Scandal

It's hard to say whether a story like this has any legs. On the one hand, those legs have the potential to kick the Obama Treasury and the remaining credulity of the Federal Reserve system square in the groin. On the other hand, it's more complicated than a story about a boy getting carried away by balloon, so it could go either way. But regardless of whether this makes it off the pages of Bloomberg and a few financial blogs, this is a legitimate scandal. And by that, I do not mean the flashing-coochy-in-the-back-of-a-limousine kind of scandal or the kind that puts the offender on the cover of National Inquirer, but instead, one can hope, in a prison cell.

One of the more transparent miscarriages of fair economic policy from the trans-presidential assortment of seemingly ad hoc policies called the Bail-Out is the way in which A.I.G.'s credit default swap contracts were re-negotiated--or rather, how they were not renegotiated:

Beginning late in the week of Nov. 3, the New York Fed, led by President Timothy Geithner, took over negotiations with the banks from AIG, together with the Treasury Department and Chairman Ben S. Bernanke’s Federal Reserve. Geithner’s team circulated a draft term sheet outlining how the New York Fed wanted to deal with the [credit default] swaps -- insurance-like contracts that backed soured collateralized-debt obligations.
[...]
Part of a sentence in the document was crossed out. It contained a blank space that was intended to show the amount of the haircut the banks would take, according to people who saw the term sheet. After less than a week of private negotiations with the banks, the New York Fed instructed AIG to pay them par, or 100 cents on the dollar. The content of its deliberations has never been made public. (Bloomberg)

Which is to say that as the New York Fed helped to restructure the bankrupted insurance company, rather than renegotiating the terms of its various obligations as would be the case in any typical Chapter 11 proceeding, the Fed decided to pay off this particularly deleterious section of the company's liabilities in full.

This fact seems particularly offensive in light of the following discovery by Bloomberg:

In the months leading up to the September 2008 collapse of giant insurer American International Group Inc., Elias Habayeb and his colleagues worked nights and weekends negotiating with banks that had bought $62 billion of credit-default swaps from AIG, according to a person who has worked with Habayeb.

Habayeb, 37, was chief financial officer for the AIG division that oversaw AIG Financial Products, the unit that had sold the swaps to the banks. One of his goals was to persuade the banks to accept discounts of as much as 40 cents on the dollar, according to people familiar with the matter.

It's impossible to know how close to the 40-cent mark the end result of any negotiations with the various counter-parties (most notably, Goldman Sachs and Deutsche Bank) would have come, but it's fair to say that any real bout of bargaining would have produced something slightly more favorable to the taxpayer than the full dollar-for-dollar value coughed up by the Fed. Which is to say that the Fed never planned to force the counter-parties into a haircut.

This may sound outrageous, but it also kind of flows the the entire perverted logic of bailing out so-called too-big-to-fail institutions. An institution is considered TBTF if its failure would trigger the failure of its business partners and contribute to a veritable Rube Goldberg machine of financial apocalypse. Making sure A.I.G.'s counterparties were insulated from that company's collapse--insulated with a cushy padding of public funding--was in many ways what the bail-out was all about. Evidently, during its secret negotiations between the New York Fed and the various A.I.G. counterparties, the bankers were able to convince the then N.Y. Fed President Timothy Geithner that every last cent of those settlement payments and collateral posts were absolutely necessary for the solvency of their firms. So maybe those payments were necessary after all.

Or maybe not.

Vickrey says that one reason the New York Fed should have insisted on discounted payments for AIG’s CDSs is that the banks likely had hedges against their insured CDOs or had already written down their value. On March 20, Goldman Sachs CFO David Viniar said in a conference call with investors that Goldman was protected.

“We limited our overall credit exposure to AIG through a combination of collateral and market hedges,” Viniar said. “There would have been no credit losses if AIG had failed.”

And maybe, as CFO of Goldman, it is Viniar's job to push the "everything is fine/everything has always been fine" line.* And maybe Goldman was unique amongst its fellow swap-buyers. But if a recent deal negotiated by Citi provides an example of the industry norm, the taxpayers got hosed. And they got hosed for no good reason.

Citigroup Inc. agreed last year to accept about 60 cents on the dollar from New York-based bond insurer Ambac Financial Group Inc. to retire protection on a $1.4 billion CDO.

[...]

Far more money was wasted in paying the banks for their swaps [relative to AIG bonus payments], says Donn Vickrey of financial research firm Gradient Analytics Inc. “In cases like this, the outcome is always along the lines of 50, 60 or 70 cents on the dollar,” Vickrey says.

So essentially what we have is, at the very least, some seriously excessive cautiousness on the part of the New York Fed. If we give them the absolute benefit of the doubt, the folks at the Fed were so concerned that AIG would become another, bigger Lehman, that they threw more cash at the problem than was strictly necessary. Just to make sure.

But as the Bloomberg article makes very clear--and here we get to the heart of the scandal--we should not give these people the benefit of the doubt.

The deal contributed to the more than $14 billion that over 18 months was handed to Goldman Sachs, whose former chairman, Stephen Friedman, was chairman of the board of directors of the New York Fed when the decision was made. Friedman, 71, resigned in May, days after it was disclosed by the Wall Street Journal that he had bought more than 50,000 shares of Goldman Sachs stock following the takeover of AIG. He declined to comment for this article.

[...]

Friedman’s role remains controversial. In December 2008, weeks after the payments to the banks were authorized in November, Friedman bought 37,300 shares of Goldman stock at $80.78 a share, according to SEC filings. On Jan. 22, he bought 15,300 more at $66.61.

