Lehman Failure - Spencer Bachus & Fuld agree: it's the Fed's fault

Well, if proof were needed that Republicans have decided the financial crisis was the fault of the government and not of Wall Street, Bachus's questioning of the April 20, 2010 panel (with Fuld, former CEO of Lehman) during the hearing should put any such doubt away.

Fuld's testimony was, in effect, that neither he nor Lehman did anything wrong. The regulators said they did nothing wrong. So they didn't. And if the Fed had opened up its window to them, or backed Barclay to let it buy Lehman, or .... well, you get the idea.

So did Bachus question Fuld's denial of all responsibility? No he questioned a regulator from another government agency, not the Fed or the Sec, to elicit agreement that the Fed, in spite of protestations by Geithner, as former head of the New York Fed, and Bernanke, that it did have the authority to regulate Lehman, to stop its doing bad things and didn't do it.

I simply do not understand how the media let Republicans get away with their continuing defense of the very companies responsible for the financial meltdown.

Also clear from Republican declamations throughout this day's hearings is their belief, in spite of the meltdown following Lehman's collapse, that a "bailout" fund isn't necessary to assist in the orderly shutdown of failed institutions because the market should just let them fail. The market just let Lehman fail - and that caused the world's financial system to go into freefall.

The media, in their continued obeisance to Republican talking points, allow Republicans to characterize a fund to be funded by the financial institutions themselves as a government guarantee or taxpayer-funded bailout when its sole purpose is not to save an institution but to shut it down, fire its management, zero out its creditors, and use the money from the fund to help in the unwinding of positions.

But, of course, that would require the media to do their job, to do actual research. And that, of course, would be too much work. Indeed, since the SEC suit against Goldman Sachs was announced last week, our esteemed members of the press have wallowed, even gloried, in their inability to explain something very simple. Goldman sold a package of securities without telling the potential buyers a very critical piece of information: that the securities had been selected by a hedge fund which expected them to fail.

BBC News & The Christmas "Bomber"

Cheers to BBC Reporter Mark Marvel (sp?) on the Sat. Jan. 9, 2010 3PM PST broadcast for his rational analysis of the media hysteria surrounding this failed attack.

If only there were somebody, anybody, in the U.S. media capable of doing something more than repeating shrill right wingers ad nauseum. Campbell Brown may take the cake for cable hysteria, but if so, only by a bit.

Media Missing in Action: Prof. Gates, Cambridge & "Disorderly Conduct"

While the media have, not without reason, focused on the racial profiling in this incident, I've seen no mention of the reason for the disorderly conduct charge.

Was Gates drunk? Was he destroying property? Was he waking up the neighbors? Or is it simply illegal in Cambridge to argue with, be disrespectful to or otherwise insult a police officer? And if so, what kind of nation have we become when the exercise of free speech, however unpleasant, is prohibited when the object of same is a police officer? (Don't answer.)

Left Missing in Action: Nobody should get between you and your doctor

One of the GOP mantras re health reform (listen to Grassley et. al.) is that Americans don't want government bureaucrats to come between them and their doctors - which is why we should oppose single-payer and a public option and comparative effectiveness.

The most frustrating thing about this mantra is the almost total lack of response by the so-called liberal media and Democrats.

We already have bureaucrats getting between patients and their doctors. They are employed by private health insurance companies. Thousands (tens of thousands? millions?) of them are employed to deny coverage to patients. Some doctors spend 20% of their time arguing with these people.

Now, I agree with the basic premise. Health care decisions should be between patients and their doctors - but if somebody has to get in between the two in order to reduce overall health expenditures, I'd rather it be a civil servant who can't be fired for saying "yes" (and who may rely on comparative effectiveness research rather than cost) than a private insurance company employee whose salary depends on reducing costs and increasing the bottom line.

Please explain to me, somebody please explain, why this very simple and accurate response to this frequently repeated Conservative canard seems to be almost completely lacking from the health care debate.

Media Missing in Action: Dealer Closings/June 3, 2009 Senate Hearing

I've spent months watching a lot of frustrating Congressional hearings on various aspects of the financial crisis this past year, but one of the most frustrating was the June 3, 2009 Senate hearing into the closing of dealers due to the GM and Chrysler bankruptcies.

It was an illustration both of the limits of hearings and the wholesale failure of the media to act as news organizations.

