Aravosis: Bobby Jindal's volcano erupted
The one he was criticizing the monitoring of? Just erupted in the last day or so. A friend writes:TPMDC: Bachmann: I Want People "Armed And Dangerous" Against Energy TaxErupted 4 times overnight. Nobody’s dead. The FAA and the National Weather Service know where the ash cloud is (drifting away, not toward, Anchorage, thank God) and planes are being diverted around it. Gee, it’s a good thing people were monitoring.
The eruption was accurately predicted when the number of earthquakes on the mountain suddenly jumped to 40 to 50 per hour Sunday morning. So everybody had time to get ready.
Your tax dollars put to work by dedicated scientists at the U.S. Geological Survey who keep doing their jobs even when politicians decide to demean their work for a cheap sound bite.
If we were approaching this from a less scientific perspective, some might be tempted to appease the volcano gods by throwing somebody into the crater. Since he doesn’t like volcano monitoring, perhaps Bobby Jindal would volunteer?
Rep. Michele Bachmann (R-MN): Foreign corespondent on enemy lines, helping to keep the folks back home armed and dangerous.Bachmann appeared over the weekend on the First Team radio show with John Hinderaker and Brian Ward, speaking about the horrible stuff that the Democrats are doing: "I'm a foreign correspondent on enemy lines and I try to let everyone back here in Minnesota know exactly the nefarious activities that are taking place in Washington."
Bachmann also spoke out against the cap-and-trade proposals currently making their way through Washington, and how she'll be distributing information against it at an upcoming event in the district. "I want people in Minnesota armed and dangerous on this issue of the energy tax, because we need to fight back," said Bachmann. "Thomas Jefferson told us, having a revolution every now and then is a good thing. And the people - we the people - are going to have to fight back hard if we're not going to lose our country."
On the one hand, it seems clear that Bachmann was speaking figuratively. On the other hand, is it appropriate for a member of Congress to speak in any context about being armed for revolution?
(Via the University of Minnesota and the Dump Bachmann blog.)
This is depressingly like the Bush administration. And Orwell. Just. Stop.
Benen: YOU SAY 'TOXIC,' HE SAYS 'LEGACY'....
In a Wall Street Journal op-ed this morning, Treasury Secretary Tim Geithner offers some analysis on his response to the banking crisis. He takes care to avoid to "t" word.
Today, we are announcing another critical piece of our plan to increase the flow of credit and expand liquidity. Our new Public-Private Investment Program will set up funds to provide a market for the legacy loans and securities that currently burden the financial system.
And what are "legacy loans and securities"? They're toxic assets, with a more pleasant sounding name.
As Jake Tapper asks, "Note that, branding experts?"
Likewise, the Treasury Department unveiled a new fact sheet on the new proposal, which uses the word "legacy" 40 times.
There's only so many ways to spin "toxic."
- Atrios It isn't as if "legacy" loans and assets were from 40 years ago. They're from like, you know, a year ago.
Tim F. Along Similar Lines, If I Take A Dump And Call It Prosciutto, I Have A Tasty
- As if to demonstrate how challenging the optics of this are, clearly Wall Street likes calling a shit sandwich Prosciutto. Perhaps if they started actually serving shit sandwiches labeled Prosciutto at Wall Street restaurants ...? Headline from TPM:
E.J. Dionne: Obama vs. the Dodgers
President Obama's biggest task at his news conference tomorrow will not be to defend Treasury Secretary Tim Geithner or to push aside the administration's bungling of the AIG bonus imbroglio. It will be to challenge Washington's habit of evading substantive issues by transforming them into procedural questions.
A deep narrative is taking root in the political class, and it goes something like this: Obama is biting off way more than he can chew, "overloading" the system and dealing with all sorts of "side issues," when he should be focusing solely on the broken economy. He is said to be asking Congress to do too much.
Note that anyone who makes an argument of this sort is freed from responsibility to mention any of the specific problems Obama is proposing to take on. Insisting the economy trumps everything means you don't have to say a thing about health-care reform, energy, education and taxes.
And that's the beauty of this critique. It's far easier to talk about an overloaded system than to tell those without health insurance that they will have to wait a few more years, or to be honest in saying that balancing the budget long-term will require raising taxes. It's much easier to use the economic crisis as an excuse for inaction than to defend the status quo.
...
- Doug J: More punch-drunk love
Following up on John’s “Mission Accomplished” post, check out the second from-the-top story at Halperin:The hosts of the daytime show aren’t smiling at Obama’s chuckles about the economy in his “60 Minutes” interview.
Hasselbeck: “Nobody’s laughing… It’s not a joke.”
