidding process for assets or if firms take up "management fees" for participating and leverage their own client base.
Early on, two things stand out.
They don't have the housing piece, yet. Why does everyone continues to put this last in the queue, except that it is the politically most difficult? It's fire-ready-aim, in the worst way.
Geithner hasn't impressed me that he understands the timelines, that he's in a really, really, really, really, really high-stakes race, with his plans and so forth. To be fair, it looks like Paulson & Co. didn't leave him with anything on housing to work with, plans OR analysis.
At the very top, still, at the Obama-Biden level, it's not clear that they understand that they need new organizational structure. "Advisory council", especially of the kind they just appointed, is ... well, would you appoint a "war council", or would you go for a far-reaching command-and-control structure, that could marshall huge amounts of information and execute a wide-range of policy initiatives? I know they have only been in office for 20 days...
Posted by Amicus at 12:42 AM
Tuesday, February 10, 2009
They are getting all this Homeland Security money. Billions. Some for energy research at the University. All the rest of the pork that "The Hammer" Delay and Bush brought home for the state, over the years.
So why should they get more, even though their two Senators will likely vote against any fiscal Rebuild America plan?
Posted by Amicus at 9:42 AM
Very impressed with the 'there is no such thing as clean coal' campaign.
They've been on the air here with strategic advertising.
Very effective. Enough so that the opposition had to buy some time.
We'll see what they can sustain.
Flashback (to the future?): Clean Coal Project Collapses
Posted by Amicus at 9:11 AM
THIS POORLY HANDLED LEGISLATION
I cannot even listen to the news, these days; because the stimulus plan and its windy road to enactment just cause one to recoil.
We'll see what happens in conference, if it gets beefed back up again. When was the last time the House actually asserted itself against the Senate?
GOP PREPARED TO NOSE-DIVE REPUBLIC - APPARENTLY THAT WAS NEWS, TO SOME
True or false: there is nothing lasting or permanent or 'remarkable' in this legislation, that people will be talking about for generations or that cannot be reversed by the next GOP nose-dive.
Items (and to think that States with Senators voting against will get as much money as those with Senators voting 'yes'!!!):
Posted by Amicus at 7:57 AM
Monday, February 9, 2009
Saturday, February 7, 2009
This weird juxtaposition comes from the Andrew Sullivan blog, via living pundit Will Wilkerson (besides his cool name, I pick on Will because it's time, not because he's not worth reading altogether or scary, like Malkin, say):
consciously or subconsciously, undertake every damn story as a public-opinion-shaping framing [or] counter-framing exercise and eventually forget how to report the obvious interpretation of events.
Government-subsidized borrowing [?] gave us the housing bubble ... By zealously [?] pushing home-ownership, federal housing policy
Care to quantify that? Or be original? I mean even a glancing acquaintance with the facts of sub-prime lending would be welcome - god knows, I had to wait ages, because a lot of them have been tied up in private, not government, databases far, far too long.
Ending with this gem of a high-hat:
give some cash to those evicted to help them move on
Home ownership is a good thing, for a host of economic reasons, not just sentimentality, even Bush's economists thought so. Federal housing policy has a role. Calling liquidity a 'subsidy' isn't worth debating.
Posted by Amicus at 5:49 AM
NO MORE UNPAID FOR TAX CUTS IN AMERICA!
I'm totally behind this kind of an effort (Obama Hits the Road on Economic Rebuilding).
Better late than never.
It might help them "refine" the stimulus, without having to fire his pedestrian advisers.
He could gain a grassroots sense, again, for just how much people really don't want some kind of wishy-washy, halfway, non-legacy, diddly pinky effort.
Would love to see a visit to Minnesota, where GOP have Al Franken pinned down. Florida. You know how much Arizona is hurting, while McCain grandstands?
Posted by Amicus at 12:30 AM
ARE DEMS FIGHTING HARD ENOUGH?
Who knows what is going on behind the scenes, but a bill without much legacy for Obama-Biden, is probably all the GOP need to achieve 'victory'.
Dems ought to have _started_ with a different, aggressive allocation formula. (McCain wants to go back and start again? I'll gladly take up that gauntlet!).
- For the states that had no Senators voting for the Bill, as proposed, no money. Nada.
- 50% if you only had one Senator voting.
Alternative, for all the states in which both senators voted "no", just income tax cuts. No schools, no roads and bridges, no other aid.
We'll see if the Republicans are willing to 'stand on principle', afterall.
As Joe Biden used to say, show me your budget.
Posted by Amicus at 12:17 AM
Friday, February 6, 2009
YEAH, CUT ANOTHER $100 BILLION, SUSAN COLLINS
Fresh off their stellar "wartime" planning, the GOP now have a hip, techno video to explain how their do-nothing policies might work, to ease foreclosures, fix banking, and mind the output gap, brought on by soaring unemployment started in the Bush-Cheney era:
Posted by Amicus at 10:51 AM
LIFE OUTSIDE THE PENTAGON
From a duo Francais .."Guide à l'attention des forces américaines en ... 1943"
"Ce petit manuel, très intelligemment préfacé par François Heisbourg expose aux futurs "libérateurs" venant en soutien des forces anglaises comment aborder le peuple irakien pour que leur passage se passe bien.
extrait " Le succès ou l’échec des Américains en Irak dépendra pour une grande part du fait que les Irakiens (c’est
leur nom) aimeront ou n’aimeront pas les soldats américains.