Both purchases took place before the payments to Goldman Sachs were publicly disclosed under pressure from Senator Dodd in March. On Oct. 26, Goldman Sachs stock closed at $179.37 a share, meaning Friedman had paper profits of $5.4 million.

Jerry Jordan, former president of the Federal Reserve Bank of Cleveland, says Friedman should have resigned from the New York Fed as soon as it became clear that Goldman stood to benefit from its actions.

“It’s an outrage,” Jordan says. “He needed to either resign from the Fed board or from Goldman and proceed to sell his stock.”

There is of course a third option, the one where Friedman go directly to prison. I am not a securities lawyer. I am not an expert on financial regulation. But someone tell me how this is not the most idiotically blatant form of insider trading. How does this differ in any way from what Raj Rajaratnam was just arrested for at Galleon?

Did the prospect of private gain provide the primary incentive of the various members of the N.Y. Fed to pay in full AIGs CDS obligations? I seriously doubt it. I doubt it partially because the claim just sounds conspiratorial. But I also doubt it because in order to believe that such obvious corruption exists at the top of the financial regulatory structure, I would have resign myself to the fact that the U.S. government will probably never be able to adequately regulate the financial sector and that financial, fiscal, and monetary policy of the United States will always be dictated by the interests of investment banking.

In the meantime:

Bloomberg News has filed a Freedom of Information Act request seeking copies of the term sheets related to AIG’s counterparty payments, along with e-mails and the logs of phone calls and meetings among Geithner, Friedman and other New York Fed and AIG officials. The request is pending.

*There is also the possibility, as suggested at ZeroHedge, the Bedlam of frothy-mouthed but often convincing financial blogs, that not only was Goldman fulled hedged against AIG's failure, but that the value of those "hedge" positions--largely CDS contracts on AIG debt itself--far exceeded Goldman's potential return given AIG's success. Which is to say that Goldman was actually betting on an AIG bankruptcy. Therefore the reimbursement of Goldman on its CDS contracts with (as opposed to on) AIG only padded a hefty return on the entire deal.

Purchasing $10 billion in CDS (roughly in line with what Viniar claims happened) at a hypothetical average price of 25 bps (and realistically much less than that) and rolling that would imply that at today's AIG 5 yr CDS price of 1,942 bps, the company made roughly $4.7 billion in profit from shorting AIG alone! This would more than make up for the $2.5 billion collateral shortfall (out of $4.4 billion total) GS claims AIG had with Goldman Sachs. (ZH)

I have absolutely no idea how realistic those "hypothetical" figures are, but the claim isn't one that I would dismiss on its face alone.

Sherman Has Nothing On Banking

As Dave has shown us, while Florida may take home the gold prize in real-estate market myopia (and then sell that gold prize to a Cuban scrap dealer for Oxy-cash), its neighbor to the north is the undisputed national champion of bank failure.

The state is home to just 4% of all U.S. banks, but 20% of the nation's bank failures since August. More banks have collapsed in Georgia than in any other U.S. state, even foreclosure-racked California and Florida. Six Georgia banks have been seized by regulators this year, burned by too much expansion in the past decade and bad real-estate bets
...
Georgia had 334 banks at the end of 2008, not counting branches of banks based elsewhere, such as Bank of America Corp., of Charlotte, N.C., and Wells Fargo & Co., of San Francisco. Since 2000, 112 banks and thrifts were started in Georgia, the third-highest total in the U.S., after California and Florida. (source: WSJ)

Just to point out the obvious:

• California: 36.7 million people
  
• Florida: 18.3 million people
  
• Georgia: 9.6 million people
  

While it's difficult to point to one overarching cause that so successfully rendered the state of Georgia "the Chernobyl of banking," as the head of a state-level industry-lobby said, it seems to be a combination of three factors.

First, the regulatory system within the state is, from what I can tell, particularly idiotic. And to take a look at the barren wasteland that is smart financial regulation across these United States, that is one hell of a condemnation. As I understand things, Georgia regulations prevent state-chartered banks from operating over county lines. This rule was written to ensure that every county has its own bank. But with Georgia as one of the most sliced-and-diced states in the Union, this allowed large out-of-state and Federally chartered banks to run train on every tiny mom-and-pop financial shop in Georgia.

Second, during the boom years, Atlanta boomed more than most. With soaring demand for real-estate loans, residential and commercial, and a dearth of local lenders, state-level banking regulators began handing out charters like banks were handing out mortgages (see: imprudently, hotcakes).

And this is very closely related to the third issue: a massive inflow of speculative cash during the boom years. The new class of banks needed to find deposits to support their loans. Sadly for them, most of the local savers had their money with the out-of-state and national branches. And so, partially to get the locals to save locally, but more than anything, to get large whole-sale level out of state deposits, these new banks raised their interest rates on deposits. In short, Georgia tried the Iceland approach to banking and was met with less than...peachy (I'm sorry)...consequences.

Atlanta is one of the fastest growing areas of the country, and there has been great demand for real estate development. Many new banks sprang up and needed deposits to make loans. So they got what's known as "hot money" — large deposits from brokers who search for banks paying the highest interest rates. The problem is that money can leave the bank as fast as it comes in.

"The bankers aren't stupid," says Walter Moeling, a veteran banking attorney in Atlanta. "They knew that there was risk."(source: NPR)

No, they're probably stupid too. Stupid and criminal.

