TPMDC Saturday Roundup
President Obama spent the day in Europe, meeting with foreign leaders in France and then heading to the Czech Republic. That and other political news in today's TPMDC Saturday Roundup.
--Eric Kleefeld
Money Porn
According to disclosure documents filed today, Lawrence Summers made almost three million dollars in speaking fees from major commercial banks and investment banks and another $5.2 million as a managing director of D.E. Shaw Group, a large hedge fund.
--Josh Marshall
Times Threatens to Shutter the Boston Globe
From the Globe ...
The New York Times Co. has threatened to shut the Boston Globe unless the newspaper's unions swiftly agree to $20 million in concessions, union leaders said.Executives from the Times Co. and Globe made the demands Thursday morning in an approximately 90- minute meeting with leaders of the newspaper's 13 unions, union officials said. The possible concessions include pay cuts, the end of pension contributions by the company and the elimination of lifetime job guarantees now enjoyed by some veteran employees, said Daniel Totten, president of the Boston Newspaper Guild, the Globe's biggest union, which represents more than 700 editorial, advertising and business office employees.
The concessions will be negotiated individually with each of the unions, said Totten and Ralph Giallanella, secretary-treasurer of the Teamsters Local 259, which represents about 200 drivers who deliver the newspaper.
"We all know the newspaper industry is going through great transition and loss," said Giallanella. "The ad revenues have fallen off the cliff. Just based on everything that's going on around the country, they're serious."
--Josh Marshall
Always Face Des Moines
Rep. Steve King (R-IA): We must act immediately "so that Iowa does not become the gay marriage Mecca due to the Supreme Court's latest experiment in social engineering."
--David Kurtz
Talk to the Hand
Norm Coleman won't say whether he's talked to the FBI about Nasser Kazeminy, the businessman buddy who allegedly funneled $100,000 to Coleman to cover his living expenses.
--Josh Marshall
Paying to Spin Ourselves (Bonus: Question of the Day!)
Find out the latest on AIG's taxpayer funded PR blitz.
An interesting side question -- are we even getting good value paying to spin ourselves since one of the main spinners is Mark Penn?
Actually, come to think of it, it's worth a question of the day. If we need to pay a bailed out financial institution to spin us about how good a job they're doing, who would we want it to be to get the best value for our dollar?
Contestant Entry Update: TPM Reader MG says there's no question we'd get our best deal with Clinton spinmeister Terry McAuliffe. I could see it. Any other ideas? ... 4:11 PM ... Now TPM Readers MM and DW are pushing strongly for Mohammed Saeed al-Sahhaf, sometimes, albeit rather jingoistically known as "Baghdad Bob". That aside, it seems like a good match.
--Josh Marshall
Fly on the Wall
There are a few details and color in Politico from that meeting Obama had with the bank CEOs last week ...
"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."
--Josh Marshall
The Good Old Days
A wistful TPM Reader RC checks in ...
Something triggered a memory that made me wistful for the early days of the bailout. Remember "tranches".Sometimes a single word comes to represent an era, but rarely does a word so perfectly signify a single month, while that month completely circumscribes the usefulness of the word. For a brief moment, everyone was discussing tranches, what they were, whether they were edible, who was getting them and where they might turn up next. You'd drop tranche in a conversation just to show you knew what was happening - "I'm not giving Johnnie his allowance all at once. Instead, he's getting the first tranche Wednesday."
A month later, tranches were gone. "Tranche" didn't even survive long enough to see the second tranche. Now, tranche is like "Ograbme" or "the XYZ Affair", so distant that most people wouldn't even know you were making a historical reference, let alone knowing the thing you were referring to. But damn, tranche was big for a few weeks.
Well, my investment banker friends had mentioned tranches to me here and there over the years. But yeah, brings back memories.
--Josh Marshall
Quick Personal Note
I'm not much of a vacationing type. But I've been going pretty much non-stop since late 2007 without a day off. So I'll be away next week, taking some downtime with my family. Of course, I'm just one of a dozen people running this site. So TPM will be covering the news as usual. Just I won't be here. I'll be back in a week, refreshed I hope, and ready to see if there's any news going on to cover.
--Josh Marshall
Evan Bayh: In Search of Himself?
Ezra Klein, on Evan Bayh's unsteady ideological course (including cool graph).
--David Kurtz
Obama Abroad
Sometimes, I have to confess, it's just a pleasure to hear President Obama speak at news conferences abroad. Here's video of Obama fielding a question yesterday in London about America's standing in the world. The video has the question and answer in its entirety. But the part that really caught my ear as we were listening yesterday in the office starts at about 2:45 in where he discusses the comparison to Bretton Woods.
Here's a link to the transcript of the entire news conference.
--Josh Marshall
American Gothic
Iowa Supreme Court overturns state law limiting marriage to man and woman.
--David Kurtz
TPMDC Morning Roundup
Obama, speaking in France on climate change: "We all know that time is running out. America must do more, Europe must do more." That and the day's other political news in the TPMDC Morning Roundup.
--David Kurtz
Crazy in Alaska
Sarah Palin jumps on the "Mark Begich should resign because Bush DOJ tainted his election by convicting Ted Stevens of corruption" bandwagon.
