Tuesday, March 24, 2009

Media Missing in Action: Presidential Press Conference Mar. 24, 2009

What did we learn from this press conference? That the members of our media become dumber and more out of touch with every passing year. Before long I suspect that prepubescent children could ask better questions.

It's not just the "gotcha" journalism to which we've been endlessly subjected for the past 20 or 30 years. It is the shear stupidity on display. And that was clear with the first question. The reporter wondered why, given the problems with AIG, the government wanted greater regularity authority. Doh? One could almost see Obama wondering if she were really that dumb or if it was simply a setup question so he could explain about the lack of current authority to wind down non-bank institutions.

I'd say more but, quite frankly, I'd have to watch the whole mess over again to isolate the one or two semi-reasonable questions that were asked and it, quite frankly, is not worth the time.

If you have not yet watched the press conference or have seen only TV excerpts, go to C-SPAN and watch the last 30 seconds or so. Obama's answer to the final dumb question tells you all you have to know about one of our biggest media problems: that they have the attention spans of infants.

Wednesday, March 18, 2009

Systemic Risk

It's obvious that Americans do not understand what is meant by systemic risk. Worse, I suspect that most of the members of the various House and Senate oversight committees do not understand it either.

Paulson, Geitner, Bernanke: they all understand it. But the knowledge is so complete, so innate, they simply do not realize that other people do NOT understand what they mean, how it is assessed, what the risks are. Or, perhaps, they know their Congressional overseers do not understand, but they haven't figured out how to explain it without showing that the emperor has no clothes (that a lot of those in Congress have not a clue.)

Worse, the ignorance related to this issue goes further. On Monday, Mar. 17, 2009, Pulitzer Prize-winning journalist Gretchen Morgenson said two truly idiotic things on Terry Gross's Fresh Air.

First, she couldn't understand why U.S. taxpayers should pay off foreign counterparties of AIG. Apparently the NYT's crackerjack financial reporter doesn't realize that our financial system does not stop at the country's border. We live in a worldwide financial market. Americans invest abroad. Foreigners invest here. The banks are actually rather tightly connected. Nor does it occur to her, apparently, that obligations (treaty, legal, etc.) also do not stop at the Atlantic and Pacific Oceans. Further, if there were no legal or self-interest reason for doing this (because massive bank failures in Europe would, and to some extent have, effect us), there would still be a moral obligation.

The worldwide financial crisis (not the recession which probably would have happened anyways) began in the U.S. with our sub-prime mortgages, our inadequate or non-existent, or lax regulatory systems, and our glorious "quants" who invented all these instruments that have come close to destroying not just our financial system but the world's. This mess was made in the U.S. and we have an obligation to help our partners while we help ourselves.

Second, she couldn't understand why the President couldn't just break the employment contracts at AIG because they're no different than the bankruptcy cramdown (allowing judges to force a write-down of first home mortgages in bankrupt proceedings).

Hmmmmm. The President can't do either. He hasn't the legal authority. As a matter of fact there has been enormous resistance in the Congress to the proposed bankruptcy cramdown bill (passed in the House but not, at this date, in the Senate) precisely because "contracts must be respected". Nobody in the Executive branch, including the President, has the authority to abrogate, willy nilly, any kind of contract between willing parties.

Barney Frank, to his credit, admits it is not a good idea for the Federal Government to get in the business of, through statutes, canceling contracts. And I, quite frankly, do not like the idea of using the IRS to punish people we think ought to be punished. No matter how such a law is written, I figure some innocents will be caught. And, again, if the Congress can do that in this case, where there is lots of public support, what if it did it for less universally approved reasons?

Frank thinks it makes more sense to exercise our rights as owners of AIG. I will note, however, that Liddy's lawyers told him that if they broke the contracts, the employees could sue, would probably win and it would end up costing even more. I'm not a lawyer. I have no idea if this is true. But the retention bonuses do seem to be issued on a "pay for performance" basis rather than a just "you're here" basis which makes them more rational than otherwise might be thought.

P.S. As I have said before, I am not an accountant, a lawyer, an auditor or a finanacial analyst. I do not work in the financial services industry. My opinions are based on a lot of reading and hundreds of hours of watching C-SPAN and my own commonsense.

