Instavision, capitalism and morality

Glenn Reynolds sits down with John Allison, former CEO of BB&T, to discuss the causes of the financial crisis, what it is we are doing completely wrong to recover from it and the moral nature of capitalism.

Understanding what happened in the financial crisis is complex and people are looking for simple solutions; they're looking for solutions like "greed" which is not the cause of the financial crisis. In fact the Federal Reserve is the primary cause of the financial crisis - they printed too much money which resulted in a bubble which is really a massive mis-investment and it ended up in the residential real estate market because of government housing policy: affordable housing, sub-prime lending that was primarily financed by Fannie Mae and Freddie Mac.

In fact, history (shows) that what we've done with government policy always fails. If you look at trying to correct corrections by spending money you don't have to do things that don't need to be done, which is what a stimulus program really is, and try to finance that spending by printing money, it always fails.

So, why do we keep doing it?

Unfortunately, Keynes theory which is the basis of the current actions has got a lot of academic credibility even though it's failed and that's because it gives Congress and the government lots of power; interestingly enough it gives academics lots of power. The answer is the government need not do anything... It's really just a huge power lust for politicians and academics.


There's almost an inverse relationship that you describe between the where the government is most involved, you have the worst consequences (financial sector) and where it's least involved, like (in) technology, you have the best outcomes.

If the Federal Reserve can manipulate the quantity and value of money it makes it very hard to make business decisions.

Capitalism as a "moral" system.

Capitalism is the only moral system, because it's the only system that is consistent with man's fundamental nature as an independent thinking being. And in order to think for yourself and be productive, you have to be free. And capitalism is the only system that allows people to be free to think and innovate and all human progress is based on creativity.

Funny yet downright scary

Via W.C. Varones: World collapse explained in 3 minutes.

So it wasn't Bush's fault?

Just sayin'...

Evidence outlined in a Pentagon contractor report suggests that financial subversion carried out by unknown parties, such as terrorists or hostile nations, contributed to the 2008 economic crash by covertly using vulnerabilities in the U.S. financial system.

The unclassified 2009 report “Economic Warfare: Risks and Responses” by financial analyst Kevin D. Freeman, a copy of which was obtained by The Washington Times, states that “a three-phased attack was planned and is in the process against the United States economy.”

While economic analysts and a final report from the federal government's Financial Crisis Inquiry Commission blame the crash on such economic factors as high-risk mortgage lending practices and poor federal regulation and supervision, the Pentagon contractor adds a new element: “outside forces,” a factor the commission did not examine.

“There is sufficient justification to question whether outside forces triggered, capitalized upon or magnified the economic difficulties of 2008,” the report says, explaining that those domestic economic factors would have caused a “normal downturn” but not the “near collapse” of the global economic system that took place.

Suspects include financial enemies in Middle Eastern states, Islamic terrorists, hostile members of the Chinese military, or government and organized crime groups in Russia, Venezuela or Iran. Chinese military officials publicly have suggested using economic warfare against the U.S.

In an interview with The Times, Mr. Freeman said his report provided enough theoretical evidence for an economic warfare attack that further forensic study was warranted.

However...

Paul Bracken, a Yale University professor who has studied economic warfare, said he saw “no convincing evidence that ‘outside forces’ colluded to bring about the 2008 crisis.”

“There were outside players in the market” for unregulated credit default swaps, Mr. Bracken said in an e-mail. “Foreign banks and hedge funds play the shorts all the time too. But suggestions of an organized targeted attack for strategic reasons don’t seem to me to be plausible.”

And check this out:

Regardless of the report’s findings, U.S. officials and outside analysts said the Pentagon, the Treasury Department and U.S. intelligence agencies are not aggressively studying the threats to the United States posed by economic warfare and financial terrorism.

“Nobody wants to go there,” one official said.

A copy of the report also was provided to the recently concluded Financial Crisis Inquiry Commission, but the commission also declined to address the possibility of economic warfare in its final report.