--David Kurtz
More from the Paramilitary Right
The latest from Rep. Michelle Bachmann (R-Nuremberg): Obama will make "slaves" of us all.
--Josh Marshall
Latest Outta NY-20
The latest numbers, as of late this afternoon, had either Murphy up by six votes or Tedisco up by 12, depending on which source you asked (see here for an explanation of the discrepancy). In other words, about as close as you can possibly get to not just a rough tie but a literal tie.
So to try to shed a little more light on the situation Eric Kleefeld (TPM's resident analyst of ridiculously close elections) and TPM intern Versha Sharma canvassed the different counties in the district to get data on the number and the party affiliations of the absentee ballots that were actually returned -- as opposed to those requested.
Obviously, reasoning from location and party affiliation only gets you so far. But using a conservative methodology and a minimum of debatable assumptions, you can make some rough approximations about who is in a better position. And after running the numbers through the Kleefeldizer that proved to have such a good track record in Minnesota and the absentee ballots point to ... another statistical tie.
So this one might be going on for a while.
--Josh Marshall
Global Potentates on Parade!
Another day of world-potentate-apalooza at the G-20 Summit.
--Josh Marshall
Back to Blago
A federal grand jury in Chicago has handed up a 16-count indictment of former Illinois Gov. Rod "Nothing But Sunshine" Blagojevich, his brother Rob, two former chiefs of staff, a former Blago fundraiser, and an Illinois capital mover and shaker.
Here's U.S. Attorney Patrick Fitzgerald's detailed press release (.pdf) on the new indictment. Keep in mind, this indictment takes the place of the original complaint the feds filed against Blago last December -- and it adds new and additional allegations, including the attempted extortion of an unidentified U.S. congressman.
Also worth noting that Fitz introduces Blago to RICO:
The RICO conspiracy count alleges that Blagojevich personally, the Office of the Governor of Illinois and Friends of Blagojevich were associated and, together, constituted the "Blagojevich Enterprise," whose primary purpose was to exercise and preserve power over Illinois government for the financial and political benefit of Blagojevich, both directly and through Friends of Blagojevich, and for the financial benefit of his family members and associates. Blagojevich and Kelly, the only RICO conspiracy defendants, allegedly conspired with Monk, Cellini, Harris, Robert Blagojevich, Rezko and previously convicted cooperating defendant Stuart Levine, to conduct the Blagojevich Enterprise through a pattern of multiple acts of mail and wire fraud, extortion, attempted extortion and extortion conspiracy, and state bribery.
Running state government as a criminal enterprise. Blago didn't mess around.
--David Kurtz
Murphy Lead Down to 6 Votes in NY-20
As election results in New York's 20th Congressional District are checked and rechecked, Republican Jim Tedisco, who trailed on election night by 65 votes, was briefly ahead of Democrat Scott Murphy this afternoon by 12 votes, according to a New York state political blog.
But we just checked with the state election board, and the latest tally has Murphy back in the lead -- by 6 votes. We've been looking into it, and it's not entirely clear whether everyone is working off the same data set. But for now, the official state tally has Murphy ahead by half a dozen votes.
This is before all the outstanding absentee ballots have been counted -- which will ultimately decide the winner. We'll have more on those shortly.
--David Kurtz
Which Way Is The Wind Blowing Today?
Facing a primary challenge will make you do strange things. Today Sen. Arlen Specter (R-PA) voted for Sen. John McCain's proposed spending freeze, just seven weeks after he voted for Obama's stimulus package.
--David Kurtz
Cry Me a River
The Alaska GOP is making the incredible claim that Sen. Mark Begich (D-AK) should resign so that a new election can be held free from any taint by the Bush-era Justice Department.
--David Kurtz
AIG: Not Just Screwing Tax Payers!
To hear the folks at AIG describe it, it's in our interest to pay out all this money to their CDS counterparties and keep the bonus money flowing because -- in addition to not destroying the global banking system -- we've got to maintain the value of all the good parts of AIG that we're going to sell off and get our money back.
But there are disturbing reports emerging that outside of AIGFP, where everyone is getting paid out at full dollar value, at the tried and true subsidiaries they're stiffing people they owe money to and letting whole operations basically drive into the ditch.
Here's one example we've unearthed with AIG's real estate unit basically walking away from one of their ill-advised mega-deals for some sixteen thousand residential apartments. It makes this part of AIG look like the corporate equivalent of one of those trashed and abandoned subdivision homes now gone to seed because the owners have walked away from it when they couldn't pay the mortgage.
Whether this is representative of the rest of the company is not at all clear. But it suggests at a minimum that we -- as owners of the company -- need to be asking a lot more questions about just how this behemoth is being run.
--Josh Marshall
The Drugs Ain't What They Used To Be
Jon Stewart bids El Rushbo farewell as Limbaugh announces he's leaving New York City.
--Josh Marshall
Clean Bill of Health?
As I wrote yesterday, I think Eric Holder made the right decision, taking all the facts into account, in abandoning the prosecution of now-former Sen. Ted Stevens (R-AK). But as Zack Roth reports in this new post at TPMMuckraker, we're now in the midst of an outpouring of tributes to Stevens claiming that the effective dismissal of the case makes Stevens an aggrieved victim and confirms that the prosecution never should have been brought in the first place (see this post for a list of encomiums). In other words, they seem to have mistaken him for Don Siegelman, who's still looking at a lengthy prison term. I can only think these people are either blinded by affection and insiderism or simply haven't reviewed the facts of the case.