These are not Bailouts; They are Loans or Purchases

We need different terminology. To me a "bailout" is a gift. I'm sunk in credit card debt, I go to my folks, ask them to bail me out. And they do. At no cost to me. That's a bailout.

That's not what we've done with any of these companies. We've loaned them money on which they must pay interest or dividends. The Fed has acquired assets, in lieu of cash, which they can sell later on when the markets have recovered. We acquired equity via preferred or common stock.

Whether or not you agree with the original decisions, we are now committed and our only objective should be to ensure that these investments, unlike those in our 401Ks, actually generate a profit or, at worst, make us whole some years down the road.

Please remember Chrysler way back when. That loan, too, was widely criticized, but Chrysler paid the load back early and in full and at a profit to the taxpayers. So it has been done before. Not on this scale, of course, but it can succeed.

AIG, Bailouts: Temper Tantrums vs. Commonsense

OK, I have had enough of these temper tantrums, these "cut your nose to spite you face" Congressional and public rampages.

There are two choices re AIG and the other bailouts. And both are nothing but bets.

1. Let all these companies (AIG, Citi, BofA, the auto companies, etc.) go bankrupt and just hope that the world doesn't collapse. You want to risk a global depression? A stock market down to 0? You think these are exaggerations? If the financial world collapses, not even the full faith and credit of the U.S. is likely to save you. If you're right and I'm wrong, well, you can say "I told you so".

This is what can also be thought of as one side of the "sunk cost" decision. Yes, we've invested multi billions of dollars but that's no reason to send good billions after bad billions.

2. Monitor, regulate, exercise strong oversight and help all of these companies to recover. The consequences? The economy improves and all the taxpayers get paid back. It's possible that one or more of these companies will fail no matter what we do but, at a minimum, the money we've invested will have given us the time to wind them down in a more orderly fashion. Will this take time? Yes. The economy isn't going to recover tomorrow and none of these companies can fully recover until the economy does. But only children should expect things to happen tomorrow. So what if it takes 4 or 5 or 6 years to full unwind everything? In the history of the country, that's about the length of the Revolutionary War, the Civil War or WWII. And it's a lot shorter period than the Great Depression.

This is partly much the other side of the "sunk cost" assessment: I've already put so much money into this hole, I might as well keep going and hope for the best.

Me, I'm the cautious and optimistic sort. I prefer choice #2.

Media Missing in Action: AIG Bonuses and Loans

OK, Liddy's 3/18/09 testimony has been illuminating - although many of the members of the committee don't seem to be listening.

The Bonuses

These are NOT performance bonuses. They are retention bonuses for people in AIG-FP, the source of most of the problems. The purpose of the bonuses was to pay people to stay until they had wound down their positions. The people who have left, who signed the contracts in Jan. 2008, left because they had wound down the positions they were expected to wind down. And they got their retention bonuses because they had fulfilled their contractual obligations. Those still working are being paid their retention bonuses because they have not yet wound down their positions but are still working to do so.

This division had, at the start of 2008, as I understand it, 2.3 trillion in notational value of positions. Today, 50% has been wound down - so now it's about 1.2 trillion. In short, progress has been made. Each contract is complex and, sad to say, the people who made the contracts probably know more about how to wind them down than somebody new. Think about the effort requried for a new employee, from outside the company, to replace you in your job.

What Liddy feared is that if he failed to pay the retention bonuses, the people required to wind down their positions would simply have walked out the door. And these are positions that must be managed daily. Given the 50% decrease in the value of these positions since Liddy took over, they seem to be doing their jobs.

If you've ever been employed by a company that went bankrupt or was acquired by another company (as I have), you know that people are still needed to wind down the company: to fire employees, to work with the acquiring company to integrate systems, etc. - people who know they will lose their jobs when the integration is completed or everything has been sold (think about Circuit City employees who stuck around to sell every last item they could before they, too, lost their jobs). A bonus can keep them from walking out the door and making the bankruptcy or acquisition that much more difficult.

Yes, the dollar amounts are huge, but so are the salaries at companies like AIG. All you free-marketers out there, all you wealth-defenders out there, shouldn't be upset about the size of the bonuses.

