11/17/2010 archive

Evening Edition is an Open Thread

1 Europe heads for Irish bank rescue

by Roddy Thomson, AFP

32 mins ago

While we were “sleeping” and kvetching about the President being “dissed” by Republicans, the black hole of Republican control of policy agenda has begun in full. Do not hold your breath over the next 6 weeks expecting the Democrats to get anything accomplished, the 111th congress is already dead.

Remember the “Paycheck Fairness Act” that would have given women pay equality? Come on you know the “Lilly Ledbetter Act” that was touted as one of President Obama’s “greatest achievements” by his loyal supporters. Well guess what it never got out of cloture in the Senate.

A bill aimed at stamping out wage discrimination was blocked Wednesday as too few senators voted to move forward with the legislation. The Paycheck Fairness Act needed 60 votes to move forward, and only captured 58.

The Republicans don’t need a majority in the Senate.

End the Filibuster, Mr. Reid.

And forget about extending  unemployment benefits that are about to expires for 2 million

Senators Jack Reed (D-RI) and Bob Casey (D-PA) want the Senate to take up and pass a one-year extension of unemployment insurance benefits from 26 to 99 weeks, but they did not sound hopeful on a conference call that this could get done before the extension lapses at the end of November.

Getting jobless benefits passed in the lame duck session is going to be a tough road. Congress has always passed emergency funding for extended unemployment benefits in a time of high joblessness, any time the topline rate is over 7.2%. But even with 59 votes, the Senate has faced an arduous series of votes to extend it out month by month this year. The last attempt in April needed multiple cloture votes, with several failing before the final success. At the time, Republicans like Olympia Snowe and Susan Collins said that would be the last extension they would vote for that wasn’t offset with some other revenue or spending cut. Ben Nelson (D-NE) has joined them, making it virtually impossible to find the votes.

I know how to offset the extension, end the tax cuts of the top 1%. Oh, wait, we can’t do expect to take care of the unemployed on the backs of the rich.

Remember the Republicans and Teajihadists screaming about “death panels” in the health care bill? You know, that silly end of life counseling that would have offed granny? Heh, the Republican Arizona Legislature has done one better.

In Arizona, 98 low-income patients approved for organ transplants have been told they are no longer getting them because of state budget cuts.

The patients receive medical coverage through the Arizona Health Care Cost Containment System (AHCCCS), the state’s version of Medicaid. While it may be common for private insurance companies or government agencies to change eligibility requirements for medical procedures ahead of time, medical ethicists say authorizing a procedure and then reversing that decision is unheard of.

h/t Echidne

“Punting the Pundits“ is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

Michael Moore: Let’s Pass Some Laws Before the Republicans Head Into Town

Dear Congressional Democrats:

Welcome back to our nation’s capital for your one final session of the 111th Congress. Come January, the Republicans will take over the House while the Democrats will retain control of the Senate.

But Dems — here’s something I don’t understand: Why do you look all sullen and depressed? Clearly you’re not aware of one very important fact: you are still completely, totally, legally in charge! When (and if, mostly if) you wake up to the reality that you can do whatever you want for the next seven weeks, you will realize that you have two clear options:

1. You can continue your “Sit Quietly and Hope No One Hits Me” strategy and thus lay the groundwork for an even bigger ass-kicking two years from now;

Or…

2. You can actually use the power you hold for the next seven weeks and have the Senate pass the legislation that the House has already passed!

Paul Krugman: At the Federal Reserve, It’s Lonely at the Top

What I would do if I were in charge of the Fed is the same thing I suggested that Japanese officials do in 1998: announce a fairly high inflation target over an extended period and commit to meeting that target. As I have said before, when you’re up against the zero lower bound, it doesn’t matter how much money you print unless you credibly promise higher inflation.

What does this mean? Let’s say the Fed commits to achieving 5 percent annual inflation over the next five years – or, perhaps better, to hitting a price level 28 percent higher at the end of 2015 than today’s level. Crucially, this target cannot be called off if the economy recovers. Why? Because the point is to change expectations, and that means locking in the price rise.

The sad truth is, of course, that the chances of our achieving anything like this are no better than those for implementing an adequate fiscal stimulus – at least for now.