But let's remember that none of the misconduct on the prosecutors' part, which was serious, touched upon or minimized Stevens' basic bad acts. In the course of advocating for the interests of a major political contributor in his state, Stevens accepted hundreds of thousands of dollars of goods and services from that contributor.
Our ethics and corruption laws, in certain areas, are so tight these days that politicians often get tripped up for accepting box seats at sporting events or fancy meals. But what Stevens did is like a textbook case of being on the take. Stevens had Bill Allen hire contractors to take his Alaska home, slice it up off the ground and add a whole new floor to it -- in addition to various new goodies and emoluments.
Quite apart from whether the DOJ should refile the charges and even whether the acts can be fit into the criminal statutes, beyond a reasonable doubt, those facts were true and widely reported on long before the charges were ever brought. And the behavior was disgraceful.
It's always easier to forgive or contextualize or downplay bad behavior when we know the people as actual people rather than names or numbers or two dimensional cardboard cutouts we're happy to ship off to years or decades of rotting in prison -- a fact we should take more deeply into account when we revisit our entire system of criminal justice. But context and forgiveness or just plain mercy isn't the same as simple denial -- which seems to be the order of the day today in our nation's capital.
--Josh Marshall
Greenberg: Not on My Watch
Before the current AIG meltdown there was the original AIG scandal involving its longtime CEO and chairman Hank Greenberg, who was revered 
as a titan of the financial services world before (and to a large degree even after) his ignominious end at the helm. He's testifying about the AIG mess today on Capital Hill -- and you can be sure he'll be trying to put a lot of distance between himself and AIG Financial Products, even though it originated on his watch and he enjoyed the spoils of its high profitability for years before he stepped down. We're covering his testimony this morning over at TPMmuckraker.
--David Kurtz
That Bad?
From Chris Whalen, writing at Barry Ritholtz's Big Picture blog ...
The key point is that neither the public, the Fed nor the Treasury seem to understand is that the CDS contracts written by AIG with these various non-insurers around the world were shams - with no correlation between "fees" paid and the risk assumed. These were not valid contracts as Fed Chairman Ben Bernanke, Treasury Secretary Geithner and Economic policy guru Larry Summers claim, but rather acts of criminal fraud meant to manipulate the capital positions and earnings of financial companies around the world.Indeed, our sources as well as press reports suggest that the CDS contracts written by AIG may have included side letters, often in the form of emails rather than formal letters, that essentially violated the ISDA agreements and show that the true, economic reality of these contracts was fraud plain and simple. Unfortunately, by not moving to seize AIG immediately last year when the scandal broke, the Fed and Treasury may have given the AIG managers time to destroy much of the evidence of criminal wrongdoing.
--Josh Marshall
Not Easy Bein' a Republican
"It sometimes seems we have more convictions than conviction."
Rob Wasinger, candidate for Congress from Kansas.
--Josh Marshall
TPMDC Morning Roundup
Perfect: One of the big right-wing opponents to Obama's health care reform plan is a health care executive with ties to a massive health care fraud scandal in the '90s. That and the day's other political news in the TPMDC Morning Roundup.
--David Kurtz
Only Yesterday
Do you remember this ad?
It's been knocking around my head for years as a symbol of an era in our recent history. And I just found it on Youtube. It's an ad for Enron -- entitled "Metalman" -- that ran not long before the company's implosion -- probably some time in 2000. As you'll see, it's a man encased in a confining suit of metal, hobbling his way across tableaus of 90s go-go capitalism, mostly set in Asia. As pure ad making, it's good stuff. But I always remembered it because it so boldly and expressively captured the ethos of that moment -- old, slow, regulation, limits giving way to new, unbounded, deregulated, liberated. 'Metalman' is the old sclerotic, regulated past falling behind in the deregulated, faster, freer, richer, better world.
Knowing, as we soon would, that Enron was a colossal scam adds some zing to the morality tale. But this sort of deregulatory chic wasn't confined to Enron. And it played a sizable role in bringing us where we are today. To understand just where that is and where we may be heading, we need think back and remember that different world ...
--Josh Marshall
Stipulated for the Record
Under the heading of lies and the lying liars who help spread them, a number of right-wing freaks and villains are spreading a series of vile lies about Harold Koh, Yale Law School Dean and yet-to-be-confirmed Obama appointee.
Koh is a highly respected and utterly mainstream figure who the right-wing echo chamber is now accusing of wanting to apply Sharia law in US courts. It's really ugly stuff and deserves some strong push back. Dahlia has the details.
And as long as we're on the subject, isn't it weird how Republicans can't be out of power for more than a couple months without lacing their political oppositions with hints and vocabulary of armed violence and revolution? I thought so too.
--Josh Marshall
Heads of State Meet
We're not above showing you this slideshow of the Obamas meeting Queen Elizabeth.