That’s right, one of the most important developments in American politics today, at time when a complex controversial plan to shore up our banks is being unveiled, while American troops are occupying two countries, while the economy is plunging into the worst depression since WW II…is what fucking Elizabeth Hasslebeck thinks about Obama’s jokes.
Is it any wonder we’re in such bad shape?
Josh Marshall: Wow, I Needed That
As part of their efforts to make the scale and scope of Bernie Madoff's crimes clear to Judge Denny Chin in deciding the terms of his plea, confinement and eventual sentencing, the folks at the US Attorney's Office for the Southern District of New York submitted emails from Madoff's victims describing the injury they had suffered and the punishment they believed Madoff deserved.
When you read through the emails, though, you do sort of wonder what level of vetting was applied to these emails or who some of those people even are. And when you get to the email on page 36 you get the sense that the quality control on which emails they threw on the pile maybe wasn't all that high.
Here's the text of that email ...
From: [redacted]
Sent: Saturday, March 07, 2009 6:38 PM
Subject: REPLY MEMy Name is Mr. [redacted] but my origin is from Republic of Congo. I have an inherited fund I want to invest in a business in your country with a help of a local. I don't know about what business but I found it wise to invest the funds in your country with your collaboration with me.
Ever since I move to Dubai due to the problem in my country, I have not been able to invest the funds in Dubai due to security reasons. Now I am seeking foreign assistance to transfer the funds in your country based on the news of their development.
If you can assist, I am willing to give you 10% of the funds that is US$3.5Million. You will understand that my entire life and future depend on this money and I shall be very grateful if you can assist me. The major thing I demand from you is the absolute assurance that the funds will be safe and you will not sit on it when it is transferred into your account.
I will be willing to coming to your country once everything has been done and the funds are in your bank to discuss on lucrative investment in your country.
I hope to hear from you so that we might get to talk better on this issue. Please do give me your contact information in order for me to call you ASAP.
If this email offends your moral value, do accept my apology.
Hope to hear from you soon.
Best Regards,
[redacted]
See the original here (scroll to page 36).
I have to confess I couldn't stop laughing for maybe 10 or 15 minutes after I read this. Really a bang on this one, guys. How many of the rest of these 'victim' emails are just crank emails?
(ed.note: Hats off to TPM Reader DW for looking a little closer than the US Attorney's office staff.)
I'd kind of forgotten about it, but apparently, far-right activists continue to organize "Tea Party" rallies and talk about "Going Galt." It's a little right-wing fad that hasn't quite gone away, as evidenced by this Orlando get together over the weekend. A local radio host, who helped make the event happen, called it a historic gathering of 4,000 "God-fearing patriots."Reading over some of the quotes from attendees, one starts to get a sense of what's bothering these folks. For example, they don't like government spending. Or deficits. Or stimulus efforts. Some wanted to argue that Bush isn't to blame for the economic crisis. Others wanted to see the Federal Reserve eliminated altogether.
Perhaps the most striking quote came from a local man who'd recently lost his job at an electrical-equipment company. He wants to see the federal government spend less on economic recovery and focus more on "my grandchildren's money."
Oh my.
Outside the Beltway's Alex Knapp, a libertarian, took a look at some of these events and came up with some important observations. Knapp noted, for example, the fact that most "Tea Party" participants will get a tax cut from Obama, so it's kind of difficult to believe them when they say they feel put upon. For that matter, "Tea Party" cheerleaders didn't mind excessive government spending when it was going to an unnecessary war in Iraq. He concluded:
Let's call the "tea party" and "going Galt" nonsense what it is: unprincipled partisan hackery. If these were truly principled protests, they'd have been around all through the Bush and Republican-controlled Congress years, too.
Quite right. It's no doubt inconvenient for this crowd, but a Republican Congress and Republican White House worked together to increase the debt by $5 trillion, expand the size of government, increase spending, increase the tax burden on the middle class, and expand the powers of the executive to undermine civil liberties. The some people attending "Tea Parties" not only cheered these GOP policymakers on, but voted to keep them in office as long as possible. (Indeed, many condemned those who disagreed, accusing liberals of "treason" for failing to support elected leaders during a crisis..)
Literally just two months into a Democratic administration, far-right activists are now holding public protests? They're mad about deficits and a loss of "liberty"?
I almost feel sorry for the folks who get conned into believing this nonsense.
Update: I'd almost forgotten, at the Orlando rally, organizers distributed signs that read, "Obama Bin Lyin' -- IMPEACH NOW."
