Every three years during the Bush administration, America was presented with the slickest and most appealing of Hollywood fare: the Ocean's Eleven series. In 2001, and then again in 2004 and 2007, we were treated to lots of attractive, famous people in fancy clothing surrounded by colorful lights and engaging in witty banter... while stealing unfathomable sums of money. The films, as all heist films do, relied on the simple lie inherent to the genre: the thieves are the good guys. And everyone watched eagerly as they siphoned off millions for themselves.
It is almost as if these movies were designed to enforce a decision made on Capitol Hill two years prior to the first installment: the passage of the Graham-Leach-Bliley Act. Let's set the scene:
* * * * *
The year was 1999, and, just as in the Ocean's movies (those to come and the original of long ago), the story featured a bunch of Rich Men in Nice Suits who wanted to be richer. They came into town looking for the largest casino they could find, hoping to score big.
Now, in the films, Andy Garcia runs the casino, and he at least tries to, you know, stop the thieves from thieving. Similarly, for the last seventy years, the gatekeepers of the nation had stood firmly in the way, upholding regulations such as the Glass-Steagall Act which essentially insured that the casinos of American finance would stay manageable in scope: if one did get robbed, the Strip would not disintegrate into a starry memory overnight.
For some reason, though, Congress, in 1999, did not get this gatekeeping memo. They had no interest in playing the Andy Garcia role, assuming that nobody likes a party-pooper, and managing casinos is boring, not to mention the fact that everyone wants to be Frank Sinatra/George Clooney, or if they can't, they at least want to be his friend, or if they can't, they at least want him to like them. So, our trusty representatives not only welcomed these Rich Men in Nice Suits, but they said, "hey, you know what, let's get rid of that old Act and pass a new one, because, you know, we know what you guys need: a bigger casino. Here, take America."
And they did.
And they had a field day.
The Rich Men in Nice Suits took and took and took, and gambled and gambled and gambled. Now, a lot of the suspense was gone, since there were no guards to fool, no cameras to disable, no, you know, security to, you know, stand in their way.
And everyone got rich.
It was very glamorous.
And it seemed to be working. And lots of people thought they were doing pretty well for a good, long while.
And George Clooney kept coming into their movie theatres and showing them how sexy it was to gamble. And they loved it.
The thieves were the good guys.
There were lots of thieves.
* * * * *
The problem, of course, as we now know, was that people weren't really getting rich. Some were: those who were consistently cashing out and stashing their winnings. But a lot of people were just raking in the chips, and putting those on the line, and then raking in more. They came up with fancy names, like "credit default swaps," which were when a lot of people were borrowing chips from other people, who in turn were borrowing chips from other people, to cover their own lending, without ever discerning whether they could be paid back. Chips were borrowed so many times over that everyone lost track of everything. Another fun thing they did was construct "collateralized debt obligations" out of "sub-prime mortgages," which is a fancy way of saying that chips were loaned out to millions of people who could not afford them, and then other people decided that they would invest in the future paying-back of those chips.
All of America was a giant casino, full of noise and life and color and lots and lots and lots of chips.
Not money. Just chips.
Chips, of course, are not money. And eventually, it turned out that the country, as a whole, was not well-suited to be a casino. All of a sudden, people went to cash in their chips, and found out that they weren't worth anything at all. Too many people had found too many ways to get too many chips, which was absurdly easy, because their were no rules.
The chips had no value.
The casino shut down overnight.
Now, in hindsight, we realize that these people on Capitol Hill had a very, very bad idea. We also realize that George Clooney's movie was a movie, not a lesson. (He does make movies that are lessons, for example, Good Night, and Good Luck, but these are largely ignored by the decision makers.)
So, here we are, duped by the Rich Men in Nice Suits. America spent ten years thinking it was the star of a heist movie; in this movie, thieves became good guys, and everyone was happy.
Nobody stopped to think about the fact that movies end.
27 March 2009
24 March 2009
Also, re: The Press Conference...
The Times points out that foreign policy was virtually untouched at the press conference. Similarly, Obama appeared on Leno on the anniversary of the invasion of Iraq--and this fact was not mentioned in the interview.
I understand that we are in the midst of a domestic crisis. But we spent most of the Bush administration looking outward, only to find out at the very end that things had fallen apart here at home. We can't afford to make the opposite mistake. It's a big world, and we're a small part of it.
I understand that we are in the midst of a domestic crisis. But we spent most of the Bush administration looking outward, only to find out at the very end that things had fallen apart here at home. We can't afford to make the opposite mistake. It's a big world, and we're a small part of it.
