Wednesday, December 30, 2009


Congratulations to ABC News for getting the photo of Umar Farouk Abdulmutallab's underpants. The explosives, we are told, already had been removed, and it seems some portion of the nefarious underpants were destroyed by fire — but they still look pretty skimpy to me. Really, they don't look like my concept of Muslim underpants at all. They look, well, suspiciously European.

Anyway, I was disappointed to hear major media referring to Abdulmutallab as "the Christmas Day Bomber," which does not in any way reflect the crazed fanaticism of a man willing to use his cock as a fuse. I was leaning towards "the Underpants Bomber," a parallel to "Shoe Bomber" Richard Reed. Then, on American Public Radio's Marketplace, I heard Abdulmutallab referred to as a "crotch bomber."

Thank you, as always, Public Radio! Perfect!

Monday, December 28, 2009

The Naughts

Everybody seems to agree that the past decade has been pretty crappy. Some like to blame the Bush administration, but I don't. Granted, Bush and his cronies were incompetent and corrupt, but they were just the culmination (I hope) of a process that started with Reagan in 1981.

How anybody ever managed to believe in supply-side economics and monetarism is beyond me, but when you consider how many people believe the world is less than 6,000 years old, I guess making the jump to supply-side is not that difficult. Anyway, I don't think that political leaders ever bothered to believe any economic theory at all. Starting with Reagan, they were just corporatists — dancing at the ends of strings in the hands of lobbyists and bankers.

The result is our current plutocracy — a system that neither the Obama administration nor any significant portion of Congress seems at all inclined to unwind. The fact that the events of the past 10 years have demonstrated, over and over, that the "magic of the market" is entirely mythical makes no difference to those in power. They feel obliged to keep spouting the same anti-regulatory, anti-tax nonsense — and for good reason.

They're bought and paid for.

Don't expect much to change. Health reform won't be allowed to infringe on the profit margins of hospitals, insurance companies, or pharmaceutical manufacturers. If our troops ever are withdrawn from Afghanistan (or even Iraq), there will be new places to invade for the benefit of military contractors. Somewhere on Wall Street, the next bubble is taking shape, and nothing will be done to break up the banks that are "too big to fail."

I'm guessing the "naughts" will go on a while longer. There's nothing in sight to bring them to an end.

Saturday, December 26, 2009

Oh Bloody Hell!

You all remember (who could forget?) the outcome of "shoe bomber" Richard Reed's attempt to blow up his sneakers. Well, our latest failed bomber, Umar Farouk Abdulmutallab, had his bomb materials hidden in his underwear. Yes. His underwear.

Granted, naked air travel might be more comfortable — but there still wouldn't be enough leg space for anybody who wasn't a midget or a double amputee. More immediately, though, the airlines now have an excuse to stop providing blankets.

Personally speaking, my air travel hasn't been curtailed by terrorists — the fucking airlines managed it all on their own.

Thursday, December 10, 2009

Reinhold Niebuhr?

Yes. Reinhold Niebuhr. Evil exists, and sometimes we have to respond in ways we might not like. Okay — but what does that have to do with escalation in Afghanistan, especially when there are other alternatives? True, Obama is not Bush — but who the hell is, except Bush (or somebody else with Cheney's arm up his ass)? Nobel Peace Prize. Bah!

When a country is as corrupt as Afghanistan, the best way to bring peace is to buy it — not with troops and blood, but with money. Nobody can convince me we can't buy every last warlord and Karzai relative for a hell of a lot less — not even including lives — than we're currently spending on goddamned "nation building." Someday, perhaps, Afghan girls will be able to go to school, choose abortion, and belittle their husbands' dick size — but it won't be a result of anything American troops do in Afghanistan over the next ten years or so.

In the meanwhile, I couldn't care less that the Senate looks ready to kill the so-called "public option." The CBO has reported, as anybody with half an economic brain could have predicted, that the House version of the public option probably would cost more than private plans. The only way a public option can make a difference is if it is available to large employers, or others who can guarantee large numbers of plan participants.

The idea of people in the 55 to 64 age bracket being able to buy into Medicare is a lot more interesting. If the employers of people in the 55 to 64 age bracket are allowed to buy them Medicare instead of whatever they're buying for the rest of their employees, there could be some real savings. That, of course, won't happen.

Thursday, December 3, 2009

The Plan for Afghanistan

Well, I suppose it's nice that there's some kind of plan for the continuing US involvement in Afghanistan, even though I'm afraid it was shaped at least as much by domestic politics as by any sort of strategic considerations or overriding international objectives. As usual, the President weaseled down the middle: he offered up three-quarters of the troops the military (and the Republicans) wanted, plus a probably futile attempt to get the other 10 thousand from NATO; a promise to start drawing down troops in 18 months; and an unenforceable threat against Hamid Karzai that is very unlikely to persuade someone quite so corrupt to crack down on corruption.

Here's my prediction: eighteen months from now, the usual warlords will continue to be the real rulers of the Afghan countryside, although, if we're lucky, some will be nominally on our side rather than nominally supporting the Taliban. If we're really lucky, the major population centers the administration plan seeks to protect will be a little safer, although protecting a city like Kabul against suicide bombers requires a degree of authoritarian rigor likely to be beyond the powers of Karzai and McChrystal.

The generals, as usual, will be whining for more troops. Generals don't understand "relatively positive outcomes" — they're taught to believe in an obscure 19th century concept called "victory." Of course, even in the 19th century, nobody achieved that in Afghanistan.

Most important, though, the 2010 elections will be over, and the 2012 elections still will be roughly half a year away. There will be time to maneuver around both contests. What else matters? Both parties are committed to enhancing the prospects for their major contributors, so, of course, the rest of us are left eating their shit.

As for how to go about financing the new Afghan "surge," Obama was totally vague. Here's a suggestion: how about a tax surcharge on war profiteers? Some have done extraordinarily well, especially with their connections to both government and military decision makers. To me, it makes sense to spread some of the pain to those who raked in the profits from Bush's wars.

Want to end all the current bullshit? Easy. Bring back the draft.

Sunday, November 29, 2009

Debt Burdens

I graduated from Queens College of the City University of New York in 1967. My instructors all were either tenured or in tenure-track positions — I was never taught by an adjunct. Except for very nominal registration fees, the cost to me was zero.

Queens College still is a bargain. In-state, full time students pay about $5000 a year in tuition, and many qualify for some sort of financial aid. If they're living with their parents, it's manageable — less so for those who must be self-supporting. What I'm wondering, though, is why we no longer can afford to provide free post-secondary education?

Two thirds of those attending college depend on loans to pay their way through, and the average debt upon graduation is over $23,000. Starting out in a job that pays $35,000 a year, such a level of debt is an incredible burden. Starting out in an economy that might not provide any job at all makes the burden far greater. Graduates in bad financial straights may defer payment, but interest continues to accrue.

The result is young people putting their lives on hold. Student debt is one reason for delaying marriage and children. It's also a reason to hang onto essentially crappy jobs — just to keep up with the loan payments. Taking a risk means risking bankruptcy — a bankruptcy where student loans and credit card debt are not forgiven.

We are wasting a hell of a lot of talent by strangling it with debt. If I could get my hands on the throat of a bank that has been collecting government subsidies for offering high interest student loans, I would squeeze. Hard.

I don't have solutions. We are at a point where the evil rich should be hammered into pulp by the collective (Yes! Collective!) baseball bats of virtually everybody else, but don't expect anything from Timmy Geithner, whose asshole is open to the fucking of anybody with sufficient assets.

The New Deal wasn't about economics. It wasn't about socialism. It was about morality. It was about doing the right thing. Now, all of that is lost. Had Roosevelt been able to push through a national health care program, you can bet nobody would be trying to dig up the money to pay for coverage so as to avoid paying fines. Frankly, I think the whole "compromise" with single payer is sickening.

Welcome back to the 19th century. Bend over, working people. There's a lovely assortment of shafts all ready to fuck you — hard.

Wednesday, November 25, 2009

Obama and the Generals

This morning's New York Times suggests that the Obama administration is ready to send 25,000 to 30,000 new troops to Afghanistan. I rather hope that's a trial balloon, and that the actual number will be less — especially since I took 20,000 in a betting pool.

I figured he'd split the difference between the proposals by McChrystal (40,000) and Biden (0), but who knows? Perhaps the political winds blow more powerfully from the generals than from the Democratic Left — and those assholes who call themselves "moderates" [moderate (n): doesn't know shit from Shinola) have been putting on the pressure to "cooperate" with "the men on the front lines."

For a variety of idiotic reasons, large numbers of Americans think out elected leadership is obliged to do whatever the Generals tell them is "necessary." Obama, who is, as far as I've been able to see so far, a totally political creature, feels he must make due obeisance to that moronic premise.