At best, the limited quantitative easing that was just announced will only provide mild mitigation of the country’s current problems. Perhaps when the reality that the United States is caught in a liquidity trap sinks in – as the fact that we’re doing worse than Japan starts to finally penetrate our arrogance (amazing how long that’s taking) – we will eventually get there.

But it is not likely to happen soon.

Jane Hamsher: Investigate the TSA, Not Tyner

The TSA is opening an investigation targeting John Tyner, the man who earned himself an aggressive “pat down” at the airport when he refused to go through the TSA’s new AIT “porno scanners.”

But it’s the TSA that should be investigated, not Tyner.

Tyner was now allowed board his flight after he refused to allow himself to be groped, and now he could face both prosecution and a fine of $11,000.

But his real crime was making the “don’t touch my junk” video showing exactly what happened during his encounter with the TSA, which sparked a public backlash.

Jon Walker: Where are the “Obama Tax Cuts?”

Why didn’t the White House draft up a new tax law, with a few minor changes, that permanently extended the current tax rate for people making less than $250,000, and label that the “Obama tax cut.” By making a few small modifications, they could even have slightly reduced some tax rates for the middle class. This would allow the White House to legitimately claim the “Obama tax cuts” are not just an extension of the “Bush tax cuts,” they are, in fact, better!

In the ongoing Propublica investigation Buried Secrets, Gas Drilling’s Environmental Threat today’s headline is Pittsburgh Bans Natural Gas Drilling. Citing health and environmental concerns, the city council received a standing ovation after voting 9-0 to approve the ban within city limits on Tuesday.

City Council President Darlene Harris said her biggest concern was people’s health. She said she had heard stories about people being sickened by water contaminated by Marcellus drilling. She said claims by the industry of the thousands of jobs being created wasn’t worth the risk.

“They’re bringing jobs all right,” Harris said. “There’s going to be a lot of jobs for funeral homes and hospitals. That’s where the jobs are. Is it worth it?”

Pennsylvania is the center of the Marcellus Shale activity, with more than 2,000 wells drilled in the past three years and many thousands more planned, as multinational exploration companies invest billions in the pursuit.

The Community Environmental Legal Defense Fund, a nonprofit advocacy group, takes credit for drafting the ordinance and claims this is a “first-in-the-nation ordinance” that “elevates the right of the community to decide, not corporations.”

Very good news for Americans and that’s on top of the recent bad news for Halliburton. Dick Cheney must be having a bad day!

Economics 101

The time has come, the Walrus said, to talk of many things.  Of shoes and ships and sealing wax, of cabbages and kings.

I want to focus here on Credit Default Swaps.  Since the abbreviation (CDS) is close to the abbreviation for Collateralized Debt Obligations (CDO), which includes as a subset Mortgage Backed Securities (MBS) there is a tendency to confuse them all together.

A Credit Default Swap is an insurance policy on a debtor paying their debt.

For a fee someone with deep pockets agrees to make good the debt if the debtor doesn’t pay.

Now as long as the debtor pays this is easy money, but what we are finding is that when they actually do default, the people who sold these insurance policies don’t actually have such deep pockets after all.

And since they’re “Too Big To Fail” financial institutions who owe other “Too Big To Fail” financial institutions the money is coming out of Taxpayer pockets instead.

As I might have mentioned before (but am too lazy to look up at the moment) it is Insurance Fraud not to keep sufficient reserves to pay off your policies.

What makes this even worse is that you don’t actually have to own the debt to buy the policy.  It’s like letting random people take out life insurance on you and not counting on them coming up with some brilliant Strangers on a Train scheme to bump you off.

It is fundamentally no different from going into a Casino and betting it all on Black.

A few days ago I posted on twitter this comment

So, Mr. Obama, how’s that bipartisan thing working out for you now? The Republicans have taken back the House and increased the number of seats they hold in the Senate and the leadership has vowed to continue their obstructionist agenda. They are pushing the same old policies that got the US economy into the current mess. “Trickle Down” didn’t work 30 years ago and the tax cuts didn’t create one job but, hey, there are voters, spurred by the lack of message control by the Democrats, that still believe despite the evidence.