Think Progress:ThinkFast: March 23, 2009
Treasury Secretary Tim Geithner will unveil a three-pronged program today for fixing the financial crisis, which “envisions the creation of a series of public-private investments to soak up $500 billion, and maybe as much as $1 trillion, in troubled loans and securities at the heart of the financial crisis.” In a WSJ op-ed, Geithner writes that he is confident that “these policies will work.”
Paul Krugman writes today that, if reports leaked about Geithner’s bank rescue plan are correct, then he “has persuaded President Obama to recycle Bush administration policy — specifically, the ‘cash for trash’ plan proposed, then abandoned, six months ago by then-Treasury Secretary Henry Paulson.” “This is more than disappointing. In fact, it fills me with a sense of despair,” he said.
John Cole: The Plan Geithner takes to the WSJ here, the NY Times has more write-up here, Krugman lets out a plaintive wail here, DeLong thinks Krugman is wrong, and the world stock market is reacting positively, which makes me think we are about to get screwed since the only thing those guys care about is a bailout with no pain involved for any of the actors.
Yglesias: The Market in Toxic Cars
Sully quotes Brad: Geithner Plan FAQMark Thoma has an extremely useful post that helps elucidate the structure of different plans for dealing with “toxic assets” by way of a little analogy. Here’s the setup:
Imagine a car lot that has 100 cars on it. However, some of these cars have problems. Half of them will have engine troubles that total the cars - the engines blow up and the cars are then worthless - and this will happen just after purchase. The other half are perfectly fine. Unfortunately, there is no way to tell prior to purchase which type of car you will get no matter how hard you try. Thus, half of the assets on the car dealer’s “balance sheet” - the cars on its lot - are toxic, and lack of transparency makes it impossible to tell which ones are bad prior to purchase.
If all the cars were in perfect shape, they would sell for $20,000 each. Thus, there are (50)*($20,000) = $1,000,000 in assets on the books according to one way of doing the accounting, but that doesn’t necessarily represent the true value of the cars on the lot.
The town where this dealership is located relies upon this business for jobs, it is essential, but, unfortunately, business has fallen off to nothing. Nobody is willing to risk losing $20,000 by purchasing a car that might die just after purchase, so the price has fallen. The expected value of a car is $10,000, but it’s an all or nothing proposition, the car runs or it dies, and since people are risk averse nobody is wiling to pay the $10,000 expected value. In fact, the highest price they are willing to pay, $6,000, is lower than the minimum price the dealer is willing to accept.
Thoma outlines three different ways the government might try to intervene in the market and create a situation where at the end of the day the bad cars are on the crap heap, the good cars are in the hands of customers, and the car dealership has enough financing to get more inventory.
You really need to click over to read the full analysis, but the choice between the Geithner Plan and a nationalization plan winds up mostly hinging, in my view, on how you feel about the management of the car dealership. You might find the idea of a government-owned car dealership—even just temporarily owned—very troubling. The dealership would be managed according to political dictates and subject to the whim of the local legislators. This might wind up being a very poorly managed car dealership, indeed. And you could create a situation in which nobody wants to buy the dealership under the conditions the legislature is attaching, but nobody wants to compete with it either since the dealership can operate with government subsidies. Hence, you’ve got a situation where the town depends for employment on make-work jobs at an inefficiently-run state-owned car dealership.
Another view you might take is that there’s something badly wrong with the managers of the car dealership. Somehow they wound up with all these undetectable bum cars in their inventory, even though the presence of such a mass of bum cars wrecks their entire business, and even though they’re allegedly experts in assessing cars. If you rescue the dealership in a way that keeps existing management in place, it’s not clear where this leaves you going forward. What’s their business going to be? Will they start buying good cars and reselling them at a profit? But if that’s their business, then how come they weren’t doing that in the first place? Are they going to go back to buying bum cars and trying to pass them off as good ones? How long is that going to last? And what problem have we really solved?
There are risks either way. The Saab Story sounds better to me, but people who have a higher regard for private enterprise and its titans than I do will see it another way.
Brad DeLong has a very helpful post and certainly less pissy than Krugman. Money quote:
Q: Why is the government making hedge and pension fund managers kick in $30 billion?
A: So that they have skin in the game, and so do not take excessive risks with the taxpayers' money because their own money is on the line as well.
Q: Why then should hedge and pension fund managers agree to run this?
A: Because they stand to make a fortune when markets recover or when the acquired toxic assets are held to maturity: they make the full equity returns on their $30 billion invested--which is leveraged up to $1 trillion with government money.
Q: Why isn't this just a massive giveaway to yet another set of financiers?
