Friday, March 27, 2009

What AIG is guilty of

They as a corporation made bets on random things with essentially no thought to their ability to cover those bets. Then when the time came to pay off (e.g. the wrong horse won) they had positioned themselves in such a way that we, the taxpaying public, were forced to cover them. Why we're paying off and not burning these peoples houses down is a mystery to me.

It's a mistake after all to think of AIG as an entity with a will. AIG is no more than the sum of the decisions made by individuals. Those individuals set up this situation deliberately, aided by those for whom less regulaiton is automatically good because, hey I'm making a buck. We've had 30 years of this circular reasoning (less regulation is good, hey I'm making a buck, must have worked!).

Sadly, the Clinton administration is partly responsible for the biggest step in all this, the repeal of Glass-Steagal in 1999. That was pushed through by Republicans Phil Gramm of Texas and Jim Leach of Iowa, but senate Democrats could have filibustered it (they didn't) and Bill Clinton could have vetoed it (he didn't), and so they share in the blame.

Thursday, March 26, 2009

A bottom up banking rescue

I'm a loyal Obama supporter, but I'm also a free market realist. Obama says the right things about capitalism and markets, even for a progressive. But he's insuring a lot of the same people to make market bets whose bad bets got us in the hole to begin with.

Why are we having a top-down banking recovery? This seems like a plan designed by a republican! It *is* a plan deisgned by a republican, one Henry Paulson. It has two major problems. One is moral, rewarding the very ones who messed up, the other ethical, we're leaving the victins (us) essentially out in the cold. How about a new proposal: A bottom up banking rescue.

1) A standing offer to buy any house occupied by a family that owns it for 85% of its value, with a fair leaseback committment and option to repurchase after a set time. this buys out bad mortgages from the bottom, and keeps families in their homes.

2) Immediate extension of unemployment benefits.

3) Expansion of Medicare to cover all unemployed persons as part of their unemplyment benefits.

4) A medical hardship fund to cover the costs of uninsured major medical expenses. Far far better than letting people sink.

The most important part is, no direct aid to banks! Let the banks sip their aid through the straw of saved mortgages, and it they're still losing money, break up the bad units of them and let them fail.

Republicans talk a lot about creative destruction when it's jobs on the line, but are mysteriously quiet when it's time for bad firms to reap the economic mess they have sown.

Tuesday, January 6, 2009

Burris under the saddle

Something is really bugging me about the controversy surrounding the appointment of Roland Burris to the Senate. In particular about the Dems reaction to it. If the Democrats are about good government, then they can hardly refuse to seat the duly appointed junior Senator from Illinois. The fig leaf that the appointment is not signed by the Illinois Secretary of State is just that, and won't be that for much longer. At most the onus is now on that Scretary of State (one Jesse White) to do his job. No matter what you may think about Blagojevich or his intentions, he has the job of Governor legally for the moment and has exercised his right under the relevant State and National constitutions to appoint a replacement for Barack Obama.

How can any Democrat now say that politics trumps process? It's unreal.

Now if there's evidence that Blago actually took money or some such for his appointment, rather than just talking about it, there might be an issue. But nobody has yet said that's the case, and it's not up to Blago or Burris to prove their innocence.

So lets get on with it...

Thursday, December 11, 2008

Bailout blues

What the auto industry bailout lacks that it rescues not people or jobs, but stupid business plans. With my money. And so far they are a disaster. The auto industry is ready to take big subsidies to keep on building cars whose basic principle of design (and gas mileage) haven't changed substantially since the 50's.

The problem with both bailouts is they short-circuit the "creative destruction" inherent in capitalism. Usually when well-off CEO's invoke creative destruction, they mean people losing their jobs is good. I think people whose business plans got us here should enjoy a little of the old creative destruction, while protecting working people.

So here's an alternate plan:

1. GM has been described as a health care company that happens to make cars, ~$6B/yr for 1.1 million people, less than half of whom are current employees. The big 3 have substantial liabilities in health care and retirement, which the government should assume and guarantee to assure that peoples' *existing* benefits are not compromised by what is to come.

2. A "job bailout" should be instituted that extends substantial relocation and pay extension to jobless workers. 100% benefits for some number of years capped at $100K/yr.