Contrary to the CW of the Village, Americans are not right of center. Not when the majority of polls show overwhelming support of a public option for health care, strong support of keeping the tax cuts for the middle class while letting the tax cuts for the top 1% expire and strong support to repeal DADT. Contrary to the talking heads, the voters message was not that the Democrats were too aggressive, it was that they weren’t aggressive enough in passing the progressive agenda.

Mr. Obama managed to trickle away his capital by negotiating with the likes of Sen. Lindsay Graham who walked away from every compromise by the President on climate change to the point where any hope of a climate bill is now in rigor mortis. He let blue dogs like Max Baucus, Ben Nelson and Joe Lieberman dictate the industry and Republican written Patient Protection and Affordable Care Act . DADT could have been ended with a mere stroke of a pen using “Stop Loss” and letting the 9th Circuit decision declaring it unconstitutional stand.

Mr. Obama is destined to become a one term president unless he stars standing up to the Republicans. There are those who will whine that he has to negotiate with them totally ignoring the failure of that tactic. Caving to Republican demands has only emboldened them and this is where it has gotten us. But, we, on the left, know all this.

The only way that Obama can now counter the Republican vendetta to make him a one term President is use the power of the executive as suggested today in The Nation by Katrina vander Heuval

In the wake of November’s “shellacking,” progressives are rightfully concerned that the next two years may result in little more than total gridlock. With a Republican-controlled House, the chances of major legislation making its way to the president’s desk are, indeed, virtually nonexistent.

But the administration’s hands are not completely tied. On the contrary, the president still has the power to use executive orders, rulemaking and diplomacy to further the progressive agenda without ever consulting Congress.

On Tuesday, the Center for American Progress released a report outlining its expert’s recommendations for advancing progressive change in this new political climate. (The full report is worth the read.) As John Podesta, CAP’s President and CEO noted, “The ability of President Obama to accomplish important change through these powers should not be underestimated.”

Mr. Obama, while I have my doubts about you, I still want you to do what you promised while seeking the nomination and during your campaign. You can start by standing your ground on the tax cuts, even if it means they all expire. Listen to the progressives and the left who have the best interests of the majority in this country. You have two years to turn this around. Prove me wrong and stop caving. Good Luck

With Respect, TMC

PS: Please fire Tim Geithner.

The Debt Problems of the European Periphery

By Anders Åslund, Peter Boone and Simon Johnson, The Baseline Scenario

November 17, 2010 at 12:18 am

Last week’s renewed anxiety over bond market collapse in Europe’s periphery should come as no surprise.  Greece’s EU/IMF program heaps more public debt onto a nation that is already insolvent, and Ireland is now on the same track. Despite massive fiscal cuts and several years of deep recession Greece and Ireland will accumulate 150% of GNP in debt by 2014.   A new road is necessary: The burden of financial failure should be shared with the culprits and not only born by the victims.

The fundamental flaw in these programs is the morally dubious decision to bail out the bank creditors while foisting the burden of adjustment on taxpayers.  Especially the Irish government has, for no good reason, nationalized the debts of its failing private banks, passing on the burden to its increasingly poor citizens.  On the donor side, German and French taxpayers are angry at the thought of having to pay for the bonanza of Irish banks and their irresponsible creditors.

Such lopsided burden-sharing is rightly angering both donors and recipients.  Rising public resentment is testing German and French willingness to promise more taxpayer funds.  German Chancellor Angela Merkel’s hasty and ill thought out plan to demand private sector burden sharing, but only “after mid-2013”, marks a first response to these popular demands.  We should expect more.

Financial crises are actually not rare, and the rules for their resolution are clear. The fundamental insight is that huge amounts of financial losses, of seemingly real value, need to be distributed across creditors, debtors, equity holders and taxpayers.

My emphasis.

Ireland: How much punishment for British and international banks?

Robert Peston, BBC

09:09 UK time, Wednesday, 17 November 2010

Are haircuts in or out for Ireland? Will the putative experts at the IMF, European Commission and European Central Bank, who will spend the next few days examining Ireland’s intertwined banking and fiscal challenges, recommend that there should be losses imposed on the providers of tens of billions of euros of wholesale debt to banks.

…

It is that phrase “restructuring of the banking sector” which may alarm the banks and financial institutions which are wholesale creditors of Ireland’s banks, the providers of more senior debt which is supposed to be least at risk of non-repayment. The implication is that consideration is being given to forcing losses on them, such that they would share in the costs of rehabilitating Ireland’s banks.