To say that the American taxpayers have loaned the company 170 billion dollars misstates the case. AIG owes the Fed and the Treasury about 80 billion dollars. There is, I think I heard, a 30 billion dollar line of credit that has not yet been tapped. The rest consists of assets separated off into something called Maiden Lane 2 and 3 which are now assets on the Federal Reserve's balance sheet. These assets were bought for 30-40 cents on the dollar. Today, according to Liddy, their market value ranges from about 30 cents to 75 cents on the dollar. They are all performing assets. When the market improves, the Fed will sell these assets and the money will be repaid. If I understand this correctly, it is the equivalent of my accepting your house in payment of a debt. I pay you less than it is worth based on the conviction that, since I am rich enough to just hold it (and rent it out to cover ongoing expenses), I will be able to sell it some years in the future and make a nice profit.

All of this seems rather reasonable, if unpalatable, to me. But neither the media nor a lot of people on the committee grilling Mr. Liddy (all of whom precede their often vicious attacks with statements of praise for taking on a thankless job for $1/year and no stock options) do not seem to have either heard or understood Mr. Liddy's explanations.

In short, as far as I can tell from Mr. Liddy's statements, the company has made significant progress in winding itself down - in such a way so as not to create financial chaos.

The AIG mess should not have occurred in the first place, but one plays the cards one has to the best of one's ability. And I think that Liddy has done that.

Kanjorski's AIG Hearing - Mar. 18, 2009

I've been watching these financial hearings for months and have concluded that Rep. Bachus, while perhaps the quintessential Southern gentleman, understands banking and finance no more than I do. But I was impressed by his opening statement for its lucid commonsense assessment of the issue (AIG's bailout and bonus payment) at a time when the media, the talk shows, the web, and, above all, Congress, has been whipping up hysteria equivalent to that which usually precedes a country's going to war.

And if Hypocrisy has a pantheon of heroes, surely Congress must rank at the top. I haven't done a count, but I suspect that many of the Representatives and Senators who opposed the bankruptcy cramdown for first-home mortgages (allowing, for the first time, a bankruptcy judge to write down the principal) on the grounds that mortgages were sacred contracts now consider contracts to be in, I think, Ackerman's words, "legal technicalities".

And, from the part of the hearing I've seen, I was more than a little bemused to see a Republican ask the GAO to investigate the conference committee hearing on the stimulus package which specifically exempted employment contracts from being abrogated. He apparently is unaware of the separation of powers. Or perhaps he thinks the executive branch should routinely investigate Congressional hearings and deliberations.

Friday, March 13, 2009

Jon Stewart vs. Jim Cramer: Takedown Part II

The Daily Show's Mar. 4, 2009 takedown of CNBC was brilliant, biting, and funny.

Stewart's interview with Jim Cramer on Mar. 12, 2009 was one of the most serious and substantive analysis (if not the most) of the purpose of the CNBC network that I have ever seen.

Jim Cramer was way, way, way out of his league.
Jim Cramer Extended Interview

First, Cramer assumed that he was the only target. Second, he completely failed to understand Stewart's fundamental issue: that CNBC was not giving value to the people who invest in pension funds and 401Ks, that it was, rather, a shill for Wall Street. Worse, it misrepresents itself as being for the former. Cramer simply did not get it.

This was a serious and often uncomfortable interview by Stewart, but it showed just how feckless the MSM (and the blogosphere for that matter) has been when it comes to business reporting.

Thursday, March 12, 2009

Tracking the TARP: How Practical?

Since everybody in the media and in Washington wants to know where the TARP money went, I've been thinking about the mechanics. (Please note: I'm not an accountant or an auditor and, although I am an IT person, I don't know how bank systems are designed.)

As I believe the CEO of BofA told one committee, the government's money doesn't get a color-code. And some in Congress do recognize that money is fungible. This, however, only makes them angrier (as if being angry would make money less fungible or more trackable).

So, anyways, in this thought experiment, let's start on the input side. I assume it is easy to set up a new account called "TARP" and, for all I know, that is what the banks have done. It's the output side that is the problem.

I suppose one could tag the TARP money, but that would mean changing who knows how many computer systems in these banks. It would probably take years and cost a bundle. Not a realistic idea. And this is why, I assume, it is so hard for Treasury or anybody to answer the question of "where did the TARP money go?"

But let's take a very simple, and unrealistic, system. One input account labeled "TARP". All the hundreds or thousands of loan officers in all the branches of these banks are given access to this account. (Practically speaking, programmers would have to add all the controls needed to assure only authorized access and limits and to prevent waste, fraud and abuse. Naturally, the implementation of even this simplified system would take at least months - but for this thought experiment we will ignore this little problem.)

