Google, Haiti, and Taxachusetts

Saturday, January 23, 2010

There have been so many juicy topics to cover, it’s been difficult to keep away. Every time I’m moved to write, though, I really have something else to do or simply don’t want to devote the time to it. That said, here is, in summary, how to think about the following issues:

Google/China: Yes, if Google was #1 in China this wouldn’t have happened, but they’re not and it did. As a result, this is one of the great humanitarian corporate moves of all time. Perhaps the greatest (there’s not a lot of competition, I’m guessing). Google should follow through and close their business there. As arguably the most important corporation in the world, the move will properly shame China and the many companies that remain in that authoritarian country. Here’s a question that any one doing business there should ask: Would I want to live here?

Haiti: Nothing to do in the aftermath but help. In the long term, I’m with David Brooks and Bret Stephenson. Let’s stop giving money to countries “in need.” It does nothing, and may actively do harm. It’s difficult, because it is human nature to try to help fellow humans in need, but it’s also the right thing to do. Certainly, what the first world has been doing for decades has not worked.

Taxachusetts: I would have voted for Scott Brown too. Seriously. I would have voted for a cardboard cutout against Coakley. Although she was inept, I would have done it to send the message. I have said, many times, that if Obama and this Congress can’t get it done, then there is no hope for us. Year one has been an epic, unmitigated failure. Iraq, Afghanistan, secrecy, deficit spending, bank coddling, and worst of all, the healthcare nightmare. I blame Obama for not using his robust post-election strength to strong arm Pelosi (failure) and Reid (failure) immediately. Weak, poorly managed, pathetic. Obama, where are your balls? It’s time to lead.

And, btw, why do you need the 60 votes? Make an exceptional bill and let the GOP filibuster. Call their bluff. If they do it, and the bill dies, you hang it around their neck. Now, the bill dies, and it’s a Dem failure. Disgraceful.

(But then there would be no healthcare bill, someone wails. So fucking what? Paul Krugman can cry to his cats. This is not the most pressing issue in America. Budget restraint, financial reform, and confiscatory, punitive taxes on very wealth bankers, should be the priority. Followed by a 10% spending cut across the entire government, no exceptions.

We are going to have to suffer, period. Let us start suffering already so we have a shot at not fucking our children.)

The bottom line for me, in all this, is that I have really given up hope. I don’t believe our Congress (and the state legislatures) are capable of introducing the change (ethics, responsible spending) that is necessary.

Something very, very bad is going to happen in the next ten or twenty years. War with China, epic depression/inflation/default, or, in the best case scenario, a benevolent military coup (and a draft) that reforms the government in a way that makes it possible for America to function properly.

David Petraeus, are you out there? Rome needs you. Cross the Rubicon. Cast the die!

P.S. I can’t believe I just wrote that. Nevertheless, letting it stand.

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The Decade of Fear

Sunday, December 27, 2009

Since everyone is summing up the decade, here are my two cents:

In America, it was the decade of fear. Beginning with Y2K, punctuated by 9/11, and ending with the continuing uncertainty of economic apocalypse.

We have gone, in a matter of a decade, from the security and comfort of Pax Americana, to, at best, a weak bipolar partner whose straits are inelegantly summed up by the popular construction Chimerica.

We are polarized, insecure, and, not surprisingly, at risk.

It hasn’t been a pretty picture.

You can figure out who to blame for yourself.


Why the Stimulus Will/Has Fail(ed)

Monday, July 20, 2009

Because it’s a matter of trust. The economy won’t recover until there is a palpable sense that we are doing the right thing. But no one can say, with certainty, that we are. Meanwhile, Americans, who truly understand being in debt, are watching the government pile on trillions with only a possible (it’s a bet!) positive outcome.

It’s beyond frightening. And though as a basic matter of economics – the money goes into circulation and revives the patient – what they are doing should work, there is a “spiritual” component here that is ignored. The patient has got to believe he’s going to get better. On that score, the doctors have a lot more work to do.

Just watch the Q2 GDP numbers beat expectations. We’ll hear that the recession is (near) over. And yet…their are plenty of layoffs on the horizon and no job creation; plenty of debt, and nothing resembling a balanced budget.

The hardest times are still ahead.

P.S. On a related note, if Congress doesn’t tax Goldman Sachs bonuses at, like, 90% (and they won’t), it will be hard to say that Americans aren’t justified in taking the law into their own hands down at 85 Broad Street. They shouldn’t. It is wrong to do so. But it will still be hard to say. Goldman Sachs represents the apotheosis of the moral hazard. Too big to fail, they make their profits on your back.