A: The private managers put in $30 billion and the government puts in $970 billion. If we were investing in a normal hedge fund, we would have to pay the managers 2% of the capital and 20% of the profits every year. In this case, the private managers' returns can be thought of as (a) a share of the portfolio's total return proportional to their 3% contribution, plus (b) a "management incentive fee" of (i) 0% of the capital value and (ii) between 0% (if the portfolio returns 3% per year) and 9% (if the portfolio returns 10% per year)--much less than hedge-fund managers typically charge.
Q: Why do we think that the government will get value from its hiring these hedge and pension fund managers to operate this program?
A: They do get 17% of the equity return. 17% of the return on equity on a $1 trillion portfolio that is leveraged 5-1 is incentive.
Q: So the Treasury is doing this to make money?
A: No: making money is a sidelight. The Treasury is doing this to reduce unemployment.
And this morning, this also helpful point:
One way to think about it is that the privates are placing a low market price on distressed securities because they place a high weight on future scenarios in which the prices of distressed securities fall still further: in such scenarios they will really need cash really badly, and the additional losses that would be generated if they further extending their positions and if such scenarios came to past would be extremely painful--institution-destroying, and hence to be avoided at all costs.
The government, however, is the agent of society at large. As such, it is close to risk neutral: only the losses associated with truly great depressions get substantial extra weight. It doesn't care much about bad news that leads to further declines in the values of toxic assets it holds: if worst comes to worst, it can always offset them by printing more money and so generating an inflation that is annoying and painful but not something to be avoided at all costs.
It is this difference between the (extremely low) risk tolerance of private financial intermediaries and the (relatively high) risk tolerance of the government and of society at large that creates the rationale for a program like the Geithner Plan.
atrios Angry: Ponies In The Shitpile
Aside from setting up an overly complicated plan to try to disguise what they're really doing, the utility of the Geithner plan rests (or pretends to rest, not sure) on one fundamental premise: that Big Shitpile is greatly undervalued by "the market" and that these mortgage securities really have expected revenues which justify higher prices. One could have reasonably believed this months ago, I have no idea why anyone would believe this now. The housing bubble burst, and now recession is here. There's a lot of shit to be eaten, the question is who will eat it? Timmeh wants to make sure it's not the banksters.atrios Uh, Brad?
Come on, you're better than this.atrios What's The Goal?
Q: What if markets never recover, the assets are not fundamentally undervalued, and even when held to maturity the government doesn't make back its money?
A: Then we have worse things to worry about than government losses on TARP-program money--for we are then in a world in which the only things that have value are bottled water, sewing needles, and ammunition.So if shitpile is really as shitty as I think it is, then without Timmeh's cunning plan it's Mad Max for all of us.
Actually, it's worse than that, it's "If Timmeh is wrong about the ponies in Big Shitpile then it's Mad Max for all of us."
Others have made this point in various ways, but if the goal is to bail out the banksters and keep the existing too big to fail financial order in place with the same cast of characters in charge, then all of this sounds like a cunning plan.
If the goal was really to get banks lending again they'd be funneling large sums of money to healthy (mostly smaller) financial institutions who actually made sensible choices over the last few years.
atrios Just A Thought One (there are a few) reason that the market for Big Shitpile securities is "frozen" is that it would have been stupid to sell them at an actual market price when Timmeh's been promising that one day soon he'll scoop them up at above market prices.
atrios Banksters
This is such a good idea.
- But some executives at private equity firms and hedge funds, who were briefed on the plan Sunday afternoon, are anxious about the recent uproar over millions of dollars in bonus payments made to executives of the American International Group.
Some of them have told administration officials that they would participate only if the government guaranteed that it would not set compensation limits on the firms, according to people briefed on the conversations. The executives also expressed worries about whether disclosure and governance rules could be added retroactively to the program by Congress, these people said.
atrios Risk
One thing which stood out from Timmeh's WSJ op-ed (perfect place to leg hump the banksters) was this:This story about "risk" is a pleasing one for people who imagine that the masters of the universe, or their managers, actually worry about such things. I don't know if Timmeh does or doesn't believe this, but it's absurd. The current financial crisis has nothing to do with how much risk the banksters were willing to take on. They didn't say: oh, well, I think we should tolerate a bit more risk now. They said: CA CHING CA CHING CA CHING CHING!
- While this crisis was caused by banks taking too much risk, the danger now is that they will take too little.
I have no idea if Timmeh is a fool or corrupt and I'm not sure which is better or worse. But the idea that all this came about simply because the banksters decided a bit of extra risk was good is an idea only a macro finance person could sanely entertain.
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