The Republicans put out a their "Road to Recovery"It's way too early to pass judgment on the legacy of the Obama administration, but the one thing you can say is that all of the predictions made by folks on both sides of the political spectrum have been off the mark: he's not the wild-eyed socialist Black Panther liberal the right feared he was (and in a perverse way hoped he would be so they could raise campaign funds on secret photos of Angela Davis playing on the White House swing set), and he's not the crusading progressive mowing down the malefactors of great wealth and purveyors of narrow-minded homophobia and intolerance that the liberals hoped he would be, either. The most predictable -- and maddening -- thing Barack Obama has done is defy predictions.
Meanwhile, I actually think the most distressing thing about the criticism from folks like Krugman and Stiglitz is what you can infer reading between the lines from how ferocious it is. They, and other leading critics, are acting like people who’ve been totally shut out of the consultation/communication loop. And it’s distressing to see people of their stature and expertise getting shut out while the administration works harder on kissing Wall Street’s ass to try to persuade the finance class to avoid deliberately sabotaging the economy.
So here was one of Obama's top economic advisers undermining Geithner's key claim (we have no choice!) and questioning Romer's characterization of the firms participating in the toxic assets program. This was not a confidence booster. And I wondered what it would be like to sit in the room when Obama's economic advisers get together and try to sort all this out.
One may reasonably conclude that Geithner, as head of the New York Fed, had a good understanding of the sort of compensation packages that were used at financial institutions like AIG. It is also reasonable to assume that if he didn't explicitly take steps to change these practices following the Fed's takeover of AIG, that the practices would still be in place.
In other words, insofar as he gave the matter any thought at all, it is reasonable to assume that Geithner knew that AIG would be paying large bonuses to most-valued employees. If he did not give it any thought then it was because he did not care that a firm receiving more $160 billion worth of taxpayer dollars was paying multi-million dollar bonuses to its top executives. It is implausible on its face that Geithner was surprised by this situation. [emphasis mine]
It's an utter waste of government time and money to go on the offense and
direct senior government people to do something about the bonuses, no matter how distasteful. Not to mention, Congress is busy today putting AIG's senior management through the wringer, when many of those now in power at AIG were in fact not on duty when the ship went down. Edward Liddy, AIG's current CEO, for example, was appointed in September last year to help get the life boats out.
There is no shortage of blame to go around. But there is a shortage of time and political will, which should not be squandered on hopeless cases like this one.
Some say that it was Geithner and Summers pushed to remove the language regarding the limits on compensation. I say that we need to remember the context of the ARRA Senate voting context. The Obama administration was actively trying to curry Republican support. The list of concessions to Republicans was very outsized and painful (here is such a list, see the "What's Out" heading). But those are programs and there were other changes that the Republicans wanted. Most salient here is Mitch McConnell talking about his opposition to limiting compensation:
It is a tough challenge. I think we are all appalled by these -- some ofthese executive salary arrangements and bonus arrangements and perks and all the rest. On the other hand, I really don't want the government to take over these businesses and start telling them everything about what they can do. Then you truly have nationalized the business. So it is a delicate dance to try to prevent blatant abuses and still not have the government as a result of taking an equity position in the government telling them, for example, you can't pay dividends or you can't -- I mean, things that are just ordinary business practices. We have to resist the temptation to basically dictate to these businesses how to run every aspect of their operation.
So let me be clear about what I believe. Wall Streeters (including Geithner and Summers) are desensitized to the meaning of these massive sums for the majority of Americans. This is a group of people who believe that $500,000/year is not enough. They craft a stimulus bill that is fraught with political compromises (compromises that they do not know will be pointless as they will not receive support for them from the opposition party). Included in the raft of concessions is a limit on executive compensation...essentially allowing for a handout to wealthy AIG employees.
I imagine that the thinking is that this concession will lead to a bigger simulus dollar figure in the end (because it wasn't actually in the stimulus package...the money came from the TARP allocations, direct bailout dollars, etc...not ARRA). Could they have substituted $165 million in, say, transportation money in exchange for the bonuses? I doubt it. I don't know if anyone had calculated how much the bonuses would be at all. I do know it was giving in to the Republicans during a contentious moment when the Obama peope thought they could get bi-partisan support. I also know that the government wanted money to be spent.
Do I think that the AIG bonuses were proper? I think they're outrageous. Do I think that Bremmer is correct? I agree that compared to the size of the whole crisis, this is small. I also agree that spending a week on this is not the best use of anyone time in light of the crisis. But I think that the public might need to be outraged in order to push forward other parts of the agenda that they may otherwise be ambivalent about (for example EFCA, whose support is growing but still needs more help).
Bloomberg may be correct, though...a currying of outrage, if this is what the administration is doing, may backfire.
more ecologically-aware energy infrastructure is that it will cost too much. Setting aside the costs of not doing anything, it is important to keep in mind that there are direct economic benfits from such a move. This PBPost article, for example, is about the Vote Solar movement and their contention that 85,500 jobs can be created in Florida from the adoption of a proposed requirement that 20 percent of the state's electricity comes from renewable sources by 2020.Yann Brandt, vice president of Advanced Green Technologies in Fort Lauderdale, said a typical residential solar power system costs from $30,000 to $40,000 to install, but that the homeowner receives $25,000 to $30,000 in federal tax incentives and state rebates.