A more pointed Material Loss Review was issued about another Georgia bank --Haven Trust of Duluth GA --back in August. That one cost the FDIC deposit insurance fund $207 million. Among the interesting items in the FDIC OIG's Material Loss Review for $576 million Haven are dubious multi-million dollar loans to the school age children of one of the bank's owners. The review also contains a photo of a planned 238 townhouse project that the bank financed for $5.6 million in 2007 even as the real estate market was softening. By September 2008 about three quarters of the loan had been disbursed. The photo taken in 2009 shows an empty lot with no construction on it. The FDIC now appraises the property's value at $1 million. (Business Week)

Feeling bad, feeling worse

I suppose that, as a man who currently has a job that he is getting paid to do, I shouldn't have immediately felt as shitty as I did when I read this, but still:

We often hear about people who are unlucky in love, but what of those who are unlucky in the business cycle? What is the impact of being born two decades before a significant economic downturn, such that you graduate from college and enter the labor force in the middle of a period of high unemployment?
As the class of 2009 is keenly aware, entering the labor market during a recession has immediate negative effects. Job offers are harder to find: according to the National Association of Colleges and Employers, less than 20 percent of the class of 2009 graduated from college with a job offer in hand, compared to 25 percent in the class of 2008 and more than 50 percent in the class of 2007. Whereas year to year starting salaries on average tend to increase, with the tough competition in this year’s labor market, average starting offers for the class of 2009 are slightly down[...]

In examining the cohorts of college graduates that entered the labor market before, during, and after the recession of the early 1980s, Lisa Kahn of the Yale School of Management found that an increase in unemployment produces a significant and enduring negative wage effect.

The chart below illustrates this effect: a one percentage point increase in the national unemployment rate is associated with a 6 to 7 percent loss in initial wages. The annual wage loss declines over time, but is still statistically significant 15 years later. Comparing the wages earned by the class of 1982 (a peak unemployment year) with the wages of the class of 1988 (a peak employment year) over the first 20 years of a career, the wage difference resulted in a difference of nearly $100,000 in cumulative earnings in net present value.

So there you have it: not only are we, as a group of people, going to have (and have already had) significant problems finding a job, we're going to take a fat ass pay-cut for the next 15 years. Once again, my thanks to the various coke-snufflers and amoral Gordon Gekko-wannabes who took the global economy and kneed it in the groin. My guess is, the negative wage effect is probably the result of a number of factors: entering a rough labour market means we take worse jobs and lower pay than we probably should (or none, which is worse still), and this has a rolling effect on our resume and future ability or inclination to step up the pay scale. I mean, I'm sure all starting wages in all sectors for all peoples are down at the moment, which is dogshit to be sure, but the fact that the timing of our arrival on the real world stage is going to be a factor for the next 15 years of our lives in how we get paid or hired rather than should be paid or get hired is just a real peach.

However, all the ire I had worked up about my very own slings and arrows of outrageous misfortune was subsumed when I read this:

Over the past two years, government officials and experts have seen an increasing number of children leave home for life on the streets, including many under 13. Foreclosures, layoffs, rising food and fuel prices and inadequate supplies of low-cost housing have stretched families to the extreme, and those pressures have trickled down to teenagers and preteens.

Federal studies and experts in the field have estimated that at least 1.6 million juveniles run away or are thrown out of their homes annually. But most of those return home within a week, and the government does not conduct a comprehensive or current count.

Read the whole thing, for reals: it is incredibly depressing, and while it has the faint odor of a Pulitzer grab it's well-reported. After watching and tearing up through Wendy and Lucy a couple months ago, I realized that the story of the young migrant homeless in America is utterly alien to me, and I don't think I'm going out on a limb when I say it's alien to all of us here at the blog. And as the article points out, they're getting it right in the teeth from the recession, way more than a degree-holder from a top Canadian university is, and for them it's life and death. I mean, the stimulus package is absolutely laden with Pell Grant funding and all kinds of post-secondary stuff, but there's only 1.5 billion for homelessness in there? That's 0.19% of a supposedly progressive bill to deal with the uncounted volumes of families and kids who're living under tarps and in laundromat bathrooms and hiding from the cops because the bank foreclosed on their homes. 0.19%. Fuck.

This is why Europe works

Rich Germans demand higher taxes.

I am not making this up:

A group of rich Germans has launched a petition calling for the government to make wealthy people pay higher taxes.

The group say they have more money than they need [my emphasis], and the extra revenue could fund economic and social programmes to aid Germany's economic recovery.

Germany could raise 100bn euros (£91bn) if the richest people paid a 5% wealth tax for two years, they say.

I'll admit, when I first read this story I immediately looked the catch. What could possibly be in it for these socially-conscious plutocrats if taxes were higher? Was this a cleverly-laid ruse, the first seeds of a coup planted in a fertile field?

Then I thought, oh, well, maybe rich people everywhere aren't a pack of ravenous hyenas who cackle maddeningly at their prey even as they rip the marrow from its bones. And hey, the German petition's only got 44 signatories so far, and they had a lower-than-expected turn-out at their march in Berlin, so there must still be a lot of heinous people there, right?

But then, could you ever imagine this happening in America?

Signatory Peter Vollmer told AFP news agency he was supporting the proposal because he had inherited "a lot of money I do not need"

What about his Coup-de-ville rollin' on dubs? It's hearing stuff like that that actually makes me kind of like being a human being. It also reminds me that the root of all of our Anglo-American cynicism about the self-interested nature of man probably has a lot to do with the fact that our wealthy people never do, feel or say things like that, and so, through positive feedback, we've all come to accept that everyone really is a bastard and that you've just got to get along with that fact. I'm not saying that Germany's some corporatist miracle, but it's damn sure got a lower gini score than us and damn sure got a guy like Peter Vollmer who opts for social and environmental programs over sippin' on Petron.