Maybe I've said this before, but here's what it comes down to: the military can't conceive of any solutions other than military solutions. They're handicapped — the special education boys of the American elite. Lyndon Johnson was afraid to go up against them, and look where that got us. Obama looks like he's about to go down the same road. 20,000 — or 30,000 — won't be enough. Anticipate further escalation in short order.

Needless to say, "national security" will take precedence over any domestic programs that might actually do some good for the American people — not that anything Obama's been doing for the average American has had any impact whatsoever. Wall Street is doing fine, and the companies that were "too big to fail" are even bigger now. As for the rest of America, well...

If Michele Obama were to take on the role of Marie Antoinette, she wouldn't be saying, "Let them eat cake." She'd be saying, "Let them eat shit."

Thursday, November 19, 2009


The stock market is doing great, especially the financials. GDP was up last quarter. The recession is over — right?

Technically. Maybe.

The stock market is doing well because corporate earnings are up — but not because of increased sales, because of decreased costs. When you fire half your workers and force those who remain to work twice as hard, costs are way down, and suddenly you're profitable again. With the Fed holding interest rates at rock bottom levels (should you happen to be a large corporation and not an individual consumer), it is much cheaper to replace labor with new capital.

So far, though, all we've seen is the supply side. The demand side doesn't look nearly so rosy.

Henry Ford is remembered for his decision to pay his workers well enough so that they could afford to buy his company's cars. Somewhere along the line, that idea was forgotten. As unemployment continues to rise and wages continue to be depressed, demand for everything but luxury goods has to decline. The Wall Street execs may continue to buy their $15 million condos and $18 thousand wristwatches, but who's going to be buying the Fords?

In the meanwhile, regulatory reform looks like it's going nowhere. Flush with taxpayer subsidized profits, the banks have successfully lobbied the teeth out of proposed legislation that still might not pass. It looks pretty certain that derivatives will remain largely unregulated, and that capital requirements won't be increased enough to significantly reduce risk. Chris Dodd's plan to consolidate regulation into a single agency (that is not the Fed) is dead in the water, because no Congressional committee supervising the current assortment of agencies will be willing to give up its power. I suspect a good deal of his populist stand is an attempt to get us to kind of forget about the extra-favorable treatment he got from Countrywide Finance.

As for Obama, Emmanuel, and company — I don't think they're too anxious to give up the vast contributions coming in from those generous folks at Goldman-Sachs and the like. Don't look for leadership from the White House.

Saturday, November 7, 2009


As of this writing, nobody has interviewed Nadal Malik Hasan, the Ft. Hood shooter. Nevertheless, I think I'll stick my neck out and make a prediction. From what I've heard and read so far, I suspect that Hasan had a lot more in common with Dylan Klebold and Eric Harris — the teenagers responsible for the 1999 shootings at Columbine High School — than with Mullah Omar or Abu Nidal.

An army post. A high school. In groups. Outsiders. Makes sense to me.

Wednesday, November 4, 2009


I don't have much to say about yesterday's elections, although I suspect that John Corzine's tenure at Goldman-Sachs didn't do him much good. Hell, even fat-cat Mike Bloomberg didn't do as well as everybody who counts the money expected.

Actually, I was thinking about the non-election in Afghanistan. If there were something less prestigious than "third world," I guess Afghanistan would qualify, and if there is a country more corrupt, well...

Okay — so what is corruption? In Afghanistan, the men with wealth and power buy and coerce their way to more wealth and more power. Hmmm... does that sound a little familiar? And if your Supreme Court says that strong-arming the political class with vast infusions of money is not corrupt — that, in fact, it is free speech — does that make it any less corrupt?

Obama told Karzai he has to clean up the Afghani government. Yeah, right. Let's see if Karzai takes any action against his brother — or, if family ties are too strong, Abdul Rashid Dostum, or Muhammed Qasim Fahim. Wake me up when it happens. I need a long nap — a very long nap.

You also can wake me up when the government steps in to stop Goldman-Sachs from buying tax exemptions — at deeply discounted prices — from Fannie and Freddie.

Face it: capitalism and corruption are inseparable, and it doesn't matter if the source of wealth is opium or derivatives, nor if the country is first world or third. All hail the plutocrats!

Saturday, October 31, 2009

Not My Fault!

Okay, at the beginning of the week I proclaimed that the market improvement we've seen recently looked like just another bubble to me — then, at the end of the week, all the indices take big hits.

Honest, though, I didn't do it. Blame somebody whose blog actually has readers. (I do this for the sake of posterity or, more to the point, so I can check on how right or wrong I've been over the years.)

Okay, again — and for the sake of "posterity" — I still think the markets are overpriced by 15 to 20 percent. When the financials finally are forced to write down their losses, I can't see how the markets won't wind up taking another big hit. If Congress and the Administration ever agree on a financial regulatory bill with some real teeth, that will impact the numbers as well. With some sensible reserve requirements, the big banks won't be able to play quite so fast nor so loose.

Continuing in my usual pessimistic vein, I'll also predict that the recent rise in GDP will fall off again — that the "recession is over" news was the product of a little stimulus package and a big statistical blip. I just hope the upcoming bad news is not sufficient to inspire voters to give the Republicans another try in 2010 — the goddamned Democrats are bad enough.

Monday, October 26, 2009

Economic reform?

Why are the stock markets doing so "well" lately? Clearly, it's not because the businesses whose shares the markets trade are posting increased profits. Some of the increase in stock prices may be accounted for by the falling value of the dollar — as the dollar weakens, it takes more dollars to buy anything — but that's not the whole story.

Who, we may wonder, is bidding up the price of stocks, and where are they getting the money to do it in this economic environment? Look no further than the investment branches of our banking behemoths, using cheap, government guaranteed credit. To me, it's looking like another bubble — and given the poor shape of a lot of American businesses, it seems pretty obvious that their price to earnings ratios over the past few months have been falling like it's the nineties again.

A lot of people are blaming a handful of conservative Democratic senators for the lame, half baked efforts coming out of Congress for reforming the financial system. I suppose they have their part to play, but the real fault lies with the White House.

If the Obama administration genuinely wanted to bring Wall Street to heel, it could be making a far more aggressive effort than we've seen. Fiddling with executive pay packages may score a few populist points, but in the long run (or even the short run), it means nothing. Some of us remember that the whole corrupt bonus system arose out of efforts to rein in executive pay during the Carter administration.

As for regulating derivatives, there are enough holes in the proposed legislation to accommodate every rat looking for a way through — and damned near as many in the proposal for the consumer protection agency. Instead of breaking up the institutions that were "too big to fail," government has helped them grow even larger through mergers and acquisitions.

Paul Volcker has been out there, crying in the wilderness for genuine reform — rolling back the Clinton administration's gutting of whatever remained of Glass-Steagall, and separating banking's commercial and investment sectors again. The White House will not be doing that anytime soon — at least not as long as two of the three Clintonistas who engineered that gutting remain in power. Robert Rubin may be gone, but he left Larry Summers and Tim Geithner behind to look after the interests of the Wall Street power brokers.

Well, viva Volcker. The White House is ignoring him, but at least he's getting some attention in the press.

Saturday, October 10, 2009

The Peace Prize??!!

Everybody knows the Nobel Peace Prize has been politicized for quite a while now. Every once in a while, the political aspect seems to coincide with a genuine contribution to peace, like when it was awarded to Muhammad Yunis in 2006, or Médecins Sans Frontières in 1999. Nobody can deny that Begin and Sadat deserved the 1978 prize for negotiating the only lasting peace agreement in the Middle East that any of us can recall, and that Jimmy Carter's role in that agreement plus the work of the Carter Center in succeeding years qualified him for the 2002 prize. Speaking of lifetime achievement, Martti Ahtisaari, the 2008 laureate also was no slouch.

When Al Gore won the prize in 2007, mostly for a PowerPoint presentation, it was pretty silly — but, at least, he'd done something. So what did Barack Obama do?

So far, nothing. Maybe the committee was hoping awarding him the Nobel would encourage him to continue resisting McChrystal and refrain from escalating the war in Afghanistan. If so, I suspect they'll be disappointed. Our President, in all likelihood, will continue in his wishy-washy, distinctly non-heroic pattern of splitting the difference.

More likely, though, Obama was awarded the prize for one simple reason: he's not George W. Bush.

Hey, Norwegians! I'm not George W. Bush either! Where's my million-and-a-half bucks?

Wednesday, October 7, 2009

Obama and the Generals

It is heartening to see Obama taking some time before responding to McChrystal's request for another 40,000 troops for Afghanistan. The Biden proposal apparently has been altered a bit, to my disappointment, in that troop reductions seem to be out of the picture at the moment; but it seems we truly are lucky not to have President McCain, who seems to believe that anything a general asks for should be delivered immediately.

My guess is that the real holdup is the lack of a viable Afghanistani partner due to Karzai's almost laughably transparent manipulation of the election results. Can Obama hang in there and do little or nothing until that mess is straightened out? Maybe.