Officials, who spoke on the condition of anonymity, said senior Pentagon policymakers, including Michael Vickers, an assistant defense secretary in charge of special operations, blocked further study, saying the Pentagon was not the appropriate agency to assess economic warfare and financial terrorism risks.

Mr. Vickers declined to be interviewed but, through a spokesman, said he did not say economic warfare was not an area for the Pentagon to study, and that he did not block further study.

Mr. Vickers is awaiting Senate confirmation on his promotion to be undersecretary of defense for intelligence.

(italics, ours)

Yeah, it may be a thorny issue and inconvenience some people but someone ought to be checking into this, no?

So, what do you all think?

We anxiously await feedback from commenters who have much more experience than we do in IT and cyber-security.

Redux?

From the Wall St. Journal:

Fannie Mae,(...) launched an initiative in January that allows some first-time home buyers to get a loan with a down payment of as little as $1,000. Securities firm Morgan Stanley Smith Barney, a brokerage operation jointly owned by Morgan Stanley and Citigroup Inc., is offering some clients home-equity credit lines of as much as $2.5 million.

Credit-card issuers mailed 84.8 million offers of plastic to U.S. subprime borrowers in the first six months of this year, up from 43.7 million a year earlier, estimates research firm Synovate. Nearly 8% of loans for new cars in the latest quarter went to borrowers with the lowest range of credit scores, up from 6.2% in (...)'s fourth quarter, according to J.D. Power & Associates and Fair Isaac Corp.

(deletions, ours)

So when was this written? 3 years ago? Maybe 5? How about last week.

What does this tell us possibly about the financial reform bill's ability to address sub-prime lending and too big too fail?

It would appear that, at least on the surface, there has not been a fundamental change to how business will be done on Wall Street and that the large financial institutions know that Bailout Nation is here to stay.

Quickies

A round-up of articles, columns and blog posts that caught our eye this past week:


Left Coast Rebel has the details on yet more racism within the tea party movement, here.



So let's get this straight: The Feds raid work places and turn the illegals they find out onto the street without deporting them. Now we have illegals roaming around without any means of supporting themselves. How's that for compassion? B-Daddy has more on the incoherency of our federal immigration policy.



Guardian columnist thinks George Steinbrenner was like the Iraq War or something.



And WaPo columnist whines that we really do need the estate tax because... the government needs the money.




Charles Krauthammer on the Wall St. reform bill:

Well, the place to start when asking what it means is to see what Senator Dodd, the chairman, the author of this said a month ago about the bill: "This is about as important as it gets. It deals with every aspect of our lives." And then he adds: "No one will know until this actually is in place how it works." Well, that gives you a lot of confidence!

The fact is there are hundreds of regulations that are going to be as a result of the bill that have not been written. They are going to be lobbied and litigated. The big banks who have the big lobby operations and the big lawyering operations are going to have the upper hand here. Every comma, every adjective will carry hundreds of billions of dollars worth of importance over time.

(itlalics, ours)

If you aren't at the table then you are on the menu.

The more we read of and about this bill, the more we are convinced that it has less to do with actual reform and more to do with the further entrenchment of crony capitalism, corporatism, carve-outs and any number of other alliterative maladies.
A fitting way to end his Congressional career for Chris Dodd, we think we all could agree.




And finally, the question if unions will ever abide by any degree of outsourcing is answered:

Billy Raye, a 51-year-old unemployed bike courier, is looking for work.

Fortunately for him, the Mid-Atlantic Regional Council of Carpenters is seeking paid demonstrators to march and chant in its current picket line outside the McPherson Building, an office complex here where the council says work is being done with nonunion labor.

Priceless

Summer time reading

The 10th and final installment of Walter Russell Mead's essay: "The Top Ten Things We Learned From the Global Economic Meltdown".