ACHTUNG

For those of you who like fiction, and who like reading it raw, uncensored--still covered in emotional placenta, if you will--I just threw up a little blog devoted to exactly that at http://mikrogramme.blogspot.com.

Is it just me

On my way up to Montreal on Friday I was treated to the first of This American Life's two-part series on health insurance in America. Today, I've been blazing through the second, and I must say that I'm taken aback at how conservative it is. It sounds as if it was sponsored by Blue Cross for how tender it is to the insurance industry. In fact, both shows make a mighty effort to convince their audience that everything is wrong in American healthcare but insurance companies. The bottom line, apparently, is that premiums only go up because of hypochondriac patients, overcautious or smug doctors, mincing, greedy drug manufacturers and bird-brained public policy. At point the show even baldfacedly contends that insurance companies couldn't really deny that many people payment for their services because then they'd lose customers, but provides no evidence that this is in any way true except to ask an insurance executive's opinion. Another commentator then claims that insurance companies should deny payment more often, as they did when HMO's ruled in the 90's, because to do so would better contain costs, and mocks those instances when such denial was fatal as "anecdotal horror stories." I always have had beef with Planet Money for being such a shill of business and economic orthodoxy, but to add This American Life to the casualty list weighs heavily on my heart. The decade and a half that NPR has spent relying almost entirely on corporate largesse has certainly decayed its progressive roots.

It's like that Orson Scott Card story

I don't know what to think about this, except that it may be the biggest medical news of our lifetimes. If so, it has received a notably quiet reception from the press. Dr. David Roth, of the Fred Hutchinson Cancer Research Center, has come upon a way to put organisms in suspended animation. Success has thusfar been confined to rats, the only available test subjects. Recently, however, he's moved up to pigs, which the article claims possess a physiology more comparable to that of human beings.

I have no idea of intimate details of the biological processes at work here, but, from my meager understanding of the larger picture, the injection of (otherwise) poisonous hydrogen sulfide into the body helps drain it of oxygen, and, once empty, prevents the formation of free radicals which would otherwise cause permanent cellular damage in the absence of O2. I know that logically that's all a bit twisted--you're draining oxygen from something in order to avoid harm from the drainage of oxygen--but I assume the implication is that it's the free radical side-effect, and now the lack of oxygen, which is dangerous to us. Apparently, in the absence of O2, we would otherwise go into complete stasis.

Moral dilemmas abound. For one, the research is funded by DARPA, which, so they say, wants it to be used to keep injured soldiers alive while they are transported from the battlefield to the nearest medical facility. That's the line that the DOD's dragging in public, so we can be sure that they have a whole medley of ethical wonkiness up their dress uniform sleeves. Second, and with reference to the title of my post, there is an immediate social question raised by a discovery of this nature. Who lives, and who dies? Since the mechanism by which we distribute access to services in the United States is currently a market one--that is, purchasing power is the ultimate determinant--it would seem that we were inviting a severe perpetuating of inequality. If wealth lacks mobility when people live only 75 years, imagine what things would be like if the Buffets and Schwartzs of the world never died and could, therefore, hold onto and expand their capital in perpetuity. Sound like the kind of inflammatory daydreaming that would've adorned the rhetoric of many a barrier buster in Barcelona or Berlin of the early 30's? Well, that chicken's come home to roost, and it's a weird one.

Reporting the Obvious

Kevin G. Hall at McClatchy writes a piece on Moody's and its not at all insignificant role in the financial crisis. Anecdotal specifics aside, there isn't much in the report that anyone would find too surprising, but it's still nice to see the issue finally get this kind of attention.

A McClatchy investigation has found that Moody's punished executives who questioned why the company was risking its reputation by putting its profits ahead of providing trustworthy ratings for investment offerings.

Instead, Moody's promoted executives who headed its "structured finance" division, which assisted Wall Street in packaging loans into securities for sale to investors. It also stacked its compliance department with the people who awarded the highest ratings to pools of mortgages that soon were downgraded to junk. Such products have another name now: "toxic assets."

Every once in a while the BBC website will have in the bottom right corner a section, untitled as far as I know, that seems to function as a home for the miscellaneous and vaguely interesting or humorous chit-chat fodder; the section hovers within the Venn-Diagram of News You Can Use and Quirky Factoid Exhibition and 'Ow 'Bout We 'Ave A Lark at the Ol' Colonials? Incidentally, this is also the section where you will find summaries of certain socially scientific studies that, more often than not, seem to justify themselves on their ability to point out--but with science!--insights that should be readily apparent to anyone who is neither catatonic nor a sociopath. For instance, you might find something like "Primates Found to Become Emotionally Agitated When Repeatedly Shocked With Cattle Prods," or, "Abused Women Shown to Have a Higher Proclivity Towards Depression Then Those Not Abused," or, and this is a real one, "Kids Coming From Crippling Poverty Less Likely to Go to School."

In sheer obviousity, "Profitability, Not Ethics, Plays Biggest Role in Decision Making Process at Financial Company," seems equally groundbreaking to me. But again, I suppose it's nice to have it all on paper.

"The story at Moody's doesn't start in 2007; it starts in 2000," said Mark Froeba, a Harvard-educated lawyer and senior vice president who joined Moody's structured finance group in 1997.

"This was a systematic and aggressive strategy to replace a culture that was very conservative, an accuracy-and-quality oriented (culture), a getting-the-rating-right kind of culture, with a culture that was supposed to be 'business-friendly,' but was consistently less likely to assign a rating that was tougher than our competitors," Froeba said.