So, what do the loan officers do next? Well, given the mood in Washington and the country, they will be told to make all their loans from this one pot until they have reached their limit. Wonderful. Now we know where the TARP money went. Problem solved.

No, it isn't. Why? Because TARP was supposed to make it possible for banks to lend more than they would have lent without it. But in this very simple case, all we know is that the TARP money was spent. Had it not existed, the banks might have made all of those loans from their own non-TARP money. We would have no way of knowing if that was true or not.

What we need to know and why it's not easy to find out
Basically, we really want to know two things. First, who got the loans. Second, did the bank's lending increase over what it would have been otherwise.

We could answer the first question in my simple system. But I suspect that answering it in the real world is imposssible because of the complexity of the systems involved. (See Input and Output above.)

What about the second question? Well, one could compare loans this year to loans last year and if more are made now than before, we could assume that TARP was the cause.

Not so fast. We're in a major recession. For 4 months in a row, over 600,000 jobs have been lost. (There have been only 10 such months since records began.) An enormous amount of wealth has disappeared (predominantly in homes and 401Ks). People are saving, not spending. And they are not borrowing either. So, total loans could still be down this year - because people are not borrowing or because the borrowers are no longer credit-worthy - even though the TARP money is letting banks make more loans than they would have made otherwise. That is to say, one can't reach any conclusion about whether or not more loans have been made simply by comparing loan rates or amounts because the recession muddies the waters.

No doubt there are ways to track the TARP money (to some degree) that do not require a massive redesign of computer systems and that can take into account reduced borrowing, but I suspect they are not easy to implement and will, therefore, take time to develop and put in place.

Unfortunately, complexity is not something the media or Washington understands.

Wednesday, March 11, 2009

TARP and the Congress: Neel Kashkari vs. Dennis Kucinich

Well, Mr. Kashkari underwent another multi-hour grilling by, this time, Kucinich's Oversight Subcommittee on Domestic Policy, and one wonders why he has chosen to subject himself to this continuing abuse.

The more I watch committee hearings on C-SPAN, the more I wonder how our country has survived. Although there are some smart people in the Congress, the number of idiots and ideologues (sometimes the same, sometimes not) surely exceeds their presence in the population (I hope).

First, Mr. Kashkari must deal with the incredible ignorance of the people who are questioning him. They know next to nothing about banking, about finance, about economics in general.

Second, they are like children who want their candy NOW! The stimulus package, passed less than a month ago hasn't worked yet! (The money has only started to trickle out the door). The 1/2 of the TARP given to the banks in the Fall hasn't stopped the recession. (Note: that wasn't its job. Its primary purpose was to stabilize the financial system.) And they don't understand that our financial institutions are in a precarious balancing act: they want to lend but they also have to maintain their capital levels (Tier 1 and, now, TCE)to avoid going bankrupt. Doesn't matter to these financial geniuses. The banks are supposed to do both.

Third, some are still angry because Treasury injected capital rather than bought up the bad assets - no matter that multiple people from the FED, FDIC and Treasury have explained what happened on multiple occasions. They still don't realize that buying up those assets has turned into a hugely complex problem - and Treasury, to its credit, realized it had to do something fast, something specifically authorized by the legislation (capital injection).

Fourth, he is constantly required to respond to conflicting ideological demands between the "free market over everything" and the "throw the bums out" groups.

Fifth, they don't understand that these multinational banks have customers and businesses around the world. They want the TARP money to be used "only" in the U.S. A few recognize that money is fungible, but still want to control how the banks conduct their business.

One of the dumbest questions/ideas came from Issa who thought it would have made more sense for the government to just buy up/renegotiate all the bad mortgages. It didn't occur to this doofus (although Kashkari did his best to gently point it out) that the government would have to hire thousands of employees who knew something about mortgages and those people would have to come from the very industries under scrutiny. Amazing, isn't it? Issa, foe of all government, convinced that the federal bureaucracy is the devil, thinks that same government should have gotten into the mortgage modification business down at the individual level.

