Saturday, March 21, 2009

Our President's weekly address. On the budget, taking on critics proactively.

All Mixed Up Like Pasta Primavera

This is a fantastic story in both senses of the term: elegantly written and reported by the Washington Post's Anthony Shadid; and substantively a Good Thing. Shadid reports on the emerging political coalitions in Iraq that, for the first time since the invasion, cross sectarian lines. I like this anecdote between Sunni hardliner Saleh Mutlaq -- whom I once saw taking care of business in a Green Zone hotel two years ago -- and Prime Minister Nouri al-Maliki, who have been bitter sectarian and political rivals for three years:

Mutlak draws backing from among the still-numerous supporters of Hussein's Baath Party in Sunni regions, and he has long pushed for reconciliation with its members. Despite his reputation as a Shiite hard-liner when he came to power in 2006, Maliki echoed the call this month. In a speech, he urged Iraqis to reconcile with rank-and-file Baathists, those he described as "forced and obliged at one time to be on the side of the former regime."

He declared that it was time "to let go of what happened" in the past.

Mutlak said he told Maliki in a meeting two months ago that "there was a time when you stood against me on those issues. 'You should be happy I changed,' he told me." Smiling in the interview, Mutlak joked that first the prime minister "stole the government from us, and now he's trying to steal our political speech from us."

Read the whole piece for a flavor of the complex coalition forming that's taking place in Iraq. Much of it concerns alliances of convenience in the south, where Maliki will break bread with followers of Moqtada al-Sadr, despite their war last year. And much of these alliances are furtive and prone to collapse as the factions test each other. But that's what's so broadly significant. Since the occupation began, politics had been a subset of sectarian activities -- violent and otherwise. For that dynamic to erode is to mean Iraq has a chance at being a functional, healthy, successful state.

This is entertaining, but Shuster needs better arithmetic skills to demonstrate Bachmann's hackitude. In the second section she actually would have been correct-ish had she said "total" instead of "average." It's Shuster who needs a math lesson. Her total earmarks amounted to $3.7 mill, not her average earmark. The average earmark that he put up - $2.1 mill - was $330 mill/158 earmarks. Taking out Bachmann's $3.7 mill from the, and dividing the remaining total earmarked dollars by the number of remaining congresscritters, you get $46.6 mill per rep.

Twice South Carolina Gov. Mark Sanford (R) has asked the Obama administration to let him undermine the economic recovery efforts. And twice, OMB Director Peter Orszag has respectfully declined.

So, yesterday, Sanford announced that he will officially reject $700 million in federal stimulus money for his state, a decision that isn't going over well among struggling families in South Carolina.

Today, the governor has an op-ed in the Wall Street Journal, explaining the rationale for his decision. It's a reasonably detailed, 900-word piece, but this summary sentence gets at the root of Sanford's thinking.

In the end, I just don't believe a problem created by too much debt will be solved by piling on more debt. This doesn't strike me as an unreasonable or extremist position.

That's exactly the explanation I wanted to see, because it makes clear where Sanford is coming from. Why would he reject stimulus aid in the midst of a severe recession? Because the governor believes the current crisis was "created by too much debt." And if the crisis were created by too much debt, Sanford's response would be perfectly sensible.

The problem, of course, is that Sanford is completely wrong. His analysis is not even close to reality, and it's unsupported by any evidence at all. But it at least offers us some insight into why a governor would deliberately choose to undermine the interests of his constituents -- he starts with a lack of economic understanding, follows it up by misdiagnosing the problem, and then concludes by making a misguided decision based on foolish assumptions.

Good to know.

Saturday Econ

I do wish I had a better grasp of the "correct path" for economic recovery. Hoiwever, I find myself concerned that Geithner and Obama are choossing a path that the people who have been right about everything find disastrous.

Cole: The Geithner Plan

The reviews are in on the leaked Geithner plan, and we are going to do something different here for a change. We are not going to listen to people who have been wrong about everything, and instead are going to listen to people who have been more right than wrong. The administration might learn from this approach. First up, Yves at Naked Capitalism:

And notice the utter dishonesty: a competitive bidding process will protect taxpayers. Huh? A competitive bidding process will elicit a higher price which is BAD for taxpayers!

Dear God, the Administration really thinks the public is full of idiots. But there are so many components to the program, and a lot of moving parts in each, they no doubt expect everyone’s eyes to glaze over.

Calculated Risk:

With almost no skin in the game, these investors can pay a higher than market price for the toxic assets (since there is little downside risk). This amounts to a direct subsidy from the taxpayers to the banks.

Oh well, I’m sure Geithner will provide details this time …


The Geithner plan has now been leaked in detail. It’s exactly the plan that was widely analyzed — and found wanting — a couple of weeks ago. The zombie ideas have won.

The Obama administration is now completely wedded to the idea that there’s nothing fundamentally wrong with the financial system — that what we’re facing is the equivalent of a run on an essentially sound bank. As Tim Duy put it, there are no bad assets, only misunderstood assets. And if we get investors to understand that toxic waste is really, truly worth much more than anyone is willing to pay for it, all our problems will be solved.

If this were a medical emergency, it appears it would look something like this:

The Illness- reckless and irresponsible betting led to huge losses
The Diagnosis- Insufficient gambling.
The Cure- a Trillion dollar stack of chips provided by the house.
The Prognosis- We are so screwed.

If these guys are right, this will be the undoing of the Obama administration. Better enjoy this four years, libs.

Aravosis: Senate Republicans block AIG bonus tax
The defenders of the rich come to the rescue, again.
Sen. Jon Kyl, the Republicans' vote counter, blocked Democratic efforts Thursday evening to bring up the Senate version of the tax bill to recoup most of the $165 million paid out by AIG last weekend and other bonuses in 2009. The House had swiftly approved its version of the bill earlier in the day.
Q: How do you spell AIG?


Yglesias: Quantitative Easing 101

Here’s a nice primer from the Financial Times on quantitative easing. When trying to understand this, it’s worth keeping in mind that the name “quantitative easing” is very non-descriptive and I have no idea how it got this label. So don’t try to think about what those words might mean, just pay attention to the description of what it is.

Meanwhile, Larry Kudlow finds the inflationary potential of this move so terrifying that he’s setting money on fire which, as Ryan Powers observes, is actually illegal:

Spurring Kudlow’s inflationary expectations is, however, actually part of the idea. One problem the US economy is having right now is that even though I’d kind of like to buy a new MacBook and have the money in my bank account to pay for a new MacBook, I’m not buying a new MacBook. Why? Well, because I don’t really need one, and I keep having this feeling that they’re going to start being discounted soon once Apple realized that nobody wants to buy their super-expensive laptops amidst a cataclysmic recession. I have, in other words, deflationary expectations. These kind of expectations, when widespread, become self-fulfilling as all kinds of spending on non-necessities collapses. Change those to inflationary expectations and I think, hey, I’d better buy that today because it’ll cost more next week. And that helps the economy grow.