--Josh Marshall
Reassuringly the Same
I realize that it doesn't afford me a lot of opportunities for personal or spiritual growth. But I'm nonetheless comforted by the fact that the Republicans running things in the House GOP caucus are still as clinically insane as in years past. We see today from their House GOP 'budget' that their new-found allegiance to fiscal discipline has them lowering the top marginal tax rate to 25% (it's currently 35%, with the Bush tax cuts), which for anyone who knows anything about the federal budget would pretty much inevitably lead to gargantuan federal deficits and the Treasury exploding probably some time early in the next decade. They manage to still have the deficits coming down by bunch of nonsense hokum about oil rigs and other foolery.
If that weren't enough. This is the scoring the House Republicans have provided, tracking Democratic budget policy and theirs over the next 70 years. As you can see, predicting ideological stances over as yet unborn Democratic members of Congress, the GOP scoring appears to have us on track for the government owning about 90% of the economy in the early-mid-22nd century, which if I remember is about the time period of the invention of the warp drive. So I don't know if they've figured that in too.
(ed.note: Alas, I'm not the Star Trek aficionado I once was or flattered myself to be, I guess. Turns out warp drive is invented in 2063, almost two decades before the current House GOP budget projections.)
--Josh Marshall
Coleman v. Franken: The Video
The longest election in Minnesota history -- in 16 minutes.
--David Kurtz
Prosecutorial Discretion
Whatsoever some might think, given that I'm the one who created this site, I actually end up being a pretty big softie when it comes to the punishment side of these corruption stories. And in that vein, I think Eric Holder's decision to abandon the Stevens prosecution is a good idea when you put the full context in view.
Stevens is 85 years old. He was tried and convicted. He lost his senate seat and ended his 40+ career in disgrace. Whatever the prosecutors did wrong -- and it seems like they did a lot wrong, which we'll get to in a minute -- that doesn't erase the fact that Stevens got a freebie home renovation from a wealthy contributor whose interests Stevens repeatedly and habitually service in Washington.
In this case, though, the prosecutorial misconduct appears to be of a non-trivial sort. So given his age, the disgrace he's already suffered and the fact that future prosecution may be fatally undermined by the earlier prosecutorial wrongdoing, setting this whole effort aside makes sense. At least that's how it seems to me on first blush.
And as long as we're all in a generous mood, how about we get some justice for former Gov. Don Siegelman and those crook US Attorneys who sent him to the slammer on politically-trumped up charges probably ginned up by Karl Rove and his Alabama pals? And maybe some attention to reform of our national prison system Sen. Webb is pushing, because disgraced senators aren't the only ones who need some wise exercise of mercy in the administration of justice. And our incarceration policies are a disgrace in themselves.
Let me know your thoughts.
--Josh Marshall
TPMDC Morning Roundup
Senate Republicans are considering filibustering the nomination of Dawn Johnsen to head up the Justice Department's Office of Legal Counsel. That and the day's other political news in the TPMDC Morning Roundup.
--David Kurtz
Black Eye
Attorney General Eric Holder has issued a statement confirming what everyone has been reporting this morning: He is dropping the Ted Stevens' prosecution even after obtaining a conviction.
--David Kurtz
The "Obama Democratic Machine"?
RNC Chairman Michael Steele just issued a statement on the party's loss (pending counting of the absentee ballots) in the NY-20 last night:
[We] went toe-to-toe with the Obama Democratic machine that looked invincible in the Northeast just a few months ago and showed that our party can and will be competitive in areas of the country where our party hasn't won recently.
--David Kurtz
Holy Crap
Sources are telling Nina Totenberg that the DOJ is planning on dropping all charges against ex-Sen. Stevens.
--Josh Marshall
Passing
TPM Reader PU sends word that Raul Alfonsin, the first democratically-elected President of Argentina after the "dirty war" dictatorship of the late 70s and early 80s has died at age 82.
--Josh Marshall
That Mystery Motion
FDL was first to report this afternoon that Republicans had filed an ex parte motion "the effect of which would be to investigate and overturn today's election results, should the outcome not be to Republicans' liking." Brian Beutler followed up and was told by the Tedisco campaign that the petition was actually filed by the state Republican party.
This afternoon and evening we had a hard time figuring out just the significance if any of this court filing even was. But now we're hearing that it will mean the lawyers will be involved before the absentee ballots even get opened.
We'll have a full report for you momentarily.
Late Update: State board of elections spokesman Bob Brehm tells us that 10,055 absentee ballots were issued for this election. And 5,907 were returned. When you figure that the election night total was a 65 vote margin this really is going to be all about who had a better absentee ballot operation.
Late Legalese Update: A few sources tell us that the motion is question is perhaps not routine but also not out of the ordinary if one or both of the candidates think it's going to be close. So, the facts above stand. But I wanted to dispel any notion that such a petition is nefarious or out of the ordinary.
--Josh Marshall
"Final" Results
Murphy over Tedisco by 65 votes with 100% of precincts reporting.
That, of course, does not include absentee ballots. This ain't over. But you'd rather be Murphy than Tedisco.
--Josh Marshall
Watch the Results With Us
The polls just closed in NY-20 about 15 minutes ago. We're updating the results as they come in in our scoreboard to the lower right.
9:42 ... As you can see this thing is as close as it can be at the moment. We're getting some ward by ward data that offer some very mild encouragement for the Dems. But basically it looks like down at the ward level it's about as close as the top lines.