The biggest complainer was Kucinich, appalled by the lack of oversight on how the money is being spent. Sure, it could probably be better. But since Sept., a new Administration has taken office, the economy has gone into a tailspin, banks are failing weekly, and the stock market may be headed toward 5000. You'd think it would have occurred to Kucinich that, just maybe, the Treasury has a lot on its plate and expecting penny-by-penny accounting of the money would be impossible under the best of circumstances and impossible given the speed with which the economy has deteriorated.

Monday, March 9, 2009

Media Missing in Action: Small Business and Obama's Awful Tax Increase

Well, Republicans have been screaming for days about how Obama's tax increase on those earning over $250,000 will kill small business.

It turns out that only 3% of the small businesses in this country would be affected. (Thank you Peter Orszag for this rather important fact that none of our useless media ever bothered to ferret out.)

When faced with that fact, a Republican changed tactics. Yes, that's true. But that 3% employs 50+% of all small business employees. So?

And, remember, we're talking about turning back the top marginal tax rate to where it was in 2000. Less than a 4% increase.

But we are supposed to believe that a 4% tax increase on 3% of the small businesses in this country will cause these business people to ... what? Shut down their businesses? No, I don't think so. Refuse to expand or hire new employees? That's kind of hard to see, too. Don't most businesses expand when there is increased demand for their products? So unless a tax increase is confiscatory - costs the company more than it can earn through expansion - I find it truly difficult to imagine this outcome either. (Any of you small business people earning more than $250,000, please let me know if I am wrong.)

This reminds me of an argument that I haven't heard in a couple of decades:that the progressive income tax on individuals will cause them not to seek promotions. Because promotions come with salary increases, usually, and some salary increases come with increased taxes. Now, I have never known anybody to turn down a promotion because of an associated tax increase. Again, if the increase totally wipes out the salary increase, I suppose a person might refuse the promotion - but being primates, I suspect most of us would still go for the promotion.

Friday, March 6, 2009

Same-Sex Marriage Ban: California Supreme Court Hearing (Mar. 5, 2009)

Well, I've been watching the replayed hearing on C-Span and, as an opponent of Prop. 8, am utterly disappointed in the arguments by its opponents.

With the exception of Maroko, none of the lawyers seems to have given much thought to the questions they would be asked, especially since they are presenting an admittedly novel argument: that the difference between an amendment and a revision is relevant only when considering the structure of government, not inherent rights.

Their arguments, to this non-lawyer, were weak. Their presentations (Maroko excepted) were weak. Their answers to questions were, to be kind, unimpressive.

Ken Starr (a man I truly despise), on the other hand, was masterful. He was prepared for the questions he got. His responses were to the point.

My guess: the court will let Prop. 8 stand but will not make it retroactive.

Media Missing in Action: The Stimulus Package (If only the Democrats hadn't shut out Republicans)

I am sooooooooo tired of the endless whining by Republicans that they were shut out of the writing of the Stimulus Package and that, if they had been able to participate, it would have passed with overwhelming support of both parties. Bull.

But our useless media, of course (including NPR), continue to repeat this idiocy, to rail against Pelosi (who has become this decade's Hillary Clinton).

Now, I realize that these blow-dried, 6-figure media figures can't be expected to actually report on anything, but couldn't NBC or CNN or ABC hire an unemployed liberals arts graduate to watch C-SPAN? If they had, they would have learned that Republicans were involved. I watched the mark-up committee; I watched the arguments on the floors of both chambers.

Dozens (maybe a hundred or more)of amendments were offered by both parties. Most, but not all, of the Republican amendments were defeated. But a number of the tax cuts survived solely to garner Republican support - not that they did much good.

What proposal did Republicans think would gain bipartisan support? A $450 billion dollar bill focused almost solely on tax cuts.

The Republican amendments failed not because they were not allowed to participate but because they implemented Republican theories of government and spending. Republicans, it should be obvious to our dolts in the media, lost the election in Nov. 2009 by substantial majorities. They have no right to expect a Democratic President and a Democratic Congress to throw over Democratic principles in favor of Republican principles.

One wouldn't think that this simple fact should need to be pointed out to those self-defined experts on politics. Republicans lost. Lost. Lost. If they want to have some input, they have to be willing to step outside their hard-right ideological base. If they don't, they cannot expect Democrats to move right to join them. That is what elections are about.

To quote Republicans after 2000: get over it.

Media Missing in Action: More on Earmarks

Does anybody in the media ever read anything, do anything other than gossip with their counterparts and political operatives?