10. The politicization of economic governance is dangerous business.


The economic system we’ve built depends heavily on a small number of global financial firms who necessarily enjoy close links to national governments. Because of their power and their wealth (and also because they are sometimes ‘too big to fail’), these firms can potentially control the laws that govern their behavior and the regulators who enforce them. In the United States there has been a lot of attention paid to the close relations between current and former executives at Goldman Sachs and the Clinton, Bush and Obama administrations. The finance-government nexus in the US has its counterparts in other countries as well. These close connections, and the obvious danger of conflict of interest, have gotten a lot of attention — as well they should.

But the problem of regulatory capture is much greater and more deeply entwined with our current economic structure than this one case. The rise in the economic importance of the state during the twentieth century–however necessary and in many ways benign this role may have been at various points along the way–inevitably brings politicized governance and regulation in its wake in ways that make bubbles, panics and crashes both more destructive and more likely.

To take one important example, when government workers make up a substantial portion of the electorate, they can influence their own wages and pensions by voting as a bloc. They can — and they do. California, Illinois and Greece have a lot in common.

But even this is just the tip of the iceberg. The increased economic role of the state naturally and inevitably multiplies conflicts of interest and creates moral hazard. American housing policy, widely and correctly blamed as a major contributing factor to the crisis of 2008, was an outstanding example. The combination of interest groups — consumers who wanted cheap loans and rising house prices, banks who wanted a safe and profitable business model, contractors and other businesses with a stake in the home-building industry, cities and towns whose tax bases increase with rapid growth, advocates for the poor who wanted to improve the access of marginalized groups to the Great American Wealth Machine of home ownership — put them all together and there was an irresistible political force driving the United States real estate market and the financial system into more and more dangerous territory. The housing bubble wasn’t an accident; it was the result of decades of national policy and we worked very hard and spent lots of money to make that bubble as big and as dangerous as it turned out to be.

“Vote yourself a farm!” was a slogan of those who campaigned for the Homestead Act that gave free farmland in the west to anyone willing to settle it. Farm subsidies from the Homestead Act through price supports helped cause the Dust Bowl catastrophe and the great agricultural depression of the 1930s by encouraging over-investment in farming and the creation of marginal farmsteads. The crash was more brutal because government support had inflated the bubble past what would otherwise have been its ‘natural’ size.

“Vote yourself a home!” has been our national motto for the last fifty years and today Americans are as addicted to the home mortgage deduction (and the even less justifiable deductions for second mortgages and home equity loans) as Greeks are to early retirement and government employment. Political popularity makes the policies harder to change — but no less damaging and destructive.

There is no easy way out of these problems. Global markets need sophisticated firms and large firms can manage risks and survive shocks that smaller ones can’t. Civil servants do not and should not lose the right to vote when they take government jobs. The decision to favor home ownership on social and political grounds is one that politicians can properly make, and there is a lot to be said for policies that have helped millions of American families acquire substantial equity over the years.

Yet it is clear that the mix of democracy and capitalism is a dangerous if necessary brew; after decades in which we failed to think the costs and risks through, we are now suffering the consequences of policies that create dangerously perverse incentives in both political and economic spheres. Reducing damaging but popular forms of state intervention in the economy while ensuring the state retains the authority and the ability to provide the effective legal and regulatory frameworks without which no modern economy can flourish is the fiendishly difficult and delicate task which Europeans and Americans alike must now undertake.

(italics, ours)

Don't count on this Wall St. reform bill to come anywhere close to striking that fine balance. We hate to look like Know Nothings but really... what more do you need to know about this particular piece of legislation than the fact it was written by Chris Dodd and Barney Frank?

Look for crony capitalism and "corporatism" once hated by that near-extinct animal known as "liberal" to become further entrenched by this bill.

Our blog buddy, Harrison, has a nice round-up of quotes and goings ons from Frank and Dodd that will only prove our point, here.