Obviously, this is the kind of thing that can be taken too far. And it is true that if aggressive Fed policy succeeds in returning us to growth, we will soon enough need to deal with the prospect of problematic inflation—either in the sense that the level might get too high, or that we might see increases of an accelerating character. Which is certainly a good reason to wish we hadn’t gotten into this situation. But it’s not a good reason to eschew the methods that are most likely to get us out of it.

The conventional wisdom about the discouraging new deficit projections from the CBO is that President Obama's ambitious agenda is necessarily in jeopardy. If budget deficits are poised to spiral out of control, the argument goes, then lawmakers will have to start making significant cuts.

Indeed, the NYT's Jackie Calmes noted today that the CBO deficit numbers "complicate" Congress' efforts of "achieving the president's priorities on health care, energy policy and much more."

But Ezra Klein raised a very good point about the "costs" associated with the administration's agenda.

[T]he $634 billion set aside for health reform doesn't contribute to the deficit at all. It's entirely offset by capping itemized deductions for the rich and squeezing private insurers in Medicare and a couple other policies. The cap and trade proposal is actually revenue-positive.

The stimulus package, by contrast, sharply increased the deficit, because there were no immediate offsets to pay for it. So too with Bush's tax cuts.

But the big new initiatives in Obama's budget don't necessarily affect the deficit at all. They're entirely paid for. There may be a political impact in which the size of the deficit saps political will for new initiatives and gives Ben Nelson a preening opportunity he can't pass on, but there's no debt-related reason that these numbers should affect those priorities. Indeed, quite the opposite: Cap and trade would raise revenue and health reform will cut the long-term deficit by about $3 trillion. It's only in the weird world that is Washington that budget projections showing the current fiscal path is unsustainable would be used to argue against policy changes that better the long-term outlook.

Exactly. The principal argument from the White House about health care and energy has been that these initiatives are necessary for long-term economic growth. That's certainly true. But critics reflexively respond that these reform efforts will have to wait until the budget deficits Obama inherited are significantly smaller. This is not only wrong, it misses the point -- the administration's health care and energy proposals save money over the long run.

It's why OMB Director Peter Orszag felt comfortable with sounding a relatively optimistic note yesterday. In a blog post, Orszag argued that the CBO report "only underscores the severity of the economic and fiscal crisis the Administration has inherited. There is need for urgent action to get our economy moving again, invest for the future, and put the nation on a sustainable fiscal path."

He presented four key challenges (invest in health care, invest in education, and invest in energy, while cutting the deficit in half by 2013), adding, "The new CBO numbers do not change our commitment to these goals or our ability to achieve them."

Lawmakers start debating the budget in earnest next week. It's bound to be interesting.


What's long baffled me about Madoff's scheme is that Madoff was already rich. He began as a successful money market manager building faster, more technologically advanced, platforms. Why begin a Ponzi scheme?

Ron Chernow has an article this week that might provide an answer. He delves into the story of Ivar Kruegar, a Swedish matchmaker who began with a deviously brilliant scheme to trade countries low-interest loans in return for monopoly access to their match markets. But then the funding dried up. So he he began funding the loans with a Ponzi scheme in order to build up the monopolies so he could go back to legitimate business. But the match business never overwhelmed the fraud. Years of wild success and international stardom eventually gave way to wide suspicion. Kruegar shot himself in the heart. Chernow concludes:

Few financiers become embroiled in Ponzi schemes voluntarily, for the simple reason that such schemes are mathematically certain to fail. At some point, the incoming money cannot keep pace with the outgoing claims, and the fraud must unravel. And so the saga of Ivar Krueger presents a credible explanation of how giant Ponzi enterprises come about: not as sudden inspirations of criminal masterminds but as the gradual culmination of small moral compromises made by financiers who aren't quite as ingenious as they think. As Charles Baudelaire once said, we descend into hell by tiny steps.

Indeed, in pleading guilty last Thursday, Madoff explained that he had initially thought his fraud would be short-lived. He may well have fancied himself a brilliant money manager. Perhaps, early on, he even had a few good, legitimate years When his lucky streak suddenly ended, he might have thought that he would temporarily make whole the losses of old investors by giving them money from new ones. And then he was off and running.

In a way, the Ponzi scheme is actually more analogous to the bubble earnings than some want to admit. The Ponzi schemers didn't mean for it to go this way either. They didn't begin by trying to defraud anyone. The fundamentals of the business were unorthodox but they had reason to believe the numbers would come into alignment. In the meantime, they were just trying to keep solvent, and that required more earnings, and that meant stepping outside the acceptable risk profile. The real difference is that Madoff and Co. lost their plausible deniability earlier in the process than Citibank did.

"Holy Hand Grenade of Antioch" thread

Pub evacuated after Monty Python prop mistaken for grenade (h/t attaturk)
... But after nearly an hour of analysis bomb experts realised that the cause of the scare was in fact a copy of the "Holy Hand Grenade of Antioch" used by Eric Idle to slaughter a killer rabbit in the 1975 film Monty Python And The Holy Grail.

President of all media
March 20: Fresh off a stop on The Tonight Show, President Obama seems to be everywhere lately. He even released a video message to Iran to mark the Persian New Year. Will this help to mend strained relations? Rachel Maddow is joined by Los Angeles Times Beirut bureau chief Borzou Daragahi.


House GOP Candidate: Don't Take My Comments As Criticism Of Rush

Jim Tedisco, the GOP candidate in the NY-20 special election declared yesterday "Rush is meaningless to me." Now, less than a day after his remark was published, Tedisco issued a statement "clarifying" what he meant.

Paranoia Watch. Entertaining. Keith Olbermann - a liberal smear merchant?! March 20: MSNBC's Rachel Maddow talks with Keith Olbermann about the Countdown host being named the number one left-wing smear merchant in a list of five conceived by Fox News' Bill O'Reilly and author Bernie Goldberg.

In any case, what's the worst they could have done?

Tom Toles

Mark Haines Doesn't Get It
If anyone on Wall Street is wondering: what is this "it" that we are supposed to "get"? Is it just that people are angry? Could I be one of those people who don't "get it"? If so, how would I know?, s/he could do worse than consider this YouTube of CNBC's Mark Haines interviewing Rep. Brad Sherman (D-CA) (via TPM). It's a pretty good diagnostic tool.

This is what "not getting it" looks like. At about 50 seconds in, Haines says: "You and people who share your opinions seem to feel that, you know, let's hold salaries on Wall Street to $100,000. Do you have any idea what Wall Street would look like if you did that?" If your immediate reaction is: that's telling him, Mark Haines!, then you don't get it.

A couple of years ago, it would have been hyperbole to suggest that we would all be better off if the senior executives at all our major financial firms were people picked entirely at random out of the phone book. Now, it's arguably true. People picked at random would, admittedly, be likely not to have been to business school. They might not know a lot about futures or derivatives or put options. But so what? At least they might have been more likely to know that they were clueless, and a few of them might have had the common sense to ask questions like: will housing prices really go up indefinitely?