His first order of business, though, must be pulling back the undermanned, isolated outposts in the south to cut back the alarming increase in American fatalities. The Taliban — or whoever is organizing the attacks on those outposts — is demonstrating considerable military skill and determination, with well planned assaults rather than spontaneous raids.

As for McChrystal and the generals, Obama must bear in mind that they are military men who automatically think of military solutions for every problem — and as the Soviets learned some years back, a military solution might not be a solution at all.

Friday, October 2, 2009

Public option? Who cares?

Okay, the Senate Finance Committee has turned down the "public option" in its health care bill — to which I say, "So what?" If people actually were paying attention, they'd know that any real public option — to wit, one that actually could lower the cost of health care — never even was considered by either the Senate or the House.

The alleged public option was always nothing more than a choice for individuals forced to buy their insurance via local or regional "exchanges." It never was an option for employers, and employer funded health insurance is where the money is.

So, some paranoid Republicans possibly think such tiny and limited public options might be a "first step" towards SOCIALIZED MEDICINE (gasp, wheeze, urinate fresh white tennis trousers) and some not especially bright liberal Democrats think public options can successfully compete with private plans even under enormous constraints. Nothing ever has prevented the American Public from electing individuals who are enormously stupid.

If there's no public option for employers to buy into, there is no real competition. The so-called public option now under consideration is just a straw horse, set up so as to be knocked down — or not — but it doesn't matter to any real extent. It serves only to differentiate "liberal" Democrats, "moderate" Democrats, and Republicans — and if that's all that matters, we may as well roll over and go back to sleep.

Monday, September 28, 2009

William Safire

I will miss William Safire.

The "On Language" column in the New York Times Sunday Magazine, of course, will never be the same — if the Times keeps it. Who can replace Safire? Certainly not any of the lightweights who caught the column while Bill was "on vacation." The secret of "On Language" was that it continued to be Safire's editorial page column, but with greater subtlety.

I felt our national dialogue suffered when William F. Buckley died — and, while I didn't mention it last week, I thought it was sad to lose Irving Kristol. (His son, William Kristol, should have been a disappointment to Irving — but who knows? Jewish fathers are not all that different from Jewish mothers.)

Anyway, conservative America is being whittled down to the likes of Newt Gingrich and Sarah Palin — or, more to the point, Rush Limbaugh and Glenn Beck. It's a damned shame. Without an intellectual right, there's nobody for the intellectual left to talk to — not that anybody is listening.

Okay, I'm listening.

Bye, Bill.

Friday, September 25, 2009

Afghanistan, again...

Well, I sure was wrong about Hillary!

My mistakes include a couple of retrospectively dumb assumptions: first, that a reasonably intelligent person who remembers Vietnam would not want to repeat it; and, second, that since Hillary's chance of ever being President is down in the low single digits now, she no longer feels obliged to be so goddamned butch.

Silly me. It's not as if I never heard of cognitive dissonance theory — it's just that I wanted to think better of her than she deserves. Look back at my pre-election posts, and you can explain it with cognitive dissonance theory.

So, now, the rational elements of the Democratic party find themselves wondering if lining up behind a majority of their constituents and doing the right thing in Afghanistan remains rational if it means lining up behind Joe Biden. Joe Biden is not nearly as butch as Hillary. Joe Biden, unlike his boss, is not terribly adept at working the press. Joe Biden is just... he's just right.


Meanwhile, here on Long Island — and, to be sure, everywhere else in the United States — our public schools and suburban neighborhoods are being flooded with cheap, high quality heroin. For some odd reason or another, nobody in the mainstream press seems to be relating that to the vast increase in opium production in Afghanistan in recent years. Maybe I'm wrong, but it just kind of seems like the two might be related.

Some who are familiar with my solution to both the Afghanistan problem and the heroine problem — going directly to the warlords and outbidding all competitors for the raw opium — seem to think it's just my characteristic cynicism in action. Okay, I am characteristically cynical — but this idea can work.

So, over the weekend, I'll send out another batch of fax messages to various Persons in Power, for all the good that will do. Mostly, though, I'll hope that somebody that somebody in power actually might listen to came up with the same idea — and that somebody in power actually listens.

Monday, September 21, 2009

Unnecessary Roughness

Governor David Paterson is pissed. Who can blame him?

Okay, he's not especially popular at the moment. He never was. Trying to act responsibly — shutting down underutilized hospitals and nursing homes — was a major political mistake, and the attack ads from 1199 did a lot of damage. Add to that the fact that he was stuck with a totally unfair share of the blame for New York's sleazy and dysfunctional legislative branch, and that he's not exactly a dynamo of charisma, and it was bound to look bad for him.

So it is not surprising that Obama's political staff decided it would be better if he didn't run for governor next time around. Personally, I don't think Giuliani is much of a threat anymore — he kind of has "loser" tattooed on his forehead — but it wouldn't hurt at all to have a stronger Democratic candidate like Andrew Cuomo.

Okay, so the national party sends an emissary to urge Paterson to withdraw. Fine. The problem is in how it was done.

First, it was just plain bad manners not to invite the governor of New York to Obama's speech to Wall Street last week. Second, it was worse that, simultaneously, the President's chief political adviser, Patrick Gaspard, was telling Paterson to pull out of the race. Third, it should not have been Gaspard, the man behind those 1199 attack ads.

Then it gets worse: practically the complete text of the "confidential" conference is leaked to the press, almost immediately, by an "unnamed source" whose name probably is Patrick Gaspard. Obama not only yanked Paterson's legs out from under him, but he pissed on him when he was down. I truly hope the idiots still drooling over our "idealistic young president" are paying attention, but I'm pretty sure they're not.

Paterson could have been persuaded to withdraw gracefully. They could have offered him some ceremonial role at HUD, or made him ambassador to Anguilla, or something. They didn't.

However lacking David Paterson's skills as a chief executive may be, everybody in Albany agrees on one thing about him — he's a nice guy.

He deserved better.

Friday, September 11, 2009

Obamacare: Devils in the Details

Many have proclaimed the President's health care address to the joint session of Congress a success. Okay, nobody expected him to convince the average FOX listener. Unfortunately, he hasn't exactly convinced me either.

I read the speech several times, and I kept getting hung up on one very basic promise: "it will be against the law for insurance companies to deny you coverage because of a preexisting condition." Okay, how can you argue with that? That's one of the biggest problems, right?

Here's what I didn't hear: will insurers be entitled to charge a higher rate to people with preexisting conditions? How about higher rates for people who smoke, or who are obese, or who, say, race motorcycles? I didn't hear anything about rate structures based on experience ratings.

Without experience ratings – projections of the costs the insurance company may incur by taking on particular individuals or groups – there is no logical way to set rates. If individuals with known health problems cannot be charged more than the healthy, then everybody in the group must be charged more.

Here's an example from the current, employer based system: a small business buys health coverage for its 250 workers. One of those workers unexpectedly develops a serious illness, incurring medical costs of $500,000. Since it is a group policy, those costs average out to $2,000 per enrollee. The insurer will get it money back – the group rate will go up, substantially. The increase may be amortized over several years, but still it will be substantial.

Anxious to control health costs, businesses already discriminate against potential employees with known health problems, who are obese, or who appear to be smokers. The practice will not appear in the personnel office's policy manual, but it still will be quietly enforced. Although that may "help," there still will be surprises – and under the proposed health care reforms, a business that encounters such unanticipated health costs may find it cheaper to pay into the proposed public insurance fund rather than continue to buy its own coverage. Granted, this is preferable to dropping coverage and paying nothing, but it is far from optimal.

Individual policies, we expect, will fade away, replaced by groups formed to participate in the new insurance exchanges. Those groups, of course, also will be assigned experience ratings, and those ratings will help determine the rates they are able to negotiate with the insurance companies. The lowest rates will go to those which, one way or another, wind up with the healthiest enrollees in the lowest cost parts of the country. No longer able to cherrypick individual clients, the insurance companies will cherrypick groups.

Inevitably, some groups will be made up of lower income individuals and families not poor enough to qualify for Medicaid, but entitled to government subsidies to make their insurance "affordable." Demographically, those groups will include more smokers; more of the obese; more who have, for years, neglected basic preventive health care. Making their insurance "affordable" will require substantial funding, and the insurance companies can be expected to drive hard bargains. To make "reform" revenue neutral, contributions to the public fund must necessarily go up.

I could go on, but I won't. In brief, the chief competition among insurance providers is not to provide the lowest rates and so garner the largest share of the market, but to enroll the healthiest clients, and so be responsible for the smallest possible payouts. As long as this "competition" exists, the sickest must pay more – unless government pays it for them – and overall health care costs will not go down.

There is only one answer to the problem of competitive experience ratings. There must be just one pool of enrollees, sharing the expenses of health care for all; just one insurer, responsible to all the people rather than a small group of shareholders, and capable of negotiating with health care providers out of strength.