After Froeba and others raised concerns that the methodology Moody's was using to rate investment offerings allowed the firm's profit interests to trump honest ratings, he and nine other outspoken critics in his group were "downsized" in December 2007.

[...]

Experts such as Columbia University's Coffee think that Congress must impose some legal liability on credit rating agencies. Otherwise, they'll remain "just one more conflicted gatekeeper," and the process of pooling loans — essential to the flow of credit — will remain paralyzed and economic recovery restrained.

"If (credit) remains paralyzed, small banks cannot finance the housing demand. They have to take them (investment banks) these mortgages and move them to a global audience," said Coffee. "That can't happen unless the world trusts the gatekeeper."

It is, I believe, a trap

While I haven't yet read anyone take Lieberman's threats seriously, this is aggravating:



The interviewer in the video takes this to be a good sign, that he seems to have some doubts about whether filibustering his own party's health care bill is such a good idea. Elsewhere, Lieberman vaguely announces that he is "inclined" to break an inevitable filibuster, but that he still "hasn't decided yet".

Again, I don't know how much there is to this, in that he is certainly able to vote to break the filibuster and then later vote against the bill if for some reason he doesn't want it on his record. It will still pass, and still help millions of Americans regardless. It seems to me that maybe he was testing the waters, seeing how much his own party was willing to bend over to keep him on board, and that, as with the AHIP study that came out earlier this week and backfired spectacularly, there was little to no bending involved.

Even if this is not the case and he really does have some deep ideological discontent with health care reform or whatever and he's not just trying to give himself some political leverage, this still seems like a remarkably dumb move. The dude is largely disliked by Democrats, the ones that vote, help run campaigns, and fork over money to the DNC. In fact, his own party rejected him in 2006. He's also on thin ice with the party leadership, as he spent all of 2008 questioning Barack Obama's ability to be as awesome as John McCain. And now, after remaining fairly quiet, he has resurfaced to throw a potential wrench in the biggest piece of Democratic legislation in decades. I can't tell whether he thinks he's taking principled stands or if he just has so much contempt for the Democratic party that he doesn't think they'll ever respond to him.

Lest we forget

The Christian Right has a field day with us god-forsaken doubters of the Monotheistic Deity scurrying about the Left, but somewhere amidst the pro-euphemism rallies, xenophobia and Islam-bashing, they have let a vital part of their heritage go up in flames. Hey guys, there're still pagans.

Yep. Over a billion, and some of them are making your cellphones.

In the midst of all the turmoil of the post-post-modern era - a time when worship in most of this country revolves around ritual politician harassment at at least a third degree of punditry (including the always fashionable pulpit-pundit), and the small fraction left over who aren't semi-professional jihadists or godless billionaires have allowed the construction of great Totems of Douchebaggery to reify the missionary zeal of the self aware (and neighborhood-blind*) progressive arts scene - amidst all this there is a remarkable peace in watching a ship full of money burn.

and no voiceover to boot!

*Due to technological constraints, "Triumph of the Swill : A Chinatown Photojournal" will appear in a later publication. Please assuage your disappointment by looking at these adorable pooches (Woodward Gallery, near Allen and Delancy)

A New Direction for the Republican Party

A majority of Senate Republicans rallied earlier this week in a concerted effort to rebrand the G.O.P.. Based on an internal memo circulated amongst Capitol Hill staffers and interns, high-level Republican Senators were encouraged to distance themselves from those positions considered by a majority of the American public to be simply "Vile and Odious," and instead to embrace those more radical viewpoints typically reserved for "Comic Book Villainy."

The Daily Show Reports:

(U.S.)
Rape-Nuts

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
www.thedailyshow.com
Daily Show Full Episodes Political Humor Ron Paul Interview

For Canadians. Dave, you may be on your own on this one.

Here are a list of those Senators who may now be said to be members of the pro-rape camp of the Republican Party:

Alexander (R-TN) Barrasso (R-WY) Bond (R-MO) Brownback (R-KS) Bunning (R-KY) Burr (R-NC) Chambliss (R-GA) Coburn (R-OK) Cochran (R-MS) Corker (R-TN)	Cornyn (R-TX) Crapo (R-ID) DeMint (R-SC) Ensign (R-NV) Enzi (R-WY) Graham (R-SC) Gregg (R-NH) Inhofe (R-OK) Isakson (R-GA) Johanns (R-NE)	Kyl (R-AZ) McCain (R-AZ) McConnell (R-KY) Risch (R-ID) Roberts (R-KS) Sessions (R-AL) Shelby (R-AL) Thune (R-SD) Vitter (R-LA) Wicker (R-MS)

Florida's contribution to American health

Back in February, George Packer wrote an article in the New Yorker that I talked a lot about at the time. It was about real estate in Florida and it's part within the grander scheme of the financial collapse. Packer's conclusion (unfortunately a subscription is required to read the article now) was that Florida's entire real estate industry was a scam, one that Florida's economy was completely dependent upon to exist. As the scam unraveled and foreclosures started to pile up, so too did Florida as a whole. Not knowing much about Florida other than its special place in the hearts of Cubans, Jews, and Brooks Brothers rioteers, I felt that this was an interesting yet maybe overreaching conclusion. Could one entire state really live or die solely on the greed, stupidity, and suffering of its own residents?