In any case, what's the worst they could have done? Bankrupted their companies with ludicrously risky gambles that fell apart once markets went south? Destroyed trillions of dollars in value? Brought the world financial system to the brink of collapse? Left taxpayers across the globe on the hook for trillions of dollars? Bankrupted entire countries?

Oh, right.

"Getting it" means understanding that the entire story that some people on Wall Street have told themselves about why they got such obscene levels of compensation is false. As a group, they were not uniquely talented. They did not make a lot more money for their company than they earned, at least not in the long run. Their salaries were not fair compensation for the value they produced. It would not have been worse if they had been replaced by people chosen at random.

Look at the YouTube clip again. Mark Haines seems astonished and baffled by Rep. Sherman's comments. He acts as though he's dealing with some ignorant Yahoo who just doesn't see that when people on Wall Street and people on Main Street disagree, Wall Street is obviously right. That's why he takes "What do people on Main Street know about running a financial system?" to be such a killer response to Sherman.

A few years ago, it would have been a killer response. Normally, it makes sense to think that people on Wall Street know more about running a financial system than people chosen at random, just as it makes sense to think that a successful director knows more about making movies than I do. When people reach positions of prominence in a given field, it makes sense to think that their opinions about the field they work in are entitled to some deference*. It takes a lot to completely forfeit any right to that deference. But the people in the financial services industries have managed to pull it off.

And that's what Mark Haines doesn't get.

* Preemptive footnote: their opinions are entitled to "some deference", not "complete deference". Imagine me talking to a successful director about what really goes on in the movie industry: I don't think that I should slavishly abdicate my judgment just because the director is successful, but I do think that before I go spouting off, I ought to take seriously the possibility that that director might know more than I do. That's all I mean.

TPM has a slide show of

The Men Who Wrecked The Economy

Here's Maddow putting all the pieces together in another fine segment. Cops and Robber barons March 20: President Obama is vowing to re-regulate Wall Street in the wake of the AIG bonus fiasco. With both sides pointing fingers, who is to blame? Rachel Maddow is joined by Pulitzer Prize winning reporter David Cay Johnston.
Halcro on Stimulus Politics

(3/20/09) It appears lawmakers in Juneau are feeling burned over Governor Palin's announcement yesterday that she was declining 30% of the federal stimulus money. The most controversial chunk of change left on the table was $170 million for education that has both lawmakers and education professionals stunned.

Lawmakers are apparently upset because they thought they had a deal with the governor on what funds the state would be keeping and now she has put them in a position where they'll look like the spenders while she polishes her appeal to conservatives who are courting her for 2012.

This was an email I received this morning from a legislative leader:

Here’s the scoop on the Big Stim funding. Until 24 hours before her press conference, the Governor was going to accept most everything, and reject a few items that we all pretty much agreed were not acceptable. Most of the Big Stim money is really pretty benign and does not require unsustainable new permanent programs. The issue became a big tug of war for control of the Gov between folks in state government and Sara PAC. Sara PAC won, literally hours before the announcement was made. Alaska was sacrificed again to the godless pagan illusions of her national ambitions.

hilzoy on HR 1586

Even though I am furious at the people who brought down AIG, along with all the other Masters of the Universe, I do not support the House bill that passed yesterday -- the one that would tax bonuses at 90%. For starters, it's badly targeted. On the one hand, it leaves out the incredibly troubling Merrill Lynch bonuses, along with any other bonuses paid before Jan. 1 of this year. On the other hand, it hits people who were just writing life insurance policies at AIG. Moreover, it also hits anyone AIG hires now. Suppose, for instance, that AIG were to hire Paul Krugman to supervise the liquidation of its Financial Products Division. And suppose AIG wanted to pay him a bonus if he did his job quickly and well. His bonus would be taxed under this bill, even though he had nothing to do with the financial crisis (which is why I picked him), and is being given a bonus for helping to solve it.

The bill would also allow firms receiving TARP funds to avoid the tax by simply paying their employees exorbitant salaries. Bonuses are bad, but exactly the same amount of money paid to exactly the same employee in the form of a salary is apparently fine. This seems exactly backwards to me. Part of the problem with the AIG bonuses was precisely that they were not tied to performance in any way: the people at AIG-FP, who had gotten enormous amounts of money when times were good, supposedly on the basis of their performance, locked down the same level of compensation when it looked as though their trades were about to go bad. Now, apparently, we want to give people an enormous incentive to decouple their compensation from performance in exactly the same way. Oh goody.

If that weren't enough, it seems likely to drive down the value of AIG generally, which will make it much harder for us to get the rest of our money back.

Besides all that, it's spooking the banks needlessly. I want to emphasize the word 'needlessly' here. There are a lot of things I think we ought to do that would spook the banks. Nationalizing several of the large banks, for starters. Putting in place regulations that ensure that no company is "too big to fail", that depository banks and investment banks are different companies, that liquidity requirements are bigger and (preferably) countercyclical, etc. Regulating all types of financial services firms, including hedge funds, and all financial instruments, including derivatives. Setting up procedures to liquidate any companies that manage to become systemically important despite these regulations, procedures that ensure that their investors take a very serious haircut. Unless someone can explain to me why off-balance entities serve some useful purpose, I think they should be banned. So I am fine with spooking banks.

That said, no business does well when the rules are constantly changing all around them. A lot of the reforms I favor are aimed not just at making the rules better, but establishing predictable rules where none exist. The fact that we have been improvising ever since this crisis hit is a tremendous indictment of every preceding administration that could have set up mechanisms to deal with these sorts of problems but did not.

If we want to spook the banks, then, I think we ought to do it in some way that actually solves a genuine and serious problem, and does it in an intelligent and targeted way. This bill is neither intelligent nor targeted. Moreover, while the bonuses are outrageous, they are not on my list of the top 100 things we need to worry about right now.

I'd rather save my fury and use it to force serious, lasting reform of the entire financial industry, and save spooking the banks for something really worthwhile, like nationalizing Citi.

Friday, March 20, 2009

Evening Reading

Just a note concerning what I am trying to accomplish with this blog. Only one thing - expand the universe (if only by a little) of people who are exposed to information I find important (and occasionally offer something to amuse or amaze).

For that reason, I have chosen to err on the side of including all of the information/analysis I find important rather than providing a tantalizing smidgy bit with a link that I hope readers will then maybe follow to actually read the entire post. Most blogs are, by their nature, already very concise and to the point and I often include them in their entirety. I make every effort to prominently highlight the authors the posts, to provide a hyperlink pointer to their sites, and I strongly encourage people to visit them.

Feedback would be most welcome. Is this approach appropriate? Is it fair to the authors?

via John Cole, here's Matt Taibbi:

The best way to understand the financial crisis is to understand the meltdown at AIG. AIG is what happens when short, bald managers of otherwise boring financial bureaucracies start seeing Brad Pitt in the mirror. This is a company that built a giant fortune across more than a century by betting on safety-conscious policyholders — people who wear seat belts and build houses on high ground — and then blew it all in a year or two by turning their entire balance sheet over to a guy who acted like making huge bets with other people’s money would make his dick bigger.