Obama's Second Primetime Press Conference
Overall, a pretty strong performance as far as clarity and demeanor.
However, the President's first answer, to a question from Jennifer Loven of the A.P. regarding Secretary Geithner's request for more control over financial institutions, contained a gaping hole in logic that strikes me as both out of character and extremely dangerous. Consider the following statement by Obama:
"Now, understand that AIG is not a bank. It's an insurance company. If it were a bank and it had effectively collapsed, then the FDIC could step in...
I think a lot of people understandably say, "Well, if we're putting all this money in there, and if it's such a big systemic risk to allow AIG to liquidate, why is it that we can't restructure some of these contracts? Why can't we do some of the things that need to be done in a more orderly way?"
And the reason is, is because we have not obtained this authority. We should have obtained it much earlier so that any institution that poses a systemic risk that could bring down the financial system we can handle and we can do it in an orderly fashion that quarantines it from other institutions."
The response is what we have come to expect from Obama: professorial, intended to teach, easy to follow. But, contrary to his usually high standard of logic, this response makes very little sense. First of all, as Obama himself explained on Leno last week, AIG is not simply an insurance company; it is a financial behemoth of nearly unfathomable size and scope. And secondly, his proposal for solving the problem of a company that "poses a systemic risk that could bring down the financial system" treats said company as a given. Obama is offering band-aids, antibiotics, and preventative care as solutions for combating a fatal epidemic; I, personally, would prefer eradication.
What he is basically saying is the following: "We need to be able to regulate too-big-to-fail companies."
What he should be saying is: "We can no longer tolerate the existence of too-big-to-fail companies."
Matt Taibbi drove the point home on Rachel Maddow's show just hours after the above comments were made. He explained in plain terms just how and when insurance companies, investment banks, and commercial banks were allowed to join into unified mega-conglomerates (and choose their own regulators). He outlined what was, in essence, the moment in time when Congress decided it would allow companies to become too-big-to-fail: the passage, in 1999, of the Gramm-Leach-Bliley Act, which repealed the Glass-Steagall Act of 1933.
This Act must be overturned.
I know that Obama's administration is filled with financial insiders whose histories and abilities and affiliations are being questioned. I want very much to give him the benefit of the doubt on said insiders. But it is truly baffling to me how a man of his intellect, no matter what received wisdom is being whispered in his ear by Geithner and Summers, can fail to see the crucial point here: no one company should ever be too vital to fail. It is not enough to try to control these companies. They must, as Taibbi argues (and he cites precedents, too), be disbanded and forbidden from ever again existing.
To allow them to go on is a recipe for further disaster: speculation will always occur; greed will always drive Wall Street; to imagine that the lessons learned today will be remembered tomorrow is foolhardy. We should never knowingly put ourselves in a position that leaves us vulnerable to being held hostage as a nation: not by terrorists, not by hostile foreign governments, and certainly not by our very own companies.
However, the President's first answer, to a question from Jennifer Loven of the A.P. regarding Secretary Geithner's request for more control over financial institutions, contained a gaping hole in logic that strikes me as both out of character and extremely dangerous. Consider the following statement by Obama:
"Now, understand that AIG is not a bank. It's an insurance company. If it were a bank and it had effectively collapsed, then the FDIC could step in...
I think a lot of people understandably say, "Well, if we're putting all this money in there, and if it's such a big systemic risk to allow AIG to liquidate, why is it that we can't restructure some of these contracts? Why can't we do some of the things that need to be done in a more orderly way?"
And the reason is, is because we have not obtained this authority. We should have obtained it much earlier so that any institution that poses a systemic risk that could bring down the financial system we can handle and we can do it in an orderly fashion that quarantines it from other institutions."
The response is what we have come to expect from Obama: professorial, intended to teach, easy to follow. But, contrary to his usually high standard of logic, this response makes very little sense. First of all, as Obama himself explained on Leno last week, AIG is not simply an insurance company; it is a financial behemoth of nearly unfathomable size and scope. And secondly, his proposal for solving the problem of a company that "poses a systemic risk that could bring down the financial system" treats said company as a given. Obama is offering band-aids, antibiotics, and preventative care as solutions for combating a fatal epidemic; I, personally, would prefer eradication.
What he is basically saying is the following: "We need to be able to regulate too-big-to-fail companies."
What he should be saying is: "We can no longer tolerate the existence of too-big-to-fail companies."