As I pointed out before, the earmarks in the Omnibus Appropriation Bill for 2009 constitute less than 2% of the total. 2 billion dollars. The effect on the debt or the deficit? Invisible. And we are in a major, major recession by any criteria. Government spending in this environment pretty much can't be bad. And if Representatives and Senators want to direct some of that money to projects of particular interest to them, who cares? (If earmarks were 50% or 75% of the bill, I might argue differently although, again, in this economic climate, I'm pretty much for government spending of any kind.)

Two of the earmarks that have gotten special treatment from John McCain and the media particularly irritate me as examples of "unprincipled" spending: the research on hog smells & manure in Iowa, and on termites in Louisiana. I am neither a farmer, nor a Southerner. But I do read widely. So I know that the effluent from factory hog farms (smells and manure disposal) are both major environmental problems that also have significant economic consequences as well. But nobody on TV (or, unfortunately, on NPR) seems to have read Michael Pollen. As for the termites, I'm not up-to-date on the current situation, but I recall reading that termites in New Orleans are especially destructive, hard (impossible?) to kill, and moving north. That isn't good for anybody who lives in a wood building.

Thursday, March 5, 2009

Campbell Brown's No Bias, No Bull - Appropriations Bill "Loaded with Pork" - Earmarks: Another Look

Well, snarky Brown opened up her show tonight with another slam about the "loaded with pork" appropriations bill. And what is her definition of "loaded with pork"? 7 billion out of 410 billion. That's less than 2% of the entire bill. 40% came from Republicans, 60% from Democrats. One wonders how she would describe a bill that were oh, say, 50% earmarks?

Worse, I have recently learned that earmarks are not what I thought they were: spending added to a bill by a Senator or Representative to benefit a special project. That's not true, and it is time that our useless media got it right.

From the Wikipedia:

The federal Office of Management and Budget defines earmarks as funds provided by Congress for projects or programs where the congressional direction (in bill or report language) circumvents Executive Branch merit-based or competitive allocation processes, or specifies the location or recipient, or otherwise curtails the ability of the Executive Branch to manage critical aspects of the funds allocation process.

Attempts have been made to define earmarks in ethics and budget reform legislation. However, due to the controversial nature of earmarks and the effects these definitions would have on Congressional power, none of these has been widely accepted.

Despite the lack of a consensus definition, the one used most widely was developed by the Congressional Research Service, the public policy research arm of the U.S. Congress:

"Provisions associated with legislation (appropriations or general legislation) that specify certain congressional spending priorities or in revenue bills that apply to a very limited number of individuals or entities. Earmarks may appear in either the legislative text or report language (committee reports accompanying reported bills and joint explanatory statement accompanying a conference report)."[2]

In short, this is not new money but the allocation of money already authorized but not directed.

The argument in favor of earmarks that I heard during the debates this week is that Congress has a right, and a duty, to direct spending. The issue is not whether the money should have been appropriated but where it should be spent. So who should decide? For conservatives (one of whom I am not) the quandary could be stated thusly: who can better decide where to spend money? A faceless Federal bureaucrat or the person representing the district or state?

Looked at in that light, maybe earmarks aren't so bad. Yes, some are dumb, from one perspective or another. But Representatives are elected to represent the needs of the people in their district. And Senators are elected to represent the interests of their states. As a Californian, I might think a project in Minnesota is stupid and wasteful while a Minnesotan might think the same of a project in California.

Obviously, our elected officials have obligations to the country as a whole, in addition to their parochial issues, but I can't see any bright hard line telling them when to give priority to their personal morality, their constitutents, or the country.

Bottom line: earmarks do not increase the cost of spending bills, they simply direct some of the spending. One can argue about who should direct the spending (the Federal government or Congressional representatives), and whether specific projects benefit the country as a whole and even whether that kind of test is realistic or practical in our federal system. But it is time that Americans learned that when we are arguing about earmarks we are arguing not about how much money has been authorized but where it is being spent and who has the right or duty to decide where it is spent.

Grunwald's March 5, 2009 Time piece does a better job than I have done at pointing out where the real problem may be.

Jon Stewart - The Daily Show on Mar. 4, 2009 - Roasts CNBC (incl. Rick Santelli & Jim Cramer)

The Daily Show keeps getting better. Having a liberal in the White House has in no way affected its quality.