The most galling thing about this financial crisis is that so many Wall Street types think they actually deserve not only their huge bonuses and lavish lifestyles but the awesome political power their own mistakes have left them in possession of. When challenged, they talk about how hard they work, the 90-hour weeks, the stress, the failed marriages, the hemorrhoids and gallstones they all get before they hit 40.

“But wait a minute,” you say to them. “No one ever asked you to stay up all night eight days a week trying to get filthy rich shorting what’s left of the American auto industry or selling $600 billion in toxic, irredeemable mortgages to ex-strippers on work release and Taco Bell clerks. Actually, come to think of it, why are we even giving taxpayer money to you people? Why are we not throwing your ass in jail instead?”

But before you even finish saying that, they’re rolling their eyes, because You Don’t Get It. These people were never about anything except turning money into money, in order to get more money; valueswise they’re on par with crack addicts, or obsessive sexual deviants who burgle homes to steal panties. Yet these are the people in whose hands our entire political future now rests.

Good luck with that, America. And enjoy tax season.

  • Read the whole TAIBBI thing at The Big Takeover:

    The global economic crisis isn't about money - it's about power. How Wall Street insiders are using the bailout to stage a revolution

Yglesias quotes Brad DeLong: Zombie Firms Need Silicon Valley-Style Compensation

I think Brad DeLong has hit upon the right answer of what we need to do about compensation at AIG and firms in need of TARP money:

The engineers of Silicon Valley startups are significantly smarter and work a lot harder than do the traders of Wall Street. Some of the engineers of Silicon Valley make fortunes: they are compensated with relatively low salaries and large restricted equity stakes in the startup businesses they work for, and so if the businesses do well they do very well indeed–in the long run, in the five to ten years it takes to assess whether the business is in fact going to be a viable and profitable going concern. And the engineers of Silicon Valley have every incentive to use all their brains and all their hours to make their firm viable and successful: they get their cash only at the end of the process. They don’t get big retention bonuses if they stick around until the end of a calendar year. They don’t get big payouts if they report huge profits on a mark-to-market basis.

The traders of Wall Street, by contrast, get their money largely up front. If the mark-to-market position is good, they get paid–even though it is almost surely the case that nobody has tried to actually sell the entire position to somebody else. If the strategy produces short-run profits, they get paid–even though not nearly enough time has passed for anybody to be able to assess what the risks involved in the strategy truly are. They get “traders’ options”–we claim that we have made you a lot of money, we claim that the positions and strategies we have left you, the stockholders, with are sound, we claim that we have correctly managed our risks–but we are not interested in putting our own personal money where our mouths are but instead we insist on getting our fortunes up front.

The failure of the major institutions of Wall Street to adopt Silicon Valley compensation schemes in the 1980s and 1990s was always a great worry to regulators and policymakers. The strong view was that the venture capitalists of Silicon Valley knew what they were doing and were acting as prudent and responsible agents of their investors when they insisted on SVCS for their startups. So why didn’t the shareholders of the major banks do the same with their traders, quants, and strategists? The decisive argument in regulatory and policymaker bull sessions about this issue was that this was the shareholders’ business–that if the shareholders of these companies thought that there was good reason to elect board members and CEOs who did not impose SVCSs, the government should be cautious about stepping in. And the argument that “maybe the shareholders know of some good reason not to adopt SVCSs” no longer applies: we are the shareholders, we know of no reason, and we see no reason not to align the interests of our employees at AIG and at TARP-receiving companies with the long-run interests of the U.S. Treasury.

Therefore: punitive taxes on excessive immediate cash payouts paid by TARP and other government financial commitments are, I believe, completely appropriate. But thou shalt not bind the mouths of the kine that tread the corn: traders and financial executives who are willing to work very hard for what are now government-owned enterprises should be offered the carrot of long-term restricted equity stakes: that if they do their jobs well and if the government makes a healthy return because of their skill, forethought, and diligence, they should make healthy returns as well.

Punitive taxes on compensation that takes the form of long-term restricted equity stakes is a dangerous and destructive move. If the compensation bill that emerges from the conference committee does not allow TARP-receiving companies to offer such SVCSs, then Obama should veto it.

And if the traders of Wall Street then quit en masse? If they say that they are going to “Go Galt” if they don’t get their traders’ options to take the money upfront after assuring us shareholders that they have made us a lot of money, that their positions and strategies are sound, and that they have prudently managed the risks? Well, then that tells us something about what they really think the true value of their work product has been.

The Senate can and should step in here and offer a bill of this sort. That would take the worthy impulse behind the House bill and temper it in a more workable, more constructive way.

Yglesias: Quote of the Day

Kevin Drum quotes Charles de Gaulle:

“The cemeteries of the world are full of indispensable men.”

His larger point is how very unlikely it is that it’s genuinely true that only the people who screwed up the financial system and their buddies are competent to fix it. This is what the culprits in a financial crisis always say and the role of the United States when these things happen in a developing country is to try to kick butt a bit, and get the country in question to see that it needs to crack down on its financial elites not further indulge them. Now it’s our turn, and the best advice is still the same even if there’s no international institution that’s going to make us do it.

TPM's Elana Schor. Rep. Sherman Squares Off With Pro-Wall Street CNBC Host

atrios happens to mention that They Are Bastards. Which is the important point. The issue is that Timmeh and friends never distinguished between bailing out the system and bailing out the players. There was a way to do that, and they didn't do it.

  • -Attaturk "Those poor people, so rich and so white." - presumed future Wolf Blitzer quote.
  • Atrios What Krugman Said. This has been another edition of what Krugman said.
  • Krugman: AIG
    Preliminary thoughts on the tax bill:

    1. It’s not the way you should make policy — it’s clumsy, and it will punish some innocent parties while letting the most guilty off scot-free

    2. But — there wasn’t much alternative at this point. And for that I blame the Obama people.

    I’ll leave to others the question of who knew or should have known that the bonus firestorm was coming; but it’s part of a pattern. At every stage, Geithner et al have made it clear that they still have faith in the people who created the financial crisis — that they believe that all we have is a liquidity crisis that can be undone with a bit of financial engineering, that “governments do a bad job of running banks” (as opposed, presumably, to the wonderful job the private bankers have done), that financial bailouts and guarantees should come with no strings attached.

    This was bad analysis, bad policy, and terrible politics. This administration, elected on the promise of change, has already managed, in an astonishingly short time, to create the impression that it’s owned by the wheeler-dealers. And that leaves it with no ability to counter crude populism.
  • Jed L - AIG sues U.S. government for $306 million.