Yes, I know, it's impossible to achieve, here in the steaming rectum of plutocracy – but, if that's true, we may as well give up now. Are you giving up? Am I?


Tuesday, September 8, 2009

The Original Message to the Schoolchildren

Yo, lil homies. Uh, I mean, greetings, children.

My advisers tell me we can't sing the Internationale to start the program this morning, but I still want to remind you that it really is the final conflict, and that the international working class will, one day, be the human race. You want to be part of the human race - don't you? Yes, I thought so.

So let's all make lovely red flags in art class today, and fly them high over our socialized public schools. When uncle Barack Hussein takes mommy and daddy's guns away, life will be lovely - we will breed all you little girls with your blond ringlets with big black studs, and produce a new race of Spanish speaking homosexuals of indeterminate race and gender. Won't that be fun? Don't worry boys, we haven't forgotten you - uncle Barack Hussein wants you all to marry each other, and I'll make sure you have all the Medicaid dollars you need to have those perverted welfare babies everybody knows are so cool. All you have to do is kill Grandma.

So work hard, kids, and go to liberal coastal colleges where we can finish your indoctrination. Mommy and Daddy are doodyheads, and uncle Rush is even a worse Nazi than me...


(The real hell of it is that they're attacking a centrist - and today's centrist (Obama) is about on a par with Wendell Wilkie. Well, we'll see what he has to say about health care tomorrow night.)

Wednesday, September 2, 2009

The Road to Obamastan

It certainly is a wonderful moment in history not to be Barack Obama. His approval rating is down to about 50%, and I wouldn't be surprised is a lot of those who still approve are sticking with him out of pure cognitive dissonance, having made significant emotional and public investments in him during the campaign. Trapped by conventional thinking, many of the news media seem to assume he's losing people from the center, and hence losing them to the right.

Maybe they're right, but I don't think so. There is a vast amount of anger on the left, and the decline in his numbers started well before the health care fiasco was fully formed. The peace movement, civil libertarians, the LGBT groups, and plenty of others on the left were sick of him well before he let Rahm & The Boys convince him that any health insurance legislation would be better than none – and that one that kept the contributions flowing from major health industry lobbies like AHIP and PhARMA would be best of all.

I despise what's become of American politics over the past thirty years, and I'm just too pissed even to vent my feelings right now. Instead, I'll head straight to the latest impending catastrophe: Afghanistan.

The generals are whining for more troops. The Afghani police and army are useless and corrupt, and the numerous militias are loyal to local leaders, not the central government. The Karzai government is even more corrupt than the police and the army, and its legitimacy rating is hovering somewhere around zero. The Taliban, also corrupt, looks honest by comparison.

If the US pulls out its troops, the right will accuse Obama of "knuckling under to terrorism." If the administration sends more troops, assuming they ever can be successfully withdrawn from Iraq, our NATO "allies" can be depended on to extract their troops as rapidly as ours go in. The current proposal for "winning" in Afghanistan is to "protect" Afghani villagers against the Taliban. Needless to say, there are far too many villages and there never can be nearly enough troops – especially since what the villagers want most is for everybody to go away and just leave them alone to grow their opium.

Isn't there anybody who has Obama's ear old enough to remember Vietnam? The notion of "protecting" villagers sounds a hell of a lot like the Vietnam "pacification" program – which was an abysmal failure, of course, and wouldn't work in Afghanistan either. Doesn't anybody around the president remember how debilitating the escalation of the Vietnam war was to the Johnson administration? Isn't it time to bring Hillary Clinton home from Africa or Latin America or Antarctica or wherever they have her now and get some advice from an adult?

The route out of Afghanistan is, in my opinion, fairly simple. In Afghanistan, what we call "corruption" is called "standard operating procedure." Let's forget about "democratization" and all its associated bullshit, and just bribe our way to peace. Provide the tribal leaders with Hummers, Viagra, and whatever else will keep them happy, and stop trying to "unify" a geographic region that never even remotely resembled a modern state, and is not likely to become one any time in the foreseeable future.

And the Taliban? Bribe them too. I'm sure we can offer them considerably more than Al Qaeda can – and it's bound to be a hell of a lot cheaper than fighting a war that can't be won.

Friday, August 21, 2009

Very strange...

I just got a robocall from Omaha, Nebraska. A male voice said, "Press one to hear a message about capitalism."

"Sure," I thought. "Why not?"

I pressed one, and heard, "America was founded on the principle of small government and allowing people to pursue their dreams. Keep capitalism strong in the USA."

That was it – nothing more.

The only capitalist I associate with Omaha is Warren Buffett, but, of course, a robocall phone bank can be anywhere and hired by anyone. I doubt the call came from Buffett, who is not known for wasting money on useless gestures.

If I were so inclined, what would the call's originator have me do to keep capitalism strong? Expand my stock portfolio? Set up a lemonade stand in my front yard? Send back my social security check in protest?

More likely I'm supposed to oppose the public option for health insurance reform; or, maybe, oppose new regulation of the financial markets. Maybe I should be supporting unlimited worldwide immigration so that labor markets can be internationalized as thoroughly as capital markets, or working to eliminate the unfair and uncompetitive tax advantages enjoyed by religious organizations.

There's capitalism, and then there's capitalism, after all. One way or the other, I think it's become fairly obvious that keeping it on a shorter leash might not be that bad an idea.

Monday, August 17, 2009


To nobody's great surprise, the Obama administration has backed off its support for a public option, suggesting that state level non-profit cooperatives would do the trick just as well. That, of course, is bullshit.

Just creating fifty-one (including DC) separate cooperatives presents an organizational nightmare, especially if it is left primarily to the states. They will be too small to negotiate effectively, will find it hard to find a sufficient number of doctors and hospitals to participate, and will provide no significant savings over the privates. Essentially self-insurance plans forced to accept everybody not cherry picked by the local privates, they'll be worthless, and bound to fail.

A public option, on the other hand – nationwide, and with a very large membership – cannot be marginalized or ignored. Despite Obama administration commitments, it may be able to drag additional concessions from big pharma. It also may be able to start the move towards outcome based rather than fee for service payments.

One only can hope that Obama's bag of political tricks includes more than "compromising" with those who want him to fail. It is pretty clear that the public option will be included in the House bill, even if health cooperatives are the best that can win sixty vote approval from the Senate.

One also hopes that the administration will work, however covertly, to get the public option reported out of the conference committee. If that happens, it will take only fifty votes in the Senate to pass the final bill – most of the media seems to have forgotten that the health care bill will be considered under the reconciliation process, and cannot be filibustered.

So, like everybody else, I'll wait and see what happens. This is the big one for Obama, so maybe he'll come through.

Wednesday, August 12, 2009

What 850,000 assholes don't know

Yesterday I got a robocall asking me to "just press one" in order to join 850,000 other Medicare recipients in a campaign to save Medicare Advantage. It went on for about two-and-a-half minutes, progressing from "surely you want to press one" to "IF YOU DON'T PRESS ONE YOU WILL DIE!!!"

Actually, I'm not on Medicare yet, and I won't need Medicare Advantage when I go on it because I'll have secondary insurance via my former employer. Of course, there was another reason I wasn't about to press one.

Unlike the 850,000 already signed on with the insurance industry's front group, I'm not an idiot.

I had a look at the Medicare Advantage plans available in my area. Most of them, naturally, are HMOs. If I correctly recall the Clinton era, the advantage of an HMO is greater efficiency, which makes it possible for the HMO to offer enhanced coverage for the same amount of money as the usual fee-for-service coverage. Other Medicare Advantage plans either use preferred provider networks (doctors willing to accept reduced fees for more business), or allow the insured to use "Any Willing Doctor" [emphasis added] – to wit, any doctor willing to accept reduced fees.

What those 850,000 assholes don't understand is that the government subsidy to the insurance industry for offering Medicare Advantage plans – roughly 14% – does not pay for additional services. It goes straight to insurance company profit margins. If the final health care reform bill includes a public option, the privates quickly will learn to do without their 14% markup.


My congressman punked out early, and did a health care teleconference instead of a town meeting. It was done well, but I still was disappointed – I wanted to get out there and mix it up with the local Republican crazies, waving my "Smart People for Single Payer" sign, and wearing my "Obama's not a Socialist, but I AM" button. Well, life is full of disappointments. Sigh.

Sunday, August 9, 2009

The Good News: despair?

Good news, everyone! Only 247,000 jobs were lost in July – and the unemployment rate dropped from 9.5% to 9.4%!

Those who have studied arithmetic may be counting their fingers, trying to figure that out. It takes 100,000 new jobs a month just to stay even with the flow of new entrants into the job market, so how can the unemployment rate have gone down?

The answer, of course, is a reduction in the size of the labor force. Some number of individuals substantially in excess of 347,000, it seems, are no longer looking for work – or so we are told, according to government surveys of households.