…

(I)t would be a bit odd if the ECB, in the shape of all its senior movers and shakers, were opposed to such haircuts: there is a powerful moral argument, of the sort that normally appeals to central bankers, to the effect that overseas banks and institutions in the UK, Germany and so on should have known better than to encourage Ireland’s banks to lend recklessly and pump up a completely unsustainable property bubble – and that they therefore deserve a bit of a spanking.

What’s more, if Ireland is fundamentally incapable of paying off all it owes – which is equivalent to an oppressive 700% of GDP when banking, public sector and private sector debts are added together -some will say it is grotesquely unfair that the cost should fall entirely on taxpayers in Ireland, the European Union and (if IMF money is drawn) the rest of the world.

…

What would then be triggered would be enormous payments by underwriters of credit default swaps (CDSs), the debt insurance contracts taken out by lenders and speculators. These payments would generate enormous losses for the financial institutions, including banks, which provided the CDS cover.

…

Even without the CDS loss multiplier, the impact of debt haircuts would be painful for British and international banks. According to the Bank for International Settlements, total lending of non-Irish banks to Irish banks is around $170bn, of which British banks provided $42bn, German banks provided $46bn, US banks $25bn and French banks $21bn.

…

What’s more, if there are haircuts imposed on Irish bank debt, it’s very difficult to see how haircuts could be avoided for Greek and Portuguese bank debt too, and also for plain vanilla Irish, Portuguese and Greek government borrowings.

If you add all that together, it comes to $435bn of exposure for international banks to the banking and public sectors of the eurozone’s three weakest economies. If, say, a third of that were written off (enough to make the residual debt almost bearable) that would trigger not far off $150bn of losses for banks alone.

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

November 17 is the 321st day of the year (322nd in leap years) in the Gregorian calendar. There are 44 days remaining until the end of the year.

On this day in 1558, Queen Mary I, the monarch of England and Ireland since 1553, dies and is succeeded by her 25-year-old half-sister, Elizabeth.

Elizabeth became queen at the age of 25, and upon hearing of her accession to the throne, she is reputed to have quoted the 118th Psalm’s twenty-third line, in Latin: “A Dominum factum est illud, et est mirabile in oculis notris” – “It is the Lord’s doing, and it is marvellous in our eyes.”

On 20 November 1558, Elizabeth declared her intentions to her Council and other peers who had come to Hatfield to swear allegiance. The speech contains the first record of her adoption of the mediaeval political theology of the sovereign’s “two bodies”: the body natural and the body politic:

My lords, the law of nature moves me to sorrow for my sister; the burden that is fallen upon me makes me amazed, and yet, considering I am God’s creature, ordained to obey His appointment, I will thereto yield, desiring from the bottom of my heart that I may have assistance of His grace to be the minister of His heavenly will in this office now committed to me. And as I am but one body naturally considered, though by His permission a body politic to govern, so shall I desire you all…to be assistant to me, that I with my ruling and you with your service may make a good account to Almighty God and leave some comfort to our posterity on earth. I mean to direct all my actions by good advice and counsel.

As her triumphal progress wound through the city on the eve of the coronation ceremony, she was welcomed wholeheartedly by the citizens and greeted by orations and pageants, most with a strong Protestant flavour. Elizabeth’s open and gracious responses endeared her to the spectators, who were “wonderfully ravished”. The following day, 15 January 1559, Elizabeth was crowned at Westminster Abbey and anointed by the Catholic bishop of Carlisle. She was then presented for the people’s acceptance, amidst a deafening noise of organs, fifes, trumpets, drums, and bells.

The Elizabethan era was a time associated with Queen Elizabeth I’s reign (1558-1603) and is often considered to be the golden age in English history. It was the height of the English Renaissance and saw the flowering of English poetry, music and literature. This was also the time during which Elizabethan theatre flourished, and William Shakespeare and many others composed plays that broke free of England’s past style of plays and theatre. It was an age of exploration and expansion abroad, while back at home, the Protestant Reformation became more acceptable to the people, most certainly after the Spanish Armada was repulsed. It was also the end of the period when England was a separate realm before its royal union with Scotland.

