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.
Wednesday, June 24, 2009
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:
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!
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.
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!
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?
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.
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
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)
(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.
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.
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