I have little to no confidence in the statistical analysis accounting for the reduction in the unemployment rate. Surveys? How many? Seems to me that, in earlier decades, people were considered "no longer actively looking for work" as soon as their unemployment benefits were exhausted. I don't recall hearing anything about a change in that accounting procedure.

Granted, plenty of those people must be pretty "discouraged workers" by now, but I still suspect most of them would accept a job if something decent were offered – which is to say, I suspect the labor force is substantially larger than we're being told.

Naturally, the drop from 9.5 to 9.4 will be good news to those who think economic activity is entirely a function of psychology – that "thinking positive" is all we need to emerge from the current morass. On the other hand, if a huge number of workers have fallen into such despair that they truly are no longer looking for work, "thinking positive" really presents some problems.

Friday, August 7, 2009

Obama confirms sellout

Billy Tauzin of Louisiana was a founder of the Blue Dog Democrats, but decided in 1995 that the Blue Dogs were way too liberal, and became a Republican. Later, he helped to "negotiate" the Bush administration's creation of Medicare part D -- the drug plan -- which specifically forbids Medicare administrators to negotiate prices with pharmaceutical companies or even consider re-importing lower-cost drugs from Canada.

Almost immediately after that towering legislative achievement, Tauzin left the House to become the leader of PhRMA, the drug lobby. Earlier this week, Tauzin was hopping mad. It seems that Democrats in the House had the audacity to think that the drug cartel ought to kick in cost savings somewhat greater than the eighty billion dollars over ten years which the Obama administration agreed to for the purpose of getting Harry and Louise on its side. Taubin insisted that the administration affirm the eighty-billion-dollar agreement.

Obama, who does not have his predecessor's flair for lying, confirmed the deal.

One of the real advantages of leaving the details of health care reform to Congress is that Congress does not have to go along with half-assed deals agreed to by the administration. One only can hope that Congress will do the right thing, and pass a bill that endorses negotiation of drug prices by Medicare, Medicaid, and the much maligned public option that had damned well better be part of the final bill.

I can't see Obama vetoing a health care bill, no matter how inadequate it turns out to be. Let's just hope whatever comes out of Congress is better than what we have now, and that both the Executive and Legislative branches show some guts. If a strong House bill and a weak Senate bill go to conference committee, the administration can strongly influence what comes out.

That's when we can find out if Obama actually has some liberal inclinations, or if he's just another unprincipled pol like Bill Clinton.

If it ever gets that far.

Mark Twain called it "the best Congress money can buy." We'll see.

Tuesday, July 28, 2009

Meanwhile, at the Department of Education...

One of the President's old basketball buddies now is in charge of passing out $4.35 billion which, we are told, will jump start the process of transforming American education. Secretary of Education Arne Duncan will dispense the funds as "incentives to competition," specifically to states and school districts that knuckle under to the Administration's formula for "reform."

Duncan is a Hyde Park liberal who never was a teacher, and whose "success" as CEO of the Chicago schools is open to question -- given that the Chicago schools remain among the worst in the nation. States that wish to benefit from Duncan's largess must take two steps immediately: ensure that there is no limit on the number of charter schools permitted under their laws, and ensure that there are no obstacles to tying teacher pay to student test scores.

That's not education reform. That's an ideological juggernaut bent on crushing anybody in state government or educational leadership who disagrees.

There is nothing in the Administration program that requires states to close down the 37% of charter schools where students do worse than the students in local traditional schools, or to reexamine the charters of the 46% that do no better despite the suspension of union work rules (see CREDO National Charter School Study*). There is no provision for research to determine whether existing merit pay structures actually improve student outcomes, and which, if any, works best.

It's interesting that teachers in charter schools are displaying a lot more interest in unionizing, citing factors like longer hours, lower pay, and very high teacher turnover. High turnover is not surprising in a building where the principal can unilaterally change the teaching load from five classes to six without even bothering to consult, much less negotiate. It's not surprising in a building where "teachers" with no experience or training are tossed into classrooms with nothing but happy platitudes expressed in pie-in-the-sky "mission statements" to back them up.

In the meanwhile, though, there are plenty of young, would-be teachers -- idealistic to the point of stupidity or stupid to the point of idealism -- who will flock to the flood of charter schools that will be inspired by Duncan's pot of gold. In the rush by fiscally challenged states to grab the money, charters will be approved for applicants who would have been denied had some restrictions on the number of charters remained in place. The effect of the Duncan plan will be to reduce competition.

Anticipate a glut of "awareness" charters, catering to every racial, ethnic, and interest group you can imagine. Anticipate a glut of for-profit charters specializing in glossy brochures aimed at impressing parents and state legislators. Anticipate that the 37% pure failure rate will surpass 50%. Anticipate that the program will be a political success, because all those racial, ethnic, and interest groups will be happy, and the for-profit school industry will be pouring much of it's new profit into lobbying and campaign contributions.

For more complete critiques of charter schools and merit pay, please see my most recent articles for the online magazine, Suite 101.

Thursday, July 23, 2009

Health care

I tried to hear the President say something of substance in his news conference last night, but to no avail -- unless you count the minor point that he's okay with taxing millionaires. Whoop de doo.

Obama is not nearly so fluent when speaking off the cuff as he is when delivering a prepared speech, but still adroitly ducked a question about whether he would insist on a public option being part of the final bill. He also managed to avoid making any concrete suggestions regarding how cost containment could be accomplished. Both of those must be present in a final bill if we are to have any hope of a successful outcome.

The harder task, by the way, is the cost containment -- and the problem lies not with the "moderates" of both parties who insist on fiscal responsibility, but with the "business as usual" Democrats catering to health industry lobbyists working to preserve the cash cows of their particular employers. It seems to be clear to everybody but doctors and hospitals that the "fee for service" model has to be jettisoned and replaced with outcome based compensation. It seems to be clear to everybody but Big Pharma that insurance plans should not pay for high priced drugs under patent protection when older, generic substitutes will work just as well, or better.

I needn't go through all the examples of industry players fighting hard to maintain the status quo because it's more profitable than change -- everybody who's been paying attention gets it -- but the resistance to researching which treatments for different medical conditions achieve the most positive outcomes is not just mind boggling -- it is immoral. Don't blame the lobbyists, though -- they're just doing their jobs. Blame Congress.

The CBO's recent report, which projects a trillion dollar cost over ten years for the plans currently knocking around the House committees, should not be ignored. It's not often I find myself in agreement with Ben Nelson and Mike Ross, but their criticisms of the plans that currently are in play are valid criticisms.

It's time for the rest of the Democratic Party to deal with cost containment -- and it's time for Barack Obama to take the lead.

Wednesday, July 15, 2009

Odds and ends

Sotomayor confirmation:

Being elected to the Senate is harder (well, more expensive) than being elected to the House. In most Congressional Districts, a trained monkey could be elected -- indeed, might have a distinct advantage, provided it threw its excrement at the right people. Senators, however, must rise at least to the level of Zippy the Chimp.

Will they make Sotomayor take a drug test? I don't see how she could have withstood those questions without tranquilizers to help her stay calm and amphetamines to keep her awake.

Goldman-Sachs profits:

Now that Lehman and Bear-Stearns are gone and Merrill-Lynch is a subsidiary of the moribund B of A, Goldman-Sachs is the only game in town. Although they've put aside money to pay anticipated executive bonuses, those won't come due until the end of the fiscal year -- and who knows what might happen next quarter?

Is it conceivable that Goldman's execs will agree their bonuses should be tied to long-term growth, or that the federal government will force the issue? Don't hold your breath.


When LaFolette and his Progressives fought for the referendum process way back when, they never foresaw contemporary California. Starting with Proposition 13, back in 1978, the referendum process in California has driven the state into total dysfunction. Spend enough money and you can get Californians to support any vaguely populist sounding bullshit you like. Then you can just stand back and watch the state go a bit further down the crapper. Hell, you don't even have to live there!

While the Governator counts down to the end of his political career, a particularly pernicious little piece of shit by the name of Ted Hilton is building his reputation by abusing children. In the meanwhile, I've read that current Attorney General and former governor Jerry Brown is interested in being governor again -- along with a bunch of other characters whose motivations are beyond ordinary human comprehension.

I'm usually opposed to state constitutional conventions, because they almost always do more harm than good. In the case of California, though . . .

Meanwhile, in New York...

I don't know the extent to which outsiders are following what a wrestling promoter probably would call the Amazing Idiocy in Albany, but it's pretty idiotic. I'm sure a lot of New Yorkers were wishing they had Spitzer back, whores and all, but it's starting to look like Patterson is getting things in hand.

Constitutional or not, Richard Ravitch was an inspired choice for Lieutenant Governor, and you couldn't find a better choice than Jay Walder to replace Ravitch at the MTA. Both sleazy outer-borough city Dems who defected to the Republicans are back in the fold now, I'd say in large part due to Patterson's actions, and some urgently needed legislation actually might get passed when everybody gets back from vacation.