P.S. The image we have been using for this series is an allegorical painting by Hendrik Gerritsz Pot circa 1940 depicting Tulip Mania which many believe to be the first speculative bubble.

Summer time reading

Continuing our series of excerpts from Walter Russell Mead's essay, "The Top Ten Lessons of the Global Economic Meltdown"

5. Nobody really understands the world economy.

6. That goes double for financial markets.

Financial markets are even more volatile than the real economy. Economists predict, with varying but rarely satisfying results, the behavior of the real economy. Few are so foolish as to predict the behavior of financial markets (and those who do often lose a lot of money). There are good reasons for this. Psychology of course plays a major role in short term fluctuations, and crowd psychology is so far at least largely beyond our power to predict. But there is more. Change in financial markets has been accelerating dramatically with the improvement of computers, communications and software. The avalanche of new securities products during the last twenty years transformed the way global financial markets work. The crash set this process back for a while, but it is sure to resume. Both borrowers and lenders are (and should be) always on the lookout for cheaper, more efficient ways to manage their portfolios and get the maximum results for the minimum cost. Financial firms are, and should be, ready to help make this happen. Over time, new securities products, larger trading volumes and complex hedging and trading programs change the nature of the financial marketplace. There are new risks and new interconnections that, increasingly, neither regulators nor market participants fully understand. As time passes after a crash, both regulators and market participants become more confident that the system is working, and there is a natural tendency for risk tolerance to increase even as risks are becoming harder to measure and price. Sooner or later this leads to a new crash as unexpected vulnerabilities emerge; at that point everyone from regulators to speculators recalibrates and the predictably unpredictable cyclical process restarts.

Starting with the Dutch Tulip Bubble we’ve had about 350 years of financial crashes and panics. They are unlikely to stop anytime soon — and each one that comes will take most people by surprise.

So, by our reading of the lay of the land as presented above, perhaps we can extend the cycles between "bust" periods by applying some common sense and some lessons learned. Eh, not so much...

GuardHill serves all kinds of borrowers, including a goodly number of self-employed folk, successful artists and financiers who tend to garner wealth in windfalls but don't have a sheaf of pay stubs to staple to a conventional loan application. Case in point: One of Dessner's people is toiling now on a loan application from a hedge fund manager wishing to borrow $800,000 against a $4 million home purchase. The hedge's fund did poorly last year, so as a sign of good faith for his investors he's drawing no salary. Good for his business, perhaps, but rotten for a conventional mortgage application.

"This guy made $5 million in 2007 and 2008. He's liquid for $10 million, and he's borrowing 20% LTV (loan-to-value)," says Dessner. A no-doc loan to that kind of borrower shouldn't be political dynamite, especially at a time when the Federal Housing Administration is making 95% LTV loans to low-income borrowers with poor credit and little savings, he argues.

(italics, ours)

Terrific. Making these no-doc or NINJA (No Income, No Job or Assets) loans to people that can obviously make that nut is one thing but apparently the federal government was not content with ruining Fannie and Freddie and is now using the FHA to further its agenda of affordable home ownership for all.

Remember, it's all about making a better America even if we can't afford it.

Summer time reading

Kicking off this glorious 4th of July weekend with an excerpt of Walter Russel Mead's essay, "The Top Ten Lessons of the Global Economic Meltdown".

4. The old left is dead.

Not even a global economic crisis can breathe new life into the world of Marxian socialism. Not only have most European countries moved to the right since the crash; the developing world has not seen any serious revival of ‘proletarian socialism’ in response to hard times. The world’s surviving ‘communist’ regimes continue to hold power by claiming credit for the successful management of increasingly capitalist economies. If you look hard, you can find a noisy fringe calling, say, for the nationalization of the banks or other old left responses to the crisis, and there are lots of places where people are protesting government austerity programs, but there is not a single free country in the world where serious political parties argue that socialist transformation will cure the economy’s ills. Increasingly, the politics of resistance and protest come from the right (and that isn’t always a good thing).