9:54 ... Down in the trenches still looking about the same, from what we can see.
9:57 ... Awfully close. But that thousand-or-so vote margin is looking pretty durable for Tedisco. And we're under 20% of the vote left to count.
10:02 ... Real close. But the majority of the votes still out seem to be in Tedisco country.
10:09 ... Or maybe not. Seems Saratoga's basically in now and there's still votes to be counted in Columbia county. So this ain't over.
10:12 ... We're hearing that the votes are now fully in in Columbia county, which hasn't yet been reported by the AP. And the numbers show a substantial Murphy pick up. We're being told it's a pick up of around 1400 by Murphy.
10:15 ... Well, as you can see the AP numbers now have Murphy down by only 30 votes. And we think there are still more net murphy votes coming from Columbia.
10:17 ... Murphy now ahead of Tedisco by 252 votes.
10:23 ... Murphy now up by 81 votes.
10:24 ... Okay, pretty clear at this point that this is going to come down to the absentee ballots. About their absentee ballot operation, a GOP source tells us, "Ours is good, but I assume theirs is too."
10:30 ... We're checking with the board of election now to see what the schedule is for counting the absentee ballots.
--Josh Marshall
Didn't Know About This
From TPM Reader BC ...
Kinda surprised that few have picked up on the news which broke late last Friday that CBNC's Dylan Ratigan had abruptly walked off the set of his "Fast Money" show and announced his immediate departure. Ratigan was a true rising star at the under-fire network, hosting two shows daily, as well as making many mainstream media appearances on Leno, The View. He also recently guest hosted MSNBC's "Morning Joe" for an entire week.Ratigan was consistent in his opinion that the average investor would never return to the stock market until we saw some Wall Street CEOs being hauled away in handcuffs. His riffs on the stupidity of 30-1 leverage were legendary. He was one of the most visible and outspoken staffers there. Regardless of the spin from the network, it's a huge loss for them. I'm sure the Cramer/Stewart thing didn't help either.
Here's a story about his departure.
--Josh Marshall
Latest From Norm
Norm Coleman's lawyers just held a conference call and said what's probably obvious -- that they'll appeal this ruling. More interesting, Coleman legal spokesmen Ben Ginsberg hinted that the final say from the Minnesota Supreme Court won't be the final word for them -- i.e., that they'll try to get the federal courts to step in and prevent the state of Minnesota from issuing Franken that certificate of election.
Hardly a surprise. Remember, Sen. Cornyn, the guy who's essentially bankrolling this show, says he believes that seating a Minnesota senator could take years.
--Josh Marshall
One Source of Hot Air
How does Sen. James Inhofe (R-OK) know there's no global warming? Because they just had a spring snowstorm in Oklahoma. Here he is, speaking on the Senate floor today:
--David Kurtz
Ehhh, Get in Line
Latest Ponzi schemer debuts, this time with a trifling $88 million in defrauded funds.
--Josh Marshall
Famous Last Words
We've dug up a speech Joseph Cassano gave in the Spring of 2007, giving a history of AIG Financial Products and explaining how risk free an enterprise it was. Here Cassano goes back a decade to explain those precious days when CDOs and MBSs and the credit default swaps that helped make them toxic where just in their swaddling clothes ...
It was a watershed event in 1998 when JPMorgan came to us, who were somebody we worked with a great deal, and asked us to participate in some of their early what they called then bistro trades, and these trades were the precursors to what's become the CDO market today, and the early movers in that.And we were able to catch that wave of that business and were able to build on that platform. And you all read in the newspapers today, credit derivatives are one of the fastest growing segments in the derivatives markets and we're a very large participant in a very specific niche, and that niche is in the super senior business and that's one of the things that Andy will talk about during his segment.
--Josh Marshall
Glass One Tenth Full!
Sen. Bunning (R-KY): My fundraising this quarter was "lousy." But it can only go up from here!
--Josh Marshall
Creeping Bachmannism
Poll: Americans decisively oppose non-existent threat of America abandoning the dollar for global currency.
--Josh Marshall
Blah, Blah, Blah
Complaints about US at the G-20? A lotta posturing, says Jon Taplin.
--Josh Marshall
Election Today in NY-20
We'll be bringing you live coverage of the results of the special election tonight in NY's 20th congressional district. The polls close at 9 PM. That's the upstate seat left vacant after Kirsten Gillibrand was appointed to serve out Hillary Clinton's term in the senate. Here's our final wrap-up of how the race looks as of today.
--Josh Marshall
Deep Freeze
I've always been curious why it is that the big proponents of the theory of man-made global warming tend to be scientists and the big skeptics tend to be talk radio hosts and members of Congress. But hey, you be the judge. Today we bring you our TPM Guide to Climate Change Nay-Sayers.
--Josh Marshall
Hell Is ...
Listening to Sen. Jeff Sessions talk about fiscal policy. Reactionary economic policies aggressively parroted by someone who lacks the candle power to even understand it.
Help.
--Josh Marshall
TPMDC Morning Roundup
Who do most people polled blame for the current economic mess? Hint: It's not Obama. That and the day's other political news in the TPMDC Morning Roundup.