Then I watched this documentary, which I very strongly recommend you guys watch, on Florida's painkiller addiction epidemic and the effect its lax regulation of these drugs has had on other states. These are serious drugs, with serious effects: as is pointed out repeatedly, 11 Floridians a day die from painkiller overdoses. I know that this blog already traffics in heavy doses (ha-ha) of scorn and anger towards weak regulation and the crass exploitation that inevitably accompanies it, but this is absolutely mind-blowing. Please watch.

Regional Round-up: Central Asia

Before I say anything else, everyone here may breathe a sigh of relief. After centuries of a human existence led in savagery, crudity and boorish ignorance, this medievalism of the mind has at long last come to be dispelled. Gentlemen, lady, I give you Bach.

Yes, it's true. We finally know what he looked like. May I be the first to say that I'd split that in half like the check on a bad date?

Also, it is apparently an ancient Jewish tradition to slap a girl in the face when she first gets her period.

But if you thought that I was just here for Germans and Jews, why, you'd be crazier than a room full of waltzing mice. No, today I want to talk to you about Afghanistan, Uzbekistan, Kyrgyzstan, Tajikistan, Turkmenistan, Iran, Pakistan and Western China.

As all of you should know, because things that are important to me capture, I assume, your hearts and minds, I published an article earlier in the year about Central Asia, water and security. To elaborate, I wrote about the challenges to regional security posed by the failure of existing water resources. Those resources are primarily two rivers, the Syr and Amur Darya, which cut through several borders and are therefore extremely important to the economic well-being of many disparate millions of people.

There isn't a single democracy in Central Asia unless you count Afghanistan, in which case it'd be fair to say you were probably a Defense or State Department employee. Not only does autocracy reign, it does so in a truly outlandish, Stalinist-inspired way, with every rock, bridge, town square, poppy plant; everything, in effect, but the countries themselves named after their leaders. Since kleptocracy is blatant, with at least 95% of the population existing at a subsistence level, some deal of resentment has been brewing like oh-so-much black bean gumbo.

Now, Central Asia has, since the Arab invasions in the 9th-century, been comfortably integrated in the Islamic world. Cultures entering later (Turkmen, ~14th-century; Uzbeks/Khazaks, ~15th-century) adapted to the Islamic paradigm without resistance, too, making the mosque probably the only stable institution in the area. Like so many other parts of the Islamic world, the reaction to repressive, secular or atheistic governments has been a muscular resurgence of Islamic faith. And, also like in so many other parts of the Islamic world, that resurgence has been in a seemingly permanent love-affair with the hard-line. And it's in this respect that Central Asia is interesting (I think) to us, just as Afghanistan, Pakistan and the stateless Chinese Uighurs are.


View Roads crossing in a larger map

This, a stop on the silk road, has been the point of access to China from the west ever since Chinese people lost the ability to fly and to murder thousands of armed soldiers with comically flimsy swords. As you can see, the Himalayas block entry into China from Pakistan, but, as they move northwards, they diminish, shooting up into the magnificent Tian Shan range and then fading into desert. Through Kyrgyzstan one reaches Kizilsu Kirgiz, and from there, Kaxi--Kashgar--capital of China's Xinjiang and the exact point at which it is concentrating its cultural genocide of the Uighurs.

From the Fergana Valley (Toshkent, Andijon, Namangan, Khujand) to Qonduz and Mazar-e Sharif in Afghanistan, Peshawar in Pakistan and thence north-eastwards into China, we have an open corridor connecting some 300,000,000 people possessing a similar set of religious-contextual values and subject to more-or-less the same degree of political disenfranchisement. And with Chinese traders flooding markets in the region's largest cities, and China investing in transportation links with its western neighbors, there now exists the opportunity for communication and collaboration. Add to this mix the fact that Central Asian economic life, if it exists at all, does so at an appalling rudimentary--and unsurvivable--level, with governments restricting emigration, and you have the makings of a serious international social conflict.

Because I've recently been presented with the possibility of researching this subject again, I thought that I'd collect my thoughts here as a little column. In the next episode, I'll talk more about Iran's surprising tack of moderation, the water recapture infrastructure in Soviet Central Asia that's been a thorn in everyone's sides, and I'll introduce you to a fantastic bunch of kids from Liverpool who've been making hearts, and the airwaves, tremble since their debut album Please Please Me hit stands earlier this year.

The internet is a good thing!

You know, the internet is always getting a bum rap. But just cause a thing is full of fisting porn and racism doesn't mean it's an all-bad thing! In fact, people who say this are probably themselves racists or fisters, and they just rag on it to make non-racist, non-fisting individuals like me or maybe (maybe) Dan leave the internet alone so they can hate and fist and fist and hate all the time without interruption.

The internet, for example, is very good at letting us know how hilariously stupid important smart people are. Did you know that Peggy Noonan is an important smart person, the 13th most important smart person there is in America? Not hard to believe when you consider her way with words, e.g. "My study group is about being a person who thinks things and believes them and turns them into words that convey thoughts and feelings."

Did you also know that Peggy Noonan is, as per our many fruitful prior posts, a lover of civility? It almost seems like overpaid, over-respected opinion writers are drawn to civility, like moths to a flame. Could there possibly be a connection between weak, meandering, poorly thought out opinions and a love of genteel style over actual morally appropriate substance? It would, I feel, be irresponsible to speculate.

He's like Jesus and the Beatles rolled into one

Live from Rome, Italy, it's time for the Loony Bin with Silvio Berlusconi:

"I am absolutely the person the most persecuted by the judiciary of all times, in all history and of anywhere in the world," [Berlusconi] told journalists on emerging from a cabinet meeting.

