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...