The bill, passed 234-191, largely along party lines, encourages lenders to renegotiate mortgages with troubled homeowners. If they can't, the bill allows bankruptcy judges to modify the mortgages, a reform that bankers have argued undermines the sanctity of a contract and rewards bad behavior.This is the so-called cramdown legislation. As it stands, the Obama mortgage relief plans give lenders and incentive to alter the interest on existing mortgages. Some question the helpfulness of this. This legislation would allow judges, under certain circumstances, to alter the principal of existing mortgages. Setting aside the "bad behavior" misdirection, the logic of this is that the value of the housing units in question are lower than they were when the original loans were made. By lowering principal amounts, two things occur, 1. the debtor pays less, 2. the debtor does not walk away from the contract.
To a non-ideological voter who's uninterested in policy and forms his perceptions of liberalism and conservatism largely through symbolism and sound bites, a conflict between Obama on the one hand and Limbaugh on the other will almost inevitably redound to liberalism's benefit.Why does a right-winger think that liberals benefit from Rush? Reihan Salam, Douthat's colleague, writes, "any successful political movement is built of both true believers and evangelizers". Here, the true believers are dyed-in-the-wool partisans. Evangelists, on the other hand, seek to convert new followers. Rush's rise in salience essentially means that the work of the right's evangelists is stymied.
It is expected to help up to 9 million homeowners lower their mortgage payments.Lenders can begin modifying troubled loans under the program immediately, the Treasury Department said in a statement. To be eligible for modification, the loans must have originated on or before Jan. 1 of this year. The program will end in December 2012, and loans can be modified only once under that part of the program.
“House Democrats picked their leader in the workplace by secret ballot; now let’s see if House Democrats will allow Floridians in every workplace the same secret ballot right,”To tell you the truth, I'm a little stunned by this. Hasner is misleading the public about the legislation. The Employee Free Choice Act, aka EFCA, preserves workers’ rights to secret balloting. Read it yourself. It's in Section 2(a)(6). Go ahead, it's short. Where is the restriction?
Included in the Obama budget proposal was a reduction in the enforcement of the travel ban of Cuban-Americans back to Cuba. Since Senator Robert Menendez doesn't want his Cuban-American brothers and sisters to travel back to that country, the NYT reports that he has decided to resond by obstructing the nomination of two top Obama science advisors.
The scale at which AIG sold this insurance is almost unbelieveable. There is a reason for this.
In most circumstances, a person buys insurance as a method of protecting their assets (for example, their house) against a loss (ie, a hurricane). Here in SF, we know that there is a hurricane season that lasts about half of the year (Rick used to have a pool going). As a result, the possibility of needing that insurance, to cover some (or all) of your loss, is real. Now, imagine that someone with money to spend (say from New York) convinces insurance companies to let him/her also buy insurance on houses in South Florida.
In fact, let's say that our investor has deep pockets and buys 30 policies for every house in the region. And let's say that the insurance company doesn't have to reserve any money for this new type of insurance. And lets say Wilma II blows through. In this case, Mr. NY Investor made a great deal of money, except the insurance company can't pay because it can't cover the policies. Oh no!
to be continued...
More regulation is certainly in the offing. But Congress tends to regulate with hindsight. After a slew of accounting scandals, Congress in 2002 passed the Sarbanes-Oxley Act, which correctly forced CEOs to sign off on the accuracy of financial statements. Markets already have started doing much of the heavy lifting of retroactive regulations. Rules that prohibit houses being bought with no money down and no-documentation mortgages? All the lenders who provided such loans are out of business.Despite self-regulation, the article highlights some key suggestions:
Note that these policies would be intended to slow down irrationality, which typically is not perceived as irrationality by those who benefit from the bubbles.
As we all know, income stagnation is something that most conservatives and Republicans have spent years pretending was not happening, because it did not fit in with the assumption that working- and middle-class Americans were thriving as part of the “greatest story never told.” It is the failure to acknowledge and address all of these things along with the preference for using symbolic gimmickry that begin to account for the lamentable states of conservatism and the GOP. There is also the war, but movement and party have become so invested in it that I have my doubts whether they can ever recognize its role in discrediting both with the public.Along those same lines, Ross Douthat notes that, "The Right has a messaging problem, yes - but it also has a message problem." Which all seems to boil down to a call for policy that is more robust than the discredited supply-side approaches that have been the modern Right's cornerstone.
Freshman U.S. Rep. Tom Rooney, R-Tequesta, and every other Republican in the
House voted against a Democrat-drafted $787 billion economic stimulus package.
But now that President Obama has signed the measure into law, Rooney has added
his signature to a Florida plea for $2.7 billion in stimulus money for public
schools.