--David Kurtz
Two More Quick Comments on Books
Following up on yesterday's post on Kindle and electronic books, a couple quick thoughts.
1. First, as much as like the Kindle technology, it's worrisome that one company -- i.e., Amazon -- could develop such a stranglehold on books. If I buy lots of books over the next few years for Kindle and someone else devises a better mouse trap, is my book collection held hostage to Kindle and Amazon? I'd figure probably so. Some universal or quasi-universal standards like DVDs and CDs would be nice.
2. My second concern is related but much more forward-looking. The common book requires a threshold level of eyesight and literacy in the given language. Given those two abilities in the owner, once a book comes off the publisher's press, it takes on a life of its own. And as long as it's kept on a shelf, relatively free of moisture and out of reach of small children, even a cheap pulp book can easily last a hundred years. Quality bound books, meanwhile, can last many centuries. Today, though, I can't easily access even papers I wrote in college, which is a touch less than twenty years ago, because they're on floppy disks that few computers can any longer read and written on programs (remember Word Perfect?) accessible only through imperfect conversion utilities. If big swathes of book publishing go the electronic route, how many 'books' will have only a short window of existence before they get marooned in derelict and outmoded technology? Tomorrow's equivalent of Betamax, 8 Track and and now videotapes. Physical books, for all their other shortcomings, can still be read today and tomorrow regardless of technology progress or, as the case may be, regress.
I'm certainly not the first one to think about this. I know that librarians and institutional archivists have given this problem a great deal of thought. And it's actually one reason why big institutions aren't able to move that quickly with new technologies. Because they put a lot of time into thinking about the probable lifespan of the technology and how easily the data will be able to be ported from one storage medium to the next. But quite a lot of information and books and other artifacts of human intellection only see the light of day in the go-go world of market-driven technologies and never make it to those hallowed halls. And what will become of that stuff?
--Josh Marshall
Them, Not Him
Just out from the Post ...
The number of Americans who believe that the nation is headed in the right direction has roughly tripled since Barack Obama's election, and the public overwhelmingly blames the excesses of the financial industry, rather than the new president, for turmoil in the economy, according to a new Washington Post-ABC News poll.
--Josh Marshall
Oh, That Too
A lot of clues now coming into focus suggest that aside from selling credit default swaps one of AIG Financial Products main line's of work was what the uninitiated among us refer to as tax evasion.
--Josh Marshall
Not Corruption, Just Love
Jack Murtha: If loving my constituents is wrong ... I don't wanna be right!
--David Kurtz
Kindle?
Quick question: following up on the post from last night about Kindle, would you be interested in subscribing to TPM on Kindle for a small fee? We've had a lot of people ask why we haven't made TPM and our news blogs subscribable on Kindle. So I'm curious how many of you there might be out there.
To date we've focused more on allowing you to read TPM on mobile devices. Kindle's a different revenue set up, since you can't run ads but only charge a subscription fee. So it's not something we've focused on before.
So do you have a Kindle and might you subscribe? Shoot us a quick note. To be clear, you're not committing to anything. This is just some quick and dirty audience research.
--Josh Marshall
Cars Inc.
TPM Reader J on the automakers ...
As a 30+ year veteran of the auto industry let me make the difference very clear; the banks can exist without the auto industry. The same cannot be said for the reverse. The automobile business from the manufacturers down to the consumers rely on banks for one reason or another.While the current economic situation has brought the oversight deficiencies in the banking industry to the forefront, the automakers have spent the better part of the last 40 years ignoring their core businesses and focusing on short term profits and muddled business plans. Anyone with a clear view of the industry knew this day was coming, it was just a matter of when. The fact that banks aren't making loans in order to buy cars just accelerated this downfall.
I was meeting a friend in the GM building in downtown Detroit about 18 months ago and was astounded to learn how few people there were actually involved in making cars and how many were involved with other GM business interests.
In Chrysler's case, this was a weak company driven into the ground and thoroughly looted by it's "merger" with Daimler-Benz. It was funny going to hotels around the Chrysler headquarters in Auburn Hills and thinking you were in Germany due to the huge number of German speaking guests. Each staying for long periods of time on the company dime and all being charged to Chrysler.
Ford has been the most proactive of the three and should be alright with minimal interruption, although any changes in the basic labor agreement with the other manufacturers will impact Ford union employees as well.
--Josh Marshall
Business Models?
The topic of the day is whether there's some imbalance or unfairness between the government's treatment of the automakers and the finance sector. And one frequent response from readers has been that at the end of the day the bankers have a viable business model and the automakers do not. And that dictates different treatment.
Now, I can't imagine any way to ask for more trouble than to get into comparisons between the troubles of the automakers and the banks, with all the differences between them. As we know, US automakers have been in relative decline for three or four decades (judged in terms of market share vs. imports) and absolute decline for a while. But I'm curious about how much we know about the business model and viability of the banks. Surely, banks as such aren't going anywhere. But these institutions?
One reader writes: "One easy answer to this question is that the banks have a viable
business model. They simply need to stop taking so much risk, and they'll be immensely profitable given the current interests rates they're borrowing at."