    Just when you couldn't stand to hear another thing about AIG, this comes out:

    A.I.G. Sues U.S. for Return of $306 Million in Tax Payments

    While the American International Group comes under fire from Congress over executive bonuses, it is quietly fighting the federal government for the return of $306 million in tax payments, some related to deals that were conducted through offshore tax havens.

    A.I.G. sued the government last month in a bid to force it to return the payments, which stemmed in large part from its use of aggressive tax deals, some involving entities controlled by the company’s financial products unit in the Cayman Islands, Ireland, the Dutch Antilles and other offshore havens.

    A.I.G. is effectively suing its majority owner, the government, which has an 80 percent stake and has poured nearly $200 billion into the insurer in a bid to avert its collapse and avoid troubling the global financial markets. The company is in effect asking for even more money, in the form of tax refunds. The suit also suggests that A.I.G. is spending taxpayer money to pursue its case, something it is legally entitled to do. Its initial claim was denied by the Internal Revenue Service last year.

    I bet if the lawyers win the case they'll ask for a bonus.

  • Yglesias: Missing: Eliot Spitzer
    Michael Hill writes for the AP about Elliot Spitzer’s long struggle with AIG, his return to the spotlight, and the dim prospects for a Spitzer comeback: “It would be a long shot. The trail for a married politician caught soliciting high-priced prostitutes would likely be prohibitively steep.”

    I have to say that I don’t really understand this. If soliciting prostitutes doesn’t ruin your career in Louisiana politics, why should it ruin your career in New York politics? Spitzer’s decision to resign has always struck me as basically just a case of blinking. I remember when the Monica Lewinsky story broke, and a lot of pundits immediately assumed that Bill Clinton would “have to” resign. And I think that was a real possibility. But he didn’t. So even though people weren’t thrilled with this aspect of his conduct, it quickly shifted from a public debate about his conduct to a public debate about the desirability of booting a popular, effective president from office and he won. I can see why Spitzer may have decided he didn’t want to fight the fight; but that’s ultimately what he did. A politician who’s well-liked by his constituents pre-scandal, hit by a scandal that has no real bearing on his job performance, can usually hang on if he wants to.

    And by the same token, I don’t think there would be any real barrier to Spitzer coming back in some form. I’ve heard some people say that they never liked Spitzer’s Wall Street work and therefore they’re glad he’s not around anymore. And I’ve heard more people say that they did like Spitzer’s Wall Street work and therefore it’s too bad that he’s not around. But the concern about the sex scandal is almost entirely a “meta” thing, people think it’s too bad that other people see Spitzer as too tainted.

  • Aravosis: Top GOP aide: We don't want to fix AIG bonus problem, because then we can't use it to hurt Democrats any more From Greg Sargent:
    A GOP leadership aide explained this to me in candid terms. The explanation becomes even more relevant in light of the news breaking just now that Tim Geithner acknowledged that Treasury pushed for the loophole to be inserted in the stim package.

    The leadership aide said that House GOPers who voted for today’s tax measure did so because they’d calculated that they couldn’t explain a No vote to voters in their districts, particularly after the expressions of outrage from Republicans about the AIG fiasco. But those who voted No, the aide said, calculated that they could explain to their constituents that they didn’t want Democrats to be able to evade responsibility for their role in creating the mess.
    Ah yes, they didn't want to fix the problem, and get us our money back, because then the Democrats would "evade" responsibility for George Bush having given AIG the money in the first place last September.

Krugman: The Great Recession versus the Great Depression

Reading this article about the global manufacturing plunge, I wondered: how does the current slump stack up against the early stages of the Great Depression? The US has consistent industrial production data back to 1919, so it’s a fairly straightforward exercise. Below is the change in industrial production, measured in logs, from the previous peak in 1929-30 and 2007-9.

At first, the current recession didn’t hit industrial production all that hard. But the pace accelerated dramatically last fall, so that at this point we’re sort of experiencing half a Great Depression. That’s pretty bad.

GOP defends AIG? March 19: Republicans seem to be on AIG's side in the bonus battle. Many of them rallied against legislation aimed at recouping the bonuses. What is going on with this bill? Rachel Maddow is joined by The Plum Line blog's Greg Sargent.

Daily Kos' DemfromCT provides the Weekly Tracking Poll: GOP Favorability Has A Case Of The Dwindles

Research 2000 for Daily Kos. 3/16-19. All adults. MoE 2% (3/8-12 results):

PRESIDENT OBAMA67 (68)28 (27)-2

PELOSI:39 (38)41 (42)2
REID:34 (33)47 (46)+0
McCONNELL:19 (20)54 (53)-2
BOEHNER:13 (14)57 (55)-3

CONGRESSIONAL DEMS:44 (43)48 (49)+2
CONGRESSIONAL GOPS:17 (16)72 (71)+0

DEMOCRATIC PARTY:53 (55)39 (38)-3
REPUBLICAN PARTY:27 (29)65 (66)-1

Full crosstabs here. This poll is updated every Friday morning, and you can see trendline graphs here.

Let's start with the graphs from Congressional Parties and national parties:

From 1/22, when everyone's spirits were highest, Congressional Republicans' favorability have dropped from 26 then to 17 now. The national party has dropped from 34 to 27, same time frame.

The Congressional Democrats saw a whopping 13-point net gain in their favorability ratings on Feb 26, and haven't looked back. That week (Obama's address to the nation — with Bobby Jindal's response — was Feb 24), the gain came mostly among Democratic respondents, who went from 68-31 favorable/unfavorable to 71-18, and Independents, who went from 38-55 to 47-44.

Hey, what about Congressional leadership? Oh, my.

I keep thinking John Boehner can't get any lower, but he keeps fooling me. He gets 37/25 (fav/unfav) from Republicans this week, and a 9/62 (fav/unfav) from Independents.

Meanwhile, Obama's slight drop from peak (now at 67/28) is made up of favorables that break out this way: 89/9 D, 73/23 I, 23/68 R. This Obama net favorability (fav minus unfav) by party shows that it's unhappy R's that drive the numbers down. Watch those independents.

And keep these fav/unfav/no opinion numbers in mind:

SOUTH 42 50 8
MIDWEST 73 23 4
WEST 75 20 5

The South is different than the rest of us [at least as far as polling patterns].

It was bound to be of interest to the political world anyway, but ABC News' Jake Tapper helped get the ball rolling on the Special Olympics/Obama story last night. He was first out of the gate with a news item and a report on the president's comment on his Twitter feed.

Not surprisingly, this generated the inevitable Drudge link. Tapper kept the discussion going with additional thoughts on potential Democratic hypocrisy (what if Bush had said the same thing) and potential Republican hypocrisy (conservatives usually hate political correctness).

My friend Adam Serwer noted some hypocrisy of his own:

Funny, I was thinking the same thing about press who moments ago believed the president had "too much on his plate" now deciding that the country should spend a whole day talking about an offensive joke.

In any case, you should know that Tapper's really disappointed about his 9 PM blog post getting picked up by Drudge, possibly driving the day and leading to all this "hypocrisy" when we have two wars and an economic crisis to deal with. That's the last thing Tapper wanted when he hyped this "breaking" news last night.