New York hasn't changed much since the days of Boss Tweed, but at least it has rules. They're corrupt rules, but, in their corrupt way, rational. All in all, I'd rather be here than in California.

Saturday, July 11, 2009

Regarding oil prices

There's been a lot of prattle, lately, about volatility in the price of oil. For some reason, lots of analysts insist on relating oil prices to expectations of economic recovery. Personally, I think that's nonsense.

Let's start by noting that there are tankers brimming with crude sitting at anchor in ports all over the world. There is no shortage of oil, despite feeble attempts by OPEC to create one. There is a glut. Let's continue by recalling that oil is denominated in dollars, so that buying oil futures is a straightforward hedge against a weakening dollar.

Fed and Treasury actions to alleviate the recession have created vast quantities of dollars since the beginning of the year. It seems to have been "common sense" for investors to buy oil futures as a hedge against inflation. As it happens, though, that sense was much too common, so demand pushed up prices.

When the Commodity Futures Trading Commission suggested it would put limits on the purchase of oil futures by buyers who are not end users -- that is, those buying the futures purely as investment vehicles -- it seemed likely that demand, and therefore price, would decline. Hence, demand, and therefore price, declined.

As usual, none of this has very much to do with the overall economy, much less the price of gasoline at the pump. Gasoline prices, distinct from oil prices, continue to be controlled by the same old oligopoly -- so gasoline will continue to cost whatever the buying public is willing to pay.

Tuesday, July 7, 2009

Regarding excess

To those who think the public mourning for Michael Jackson is excessive, let me say two words:

Ronald Reagan.


The money from the Obama stimulus package finally is finding its way into the economy, and some economists are saying that it won't be enough. It won't, but don't hold your breath while waiting for more. It seems that a substantial majority of Democrats in the Senate actually are Republicans, while a dozen or so actually are Whigs. As for those who nominally are Republicans, well... Does anybody remember a guy named Mussolini?

I'm too lazy to look up the specific posts, but I'm sure that when the stimulus was under discussion last year I was pushing direct aid to the states. The states, remember, tend to have balanced budget provisions in their constitutions, and when a whopping economic meltdown comes along and tax revenues are way down, the states have to enact whopping budget cuts.

Those who worry that the current stimulus spending is inflationary might bear in mind that cuts in state spending significantly outweigh the increase in federal spending. The overall impact of combined government spending right now is deflationary. Lost decade, anyone?

The chance for another stimulus bill right now is nil, but just in case somebody in Washington decides to act rationally, let me reiterate: give the goddamned money to the states, to restore the jobs and programs they're cutting even as we speak. Money used to restore cuts gets into the economy a lot more efficiently than money for new spending.

Friday, July 3, 2009

"Meek and Mild"

Yesterday, I suggested that Barack Obama's problem was that he came to power by not being a "scary black man." Today, I listened to the podcast of WNYC's "On The Media," and heard some relevant commentary. Here's a quotation from Duke historian Tim Tyson:
There's a sense in which Mrs. Parks is very important to our post-civil rights racial narrative, because we really want a kind of sugar-coated civil rights movement that's about purity and interracial non-violence. And so we don't really want to meet the real Rosa Parks. We don't, for example, want to know that in the late 1960s, Rosa Parks became a black nationalist and a great admirer of Malcolm X. I met Rosa Parks at the funeral of Robert F. Williams, who had fought the Ku Klux Klan in North Carolina with a machine gun in the late 1950s and then fled to Cuba, and had been a kind of international revolutionary icon of black power. Ms. Parks delivered the eulogy at his funeral. She talks in her autobiography and says that she never believed in non-violence and that she was incapable of that herself, and that she kept guns in her home to protect her family. But we want a little old lady with tired feet. You may have noticed we don't have a lot of pacifist white heroes. We prefer our black people meek and mild, I think.
Barack Obama is no Rosa Parks. He remains "meek and mild," despite the fact that he is now the President of the United States of America. I guess old habits die hard. Granted, his chance of winning that office would have been about as great as Jesse Jackson's if he hadn't played the "good nigger" so well, but now he's there, and he's there in a time of multiple crises. "Meek and mild" won't cut it.

Come on, Barack! Nobody's saying you have to be an arrogant asshole like Bush, but a touch of "scary black man" might be just what we need right now.

Thursday, July 2, 2009

Not our coup?

Like most of the rest of the world, I imagine, my initial assumption upon hearing about the coup d'etat in Honduras was that the United States, somehow or another, was involved. After all, how many Latin American military coups ever took place without our involvement?

Consider: the Honduran military and the US military work in what we like to call "close cooperation." Most of their officers were trained in the notorious School of the Americas, and their military budget is pretty much whatever we give them. Deposed president José Manuel Zelaya, originally elected from a party of the center-right, now is buddy-buddy with Hugo Chavez, and was exploring the very Chavezian notion of overturning Constitutional term limits.

It really sounded like a natural for US intervention, except for one thing -- Barack Obama says we didn't do it, and even is standing with the rest of the OAS in demanding that Zelaya be reinstated.

On the other hand, every country in the world that bothered to have an embassy in Honduras has withdrawn its ambassador save one. You guessed it. We're the one. It seems, as well, that the US State Department had some clear inkling that a coup was in the works -- and reportedly was working behind the scenes to "resolve the conflicts" between Zelaya, his opponents in the legislature, and the generals.

So, what actually happened? Was the coup truly cooked up entirely by Zelaya's Honduran opponents? Is it conceivable that there may have been US military and/or CIA involvement without anybody bothering to mention it to Obama? Word has it that Zelaya pissed off Hillary big time recently when she showed up in Teguchigalpa on a red eye flight, and Zelaya insisted that she go to a private room at the airport and shake hands with every member of his large, extended family before letting her get to the embassy to crash.

The big winner in all this, of course, is Hugo Chavez -- precisely because it boggles the mind to consider a military coup in the region without a fat US thumb on the scales. Our President, as usual, seems unwilling to risk offending anybody -- even in Honduras -- and hence is trying to steer his typical wimpy course between "extremes," even while the rest of the world is taking assertive action.

Personally, I'm sick of all the compromises, both at home and abroad. It's time to stop all the political pussyfooting and take a moral stance -- on military coups, on health care, on torture, on open government, and more. My suspicion is that Obama got where he is by studiously avoiding any action that might make him look like a "scary black man," but now he's the goddamned president! It's time for him to stop acting like a wimp and take a chance on doing what's right.

Wednesday, June 24, 2009

RIP: Health care's public option

If you support the inclusion of a public option in the impending health care reform bill and you want to feel depressed, try this analysis, by Nate Silver, of the likely impact of PAC contributions on the votes of currently "undecided" Senators. Silver concludes that a bill that includes a public option has scarcely a chance of coming out of the Senate.

Of course, it doesn't help at all that Senate Majority Leader Harry Reid is second from the top on the list of those likely to be influenced by PAC money, and hence not likely at all to take any sort of leadership role on behalf of passing the bill the president seems to want.

I say "seems to want" because I'm not really clear on his level of commitment. He's been making the right noises in public, but is he twisting any arms behind the scenes? It's just that Obama's standard operating procedure seems to be making all the right noises in public, then backing off when public attention is diverted elsewhere. We've seen it with government transparency, Guantanamo, and other issues that nobody outside the civil liberties crowd is paying attention to anymore.

Yes, a substantial majority of the public wants a public option, and Obama is invariably responsive to public opinion -- in public. He's also aware that with or without the public option, he gets to be "the president who gave us (nearly) universal health insurance." Is it truly in his self-interest to push for a plan that actually could work -- by bringing down the cost of health care? Maybe. But probably not.

This is America, where substance always is secondary to appearance. So what if we get "health care reform" that consists entirely of forcing individuals and business owners, subsidized by taxpayers, to shovel even more money into the coffers of the HMOs and big pharma? Who cares? Obama?

We'll see. According to Silver, the public option needs eleven more votes in the Senate. How many senators will sign on? A lot of that depends on how hard the president is willing to work for those votes.

Friday, June 19, 2009

Regulatory reform?

I've been reading as much as I can about the Obama plan for regulatory reform. I'm not happy.

As usual with this administration, there is a good deal less on the table than one might hope to find. The initial approach, which was to bring all the relevant lobbyists together and let them slug it out, seemed like it might have been a good idea. There were many competing interests, and reason to hope they might neutralize one another. The administration could claim it had "listened," and then go on to do what really was needed.

Ooops, pardon me! For a second there, I forgot it was the Obama administration, which works from the first principle, "It is a far, far better thing to look like you're doing something than actually to do something. Getting things done just gets people pissed off."