Big Surprise: Citi and BoA Fail Stress Test

Tuesday, April 28, 2009

From the Wall Street Journal.

Ken Lewis on life support. Pandit, too (though it really wasn’t his fault).

The real problem here is one, to repeat an oft used explanation, of confidence. No one believes the banks or the government. Any reasonably informed person sees what Geithner and Bernanke are doing and breaks out in a cold sweat. Borrowing and printing money to reinflate a bubble (our economy) is either genius or suicide. To me, it is most assuredly the latter.

We are in for years of topsy-turvy hard times with the outcome far from assured. Forget ripping the band-aid off quickly, they’re wrapping it up in bandages made of dollars. It’s going to hurt a lot more when it finally comes off.


Prosecute Bush

Friday, April 24, 2009

Krugman, rightly, calls for investigations.

It’s hard, then, not to be cynical when some of the people who should have spoken out against what was happening, but didn’t, now declare that we should forget the whole era — for the sake of the country, of course.

Sorry, but what we really should do for the sake of the country is have investigations both of torture and of the march to war. These investigations should, where appropriate, be followed by prosecutions — not out of vindictiveness, but because this is a nation of laws.

Exactly right. If laws were broken, and it certainly looks like they were, the criminals should be prosecuted.


Stress Test Leak?

Monday, April 20, 2009

This has caused a stir. Treasury claims not to have the results yet, so how can this dude have them? Treasury appears, however, to be lying. Nevertheless, this guy is apparently a major crank and the post is almost certainly false.

From a blog called Turner Radio Network:

The Turner Radio Network has obtained the stress test results. They are very bad. The most salient points from the stress tests appear below.

1) Of the top nineteen (19) banks in the nation, sixteen (16) are already technically insolvent.

2) Of the 16 banks that are already technically insolvent, not even one can withstand any disruption of cash flow at all or any further deterioration in non-paying loans.

3) If any two of the 16 insolvent banks go under, they will totally wipe out all remaining FDIC insurance funding.

4) Of the top 19 banks in the nation, the top five (5) largest banks are under capitalized so dangerously, there is serious doubt about their ability to continue as ongoing businesses.

5) Five large U.S. banks have credit exposure related to their derivatives trading that exceeds their capital, with four in particular – JPMorgan Chase, Goldman Sachs, HSBC Bank America and Citibank – taking especially large risks.

6) Bank of America`s total credit exposure to derivatives was 179 percent of its risk-based capital; Citibank`s was 278 percent; JPMorgan Chase`s, 382 percent; and HSBC America`s, 550 percent. It gets even worse: Goldman Sachs began reporting as a commercial bank, revealing an alarming total credit exposure of 1,056 percent, or more than ten times its capital!

7) Not only are there serious questions about whether or not JPMorgan Chase, Goldman Sachs,Citibank, Wells Fargo, Sun Trust Bank, HSBC Bank USA, can continue in business, more than 1,800 regional and smaller institutions are at risk of failure despite government bailouts!

The debt crisis is much greater than the government has reported. The FDIC`s “Problem List” of troubled banks includes 252 institutions with assets of $159 billion. 1,816 banks and thrifts are at risk of failure, with total assets of $4.67 trillion, compared to 1,568 institutions, with $2.32 trillion in total assets in prior quarter.

Put bluntly, the entire US Banking System is in complete and total collapse.

It’s entirely plausible, isn’t it? American ponzi, baby!


Sunday Notes and Marginalia

Sunday, April 19, 2009

Housing near bottom? Fannie thinks so. Calculated Risk? Not so much. I agree. (Fred Barnes?) [Calculated Risk]

Should Madoffs victims be means tested before getting IRS refunds? Well, let’s put it this way, should Steven Spielberg get a real payout on fictitious profits? I didn’t think so. By all means, give back whatever tax was paid on the fake gains – but please – the compensation / victimization culture is sickening. Why 9/11 and Madoff and not, say, Oklahoma City and Lehman shareholders? It’s insanity. You put your money in the market and you put it at risk. You trust someone without due diligence, you put your money at risk. [Clusterstock]

Larry Summers on Meet the Press:

But cautions that we’ve got a long way to go, that there are still substantial risks, that there are downside contingencies that we’ve got to prepare for, that there are issues in the global economy, that there are issues in commercial real estate, that’s right.

On my mind today:

  • Will the market come back to reality this week? Will the next steep drop begin tmw? It is certainly coming soon.
  • Is this crisis the end of the American dominance? Trite question now, of course, but feeling very real to me today. That would make the Clinton 90s the apotheosis of American Empire. And Bush (9/11) the catalysis that broke our upward trajectory.