Last night's roundly deserved roast of CNBC's coverage of the stock market showed TDS at its best: a stinging montage of CNBC prognostications showing just how often, and consistently, wrong its predictions have been.

I especially enjoyed the sequences that focused on Jim Cramer. I've been watching Cramer for a couple of months now and the one constant is his inconstancy. His advice varies almost daily and rarely holds up over the long haul. (Only a few months ago, he declared Bank of America, Well Fargo, and JP Morgan Chase to be among the 5 "gold standard" banks.) Yes, I know he was a successful hedge fund manager but as such he could and did trade daily, probably almost every minute. Most of the people who watch him can't do that. He's a lot of fun to watch, but unless you have money to burn and want to buy and sell stocks all day, he's not going to help you.

The Mar. 4, 2009 montage was just one of many that Stewart's staff has put together over the past year. One recent montage I recall contrasted statements by Gibbs (Obama's press secretary) with those from prior press secretaries. Not a word's worth of difference. It takes a lot of skill and research to put together these montages. You must realize that there is something worth looking for, then locate the sound bites or videos that will support your thesis. Google and the other search engines help, but anybody who's used them for serious research knows just how hard it can be to find just what you need.

So, yes, I adore Stewart. But his staff deserve special credit for providing the material. Give Thain's bonus to them.

Wednesday, March 4, 2009

Bernanke, Geithner, and Orszag Face Congressional Committees Mar. 3, 2009

Well, I've now seen Geithner and Bernanke testify before several Congressional committees and yesterday I saw Orszag's first budget presentation.

Here's my assessment of the three as performers.

Without question, he is the worst of the three. He is simply not a good salesman - in large part because of a number of quirks. First, he has a tendency to hunch over the mike and look up at the committee from under his eyebrows. Second, he has a habit of starting answers with phrases such as "that's an excellent question". Third, he has an Obama-like tendency to repeat the same phrases over and over and over. Fourth, and worst of all, he is defensive. He may be very, very smart. And his plans may, indeed, pull us out of this mess. But he does not give that impression and right now we need somebody who can be seen to be confident, optimistic and in charge. (It also doesn't help that he continues to talk in generalities.)

Calm and respectful. Sometimes, I think, too respectful. Like Geithner, he is smart. And he has acted decisively. But in front of Congressional committees, he comes off as a bit of a mouse. Perhaps he feels constrained because of the position he holds, but he seems to bend over background not to get into any kind of argument with any of his questioners - which limits his ability to sell, to Congress and to citizens, the actions he has taken.

Triple A+. His performance yesterday was masterful. His command of budget details was awesome. His answers to the questions posed were concrete and short. No endless justifications of the general strategy, goals, etc. Moreover, he was not intimidated by the Republicans and he was indulgent toward those Democrats whose questions were designed solely to prove how good this budget is in contrast to the Bush budgets. Not only was he never defensive, he seemed to enjoy the give-and-take. Orszag came across as a man who understood the budget, who supported the budget, who was not ashamed of the choices made in creating the budget. Cheers.

Coburn & Education - A Lot of Neurons Short of a Full Deck

In arguring against Harkin's earmark for repairing schools in Iowa,Mr. Coburn asserted that, of course, our schools only declined in quality after the federal government got involved (out in here in California, it's pretty obvious that schools began to decline after the passage of Prop. 13 rolling back & limiting property tax increases), and that students could learn just as well in a quonset hut as in a high-tech building.

Now, I suppose one could build a quonset hut that would hold labs for biology, chemistry, physics, computer science, etc. And that would have running water and indoor toilets - but after one has done all that, how many students could be accommodated? So, unless he thinks that one-room schoolhouses with chairs and a blackboard provide the same quality education as a high-tech school building (a very dubious claim in 2009), Mr. Coburn must be given credit for one of the dumbest arguments ever made against an earmark.

Further, he argued that to spend money repairing schools in Iowa in today's difficult financial situation would mean placing - yes, you guessed it - a burden on our children and grandchildren.

Although one can argue about the value of earmarks, or the value of this earmark in particular, it seems to me that arguing that improving the educational environment of students who will be creating those future generations could be bad for those future generations is absurd. Educated parents generally raise educated children.

One wonders if Coburn would be where he is today if he had been educated in a quonset hut.