Making the Fed regulator in chief is Obamanomics 101:
  • The Fed is an "independent" agency. Hence, if it screws up, the administration can duck all blame -- especially while Bush appointee Ben Bernanke is in charge.
  • The Fed is a creature of Wall Street, so no matter how much the financial industry may whine about oppressive regulation, you can bet they're not especially upset.
  • Larry Summers would love to be the next Fed chairman, and he'd love it even more if the job included additional autocratic powers.
For populist pandering, there will be the new Consumer Financial Protection Agency, charged with protecting us little guys from predatory bankers and their ilk. The predators, of course, are playing their role by pretending to be upset -- but the likelihood of the new agency having the power, the funds, or the political support to do anything significant is minimal.

Meanwhile, in Switzerland...

According to Carter Dougherty, in the New York Times, "Swiss financial regulators said Thursday that they were considering assuming new emergency powers that would allow them to break up large banks to wind down troubled business units that are not essential to the economy." After their UBS and Credit Suisse problems, the Swiss have decided that they've had enough of banks that are 'too big to fail.'"

They'll start by "working with" the banks -- but it sounds like, in the absence of real cooperation, they'll just go ahead and do it. Yay, Switzerland!

Saturday, June 13, 2009

Regulation, again...

Well, I'm still waiting to find out just how "customized" a derivative has to be to escape regulation. So far, it sounds like the bankers will be a lot happier with the outcome than I will.

So far, a substantial majority of the derivatives that have been created have been "customized" to one extent or another -- and the bankers insist that such customization is vital to "serving the interests" of both buyers and sellers. Okay. It makes sense that different CDOs requires different terms and due dates. It makes sense that different credit default swaps will insure different levels of risk to different degrees. Swell. Go ahead and customize them.

I also understand why it might be hard to write regulations for customized derivatives -- especially since we can expect that their creators are sure to "customize" them in ways that would help them avoid any regulations Treasury might write. On the other hand, I don't understand why they can't be sold like other securities -- in an open market, with full disclosure.

The pivotal word in that last sentence, in case you didn't notice the double emphasis, is "can't." Clearly, they can be sold like other securities -- the only problem being that the profit margins of the originating banks would be sharply reduced. Well, we "can't" let that happen, now -- can we?

Hey! Obama! Yes we can!

Thursday, June 4, 2009

Regulation and the Free Market

Just in case you haven't noticed yet, Friedman and Greenspan were wrong. Free markets are extremely fragile. Left untended and unregulated, they can't survive -- they succumb to what economists call "market failure." The only institutions powerful enough to prevent market failure are governments, and the only way they have to do that is through economic regulation.

The chief component of the market failure that created our current economic crisis was lack of information. For markets to operate properly, buyers and sellers must be aware of the real value of what they buy and sell. In the case of derivatives, as we now know, that information just wasn't available. Not only were buyers misled by the ratings agencies -- who were paid by the sellers -- but derivative sales were private. Buyers had no means of knowing what other buyers were paying for very similar instruments. The derivatives market was totally obscure, and totally unregulated.

"Then, let there be regulation," intones Obama. "Right on it, boss," cries His Boy In Treasury, Timmy G. And there shall be regulation. Effective regulation? Um, well...

Some Democrats in Congress, like Senator Tom Harkin (whom I recall supporting in a presidential primary a great many years ago), want all derivatives to be traded in an open exchange -- like stocks or commodities. That would provide full transparency, and make a repeat performance of the current mess just about impossible.

Timmy G. has another idea, though -- derivatives would be traded through privately managed "clearinghouses," which would make the trades, well, sort of semi-transparent. More complicated, "customized" securities, however -- like the credit default swaps that brought down AIG -- would remain outside the system, and totally opaque.

You get one guess: which plan does the industry prefer? Here's a hint: if buyers get to know what the securities really are worth, they won't pay as much for them.

Maybe Obama will surprise me, and get behind the idea of an open exchange. Somehow, though, I doubt it. Bill Clinton signed the December 2000 bill exempting most derivatives from regulatory oversight, and so can claim a fat share of the responsibility for our current problems. Barack Obama, who took even more in campaign contributions from the financial industry than Clinton did, is not likely to be a major improvement.

As Dick Durbin pointed out recently, "the banks ... are still the most powerful lobby on Capitol Hill. And they frankly own the place." I'm afraid that probably is true of the White House as well.

Well, so much for free markets. How can markets be free when the government that's supposed to protect them is bought and paid for?

Saturday, May 30, 2009

That tired old race card

The more I read about Sonia Sotomayor, the more I like her. I don't really care why the President chose her -- she's a good choice and, for me, at least, she was a pleasant surprise. I was expecting someone a lot more, ahem, shall we say moderate?

Nobody expected the Republicans to embrace any candidate put forward by Obama, given their current propensity to apply the Nancy Reagan approach ("Just say NO") to anything Democrats propose. On the other hand, I suppose I'm a little surprised that even the few brighter bulbs on the GOP Christmas tree are falling back on that tired old Republican standby, playing the race card. You would think that somebody smart -- Orrin Hatch, for example -- might have figured out that the party will be permanently moribund unless it can peel off some segment of the Latino vote.

But no -- they are out there accusing Sotomayor of "reverse discrimination," many even going so far as to call her a "racist." Sigh.

Their evidence seems to be one line from a 2001 speech and a history of support for affirmative action. Personally, I've always thought affirmative action should be class based rather than race based -- I don't suppose Stanley O'Neal's granddaughter will have any problem getting into a top college -- but calling affirmative action "racist" is the worst kind of backwards reasoning, no matter what John Roberts may have to say on the matter.

The real racist on the court, of course, is Clarence Thomas. He is so insistent on denying the fact that affirmative action might have advanced his own career that he votes against the interests of minorities every chance he gets.

Saturday, May 23, 2009

"Prolonged" Detention

Triangulation is a political strategy,
not a national security strategy.

-Dick Cheney, 21May2009

It's not often that I find myself in agreement with the former VP, but he's right on that one -- and, I might add, triangulation doesn't serve very well as a model for ethical behavior either. Cheney argues that if we are only partly safe from the terrorist boogie men, we're not safe. I argue that if our actions are only partly ethical, they are unethical.

(That bastion of ethics, the Roman Catholic Church, might disagree with me, having recently pointed out that "most" of the boys molested by the Christian Brothers in Irish institutions over the years were victims of "inappropriate touching" rather than, say, anal penetration -- but does that mean the boys who were diddled a bit rather than forcibly raped should be happy about it? And, anyway, is being locked up for the rest of your life with no trial more analogous to a diddling or an ass fucking? You decide.)

Yes, I know. Our President now has read all the secret documents, and somehow has concluded that there are a number of Guantanamo detainees who could not be convicted, by a federal court or even by a newly revamped military commission, due to absent, insufficient, or tainted evidence. How could such a situation come about? Let's see.

If the evidence is insufficient or nonexistent, we can assume that some "trusted asset" of the CIA or the military said something like, "Oh, that fellow, he's a really bad guy!" In the unlikely event the "trusted asset" was asked to back up his assertion, he told a few unverifiable stories that were swallowed, hook, line, and sinker, by the eager agent or officer. (Somebody with the proper security clearance should count up how many times the "trusted asset" took over the "bad" guy's farm, or celebrated victory in a longstanding family feud.)

If the evidence is tainted, we can assume the poor bastard was tortured until he confessed to whatever his interrogators thought he might have done. As for egomaniacs like Khalid Sheikh Mohammed -- who would happily have confessed to every high-profile attack for the past fifty years even without waterboarding -- we can count on them to confess once again, in open court. Hell, they totally want to be martyred, and will be unhappy with anything less than the death penalty.

How many detainees will fall into the "prolonged detention" category? Twenty? Thirty? Fifty? Last week, we were told that one out of seven Guantanamo detainees released so far has "returned" to terrorism, but let's look at a worst case scenario. Let's say there are fifty of these genuine "bad guys," and we put them back more or less where we found them. Let's say we release them near the Afghanistan-Pakistan border, where all fifty immediately join up with the 10,000 Taliban already fighting there. That would, effectively, increase the ranks of the Taliban by one-half of one percent.

To me, that is a small price to pay for maintaining our standards of justice. Consider, too, that the chance of a released detainee gaining access to the United States is virtually zero. We have their fingerprints, retinal scans, physiognomic profiles, DNA, and more. The Cheney-Obama argument for keeping them in detention disappears.

Fear eats the soul.
(R. W. Fassbinder; 1974)

Saturday, May 16, 2009

Hypocrite. Coward. President.

If I seem to be writing less frequently lately, it's because my anger and outrage are devolving into the usual depression. I never expected all that much of Obama, but I suppose all that financial industry money spent on his campaign affected even a habitual cynic like me, so I swallowed hard and hoped.

Hope. Bullshit.

Let's forget my usual economic complaints for the moment. This week, I heard promises about greater regulation of derivatives, more anti-trust suits, and action to limit predation by credit card. I'm not listening to promises anymore. I'll wait and see what, if anything, actually happens.