Matt Taibbi drove the point home on Rachel Maddow's show just hours after the above comments were made. He explained in plain terms just how and when insurance companies, investment banks, and commercial banks were allowed to join into unified mega-conglomerates (and choose their own regulators). He outlined what was, in essence, the moment in time when Congress decided it would allow companies to become too-big-to-fail: the passage, in 1999, of the Gramm-Leach-Bliley Act, which repealed the Glass-Steagall Act of 1933.
This Act must be overturned.
I know that Obama's administration is filled with financial insiders whose histories and abilities and affiliations are being questioned. I want very much to give him the benefit of the doubt on said insiders. But it is truly baffling to me how a man of his intellect, no matter what received wisdom is being whispered in his ear by Geithner and Summers, can fail to see the crucial point here: no one company should ever be too vital to fail. It is not enough to try to control these companies. They must, as Taibbi argues (and he cites precedents, too), be disbanded and forbidden from ever again existing.
To allow them to go on is a recipe for further disaster: speculation will always occur; greed will always drive Wall Street; to imagine that the lessons learned today will be remembered tomorrow is foolhardy. We should never knowingly put ourselves in a position that leaves us vulnerable to being held hostage as a nation: not by terrorists, not by hostile foreign governments, and certainly not by our very own companies.
27 February 2009
Following Through
Is it just me, or is President Obama, on the whole, doing what he said he'd do? Today's announcement on the end of combat operations in Iraq is but the latest in a series of steps (closing Guantanamo, cutting taxes, investing in health care, etc.), which have not gone unnoticed, that seem designed to... well, to do the things he was elected to do.
I Don't Get It
I'm all for seeing multiple sides of an issue. I would love to see two or more parties having a free and fair discussion in which competing relevant ideas are expressed and debated. I wish this was what the GOP was offering right now, because by doing so, they could seriously contribute to moving this country along... unfortunately, that doesn't seem to be the case. I've been stunned this week by what seems to be a new nation-wide tactic. It may or may not more harmful than the simple nay-saying strategy they so cherish, but it is far more baffling. It seems to be... mean-spiritedness.
- The as-of-today no-longer-in-operation Rocky Mountain News reports here on a Republican State Senator's opposition to a bill requiring HIV testing for expectant mothers (which would give doctors the opportunity to treat the babies against the virus' transfer). Senator Dave Shultheis said he "can't go there" because the disease "stems from sexual promiscuity for the most part." The article goes on to describe more of his remarks which are too hateful and depressing for me to reproduce here, in which he outlines his justification for condemning the unborn to living with AIDS. (I personally didn't have the stomach or the patience to read the article in its entirety... it also quotes one of Shultheis' Republican colleagues in a separate debate, in which he compares homosexuality to murder by referencing them as sins that should not be condoned... he backs himself up with quotations from the Bible.)
- Meanwhile, CPAC is underway in Washington, D.C., and the racist "Obama Waffles" cereal is on display (and Joe the Plumber gave a talk). Two big laughs so far from the gathered crowds have been in response to 1) an implication that our President was not born in America and 2) a remark by John Bolton about the possibility of a devastating nuclear attack on the city of Chicago... wow... hilarious...
- Sean Hannity had a poll on his website earlier this week asking which of three possible forms of violent revolution his listeners favored.
Most of the above came to my attention by way of MSNBC, which, I realize, is a network with a clear political bias. But they did not make these stories up, they simply shared them. Any one of these instances, on their own, might be taken as the mouthing-off of the radical fringe or, if we wanted to be really, really generous, as badly-calculated political missteps. But these are not simply rogue agents. The people responsible include a Republican State Senator, an Ambassador to the United Nations under George W. Bush, and one of the country's leading right-wing pundits.
The comments, taken together, are stunning in their spite and devastating in their hatefulness. If this is the new Republican Party, then I'm becoming less and less worried about "bipartisanship." These people can dig themselves ever deeper into a hole of hate and when they get to the bottom, they will realize that such a hole is dark and cold, and that the rest of us have forgotten them as we continue to seek the light up above.
I don't get it.
- The as-of-today no-longer-in-operation Rocky Mountain News reports here on a Republican State Senator's opposition to a bill requiring HIV testing for expectant mothers (which would give doctors the opportunity to treat the babies against the virus' transfer). Senator Dave Shultheis said he "can't go there" because the disease "stems from sexual promiscuity for the most part." The article goes on to describe more of his remarks which are too hateful and depressing for me to reproduce here, in which he outlines his justification for condemning the unborn to living with AIDS. (I personally didn't have the stomach or the patience to read the article in its entirety... it also quotes one of Shultheis' Republican colleagues in a separate debate, in which he compares homosexuality to murder by referencing them as sins that should not be condoned... he backs himself up with quotations from the Bible.)