The primary failure of the hearing was to get an answer to a central dispute: the dealers asserted that they were not cost centers, that they cost GM and Chrysler absolutely nothing, that they paid for everything they got (cars, signs, advertising, etc.) so, since the two dealers there were profitable, they didn't understand why they would be closed. GM and Chrysler asserted that they had to close dealerships to become profitable.

Now, this seems to me to be an issue of fact, not opinion. But, after listening to all the questions and the responses of GM and Chrysler, I still don't understand the issue. Isn't this something that CNBC or Fox Fin., at the very least, should have been reporting on and explaining?

Nor, during a week of endless commentary about right-wing-nut opposition to Sotomayor, did any of the major "news" networks think it might be interesting to, say, identify which Senators complaining about dealer closings opposed the bailouts, insisted that union employees had to "share" the burden, etc., argued that these companies should be allowed to go bankrupt (what did they think would happen to dealerships during a bankrupcy?). One would think that an hypocrisy watch would be at least as entertaining as debates over whether a Latina woman would be a better judge than a white man. But, of course, that would take research. They'd have to check the voting records, watch the hearing, match up questions with voting records. Gossiping with each other about "racist" statements is, after all, so much easier.

The Media and Dick Cheney - Let Him Talk

I'm baffled by all this blather, esp. by liberals, about the ethics of Dick Cheney's criticizing Obama.

Cheney's a citizen. He has a right to criticize. I don't care if it's usual or not for former VPs and POTUSes. (Heaven knows, I wish Gore had opened his mouth more than once rather than retreating into a cave.)

Let him talk. Period.

Meida Missing in Action: Obama's 4/13/09 Economic Speech

Well, even CNBC's "reporters", based on their comments, apparently didn't bother to actually listen to Obama's speech although the network broadcast it live. I guess if you've read the written speech handed out beforehand, there's no point in actually listening.

Then there was the idiotic reporting on CNN: an interview with two people who had been laid off to get their reactions to the speech. The anchor was surprised that $25 more per week could make a difference to some people.

And, yet another of our illustrious "reporters", I think this was on MSNBC, was upset because "all" of the 2000 shovel-ready projects in progress involved small construction jobs which would last only a few months. So they weren't creating "real" jobs. As if a few months' work wouldn't make a difference to somebody whose income was 0. And, as if fixing potholes was not a "constructive" activity. (Don't any of these people ever ride in a car?) Ah, yes. I guess that's why 8.5% of the working population are unemployed. They must have had only temporary work, not real jobs, right?

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.

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).

Input
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.

Output
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.

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.

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.

Jindal and the Volcano - Media Missing in Action Again

Good grief. Our media seem to get more useless with every day. (Even progressive bloggers have gotten lazy.) Here's the legislative language:

SURVEYS, INVESTIGATIONS, AND RESEARCH
For an additional amount for ‘‘Surveys, Investigations, and Research’’, 140,000,000, for repair, construction and restoration of facilities; equipment replacement and upgrades including stream gages, and seismic and volcano monitoring systems; national map activities; and other critical deferred maintenance and improvement projects.

Was this hard to find? No. I just went to recovery.gov, followed the links and voila!

Link (Instruction for Russ Limbaugh listeners: use the search function and type in the word volcano.)

BIPARTISANSHIP REPUBLICAN-STYLE

Thanks to the fact that Obama, Pelosi and Reid have been MIA when it comes to selling the stimulus package or defending how much they've given in to Republicans, Republicans have managed - with the help of our clueless media - to define "bipartisanship" as doing things the Republican way. It seems never to have occurred to CNN, NBC, ABC, CBS, etc., etc., that "bipartisanship" means BOTH parties have to give a little. None of them is asking what Democratic ideas Republicans have accepted.

Now, I've spent hours watching C-SPAN hearings. There have been a number of bipartisan amendments. But the Republican amendments that have failed have been the same old Republican ideas (you know, the counterpart of the partisan "liberal pet projects"): across-the-board income tax cuts (5%), reducing the corporate income tax, a tax holiday from payroll taxes, tax credits for business, etc., etc. And the projects they oppose are the projects they've always opposed.

But the ordinary American watching cable wouldn't know this. And it isn't all the fault of those overpaid mannequins who pretend to be journalists. Democrats are not doing what they should be doing.