Berlusconi said he had made more than 2,500 court appearances and spent more than 200 million euros on his defence in the various legal cases against him.

In a typical Berlusconi gaffe, he said the money had gone on paying "consultants and judges", before correcting that to "consultants and lawyers."

...

On Wednesday, Italy's Constitutional Court dealt Berlusconi a stinging blow by throwing out a law shielding him from prosecution while in office.

"The persecution is continuing of course," Berlusconi said Friday. "I would never have thought anyway that left-wing judges could approve" the immunity law.

"I will just have to take a few hours off from my work as head of government to deal with the trials."

I'd like to see them give this guy the peace prize. The backdrop to this absolute PR gem is a law Berlusconi had pushed (literally, if his 'gaffe' was no slip of the tongue) through which gave him and four of his goons complete immunity from prosecution. It was adopted last year, and you can read about it here.

The quality of the absurd that infuses Italian politics seems, especially at a distance, almost Blofeld-esque. Berlusconi's logic for exempting himself from the law, as far as I can tell, is something along the lines of 'I have had to spend 200,000,000 euros on these trials. Isn't that terrible?' In actual fact, it should have been 'I have committed a plurality of crimes so great as to equal in their defense the price of 200,000,000 euros, therefore I am a villain of comic book proportions.' Frankly, sir, shocked and appalled does not do what I feel justice.

All things considered, it must be nice being a judge in Italy. Where else can you be on the taxpayer's and the president's payroll?

Barack Obama wins Nobel Peace Prize

This seems... excessive. The bit that seems particularly strange to me:

Obama's name had been mentioned in speculation before the award, but many Nobel watchers had believed it was too early to award the president. Obama would have been in the White House for less than two weeks before the Feb. 1 nomination deadline for this year's prize.

Now, I understand that the voting took place much more recently, but still. I mean, I like the guy, but aside from a completely rational reset of America's relations with the rest of the world and an equally rational tilt away from retard-strength unilateralism I don't know what concrete thing he's accomplished in the realm of global peace. Beyond that, it seems to me like the Nobel prize is best awarded to individuals whose causes are either unknown or in desperate need of some good PR. Is this going to make things any easier for Obama, or will it just add more fuel to the Obama-is-worshipped-as-God-by-socialists-and-pussies criticism as it exists on the right in America, giving him a tougher and more intransigent domestic audience? Anyway, just an instant reaction on my part, without any analysis or bloggy opinion to distill it, as it is currently only 7:00 am in North America (but 8 pm here).

What do you guys think? I already miss your erudite, sensually composed opinions.

Wouldn't it be nice

Letting the numbers do the talking:

Senator	2008 Health Sector	Career Health Sector	2008 Insurance Sector	Career Insurance Sector
MAX BAUCUS (D-MT)	$1,148,775.00	$2,797,381.00	$285,850.00	$1,170,313.00
JOHN D. ROCKEFELLER IV (D-WV)	$515,150.00	$1,674,229.00	$107,874.00	$394,074.00
KENT CONRAD (D-ND)	$117,350.00	$1,331,363.00	$56,650.00	$821,187.00
JEFF BINGAMAN (D-NM)	$14,151.00	$861,841.00	$1,500.00	$160,875.00
JOHN F. KERRY (D-MA)	$289,430.00	$8,145,141.00	$90,250.00	$1,397,367.00
BLANCHE L. LINCOLN (D-AR)	$226,753.00	$1,281,608.00	$49,500.00	$440,033.00
RON WYDEN (D-OR)	$96,925.00	$1,161,488.00	$45,999.00	$229,173.00
CHARLES E. SCHUMER (D-NY)	$10,000.00	$1,402,358.00	$3,000.00	$946,400.00
DEBBIE STABENOW (D-MI)	$239,018.00	$1,188,186.00	$40,800.00	$246,750.00
MARIA CANTWELL (D-WA)	$48,951.00	$573,076.00	$12,300.00	$80,850.00
BILL NELSON (D-FL)	$60,015.00	$1,163,210.00	$22,500.00	$520,016.00
ROBERT MENENDEZ (D-NJ)	$81,650.00	$1,216,476.00	$67,450.00	$458,679.00
THOMAS CARPER (D-DE)	$15,450.00	$452,000.00	$28,700.00	$447,984.00

Source: Sunlight Foundation,"Visualizing the Healthcare Lobbyist Complex", by way of OpenSecrets.org

I would like to point out that #2 on this list, Senator Rockefeller, has been one of the strongest supporters of the public option. If he can do that while happily collecting more than two-and-a-half million from the healthcare industry, God bless him. I can't say the same for Mr. Baucus.

The main object of that Sunlight Foundation piece is to visualize the connection between the Finance Committee, its former-staffers-turned-lobbyists, and the companies those former-staffers-turned-lobbyists now serve. They even have one such visualization specific to Baucus, I assume because he's the sexiest member of the committee. Though each of his aides is playing the field with several of the biggest names in regressive-rent-seeking-corporate-buggery, It looks like one David Castagnetti is the sobbing Japanese runaway to Boardroom America's campaign contribution bukkake. Boy, if he isn't just soaking up the, uh, attention.

For me, these maps illustrate why protecting the legislative process from business is so problematic. Peter Dorman, on Econospeak, suggests today that, rather than limit the size of donations, a more effective tack to take would be to make them more opaque. All contributions could be required to go through what he calls a "Campaign Finance Administration," a public agency which receives moneys and then cuts a check to their intended recipients. The catch is that the check would be anonymous. The candidate or office-holder would then benefit from someone's largesse without promising anything by his signature de sang.