Soon after, Tapper blocked Adam from following his Twitter feed.

And around the same time, TPM was tweaking Tapper over his Twitter observations. So, Tapper blocked TPM from following his Twitter feed, too.

Now, I'm not going to pretend to be an expert on Twitter etiquette; I'm not even on Twitter. But blocking those who offer mild criticism seems kind of petty. When it comes from a journalist who frequently addresses the importance of transparency, it's especially bad form.

  • From the comments:

    On a related note, Tapper's comment section is heavily moderated. They delete a lot of polite, critical comments. Or at least that's been my experience.

    Posted by: Crust on March 20, 2009 at 12:51 PM | PERMALINK

    Crust, that has been my experience, as well. I posted a rebuttal to Tapper once, which included quotes and such (no links in case they didn't allow that) and it, along with other comments, never got posted. Just disappeared into cyber oblivion.

    Posted by: MsJoanne on March 20, 2009 at 12:54 PM | PERMALINK

Really Faint Praise from Yglesias: Pollitt On Douthat

For a column that’s critical of me, I don’t really disagree with much of what Katha Pollitt has to say about Ross Douthat. He’s a conservative. I am not a conservative. If I thought that conservative views were correct, I would be a conservative. But I think they’re wrong. Therefore, I think that conservatives such as Ross Douthat are regularly wrong about a wide variety of important topics. Thus, instances of them being wrong can be easily produced. I also am not a fan of the idea that institutions are under an obligation to be ideologically balanced. Conservative editorial pages normally contain zero progressive contributors, and there’s no particular reason that The New York Times op-ed page needs to have two conservatives.

That said, The New York Times clearly made the decision that it does want two writers from the right on its pages. Given that, I think Ross Douthat is one of the best possible candidates and certainly will be a marked improvement over Bill Kristol. I don’t think it makes sense to reason “all conservatives are wrong about important things, therefore all conservatives are equally pernicious.” Tyler Cowen on economics has a lot more to offer than Larry Kudlow on economics, even though I agree with neither of them. I think that’s common sense, and I don’t think it makes one a traitor to progressive politics to point this kind of thing out or to think it’s a good thing when conservatives-who-offer-more replace conservatives-who-offer-less.

Rise of the conservadems March 19: A caucus of moderate Democrats was officially announced this week, which includes eight Senators. Will this new moderate caucus oppose White House policies? Rachel Maddow is joined by a moderate Democrat caucus member Sen. Mark Begich, D-AK.

Lunchtime Video

Six years later, a still obscured Iraq war history March 19: Today marks the 6th anniversary of the Iraq War. Rachel Maddow takes a trip down memory lane with Foreign Policy magazine reporter Laura Rozen.

Thursday, March 19, 2009

Evening Readings

Part of the problem with the Republican strategy of exploiting the controversy over the AIG bonuses is the party's inability to convince the party's usually-loyal allies. The other part of the problem is the contradiction between the populist rhetoric this week and the opposite rhetoric, rejecting any and all limits on executive compensation, from last month.

"I really don't want the government to take over these businesses and start telling them everything about what they can do." Minority Leader Mitch McConnell told ABC News in February, when asked about Obama's proposed limits on executive compensation. Senator Jim DeMint, who attacked the original bailout bill as "pure socialism," characterized executive pay caps as a dangerous government intervention. "I think it's a sad day in America when the government starts setting pay, no matter how outlandish they [sic] are," DeMint told the Huffington Post. "This is just a symptom of what happens when the government intervenes and we start controlling all aspects of the economy." DeMint's right-wing compatriot, James Inhofe, also equated limits on compensation with the demise of the American way. "As I was listening to [Obama] make those statements I thought, is this still America? Do we really tell people how to run [a business], and who to pay, and how much to pay?"

A mere six weeks later, DeMint and Inhofe are now attacking the administration for failing to curb these executive payouts. In a long diatribe delivered on the Senate floor on Tuesday, Inhofe abandoned his earlier defense of businesses to make their own decisions about compensation to express his "deep anger" over the pay. "I don't know how someone at AIG giving out or receiving a bonus right now can look at themselves in the mirror," Inhofe thundered on the floor. "You can be sure that we will do all we can to right this wrong and get these bonuses back." DeMint has also found ways to channel his newfound anger against corporate pay. In a letter sent to the Senate Banking Committee yesterday, DeMint, along with David Vitter and Jim Bunning, demanded that AIG contracts be formally subpoenaed to determine why the company was "specifically exempt[ed]" from the executive compensation limits. In other words, DeMint is now asking why AIG hasn't been forced to comply with the conditions that he had so vehemently opposed.

Indeed, DeMint and Inhofe are among the most shameless hypocrites, but they're not alone. Senate Minority Leader Mitch McConnell (R-Ky.) and Senate Banking Committee ranking member Richard Shelby (R-Ala.) have also, all of a sudden, seen the light when it comes to compensation limits, and Rep. Peter King (R-N.Y.) and Sen. Kit Bond (R-Mo.) have also made efforts to switch their positions.

If Republican lawmakers wanted to limit executive pay, they had their chance. For them to complain bitterly now is a little silly.

Benen says Hmmmmm, the GOP, BASE NOT ON THE SAME PAGE....

Republican leaders on the Hill have been in high dudgeon this week over the controversial AIG bonuses. It's not altogether clear what their message is, but they're "outraged" and they'd really appreciate it if we'd all blame Democrats for the whole mess.

But as it turns out, there's a small flaw in the strategy: leading far-right activists, usually content to follow the party's instructions, aren't sticking to the script. It's not that Limbaugh, Hannity, & Co. are defending Democrats, but as Greg Sargent noted, they just don't care about the controversy of the week. Indeed, these far-right voices are some of the very few who are tacitly defending AIG.

Rush Limbaugh recently said: "I am all for the AIG bonuses" and attacked the Obama administration for trying to undo them. He also blasted Dem efforts to get the names of the AIG bonus recipients as "McCarthyism."

Fox News followed suit, also comparing Dems to "Joe McCarthy." And Sean Hannity has now derided efforts to tax the execs by saying: "In other words, we're going to just steal their money."

There's not really a direct contradiction between the GOP leaders' professed outrage over the bonuses and the conservative media's condemnation of efforts to recoup them. But the conservative attack on Dems is rooted in free market orthodoxy, which GOP leaders have implicitly ditched in order to get outraged.

This split could muddy the GOP message and even compromise the party's efforts to use AIG to damage Obama.

Indeed, since Greg wrote this, these same conservative characters have been even more vocal on this point. Yesterday afternoon, Hannity continued to support AIG, as did Glenn Beck and Michelle Malkin.

It's an interesting disconnect. By all appearances, the right-wing media figures are, oddly enough, sticking to conservative economic principles, while right-wing lawmakers are simply hoping to exploit public frustration for partisan gain, whether it makes sense or not.