3. The remaining parts of the company should be sold off at a substantial discount to someone who will present a credible plan to make cars. Maybe not as many cars, but probably not the stupid gas guzzlers they've been making since the Glen Miller era.

Would Tesla motors present a plan to build a million electric family sedans per year in three years with part of the infrastructure, labor and capital freed up? Who knows? I'd like to find out. It boils my blood that the auto industry CEO's have their hands out for welfare for *them* to build more crap.

Tuesday, November 11, 2008

Conciliatory republicans

Over the last week, I've been hearing a lot of strangely conciliatory sounding words from the right, like "Hey it was a hard election, but your guy won, congrats". I have to say these leave me strangely cold. As if the blasts of hell hadn't been coming from that direction since about 1986, and especially the last 8 years, and especially in this election. So what's the reason for all this bonhomie?
  • They're scared we'll do to them what they did to us. Personally, I'm ready for our 30 years of dominating the national discourse to the point that even the other side has to pretend they're us in order to get elected, then we dump on them.
  • They're thinking, this is the only way to have any influence now. Yes it feels a little funny to suddenly be part of the ruling class for a change.
  • They know the fairness doctrine is coming back, and they want to put it off as long as possible. In listening to right wing talk radio, I have heard them talking about the injustice, and inevitability of the return of the fairness doctrine. We can't disappoint them now can we?
  • It's temporary. Oh, yes. The floodgates of hell will re-open soon.
On the other side of the equation, on the left everyone is abuzz with all the things Obama must do in his first 100 days. Look below, I even pre-emptively made my own list. (#1: Election reform!). Immigration reform, ending the war in Iraq, tax reform, saving the economy, the list goes on and on and on. On the one hand he has promised he can do more than one thing at once, and I'll bet he can. On the other hand, some people are gonna be mighty disappointed in him in a year.

Wednesday, November 5, 2008


Now the #1 reason why I write this blog: So I can get stuff off my chest and go to sleep:
  1. Are the culture wars over for now?
  2. Can Republicans admit the legitimacy of a democratic president?
  3. Can the GOP operate as a respectful minority party?
  4. Will they give Obama the room to govern, now that he has a clear mandate from the people of the United States?
The next set of things to worry about. But you know -- they somehow aren't that troubling. I predict Barack Obama will be a much less irritating president to the Right than Bill Clinton was. The usual suspects will agitate, but not get much traction against him. Even more so than Ronald Reagan, who was a very controversial figure at times. I'll bet we're in for a very good eight years, a politically peaceful time. I hope I haven't jinxed it. Doesn't matter, nobody reads this blog anyway.

Good Night!

Saturday, November 1, 2008

What is this election a referendum on anyway?

I've been listening to a lot of right-wing radio recently. Maybe it's just the long boring commutes or the fund-raising drives on my favorite lefty stations. (Question: Why do right wing stations never have to hold bake sales and such? They don't run much advertizing. Hmmmm. Can you say vast right-wing conspiracy? And Rush makes millions!). Anyway, Rushbo, Hannity, O'Reilly, Savage, they're all beating the drum like crazy. It seems like all of America is bathed in these photons of electronic energy that say that a vote for Obama is a vote for socialism. And still Obama's poll numbers improve.

Is this telling us something?

Is Obama's election now a referendum on the idea of social democracy in America? What would that look like, anyway? In European social democracies, health care is cheap and afforadable for all. For the unemployed street person and the millionaire, and *especially* for the middle class breadwinner, it's something you take for granted is always there, like traffic lights, garbage pickup and the elementary school around the corner. Losing your job is not a nightmare of pre-existing conditions, or the loss of group health. The dreaded words co-pay, co-insurance and deductible are unknown. Though here's a neat trick: you save your claims up for a year, and if they're less than X dollars, you hold on to them and get a big refund. Otherwise you submit them and break even or are ahead.

And when I lived in Europe, the total cost of taxes plus health insureance was about the same as it is here. Live with it. It's nice.

Public universities (remember when UCLA in-state was free?). Public transportation -- I have the choice between a 2-hour round trip to my airport or a $140 shuttle. Wouldn't a $5.00 train be better? Like in civilized countries?

If this election is a referendum on social democracy, and Barack Obama wins it, can we actually start thinking about these things?

Just asking.