We're not sure what Mead meant by that last statement but in the essay there is a link to the Tea Party movement at "from the right". Stay tuned to see where Mead takes this as within the context of that last sentence, saying fiscal responsibility and limited government as being "from the right" is somewhat ham-fisted and inartful.

Summer time reading

For the sake of brevity we're excerpting sections of Walter Russell Mead's essay titled, "The Top Ten Lessons of the Global Economic Meltdown."

2. Liberal capitalism works.

If half the world’s commentators and pundits spent the last 18 months announcing the collapse of American power, many of the rest spent their time hailing the death of the American capitalist model: Piratical ‘Anglo-Saxon’ capitalism was obviously less effective than the more civilized, more humanistic model of, say, Europe. Wrong again. The crisis did what crises usually do: it tested the world’s companies, governments and currencies to see what they were made of. The preliminary results of that test are now in, and the United States again looks surprisingly healthy. The dollar held up well during the crash; when the chips were down investors still thought America was the best place for their money. America’s flexible labor markets meant that a lot of people lost their jobs, but also that the recovery would start more quickly here. The overwhelming lesson of the crash for Europeans is that they need to accelerate Europe’s slow and painful shift toward a more liberal form of capitalism. Europe’s socialist parties in Spain and Greece are introducing hated liberal reforms because, as Margaret Thatcher put it long ago, “there is no alternative.”

From the very beginning, it was recognized that we borrowed (beyond our means) and spent (beyond our means) to get ourselves into this mess. As such, it was immediately recognized by the sane and rational among us that we could not simply hit "repeat" and expect that to lift us out of this mess. Even Europe gets this while our Harvard educated overseers believe themselves too wise for such mundane and pedestrian common sense.

All that and they get paid for it, too?

This summary is not available. Please click here to view the post.

Picking winners and losers in today's headlines

So, what do Ben Nelson (D-NE), James Oberstar (D-OR), the current version of the financial reform bill and the California Coastal Commission all have in common?

They're all in B-Daddy's cross-hairs as targets of crony capitalism and untoward lobbyist influence.

Check it out, here.

Quote of the day

Barney Frank on his quest to fashion legislation that would restrict the pay of Wall St.’s financial institution’s execs:

Mocking the idea that firms would move overseas if their compensation were too heavily regulated, Frank, aware that the UK is also moving to restrict pay, said, "By the time they're through, they're going to have to go to Mars to escape the determination to restrict."

This speaks less to Wall St. desire to “escape” Congressional mandates and more to Frank’s complete demogoguing of the issue and his near-maniacally obsessive pursuit to dictate what private enterprises can pay their people.

We’re in the best of hands.

Tales from Bailout Nation Pt. XXI

(scheduled post warning: author not responsible for stale content or fishy aroma)


The President has given access to his “ideas that stink” generator to Barney Frank and you just know that combination will yield something stupendous.

The concept Frank is working on would be to shield us taxpayers from pouring any more of our tax dollars into the financial institution bailout black hole. Sounds good so far, right? You are probably thinking that Frank is crafting legislation for stricter oversight of these institutions or possibly a tweak to bankruptcy laws that would allow for a softer landing for investors of failed financial institutions. If you thought any of that you would be wrong.

You see, the bailout gravy train is going to continue but the bailouts will be propped up by… wait for it, the other financial institutions.

Under the proposal, future rescues of large institutions would be paid for by other big firms. The proposal says that any financial company with assets of more than $10 billion would have to contribute to the rescue of a failed firm. The legislation emerged after community banks lobbied to ensure that small institutions would not have to pay for future bailouts.

You read that correctly. The outfits that are making money and are on sound financial footing will be forced at the butt of Barney’s gun to fork over cash to their under-performing competition.

In one fell swoop, Barney has simultaneously encouraged further risky behavior by the bad actors in the financial world as he is effectively eliminating the punishment for poor performance and has dis-incentivized strong performance by penalizing it.