The Elizabethan Age is viewed so highly because of the periods before and after. It was a brief period of largely internal peace between the English Reformation and the battles between Protestants and Catholics and the battles between parliament and the monarchy that engulfed the seventeenth century. The Protestant/Catholic divide was settled, for a time, by the Elizabethan Religious Settlement, and parliament was not yet strong enough to challenge royal absolutism. England was also well-off compared to the other nations of Europe. The Italian Renaissance had come to an end under the weight of foreign domination of the peninsula. France was embroiled in its own religious battles that would only be settled in 1598 with the Edict of Nantes. In part because of this, but also because the English had been expelled from their last outposts on the continent, the centuries long conflict between France and England was largely suspended for most of Elizabeth’s reign.

The one great rival was Spain, with which England clashed both in Europe and the Americas in skirmishes that exploded into the Anglo-Spanish War of 1585-1604. An attempt by Philip II of Spain to invade England with the Spanish Armada in 1588 was famously defeated, but the tide of war turned against England with an unsuccessful expedition to Portugal and the Azores, the Drake-Norris Expedition of 1589. Thereafter Spain provided some support for Irish Catholics in a debilitating rebellion against English rule, and Spanish naval and land forces inflicted a series of reversals against English offensives. This drained both the English Exchequer and economy that had been so carefully restored under Elizabeth’s prudent guidance. English commercial and territorial expansion would be limited until the signing of the Treaty of London the year following Elizabeth’s death.

England during this period had a centralised, well-organised, and effective government, largely a result of the reforms of Henry VII and Henry VIII. Economically, the country began to benefit greatly from the new era of trans-Atlantic trade.

Well, it took me a while but I finally tracked down the Wall Street Journal article on the BP Blowout Disaster that every one-

• AFP
• Reuters
• AP
• The New York Times
• The Washington Post
• Bloomberg
• Business Week
• USA Today

is referencing.

I didn’t think it was much of a much in terms of things we didn’t know already, but it sure got the print media’s attention and since it did take so long to find I thought I’d share it with you.

Gulf Spill Linked to BP’s Lack of ‘Discipline’

By STEPHEN POWER, BEN CASSELMAN And RUSSELL GOLD, The Wall Street Journal

NOVEMBER 17, 2010

Engineers’ Report Blames Oil Giant for Failing to Ensure That Safety Trumped Cost; Regulators’ Technical Acumen Is Panned

An “insufficient consideration of risk” and “a lack of operating discipline” by oil giant BP PLC contributed to the worst offshore oil spill in U.S. history, according to a report due for public release Wednesday from a team of technical experts.

…

The report provides little new information on the specific causes of the explosion on the Deepwater Horizon rig, instead providing a long list of decisions by BP and other companies that it says may have played a role in the disaster.

…

But the panel also identifies non-technical factors that it says likely contributed to the accident. The panel cites off “a lack of management discipline” and a “lack of onboard expertise and of clearly defined responsibilities.”

The report doesn’t attempt to assign blame to individual workers or companies, and it doesn’t directly address one of the key questions raised by Congressional and other investigators: whether BP cut corners to save money. It does say that many of BP’s choices “were likely to result in less cost and less time relative to other options,” and it criticizes the lack of processes to ensure that safety didn’t take a back seat to cost.

One nice thing about it is that it does have a link to a .pdf version of the preliminary report.

Cross-posted several places including Progressive Blue and  DailyKos.

It was looking grim for H.R. 847: James Zadroga 9/11 Health and Compensation Act of 2010 that had already passed in the House. Now there is some hope for a bill named after James Zadroga, an NYPD detective who died at age 34, the first police officer to die of a respiratory disease attributed to participation in rescue and recovery operations at the World Trade Center.

The legislation that provides $3.2 billion for long-term health care for rescue and construction workers at Ground Zero, plus another $4.2 billion in compensation for others who were exposed to the toxic dust that resulted from the collapse of the World Trade Center towers in 2001 will probably have no chance in the new Congress.

So there is a big push with Ground Zero Workers lobbying in D.C. Sen, Harry Reid working to get the bill out of a committee and bring it directly to the floor. New York Senators are drumming up support. Mayor Bloomberg met with three Republican Senators today. Even Republican House members from the area are working to pass this bill.