Onward and downward: where the hell is Dwight D. Eisenhower (or some reasonable facsimile) when you need him? It's looking more and more like Obama is being cowed by Pentagon bullies, with participation by CIA, NSA, and probably a dozen other agencies whose goddamned initials are top secret. Why has McChrystal replaced McKiernan? Beats me, unless it's that McCrystal is okay with an invasion of Pakistan from Afghanistan, and McKiernan isn't. And what will that consummate bully, Benjamin Netanyahu, bully our president into doing when they meet this week?

Take some action against the torturers? Um, no, 'fraid not. Come to think of it, we can't even release any more embarassing photos. Abolish the military tribunals? Uh, sorry, but that might force us to release some people whose "confessions" were extracted by the aforementioned torture. "Don't ask, don't tell?" Don't ask.

Last week, Dick Durbin observed that the financial industry, despite its setbacks, still had the strongest lobby in Washington -- but what Eisenhower called the "military-industrial complex still has to be in the running. So, how many of the useless, overpriced "defense" contracts that now appear to be on the chopping block actually will be chopped? If experience is any guide, most of those turkeys will still be alive and well for next Thanksgiving, and for the one after that as well.

Tuesday, May 12, 2009

The Confidence Game

Listen to enough economic news and you might be inclined to believe that the economy takes place entirely in our heads. As long as we feel good about the economy, it will be fine. It follows that the economic distress we're experiencing now is our own fault. It was brought on by a lack of faith.

If that sounds totally idiotic, that's only because it is totally idiotic. Nevertheless, the mullahs of Wall Street breathlessly await the publication of the "consumer confidence" index each month, and the Obama administration has based a good deal of recent policy on the idiotic axiom that the economy is as good as we think it is.

Well, maybe not -- or not exactly. If we believe the economy is doing better, and that our personal distress might be alleviated sometime soon, we are likely to believe that the Obama administration is doing a good job. Be confident, America! Your youngish, blackish, liberalish president is out there, taking care of you.

With that in mind, let's look at the stress test results.

The first thing that struck me was that the amount of capital we were told the top nineteen banks had to raise was roughly the same as the amount of still uncommitted TARP funds. It would be very nice if the private sector stepped up to the bat and provided that capital, but, if not, it is available in government funds without having to go back to Congress for more.

How convenient! No major bank is insolvent because the funds needed to bring it back to "health" already have been approved by Congress! Be confident, America!

Sadly, America cannot muster the patriotic spirit it needs to feel confident. It is difficult to feel confident when you think your job might disappear next week, or next month. Oh, wait! I forgot the good news -- that job losses in April were a bit less than losses in February or March.

That's not good news. It means that businesses are running out of the easy jobs to cut, and are getting into the hard ones -- that is, the people who will be harder to replace when things finally turn around and business picks up again. Under those circumstances, 539,000 is a hell of a lot of jobs. It's expensive to train a new worker to use specialized equipment or software, or to understand the specific needs of your particular customers. You hang onto those workers as long as you can, and only let them go if it's absolutely necessary.

The unemployment rate as of the end of April was 8.6%. The stress test criteria included a "worst case" unemployment rate of 10.2%. Hopefully, that's as high as unemployment will go, but it's really not the proper figure for a stress test -- it's more of a "reasonable expectation" than a "worst case."

Should my suspicions be justified, and it turns out that the stress tests were rigged to keep the big banks' additional capital requirements in line with the availability of TARP funds, more trouble is on the horizon. Unemployed workers have a distasteful propensity to default on their credit card debt. Businesses in bad enough shape to lay off workers they know they will need if they survive this recession are one step away from defaulting on their business loans.

Stress tests, my ass. Confidence? No, not much.

Tuesday, May 5, 2009

Just forget national health care

The only thing I really liked about the Obama plan for reform of health insurance was the idea of creating a government sponsored health insurance plan to compete with private insurers. As you would expect, the privates freaked.

Competition makes for a great sound bite, but not when you know you're sure to lose. The privates, and their allies in Congress, are complaining that a government plan would put private insurers out of business and lead to a single-payer system. Oh, my! Wouldn't that be a shame!

Chuck Schumer has proposed a "compromise," which would require the government plan to be self-sustaining, paying claims from the premiums it collects; not require doctors and hospitals to participate; pay more than Medicare; and, like private insurers, maintain a reserve fund.

Somehow, I don't think that will satisfy the private companies -- unless they are guaranteed the right to profitably cherry-pick the healthiest health care consumers and dump anybody with a serious or chronic medical problem on the government. Without that provision, they still would be at a competitive disadvantage merely because their shareholders expect them to turn a profit.

A system in which the government insurer is stuck with everybody likely to make a major claim isn't viable. The government plan would become too expensive for employers to purchase for their workers, too expensive for individuals not receiving sizable government subsidies, and hence too small to bargain successfully with doctors, hospitals, and pharmaceutical companies.

Without a genuinely competitive government sponsored insurer in the mix, the Obama plan is nothing but a giveaway to the insurance industry. Government subsidies provided to the uninsured poor would go straight into private pockets, and the expense of making sure everyone required by law to buy insurance does so would become a taxpayer sponsored engine to churn new business for the private companies.

Personally, I'd prefer to see no health care legislation at all over a giveaway to private health insurers.

Monday, April 27, 2009

Must Reading

Anybody seriously following the bank bailouts cannot afford to miss this article in today's New York Times, an extensive review of Tim Geithner's relationships with Wall Street firms and executives, as well as his policy recommendations both as chair of the New York Fed and Secretary of the Treasury.

This article is not "commentary" or "news analysis," but a review of Geithner's history. We are left to draw our own conclusions. For me, it reinforces my ongoing belief that the "change" promised by the Obama administration, at least as far as the financial industry goes, continues to be mostly smoke and mirrors.

Tuesday, April 21, 2009

The Citi share swap

Pretty clearly, Citigroup (despite its vaunted "profits" for the past quarter) is in big trouble.

When the government swaps out its preferred stock in Citi for common stock, a liability is magically transformed into an asset, Citi no longer has to pay the 5% dividend the preferred stock involved, and the taxpayers instantly own 36% of the company. Note that when that happens, the value of a share of Citi is diluted by about a third. Why would the existing stockholders go along with that?

Easy. Two-thirds of something is worth more than all of nothing. They appear to believe -- with good reason, no doubt -- that the only other alternative is to be wiped out.

Mind you, they still could be wiped out, but the prospect becomes a little less likely. The government, which will become the largest single shareholder, will feel a certain obligation to the taxpayers, and work a bit harder to keep Citigroup solvent.

The reasoning of the Obama administration is obvious. Citi is "too big to fail." Citi needs more capital to avoid insolvency. Congress won't provide more capital. Hence, the only way forward is to convert the preferred stock liability into a common stock asset. Clever boy, our Timmy G.

The biggest political problem is figuring out what to do with the voting rights that come with common stock. There are plenty of free-marketeers out there who already are saying that the conversion amounts to partial nationalization. Raise the red flag, comrades!

I am not looking forward to watching Obama & Co. weaseling around, looking for ways to not exercise government's voting rights in Citi. I think that we've had enough problems because shareholders -- private shareholders -- have abrogated their responsibility to exercise control over the companies they own, and left it all to management. I don't see why government, too, should be irresponsible. Summers and Geithner are said to be two of the brightest lights in the field of economics. Let's give them a chance to show just how good they can be -- at Citigroup.

Monday, April 20, 2009

Stress positions

I can hardly wait. Two more weeks, and Treasury will be releasing the results of its stress tests of the banking industry. Maybe. Sort of.

I can hear it now: "We have completed exhaustive testing of the nineteen largest banks, and we are pleased to report they all passed. No details are available right now, but maybe in a month or two..."

In the meanwhile, the banks are doing their best to impress us with their "better than expected" "profits."

Yes, I had to do two sets of quotes in a row. Neither turn of phrase is what it seems, and judging by today's action on financial stocks, investors haven't been fooled.

When the "results" of the stress tests are "released," it will not be the credibility of the banks that will be evaluated, but the credibility of Tim Geithner and the Obama Treasury Department.

Thursday, April 16, 2009

Glimmers of Hope?

The President has seen "glimmers of hope." I'm trying to figure out where.

Maybe it has something to do with Wells-Fargo's record quarterly profits, or the determination of Goldman-Sachs to repay its TARP funds. Financial stocks seem to be staging a bit of a recovery, which is not especially surprising with the FDIC guaranteeing billions upon billions of dollars of the loans they are making -- essentially taking on all the risk in exchange for a negligible fee.

Goldman-Sachs posted a profit -- made possible, as it happens, by payment at 100% of face value on a credit default swap issued by AIG. Does a profit really count if it depends on free money provided by the taxpayers? Yes, apparently, it does count. If you can get the suckers to hand over their money, it's yours, right?

The only "glimmer of hope" I could believe in right now would be an effort to remove from government anybody and everybody with a history at Goldman-Sachs. Two administrations' worth of Goldmanistas already have eliminated virtually all of the company's competition. Isn't that enough?