We cannot imagine anything actually being more counter-productive to a healthy banking/finance industry.

We’re scouring our thesaurus to come up with language that would adequately describe what a complete ignoramus Frank is and we are failing… miserably.

You were expecting something different?

The Federal Reserve announced a $1.2 trillion plan three months ago designed to push down mortgage rates and breathe life into the housing market.

But this and other big government spending programs are turning out to have the opposite effect. Rates for mortgages and U.S. Treasury debt are now marching higher as nervous bond investors fret about a resurgence of inflation.

That's the Catch-22 threatening to make an awful housing market potentially worse and keep the economy stuck in a funk. Kick-starting the economy requires higher spending, but rising rates mean fewer Americans will be able to refinance their home loans. And some potential buyers will be shut out of the market by higher monthly payments they won't be able to afford.

Read more here. Any commenting by us would be superflous.

"Thanks but No"

strong-arm (v): 1. To compel by pressure or threats. 2. To domineer or drive into compliance by the use of threats or force.

From the euphemistically-titled article in yesterday’s U-T, Bof, Citigroup prodded by regulators:

With a crucial deadline looming in the federal bank bailout program, Washington regulators are pressing some unwelcome prescriptions upon two of the nation's largest lenders.

One by one, allies of Ken Lewis, the embattled leader of Bank of America, are bowing to pressure from the Federal Reserve and leaving the board. The bank named four new directors with financial experience yesterday, a shake-up that could further weaken Lewis' hold on the company. More board changes are expected.

On the same day at Citigroup, anxious executives moved to quell talk that the Federal Deposit Insurance Corp. was pushing to replace the chief executive, Vikram Pandit. Citigroup's board discussed how to cope with the situation in a series of meetings this week.

Whether Lewis and Pandit can hold on is uncertain, and even regulators are at odds about what should be done. But as banks prepare to report to regulators on Monday about their progress in strengthening their finances, and in some cases their managements and boards, it is increasingly clear that officials are trying to exert some control over Bank of America and Citigroup.

Gee, do you think the situation described above may have anything to do with the fact that a) banks want to get the hell out of the TARP program as soon as possible and b) these same banks are reluctant to enter into an FDIC-sponsored program to help sell-off the toxic assets they currently hold… especially when the banks appear to be raising sufficient capital on their own without more government money?

According to linked article, that the free market is able to outperform a government program has baffled many experts, especially those in the goverment. Wait a minute... can they really do this without us?

A bad idea that just keeps getting worse.

Fast forward to today, and that same bank is begging to give the money back. The chairman offers to write a check, now, with interest. He's been sitting on the cash for months and has felt the dead hand of government threatening to run his business and dictate pay scales. He sees the writing on the wall and he wants out. But the Obama team says no, since unlike the smaller banks that gave their TARP money back, this bank is far more prominent. The bank has also been threatened with "adverse" consequences if its chairman persists. That's politics talking, not economics.

Think about it: If Rick Wagoner can be fired and compact cars can be mandated, why can't a bank with a vault full of TARP money be told where to lend? And since politics drives this administration, why can't special loans and terms be offered to favored constituents, favored industries, or even favored regions? Our prosperity has never been based on the political allocation of credit -- until now.

Banks also cannot give the money back because it would be "sending the wrong signal." The signal that there is some health in the financial sector and that banks on an individual basis are ready to move forward and get on with business. Of course, that's not going to happen until this Admnistration and Congress extracts its pound of flesh and remakes the industry in its image. And isn't that a comforting thought?

Read more here.

Tales from Bailout Nation Pt. VII

The bankers struggled to make themselves clear to the president of the United States.

Arrayed around a long mahogany table in the White House state dining room last week, the CEOs of the most powerful financial institutions in the world offered several explanations for paying high salaries to their employees — and, by extension, to themselves.