Ce ne sera pas forcement simple. Mais, une fois
encore, faites votre possible"."
And finishes with:
"Pourquoi n'ont il pas réédité ce petit manuel pour Bush, Romsfeld et leurs sbires !
Dommage que la mémoire soit un peu courte."
Posted by Amicus at 9:43 AM
Thursday, February 5, 2009
The Senate cloture non-vote fails on the stimulus plans.
Looks like today's progressives are going to have to fight for their values (and hone their own).
Is it time to go to maximum bargaining position and fall in line, yet? Probably. Bastard ruling class.
Overall, this is bad for Team-Obama, who could really use time to put together policy on a host of very, very other pressing issues. It's a terrible waste of time to have to go into the trenches. (So much for Dodd dismissing the value of 60-seats in the Senate...).
Still, there is opportunity. Obama could really flex his muscles. The GOP truly have a weak hand to play, and he could call their bluff in a way that greatly strengthens and elevates him, right out of the gates, before the first turn!
They included all kinds of money for rural America and, just today, centralized poverty in the ...er, faith-based government (gulp). Sounds like it is time to take the fight right to the heart of the conservative base, rural America.
In other words, he needs to "do a Reagan" and go over the heads of "D.C." and right to the people. I think he could pull it off. You?
Posted by Amicus at 9:47 PM
As I listen to GOP hipsters prattle on and watch, with frustration, a new President grappling with the need to be in full stride from Day One minus 90, I'm reminded of this innocent post title:
What should Bush do now?
The answer to which might be that he could have left early, turning over the Treasury staff and more to the next in line, since he was leaving an empty refrigerator and a leaking roof. (Maybe the reason he was so "classy" was because he grasped the magnitude of the mess he and Rove planned to dump on their opposition party?)
Afterall, where is the Republican plan for the remainder of the economic crisis that is engulfing us, still?
More money for Merrill Lynch? Zero tax rates? That'll do the trick? Another trip by Paulson's Cash-'n'-Carry guy up to the Hill, to tell the Senators that the Administration is 'studying' the foreclosure problem?
Posted by Amicus at 8:49 PM
PASSIVE ACCOUNTING ALONE IS NOT PRE-EMPTIVE ENOUGH
Coupled with an aggressive - repeat, aggressive - intervention to hasten, to accelerate the clearing of bad mortgage debts / foreclosures, the end of mark-to-market might make sense (it's too late to use it as a way to halt a panic, if it was, in fact, ever suitable for that).
Otherwise, Geithner's critics are going to say he went for the "Japan option", and what can I say to them? That it's okay to focus on cash-flow "realities"? That might not carry the day...
Given that the foreclosure problem, even under "aggressive" scenarios that involve the ability of bankruptcy courts to modify loans, is one that can be eased but not accelerated, these bleeding assets will be an open wound on bank's balance sheets for a long while. We don't know how bad or how long it could get. If you take a guess of 8+ million foreclosures, then we may not be halfway through, even though the housing market turn was in 2006!
Second, moving to mark-to-market is a signal that the problem is either small enough to 'work through it', in the time and money that you have to stimulate demand for the economy - about 18 months, under the current stimulus plan, as scored by CBO. Or, it means that the problem is too large to handle, 'all at once', toute suite. [There is not enough public transparency, perhaps, to have a position 'in the middle' of those two...].
The first looks like overconfidence, in the absence of some hard-hitting estimates of what is required. The second looks like a bad signal to send, possibly. I'd much prefer an aggressive approach, like putting some real Treasury money at risk and leveraging it via the Fed. It keeps the Fed in its role of 'deep pockets' and it keeps the banking system as close to a transparent, functioning arm of the economy as possible.
But, I've said too much already...
Posted by Amicus at 8:14 PM
LOOK AWAY, RUN AWAY, OR ENGAGE? ABORT, RETRY, IGNORE?
I don't like it, much, at all.
- It doesn't get around the problem of pricing - how much do you guarantee and for how long?
- What do you guarantee - the assets or the institution? (What if a foreign bank bids for the shares of a U.S. mega-bank? Do they trade with or without the guarantee?).
- There is no risk sharing, public-private - the taxpayer takes up the "long tail" (that's just stupid, I think).
- There is no debt removal from institutions (as required during a debt-deflation?).
- It offers no control over timing - all those guarantees could come due simultaneously. It also looks profoundly rosey-eyed, unless there is compelling reason to believe that such guarantees would never be cashed-in. (Remember the Bush failures of hope-for-the-best, don't-plan-for-the-rest?)
Most of all, it doesn't do anything to accelerate the market clearing of bad-debts, consumer or institutional, either into strong hands of private investors or the long-term hands of the government or some combination of the two. (It doesn't leverage the power of the Fed to solve the problem, either...it relies solely on the Treasury).
