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.


The Israel Lobby?

Tuesday, April 21, 2009

Rahm Emanuel is Jewish??? [Jerusalem Post]

Katz went on to compare Emanuel to the biblical Esther, who ended up at using her influence with Persian King Ahashverosh to intervene on behalf of the Jews of the Persian Empire.

“For if you remain silent at this time, relief and deliverance for the Jews will arise from another place, but you and your father’s family will perish. And who knows but that you have come to royal position for such a time as this?” Katz wrote, quoting from the Book of Esther (4:14).

Plus, Jane Harman in trouble for a little quid pro quo with AIPAC? [Congressional Quarterly]


Stiglitz Hates Good Bank/Bad Bank

Wednesday, April 1, 2009

And so do I.

This is the age of the moral hazard. There is no absolutely incentive to do the right thing.

From Stiglitz in the NY Times:

Assume that one of the public-private partnerships the Treasury has promised to create is willing to pay $150 for the asset. That’s 50 percent more than its true value, and the bank is more than happy to sell. So the private partner puts up $12, and the government supplies the rest — $12 in “equity” plus $126 in the form of a guaranteed loan.

If, in a year’s time, it turns out that the true value of the asset is zero, the private partner loses the $12, and the government loses $138. If the true value is $200, the government and the private partner split the $74 that’s left over after paying back the $126 loan. In that rosy scenario, the private partner more than triples his $12 investment. But the taxpayer, having risked $138, gains a mere $37.

Ya got that? 1-to-4 odds for that wager. Stiglitz continues:

What the Obama administration is doing is far worse than nationalization: it is ersatz capitalism, the privatizing of gains and the socializing of losses.

When the high costs of the administration’s plan become apparent, confidence will be eroded further. At that point the task of recreating a vibrant financial sector, and resuscitating the economy, will be even harder.

With no good options, Obama, while staving off desperation, is courting true, epic disaster. You spell it with four letters and it got us into this mess in the first place.

Where, I ask, are the criminal prosecutions for AIG, Bear, Lehman, Citi, WaMu, Merrill, etc?

And why is Chris Dodd still in office?

I am not placated by congressional hearings. I want blood.


Bush’s Legacy

Monday, March 30, 2009

Historians will produce reams about this abject failure of a man and his hastening the decline of the United States. Some thousand years from now scholars will look back in awe at the damage one presidency could inflict on a nation. Within the scope of the limitations of his office, he couldn’t have done more damage if he was trying.

For this, I will take off my shoe and beat the walls of his presidential library at SMU, if ever I get there.

In the meantime, I give you the quote that prompted this post:

“The United States is desperately trying to assert leadership, as if it were 10 years ago, when the U.S. set the agenda,” said Kenneth S. Rogoff, an economist at Harvard and another former chief economist of the fund.

It’s from an article in today’s New York Times about China and India challenging U.S. leadership of the IMF.


Is it Wrong to Like James Baker?

Monday, March 2, 2009

Although I will never forgive him (and everyone involved) for his role in the Florida recount and Bush’s eventual presidency, I have been impressed with Baker’s latter work as a statesman and government elder.

Today, he’s got a sensible piece in the Financial Times about how to clean up our banking mess. The prescription?

We should act decisively. First, we need to understand the scope of the problem. The Treasury department – working with the Federal Reserve – must swiftly analyse the solvency of big US banks. Treasury secretary Timothy Geithner’s proposed “stress tests” may work. Any analyses, however, should include worst-case scenarios. We can hope for the best but should be prepared for the worst.

Next, we should divide the banks into three groups: the healthy, the hopeless and the needy. Leave the healthy alone and quickly close the hopeless. The needy should be reorganised and recapitalised, preferably through private investment or debt-to-equity swaps but, if necessary, through public funds. It is time for triage.

To prevent a bank run, all depositors of recapitalised banks should be fully guaranteed, even if their deposit exceeds the Federal Deposit Insurance Corporation maximum of $250,000 (€197,000, £175,000). But bank boards of directors and senior management should be replaced and, unfortunately, shareholders will lose their investment. Optimally, bondholders would be wiped out, too. But the risk of a crash in the bond market means that bondholders may receive only a haircut. All of this is harsh, but required if we are ultimately to return market discipline to our financial sector.

From everything I’ve read, this sounds about right to me. Let’s get it going.


Obama Gets It

Tuesday, February 24, 2009

I was getting worried.

Very impressed with the speech tonight.

Looking forward to his budget and to seeing how he plans to pay for all of his initiatives and still reduce the deficit.

I am skeptical that we will do the right thing, but I believe Obama will do the best that can be done.

Having read this profile of Rahm Emanuel, I am also coming around on the stimulus bill. It was, it seems, the best measure possible under the circumstances, and I do believe it will provide a boost.

This was the speech he needed to make. Positive, inspiring, hopeful. For a night, at least, he took away the fear.


Borrow from Children!

Saturday, February 14, 2009

A brilliant idea! The solution to all our financial problems!

I have to say, I am rapidly becoming disillusioned with Obama and the Dems. I think the stimulus is a huge waste of money and will ultimately prove to do more harm than good (not that the GOP tax cut solution was better; it wasn’t). If Obama isn’t going to do the right thing, no one ever will.

I am completely in favor of a cheaper, immediate, short-term burst of stimulus in the form of unemployment aid, state aid, and the like. But this bill is crap and we’re borrowing or printing money to pay for every cent of it. Eventually, we are going to have to cut costs, live within our means, stop borrowing to consume.

Right now, it looks like America is heading for default or hyper-inflation, and in either case, it’s going to look a lot worse than it does today.

It’s a good thing America is too big to fail.

Or is it?