- Meanwhile, CPAC is underway in Washington, D.C., and the racist "Obama Waffles" cereal is on display (and Joe the Plumber gave a talk). Two big laughs so far from the gathered crowds have been in response to 1) an implication that our President was not born in America and 2) a remark by John Bolton about the possibility of a devastating nuclear attack on the city of Chicago... wow... hilarious...
- Sean Hannity had a poll on his website earlier this week asking which of three possible forms of violent revolution his listeners favored.
Most of the above came to my attention by way of MSNBC, which, I realize, is a network with a clear political bias. But they did not make these stories up, they simply shared them. Any one of these instances, on their own, might be taken as the mouthing-off of the radical fringe or, if we wanted to be really, really generous, as badly-calculated political missteps. But these are not simply rogue agents. The people responsible include a Republican State Senator, an Ambassador to the United Nations under George W. Bush, and one of the country's leading right-wing pundits.
The comments, taken together, are stunning in their spite and devastating in their hatefulness. If this is the new Republican Party, then I'm becoming less and less worried about "bipartisanship." These people can dig themselves ever deeper into a hole of hate and when they get to the bottom, they will realize that such a hole is dark and cold, and that the rest of us have forgotten them as we continue to seek the light up above.
I don't get it.
25 February 2009
Spring Training Opens
Yankees and Cubs are getting underway today... that means the real Spring has to come soon, too!
Responsibility
Glad to see that just about everyone felt the way I did about Jindal's response. As for his rejection of government intervention, I don't think it carries much water with anyone anymore. As Roger Simon says, it's pretty clear that the government has been complicit in these crises from the very beginning. There is a line to be drawn between letting the markets be free and letting them run wild; there is a line to be drawn between standing by our values abroad and cramming them down the throats of others. There are tough decisions that need to be made, every day, on health care and energy, education and taxes, and many other issues. Those decisions have been put off, brushed aside, and this is where we are now. President Obama spent the evening talking about fixing those problems. The sputter of a Republican response, though it claimed to center on the idea that "Americans can do anything," seemed to be: "Don't look at us. We place our trust in you."
This is classic buck-passing, and subtly, but supremely, disingenuous. It sounds great to say "we'll spend less of your money and get out of your way," but that doesn't get near the truth. The truth is, the "American people" at large do not possess the tools to get credit flowing again, or to reform health care, or to force investment in green energy. That is why we elect people to represent us. If the Republicans don't want to be trusted with our problems, they should not be running for office. If they find it irresponsible to try to find solutions, they have no business at the table. They want us to think they are reaching out a hand when in fact they are stiff-arming progress.
There is another fundamental problem with their response. At its heart lies the standard conservative "answer" to the economy: "we must be fiscally responsible. Smaller government. Less spending." Now, I'm all for fiscal responsibility, but I do not think it can exist in a vacuum. What I would hope for is that all aspects of our government's actions be governed by responsibility. Now, when I was growing up, I was taught that an indispensable part of being responsible was the willingness to take responsibility. And that is what we are asking for now. Congress can not turn its back on the mess it has helped to create; instead, it must recognize the simple precept we all learn in kindergarten: when you make a mess, you clean it up. You do not stand around claiming that cleaning it up would be irresponsible.
This is classic buck-passing, and subtly, but supremely, disingenuous. It sounds great to say "we'll spend less of your money and get out of your way," but that doesn't get near the truth. The truth is, the "American people" at large do not possess the tools to get credit flowing again, or to reform health care, or to force investment in green energy. That is why we elect people to represent us. If the Republicans don't want to be trusted with our problems, they should not be running for office. If they find it irresponsible to try to find solutions, they have no business at the table. They want us to think they are reaching out a hand when in fact they are stiff-arming progress.
There is another fundamental problem with their response. At its heart lies the standard conservative "answer" to the economy: "we must be fiscally responsible. Smaller government. Less spending." Now, I'm all for fiscal responsibility, but I do not think it can exist in a vacuum. What I would hope for is that all aspects of our government's actions be governed by responsibility. Now, when I was growing up, I was taught that an indispensable part of being responsible was the willingness to take responsibility. And that is what we are asking for now. Congress can not turn its back on the mess it has helped to create; instead, it must recognize the simple precept we all learn in kindergarten: when you make a mess, you clean it up. You do not stand around claiming that cleaning it up would be irresponsible.
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