We have just about 18 months of 'big stimulus' to work with, because of the way "Reinvestment in America" has been rushed together.
Will Citibank's balance-sheet be clean by then? American Express? GE Capital's? BOA's? The Great American consumer? The housing market adjustment, as accelerated under Obama (hey, a guy can hope), complete?
Can we really expect no more losses in the banking sector after 18 months? I mean, it's almost completely unreasonable to expect a turnaround, if the banks are still making losses. Afterall, they could get by with zero capital, so long as they are not making losses, yes?
Posted by Amicus at 2:14 PM
About that deflation risk
Paradox of thrift
Paul K and maybe Larry S seem to be setting themselves up to realize that, in a debt deflation, the best _policy_ might be to ... er, ease the debt burden ratio, one way or the other.
Do whatever it takes: outright cancellation (pre-packaged bankruptcy, but less-so liquidation), debt-for-equity, and fixing the stupid bankruptcy reforms of 2005, and anything else that economically equates to 'paying negative interest rates'. Artificial incomes ... probably not enough to do the trick, if the problem is large or intractable or sentiment already firmly in the wrong direction.
Wealth transfer is often a dirty word; but, in my opinion, those most worried about it lost their discipline during the high-flying years, a discipline forged in fire during the 1930s ... Time to pay the piper, sadly - and no joy in that, for anyone.
Posted by Amicus at 9:56 AM
IN SEARCH OF CHERRY SOCIALISM
The foot pounding to avoid lemon socialism, in which citizen-taxpayers "agree" to socialize the risks and privatize the returns can be heard across the plains. Openly agree, one should say, to contrast with the regular way, which is to have it hidden in laws and regulations (from both parties) that enable misalignment of risks and rewards.
But, these days, we have to eat the lemon. At least on the banking side.
Until the house is actually falling down, Obama's team will never socialize the big banks, fully, despite that the best case for it might be purging a generation of dead-head management and elevating some people who really do know the risks of modern financial products and markets. (Cleaning out corporate boards is another good idea, as should have been done wholesale at Merrill and Lehman, right?).
So, what other choice is there?
PICK THE SIZE OF YOUR LEMON, PEEL, THEN EAT
The best combination is for the Treasury and Fed to work together. The Treasury provides the risk capital and the Fed has available infinite leverage (at least for a time).
The private sector, particularly the distressed assets crew, knows how to value assets no one wants, much. The best of all worlds is to share risk-capital with the private sector, to scare-up a public-private partnership, and leverage it with the Fed-Treasury combo. That's one way to get past the problem of government getting duped in setting/taking a price on things its bureaucrats don't understand.
Another risk-sharing is to pre-package large-bank bankruptcies, allowing banks (and some non-banks) to trade-out of their debt-obligations at or near market prices. A restructuring of their liabilities will allow further risk-sharing with public funds. How? Well, the Treasury can 'substitute' the erased liabilities with recourse provisions. The banks sell assets at a price to the Treasury, who picks up an amount of risk consistent with the Treasury's economic forecasts, but the banks share or assume risk that the realized asset values come in below that.
Thus, exchanging debt obligations for recourse guarantees is another public-private risk sharing that might work, if it is enough in the mid-term to avoid a terrible, terrible long-term.
The truth takes only a few words (to borrow a famous phrase from Chief Joseph). This might be the American solution, one that contrasts with the way that Europe have done so far and that Japan did a long while ago.
I wrote this in 20 minutes this morning. I have no idea what is taking weeks and weeks to revise, inside the Obama team, unless it is regulatory structure redesign.
Posted by Amicus at 9:28 AM
I'm not commenting, since it's obvious that non ruling-class input is not desired and untimely.
This Bill is a rush-job. The lack of vision, masked by an 'urgency factor', will show, down the line.
There will be after-the-fact ... "stimulus", though:
I'm sorry. I know I am supposed to support the President. But sometimes candor is the best service.
The Dem plan has money for, say, 2 million homes to 'weatherize' ...
Posted by Amicus at 9:06 AM
Wednesday, February 4, 2009
Team Obama are in an impossible position, from day one.
They are voting huge sums of money, that will make or break them politically and otherwise, in all probability; but they don't have their programs off-the-shelf, ready-to-go, for understandable reasons.
So, today, we have this (disgusting) confusion:
Posted by Amicus at 1:42 AM
Monday, February 2, 2009
AN OBAMA MISSTEP?
I'm sorry, but I'm not interested in Judd Gregg. At all.
Guy voted alongside the GOP on the articles of impeachment for Clinton.
Was a R-ubberstamp (NH) for Bush-Cheney, voting irresponsible debt-spending for Iraq (read the whole link for lotsa color) and refusing to support even basic benchmarks for progress or keen oversight.
He was on the wrong side of hate crimes legislation, joining the filibuster in 2002.
I had hoped for him to be voted out in 2010, not to hang around in a position that will set him up to be Governor or something ...
If the hope is that there is some 'moderate' Republican freshman to come up behind him, then ... the price seems too high.
Posted by Amicus at 8:48 PM