I like the idea, and, for the record, I think it would go a long way to booting lobbyists out of the affairs of state. But, to return to Sunlight Foundation, there's a non-fiduciary residual that is left unaddressed by it. The Senate Finance Committee staffers who went to work for insurance companies don't have sway with Baucus or Conrad simply because of their wallets' heft. These women and men are of course confidants and, I'll dare to hazard, friends of the senators in question. If everyone on this blog was not a very good friend of mine, I would probably not regularly perform homoerotic pantomimes in sometimes uncomfortably visible circumstances with them (except for Sarah, who I can't interact with because I can't get gay with her). I agree, nay, pursue these theatrics with gusto because I assume that they will generate a substantial pay-off in the form of mutual dependence through the increasingly alienating nature of our behavior. Then I can turn a joke about Dan's butt into a $50,000 investment in an El Paso dog-fighting tournee, or, as it were, a generous wink at my reelection prospects.

My scalpel-sharp point here is that while an institutional solution such as the government-run intermediary proposed above has a lot of potential to shape the environment for institutional giving, it can't be in every restaurant or gentleman's club, unlike Baucus and Castagnetti. But then, of course, we all knew that, and so I suppose I'm not making much of a point. It seems that the problem becomes the irreducible question of values, those that govern the interactive rules of any path-dependent social-institutional setting. If there is a market for Congressional experience, it will suffer no shortage of sellers. One can either hope for a change in ethics--i.e. Americans become good people who recognize the value of restricting their behavior for social rewards--or you can, on paper, legislate away the market. Given how much the health insurance industry opposes options, I highly doubt they'd break bread for either choice.

This is Not Related to Anything

God, that bird looks so happy. I wish I could be that happy.

See more funny videos and TBT Videos at Today's Big Thing.

That's my MP you're talkin' 'bout!

Some dick has got himself the fuckin' cojones to call my beloved MP, former Minister of Public Health, and all-around wonderful woman Carolyn Bennet, as well as the entire country she represented, "parasitic."

"One of the things that has troubled me greatly about our system is the fact that we pay more for pharmaceuticals and devices than other countries, and yet it's not really our country so much that's the problem, it's the parasitic relationship that Canada and France and other countries have towards us," the Tennessee lawmaker told Carolyn Bennett.

"Meaning that you set prices and unfortunately all the innovation, all the technological breakthroughs, just about, take place in our country ... you benefit from us and we pay for that and I resent that."

Dem's fightin' words. Or should I say, Rep's fightin' words? No.

But fight she did, responding that drug prices are set by drug companies which have little in general to do with Canada, or even France, if you can believe it, and by saying . Corker shot back with this gem:

"In essence, the Canadian government and its citizens are taking advantage of our citizens by virtue of setting prices that are lower than competitive prices."

OK, so, while the American government won't help its citizens by allowing them health care that would pay for their obscenely priced prescription drugs, Canada is taking advantage of Americans by offering them the same life-saving drugs cheaply?

Let's just say, that in a battle of wits, I would gladly challenge Mr. Corker.

Also, of fists, if he ever insults Carolyn Bennett again.

Oh Hi Doggy!

Upon closer inspection, it looks like AMERICAN POLICE FORCE is a lot less Resident Evil and a lot more Tommy Wiseau:

Since yesterday, details have been emerging about the background of the man behind APF -- a California-based grifter, who has said he's a naturalized U.S. citizen originally from Montenegro, and uses the name Michael Hilton[...]

A Lexis search conducted by Prison Legal News turned up the following aliases used by Hilton: Miodrag Dokovich, Miodrag Djokich, Miodrag Djokovich, Michael Hamilton, Anthony M. Hilton, Michael A. Hilton, Michael Milton and Hristian Djokich, plus related variants.

You should all the read the whole article, but this goes a bit of the way towards explaining the Serbian coat of arms.

This other article provides the necessary syntactical and logical insanity to reinforce my theory that this probably all has something to do with our dear sweet Tommy:

According to its web site, the company offers a wide range of services, including "Check Your Mate" cheating spouses investigations, "fugitive recovery" for fugitives hiding in one of those pesky non-extradition countries and help if a loved one is kidnapped and held for ransom.

Or is it the other way around?

"Our highly trained staff will discover information that fits your needs to get the answers you need. Some of our services include Kidknapping & Ransoms for ransom, INTL Air Marshalls, Security for convoys in Iraq, Pakistan + More!"

Need more proof? Well, this graf has the bitter sting of Lisa's betrayal all over it:

"Infidelity, Adultery, Cheating, and being unfaithful might all have a different definition in your mind but at APF its a category all by its lonesome. Married husbands and wives will typically call untrustworthy loved ones adultery or infidelity. In the non-marital relationships its commonly known as cheating and we can help you figure out what's really going on."

A Serb whose origins are shrouded in mystery, a company that appears to have no idea what is or is not legal in the United States, a website that reads like it's "sitting on an atomic bomb, just waiting for it to explode!", and a clear history of emotional and romantic trauma in the past. Is Miodrag Dokovich actually Tommy Wiseau? It would be irresponsible not to speculate!

watch out ben!!!!!1

The sun rises red in the west: http://wewanteverything.wordpress.com/2009/09/25/occupation-statement/

Health care was only the first step. Next will come radical leftists in the universities; then, we'll only be reduced to buying one kind of car and eating gray, flavorless porridge for our daily, state-allotted meal. Oh, the hubris!

All kidding aside, I hope they do occupy the university, and other public buildings besides. It worked in the 60's, and we got some great music out of it to boot.