But high levels of risk are at the root of the big banks' high profits (at least until recently) and also of the current mess. So it's not immediately clear to me how you just fiddle with the risk variable and that doesn't leave the whole system fundamentally changed, with very different profit levels. It's not precisely the same. But you could also say that all the automakers have to do is start selling more cars. Not so easily done. You can't risk your cake and eat it too.
Just to anticipate a lot of email responses. I'm certainly not saying that the current crisis means that banking is no longer a viable business. But these kinds of banks -- at this rough size, at these levels of leverage and risk, and at these levels of sustained profitability -- is that still a viable model? Is a healthy one for the country?
Which brings me to a different but somewhat related point.
When do we downsize these banks? A key part of the crisis, perhaps the key part of the crisis is that these banks were so big that we could not let them endure the normal fate of failed businesses, which is to fail. So when do we break them up into more smaller entities? Yes, we've got our hands full now. But companies always fight being broken up. So it'll be much harder if and when these companies struggle back to some level of health. So when does that happen?
--Josh Marshall
Method to the Madness
NRSC chair John Cornyn: Norm Coleman's gonzo effort to win re-election in Minnesota could go on for years!
Late Update: Will there be backlash against state GOP?
--David Kurtz
FBI Probe Into Cassano since Jan 2008?
It seems like everyone has a blog these days, even AIGers complaining about not getting their bonuses. But in posts from London-based AIGer Paul Harriman and his wife Jan Ellen, Ellen says that since January 2008, Paul "has been working with Congressional auditors and investigators and the FBI to compile evidence on the deals and dealings of the people responsible, most particularly Joe Cassano."
--Josh Marshall
Big Trouble
The more I look at these investment decisions of Pension Benefit Guaranty Corporation and former Lehman exec Charles Millard the more my suspicion grows that some very bad happened here. There's no question that something happened very bad for the pensioners who were relying on this fund. But is there any conceivable good reason why you'd take most (the quote from the Boston Globe is "much" of the funds) of the assets of the fund designed to insure pension benefits out of safe investments like bonds and put them into highly speculative investments -- hedge fund, equities, etc. -- just before the stock market collapsed.
Incompetence doesn't cut it as an explanation.
First, some topline numbers: The PBGC decided to put most of its $64 billion of reserves into stocks. And already by September 2008, i.e., before the bottom really fell out on Wall Street, the stock portfolio had already lost 23%. That percentage must be much higher today.
One of the big drives behind Social Security privatization was the desire to find more money -- in the case of Social Security, a lot more money -- to keep the fires burning on Wall Street. Not just more fees for the people handling the money, but more money to keep pushing asset values higher. This looks like the same thing just using slightly different means.
Late Update: TPM Reader HL notes that the behavior here is not at all unlike that of investment managers at a lot of big institutions who should pursue at least relatively conservative investment strategies -- college endowments, state pension funds, big non-profits, etc. And this is a very good point -- all part of the ever-escalating need over recent years, for greater and greater rates of return. Some worrisome hints came out this weekend about CALPERS (the California state pension system), for instance. So point taken. What still makes me suspicious about this case, though, is the timing. The Globe piece leaves some key variables a little vague -- just how much was put into stocks, precisely when, etc. But it sounds at least like PBGC moved a big portion of its assets into stocks last spring or summer.
--Josh Marshall
Buy High, Sell Low
The Boston Globe has an important piece out on how the federal Pension Benefit Guaranty Corporation decided to shift its holdings from bonds to equities, just about the time the bottom fell out of the stock market:
Just months before the start of last year's stock market collapse, the federal agency that insures the retirement funds of 44 million Americans departed from its conservative investment strategy and decided to put much of its $64 billion insurance fund into stocks.Switching from a heavy reliance on bonds, the Pension Benefit Guaranty Corporation decided to pour billions of dollars into speculative investments such as stocks in emerging foreign markets, real estate, and private equity funds. ...
No statistics on the fund's subsequent performance were released.
Nonetheless, analysts expressed concern that large portions of the trust fund might have been lost at a time when many private pension plans are suffering major losses. The guarantee fund would be the only way to cover the plans if their companies go into bankruptcy.
The kicker, though, comes from the Bush-era official who oversaw the switchover:
Charles E.F. Millard, the former agency director who implemented the strategy until the Bush administration departed on Jan. 20, dismissed such concerns. Millard, a former managing director of Lehman Brothers, said flatly that "the new investment policy is not riskier than the old one." ...Asked whether the strategy was a mistake, given the subsequent declines in stocks and real estate, Millard said, "Ask me in 20 years. The question is whether policymakers will have the fortitude to stick with it."
A finance professor who had previously advised the agency not to make the switch away from bonds compared the move to an insurance company writing policies to cover hurricane damage and then investing the premiums in beachfront property.
Bush was able to do for the PBGC what he tried and failed to do for Social Security.
--David Kurtz
TPMDC Morning Roundup
Gov. Jennifer Granholm (D-MI): GM's Rick Wagoner is just a "sacrificial lamb." That and the day's other political news in the TPMDC Morning Roundup.