Indeed, rank-and-file Republicans may be leaning in the direction of the media figures. The Gallup poll released yesterday gauging public anger over the AIG bonuses showed that Republican voters are far less "outraged" by the matter than Democrats, and are far less interested in seeing the government try to block or recover the bonus money than Democrats or Independents.

All of this, at a minimum, complicates Republican officials' strategy here.

  • About that base, Benen on WHEN THE ACORN OBSESSION GETS SILLY....
    District Court Judge David Hamilton of Indiana, President Obama's first nominee for the appeals court bench, is likely to be confirmed. But in the drive to score some cheap points off the nomination, the right has come up a new talking point: Judge Hamilton is "tied" to ACORN. As conservative talking points go, this one's hilarious.

    It apparently started with a National Review item from Wendy Long, who wrote on Tuesday, "Hamilton was a fundraiser for ACORN (nice ACORN payback, Mr. President)."

    And from there, the race was on to see who could be the most ridiculous.

    Hamilton's purported ties to ACORN immediately worked its way into right-wing commentary on the nomination, being highlighted by Newbusters, Powerline, Curt Levey of the Committee for Justice, and the Family Research Council ... twice, which complained that ACORN was getting it very own judge.

    The idea that President Obama's nomination of Hamilton was "payback" to ACORN quickly became the right-wing talking point of the day, with people claiming that he was "a big shot at ACORN" and leading to posts like this one written by Matthew Vadum at "The American Spectator" entitled "ACORN's Federal Judge":

    "Giving the term judicial activism new meaning, President Obama has nominated an ACORN loyalist to the U.S. Court of Appeals for the Seventh Circuit, the Chicago Tribune reports ... The Judicial Confirmation Network notes that Hamilton previously worked as a fundraiser for ACORN, the radical direct-action group that not only resurrects the dead and gets them to the polls every election but also shakes down banks and pressures them to make home loans to people who can't afford to pay them back."

    Ready for the punch-line? Judge Hamilton was a canvasser for ACORN -- in 1979. He spent a grand total of one month helping the group raise money the same year he graduated from college. He was 22 at the time.

    National Review's item was wildly misleading and ignored the key detail that makes this a non-story. But Newbusters, Powerline, the Committee for Justice, the Family Research Council and the American Spectator took National Review's word for it, and ended up looking rather foolish.


Yglesias finds Generals Perturbed By Senators’ Obstruction of Chris Hill

I don’t think I’ve posted yet on John McCain and Lindsey Graham acting to hold up veteran diplomat Christopher Hill’s appointment to serve as Ambassador to Iraq. Hill’s a career foreign service officer whose views are sufficiently compatible with conservative politics that George W. Bush made him Ambassador to Poland, Ambassador to Korea, and Assistant Secretary of State for East Asia. But neocons are mad that in that last role he helped avert a war with North Korea, so they’re holding up his appointment. There’s no real prospect of blocking him, but McCain and Graham are managing to annoy some of their erstwhile friends. Laura Rozen reports:

There’s one as yet unremarked constituency increasingly disturbed by some Republican senators’ efforts to block the confirmation of former North Korea envoy Christopher Hill to be the next U.S. ambassador to Iraq: the U.S. military.

Sources tell The Cable that Centcom commander Gen. David Petraeus, top Iraq commander Gen. Raymond Odierno, and Defense Secretary Robert Gates are frustrated by the delay in getting a U.S. ambassador confirmed and into place in Iraq, and support Hill’s confirmation proceeding swiftly.

That said, the nominal source of opposition to Hill is not his work in North Korea but his lack of experience in the Arab world. I think this is a concern that deserves to be taken seriously, but anyone who’s serious about it would recognize that it’s a systemic issue. One might think that the Foreign Service ought to be organized around regional or cultural areas of specialty. But that’s not generally how our system, which prefers to emphasize a form of generalized diplomatic expertise, works. It may be worth reconsidering this choice as a general matter. But there’s no reason to single out one senior FSO for problems here, and everyone knows that their real issue is Cheneyite opposition to the North Korea policy that Hill, Condoleezza Rice, and Bush followed at the end of the Bush administration.

Roth at TPM-Muckraker asks: Did Cassano And AIG Commit Fraud?

AIG chief Edward Liddy endured his anticipated ritual flaying today by Capitol Hill lawmakers angered by those bonuses. But, as Josh has been writing about over at TPM, there's mounting evidence that some current and former AIG execs could have much more to fear than angry questions from Gary Ackerman when all is said and done.

Since at least June 2008, the Justice Department has been investigating (sub. req.) whether AIG intentionally -- and criminally -- overstated the value of its credit default swaps, hiding its dire position from investors and government regulators. Joseph Cassano -- who during the period at issue ran AIG's financial products unit, AIGFP, which made those disastrous swaps, out of a London office -- has reportedly hired a lawyer in connection with that investigation. Britain's Serious Fraud Office is said to be on the case as well.

So here at TPMmuckraker, we've spent much of today taking a close look at the reams of evidence contained in news reports, documents submitted to congressional investigations, SEC filings, and civil lawsuits filed by AIG shareholders -- one of which charges that Cassano "hid AIGFP's ballooning exposure from public markets and short-circuited alarms within the AIG organization." And from this mass of data, a clear picture emerges in which Cassano -- aided by other AIG execs, who appear to have given his AIGFP unit broad autonomy within the company -- repeatedly downplayed the risks his unit faced, publicly painting a rosy picture that was at odds with reality. Perhaps most egregiously, he actively shut out voices -- primarily those of AIGFP's own internal and external accountants -- that highlighted potential problems at the unit.

Here's a rough, and far-from-comprehensive, timeline of events that begins to suggest a level of deliberate fraud and deception on a level that goes beyond what's generally been acknowledged so far.

- 2004: AIG pays $80 million to settle criminal charges brought by the Justice Department against Cassano's unit, AIGFP. The unit had been charged with securities fraud for allegedly helping PNC Financial improve its reported financial results by shifting about $750 million in assets off PNC's balance sheet, in return for lucrative fees. AIG admits to engaging in transactions that violated accounting rules, and signs a deferred prosecution agreement with DOJ, meaning it has to be on its best behavior to avoid charges. The episode suggests that Cassano and AIGFP were, at best, happy to cut corners in the pursuit of profits. (Wall Street Journal, June 2008)

- Late 2005: AIGFP execs, worried about loosening lending standards in the subprime-mortgage market, decide to stop selling credit protection on certain swaps, partly due to "concerns that the model was not going to be able to handle declining underwriting standards," according to one AIG risk expert. In other words, Cassano and his colleagues were aware of the risk even at this early stage. (Wall Street Journal, October 2008)

- Mid 2007: Cassano is still providing assurances that AIGFP's accounting is on the level. Referring to the PNC episode from 2004, Cassano says publicly: "We made some mistakes in those transactions and we suffered dearly for that ... [T]hat was the only accounting driven transaction we've ever done." Cassano added that AIGFP had instituted new controls to prevent a recurrence of the problem. (Investor lawsuit, found online via Google cache)