“These are complicated companies,” one CEO said. Offered another: “We’re competing for talent on an international market.”

But President Barack Obama wasn’t in a mood to hear them out. He stopped the conversation and offered a blunt reminder of the public’s reaction to such explanations. “Be careful how you make those statements, gentlemen. The public isn’t buying that.”

“My administration,” the president added, “is the only thing between you and the pitchforks.”

The leader of said unruly mob would be just the person to make that statement and to offer that guarantee.

Tales from Bailout Nation Pt. VII

There's a growing sense among some bankers that Troubled Asset Relief Program known as "TARP" has become toxic. As a result, they want to bail out of the bank bailout program.
"It should be called 'TRAP,' not TARP," said Brian Garrett, chief executive of Bank of the Bay in San Francisco, who is trying to return bailout funding. "Giving it back is harder than getting it."

So much for all the free market vs. socialism theoretical hooey, we now are starting to achieve real empirical evidence for why Bailout Nation is such a horrible idea.

Garrett and other bank executives complain the Treasury's program to stabilize banks during these turbulent times is actually weighing down their potential for growth.

They're especially concerned the limits on executive compensation - imposed in February, four months after Treasury starting sending out checks - could make it difficult to hold on to star talent who may jump to financial institutions that are not receiving any Government assistance.

"Things have changed since TARP was announced. The rules have changed," said Michael McMullan, CEO of the Bank of Florida, who withdrew his application for TARP funds Thursday. "We're going to need to attract and retain key revenue drivers and great bankers."

"The more restrictions that we are placed under from the Government, the less value we can deliver to our shareholders in the long run," said McMullan.

Goldman Sachs (GS, Fortune 500), Bank of New York/Mellon (BK, Fortune 500), Wells Fargo (WFC, Fortune 500), JP Morgan Chase (JPM, Fortune 500) and Bank of America (BAC, Fortune 500) - all 'mega-banks' that the government forced to take bailout money - say they want to return taxpayer funds "as soon as practical."

But, they're well aware no one will be permitted to return funds before completion of regulatory "stress-tests" of the major banks to determine how they would withstand a severe recession.

(italics, ours)

They can’t give the money back… even if they wanted to. And those bonuses over which everyone was so outraged - that was precisely the mechanism by which entities like AIG were going to retain their employees to help dig out of this mess but which is now evaporating into thin air as these employees don't need the hassle and don't need their neighborhoods cruised by union goon agitators.

It has yet to have been adequately explained to us how any of this is any good

Folks, it’s all pretty simple. You want universal managed health care then someone is going to have to manage it.




And we suppose it was a journalistic nod to the freak show at the carny but Newsweek allowed Codepink cofounder, Medea Benjamin to chime in with respect to Congressional handling of the financial sector. It was standard boiler plate lefty populism that concluded with this paragraph from the bearded lady, herself:

The economic crisis, and the public's furor over executive pay and behavior, has provided Congress with an opportunity not just to rein in CEO compensation but also to remake the out-of-touch, irresponsible corporate system. Until that happens, we'll keep wearing our signs.

Out-of-touch… That’s an interesting phrase given the context. Just how out-of-touch does one have to be to believe that the most out-of-control, vindictive, disingenuous and unethical Congress in generations would effectively remake or rein-in anything?

H/T: Hot Air

Hubris Pt. II

Treasury Secretary Timothy Geithner plans to propose today a sweeping expansion of federal authority over the financial system, breaking from an era in which the government stood back from financial markets and allowed participants to decide how much risk to take in the pursuit of profit.

The Obama administration's plan, described by several sources, would extend federal regulation for the first time to all trading in financial derivatives and to companies including large hedge funds and major insurers such as American International Group. The administration also will seek to impose uniform standards on all large financial firms, including banks, an unprecedented step that would place significant limits on the scope and risk of their activities.

This will get the economy rolling. Certainly sounds like some swell incentives for stimulating financial activity in the economy to us.