--David Kurtz
Just a Thought
Why is Rick Wagoner getting the boot while the management of the big banks remains in place? Whatever resonance the question has on first blush, it gets more complicated on further inspection. Citi does not have the same CEO it did at the start of the crisis. And the government installed a new CEO at AIG after the initial bailout. Another rejoinder might be that the automakers' plight is of a much more longstanding vintage than that of the finance barons, though I suspect, as we learn more, we'll be revisiting those assumptions. And even after getting substantial government aid, I think Wagoner's the first auto industry CEO to get the boot. So perhaps we should be asking why it is that something like this hasn't happened sooner.
All that said, though, after that meeting of the major bank CEOs at the White House last week, it's hard for me not to think that, for all that has happened, their clout in Washington is just on a scale where they are accepted as peers of the realm. And simply immune to certain sorts of treatment.
--Josh Marshall
Blown Head Gasket
From McClatchy:
President Barack Obama on Monday will reject requests for almost $22 billion in new taxpayer bailout money for General Motors Corp. and Chrysler, saying the car makers have failed to take steps to ensure their viability.The government sought the departure of GM chief Rick Wagoner and said the company needed to be widely restructured if it had any hope of survival. It said it would provide the company with 60 days operating capital to give it time to undertake reforms.
The government will grant Chrysler 30 days operating funds, but said it must merge with another carmaker in order to remain viable. Talks with Italian carmaker Fiat are underway.
--David Kurtz
Frightful Kindle
Until quite recently, I'd seen a Kindle only once. It was at a friend's house, only for a moment, and my general impression was that it was clunky and only borderline readable. But I'm very partial to my iPhone. So a few weeks ago in my never-ending quest to find iPhone 'apps' I might actually use, I noticed that Kindle, or rather the Kindle software, was now available for iPhone. So I promptly downloaded it and bought my first book.
Like everything else on an iPhone it was very easy on the eyes. Maybe even beautiful. But after reading a bit, it struck me mostly as a clever novelty. The text was crisp and readable. But the physical thing itself was just too small. Maybe half as small as anything you could hold and get comfortable with like you can with a book.
But then my habits betrayed my first impression. I kept reading -- when I had a free moment, before I went to bed at night and then just when I wanted to read my book. Even at that small size the system provided me what you need from a book, which is that you fall into the writing and forget the book. Or in this case, the imitation of a book.
Then, with me reading my Alexandria book on my Kindlefied iPhone, my wife got the idea to order the real thing and promptly got hooked reading on an actual Kindle.
Now, here's the thing. And I'd appreciate hearing from those who've used either or both to see whether others agree. But I still find the greyness (which is mainly the non-backlitness) of the Kindle inferior to my iPhone. It's designed that way in part because it allows the battery on a Kindle to last an insanely long period of time but also because it's supposed to be easier on the eyes. Maybe I just spend so much time in front of a monitor that my eyes are trashed and I don't know the difference. But for me, on the iPhone, it just looks more crisp and readable.
All that said, though, I tried reading a book on the actual Kindle (the new one that just came out) and I fell right into the reading there too. It maybe took me 10 minutes to get acclimated. Even though I like the cleaner, whiter screen better, the physical size won me over, at least on the initial use.
(Porting the product to other devices is very clever on Amazon's part. Not only does it expand the market for their digital books. I suspect it will function something like the iPod has with Apple, a gateway gadget that gets people to switch to Mac from PC once they see how well Apple technology works compared to PC drek.)
What I'd intended here, though, wasn't just a product review. I've always been an inveterate collector of books. Not in the sense of collectibles, but in the sense that once I buy a book, I never let it go. As I made my way through adulthood it was while dragging a tail of several hundred books along with me.
Finally, only a few months ago, I purged a decent chunk of my collection. And most are now in storage. But in our living room we have two big inset shelves where I keep all the books I feel like I need or want ready at hand. And last night, sitting in front of them, I had this dark epiphany. How much longer are these things going to be around? Not my books, though maybe them too. But just books. Physical, paper books. The few hundred or so I was looking at suddenly seemed like they were taking up an awful lot of space, like the whole business could dealt with a lot more cleanly and efficiently, if at some moral loss.
Don't get me wrong. Book books still have some clear advantages. Kindle is a disaster with pictures and maps. But I didn't realize the book might move so rapidly into the realm of endangered modes of distributing the written word. I was thinking maybe decades more. The book is so tactile and personal and much less ephemeral than the sort of stuff we read online.
I hope it's clear that I don't view this as a good thing or something I welcome. When I had the realization I described above it felt like a sock in the gut, if perhaps a fillip on the interior decorating front. All the business model and joblessnes stuff aside, that's how I feel about physical newspapers too. There's a lot I miss about print newspapers, particularly the serendipitous magic of finding stories adjacent to the one you're reading, articles you're deeply interested in but never would have known you were if it weren't plopped down in front of you to pull you in through your peripheral vision. Yet at this point I probably read a print newspaper only a handful of times a year.
When I think about it I kind of miss it. In a way I regret not reading them. But I just don't. I vote with my eyes. And I wonder whether I'll soon say something similar about books.
--Josh Marshall
Sounds Like A Deal Was Cut?
AP says GM CEO Rick Wagoner is stepping down immediately.
--Josh Marshall
TPMDC Sunday Roundup
The New Yorker reports that then-lame duck Dick Cheney disparaged Barack Obama to Israeli officials during the transition period. That and other political news in today's TPMDC Sunday Roundup.
--Eric Kleefeld