- Aug 9, 2007: Referring to credit default swaps, Cassano tells investors: "It is hard for us, and without being flippant, to even see a scenario, within any kind of realm of reason that would see us losing $1 in any of those transactions....we see no issues at all emerging. We see no dollar of loss associated with any of that businesss." (Investor lawsuit)

- Aug 13, 2007: Summarizing those comments, the Wall Street Journal reports: "Exotic financial instruments linked to subprime mortgages are showing huge losses in debt markets and weighing on companies from lenders to banks to insurers. But not at American International Group Inc. -- or so it's executives say." In other words, Cassano's representations to investors achieved their goal of reassuring the press and public that AIG was doing fine. (Wall Street Journal, August 2007)

- August 2007: Cassano berates Joseph St. Denis, AIGFP's in-house accountant, for discovering accounting irregularities in a target company's hedge accounts. St. Denis had been brought in specifically to address problems in AIGFP's accounting cited by an auditor. (Letter from St. Denis to House Oversight committee)

- Sept 2007: Cassano tells St. Denis: "I have deliberately excluded you from the valuation of the Super Seniors [ CDS's] because I was concerned that you would pollute the process." St. Denis later told Congress he had no involvement in the process of valuing the CDS portfolio, because Cassano worked to exclude him from that process. (St. Denis letter.)

- Oct 2007: St. Denis resigns. He would later explain to Congress: "I resigned because on multiple instances beginning in the late summer of 2007, Mr. Cassano took actions that I believed were intended to prevent me from performing the job duties for which I was hired." (St. Denis letter)

- Nov 6, 2007: Michael Roemer, AIG's chief auditor, informs the firm's audit committee of the reasons St Denis gave for his departure. (St. Denis letter)

- Nov 29, 2007: Accountants for PriceWaterhouse Coopers (PWC), AIG's outside accounting firm, inform AIG CEO Martin Sullivan of their belief that the company has material weaknesses related to the credit default swaps, which could result in future errors on income statements or dislcosures. PWC later said that AIG was not interested in fully understanding the impact of the collateral disputes that at this point had been set off with AIG's counter-parties. (Investor lawsuit)

- December 2007: Cassano, preparing for an upcoming presentation to investors about potential losses associated with the credit default swaps, tells PWC accountants not to interfere. (Investor lawsuit)

- Dec 5, 2007: At that meeting, Sullivan and Cassano assure investors that everything's fine. Sullivan: "AIG has accurately identified all areas of exposure to the US residential-housing market ... we are confident in out markets and the reasonableness of our valuation methods. Cassano: "It is very difficult to see how there can be any losses in these portfolios." These statements, in particular, would later be looked by federal investigators as evidence of possible fraud. (Investor lawsuit)

- Jan 2008: In an audit opinion included in an SEC filing, PWC accountants write that AIG did not maintain "effective internal control over financial reporting" related to its credit default swaps. They assert that "there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. (AIG SEC filing).

- Feb 26, 2008 -- In what appears to be an effort to absolve itself of responsibility, PWC accountants declare at an Audit committee meeting, that AIGFP alone conducted the process of valuing 4th quarter assets. (Investor lawsuit)

- Mar 31, 2008: Cassano "retires" with million dollar a month consulting contract and a $34 million golden parachute. According to one investor lawsuit filed in January, Cassano had earned $280 million over the previous 8 years -- more than AIG's CEO. (Investor lawsuit).

- June 13, 2008: In a statement put out in response to news of the DOJ investigation, AIG declares, "As is the case throughout AIG, our colleagues [in the financial-products division] have been rigorously focused on transparency and accuracy in all its disclosures. The goal is clear: make sure the numbers are right, whether it's good news or bad news." (Wall Street Journal, June 2008)

Sully: "A Crime, In Fact"

Scott Horton interviews Mark Danner, who aquired the Red Cross report on torture that has been in the news this week:

The ICRC professionals who prepared it concluded, and wrote explicitly, that the behavior they catalogued included torture, as well as cruel, inhuman, and degrading treatment. They were judging the procedures used in the black sites against the Geneva Conventions (in the enforcement of which they play a formal role), the Convention Against Torture, and a number of other international agreements. Whereas in earlier reports the Red Cross used formulations that nuanced the question somewhat (saying, for instance, that Guantánamo practices were “tantamount to torture”), in this report they spoke bluntly and forcefully, saying that the conduct was torture. That of course is a violation of international law. But it is also a violation of domestic law. It is a crime, in fact.

Why are elected officials above the law?

Sudbay: She couldn't march in her city's parade on St. Patrick's Day, but Chris Quinn did talk to the President and Ireland's leaders at the White House

On Tuesday, I noted that NY City Council Speaker Christine Quinn, one of the most powerful officials in New York City, once again wasn't marching in her city's St. Patrick's Day parade. A group of homophobes run that event and refuse to allow any gay representation. It's archaic.

So, Chris found another venue to celebrate what she said was always a "high holiday in the Quinn household." She was invited to the White House to celebrate with the leaders of Ireland and other famous Irish-Americans. Chris wrote about that event over Huffington:
I arrived almost embarrassingly early, fearful of long security lines. I eventually made my way to a reception in the Map Room, where I had the opportunity to speak briefly with the President. I told him and Mrs. Obama that I was the first Irish, first woman, and first openly gay Speaker of the New York City Council.

I told the President how grateful the Irish-American Community is for his strong and continued support of the peace in the North of Ireland. I then expressed my desire that he support issues of full LGBT equality, and suggested that a good early action would be to support a recent federal court ruling in San Francisco, requiring benefits to be extended to the same sex partners of court employees.

Our conversation flowed seamlessly from talk of the struggle for equality in the North of Ireland, to the ongoing fight for LGBT rights. And it set the tone for what would be a night of such interaction. I spoke with leaders from Ireland and openly gay political leaders from the U.S. about the broad struggle for civil rights of which we are all a part.

The event was a picture of inclusivity and the intermingling of cultures: I saw Sinn Fein President Gerry Adams and Deputy First Minister Martin McGuiness, Shaun Woodward, the British Secretary of State for Northern Ireland, and openly gay DNC treasurer Andrew Tobias all celebrating together. President Obama spoke about his own Irish heritage, tracing a great, great, great grandfather back to the same county as Brian Cowen, the Irish Taoiseach, or Prime Minister.

It reminded me that in the past year we've seen our nation elect an African American president, and we've seen peace come to the North of Ireland. It reminded me of how absurd it is that we allow a small number of small minded individuals to tell an entire group of people that they cannot march proudly and openly in their parade. It reminded me that each day we move closer to inclusion and equality. And it made me proud to be Irish, proud to be a member of the LGBT community, and proud to be an American.
Very cool.

You'd think that by now the homophobes who run the NYC parade would notice that people of Ireland are much more progressive and more respectful.