Remarks From Remarksman

October 5, 2008

U.S. Gives India Nukes, Who Cares About Non-Proliferation?

Nuclear Disarmament Symbol Another major story lost in the bailout headlines: the Senate voted on Oct. 1 to approve the Bush administration’s plan to begin supplying India with civilian nuclear reactors, nuclear fuel, and other related technologies. India has already exploded a nuclear weapon but has never signed the Nuclear Non-Proliferation Treaty.

More details in this MojoBlog article.

Another entry for the hypocrisy category: The Bush Administration handing out technology for real weapons of mass destruction without requiring India to sign on to the Non-Proliferation Treaty. How the House and Senate were convinced that this is a good idea is a mystery to me.

October 4, 2008

CIA Shenanigans

Filed under: Uncategorized — BrianB @ 9:23 pm
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Mostly ignored with all the crazy bailout and credit crunch headlines this week, CIA official Kyle “Dusty” Foggo pled guilty to wire fraud this week in exchange for dropping 27 other charges against him. This news article from Mother Jones has all the gruesome details of typical Bush-administration cronyism and scary thoughts about why Foggo was working to award one of his cronies a contract to provide secret air support to the CIA, but the “money quote” below comes from the last paragraph:

The plea deal hasn’t stopped Foggo’s former CIA colleagues from continuing to fume in outrage at Foggo’s behavior, or from pointing the finger at former CIA director Porter Goss for appointing Foggo to the Executive Director position in the first place. […] Goss abruptly resigned in May 2006 just as federal investigators were raiding Foggo’s office. Foggo is scheduled to be sentenced January 8. His co-conspirator Brent Wilkes is currently serving a 12 year jail sentence in California. Cunningham, a onetime ace fighter pilot who reportedly served as the inspiration for Tom Cruise’s character in Top Gun, is serving out an eight year sentence, the longest prison sentence ever meted out to any member of Congress. Meanwhile Foggo, based on his plea agreement, is likely to leave prison well before a McCain or Obama administration finishes its first term.

Bailout Blues

Filed under: Uncategorized — BrianB @ 9:03 pm
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It’s just politics in the good ol’ U.S. of A.: If you add enough pork to a stupid bill, you can get it passed.

That is pretty much what led to the passage of the big bailout bill yesterday. It makes no sense to add a bunch of “un-funded” tax breaks to a bill that already massively increases the national debt, but sense often does not figure into how our congress operates. Here is a quote from an opinion piece written by James Grant that will show up in tomorrow’s Washington Post (Hat tip: The Big Picture):

Low interest rates, easy money and malleable accounting rules are what plunged Wall Street into crisis. Yet it is low interest rates, easy money and malleable accounting rules that top the list of federal fixes. The unifying theme of the new bailout bill, all 451 pages of it, is the hair of the dog that bit you.

The unblinkable fact is that Americans own too much house. We overpaid and overborrowed, and many of us are “upside down,” as the car dealers say. What to do? Recognize the losses and write them off. What not to do? Inflate the currency and debase accounting standards.

But inflation and debasement are the very policies being put in place. The Federal Reserve, not waiting for Congress, embarked last month on a radical program of money-printing. Reserve Bank credit — the raw material of bank lending — is growing at the year-over-year rate of 61 percent.

Credit creation is the Fed’s signature crisis-management policy: Let a bubble inflate, then watch it burst; clean up with lots of dollar bills.

So, we’re stuck with a stupid plan and a bunch of pork. What can we do?

Representative Brad Sherman (D-Calif.) was one of those who voted no. He has issued a statement calling for pressure on Congress and the media to keep an eye on the money (Hat tip: MojoBlog):

Today, Congress approved the $700 billion Wall Street Bailout Bill. Under the Bill, hundreds of billions of dollars will be used to buy toxic assets currently in safes in London, Shanghai, and Riyadh, Saudi Arabia. Bailed out Wall Street firms will use their bail out money to pay million dollars a month salaries, and to even increase them to two million dollars a month. (For details, see paper at BradSherman.house.gov.)

Our economy will not do well in the months to come, and dropping $700 billion on Wall Street is not going to make things much better. But now Wall Street will use the same fear mongering tactics which were used to pass the Bill, in order to justify the bill.

In order to pass the Bill, Wall Street declared that unless they received $700 billion in unmarked bills, the Dow would drop by 4,000 points and blood would flow in the streets. The passage of the Bill will have little positive economic effect, and the fall and winter will be bad times for our economy. But in the coming weeks, Wall Street will justify the Bill by saying that we averted those very same calamities they had predicted during their successful effort to create panic, and pass the Bill.

The worst abuses of the Bill can be minimized if Congress, and especially the press, begins an unprecedented level of ferocious oversight:

  • We have to make sure that Paulson spends the money and the orderly rate of less than $50 billion month (as he has promised), not at a frantic pace that spends it all by January 20th, 2009.
  • We have to make sure that Paulson treats all financial entities fairly, whether they be firms he likes, or firms he doesn’t like. (It will take incredible investigative journalism to see whether the executives of any bailed-out firms are making secret contributions to Section 527 organizations, which are responsible for a big chunk of today’s political advertising).
  • When a firm receives a billion dollars in bail-out cash, we must report on which of its executives are receiving that cash in the form of salaries in excess of $1 million a year. (The bill allows unlimited salaries to be paid by bailed-out firms, and does not contain a provision preventing the bail-out cash from being used to pay those salaries.)
  • Each time a U.S.-headquartered entity sells billions of toxic assets to the Treasury, we must ask whether that U.S. entity is just acting as an intermediary. We must ask whether those toxic assets were in foreign safes on September 20th, 2008. We must be aware of the China two-step (described in a paper at BradSherman.house.gov), in which a foreign investor who made bad business decisions can sell toxic assets to a U.S. entity on Monday, and Paulson can buy those toxic assets with taxpayer dollars on Tuesday.

No one will ever be able to prove that the Bailout Bill helped or hurt our economy during the coming fall and winter. Only two things are certain: the bill will provide hundreds of billions of dollars to investors who made bad decisions and Wall Street executives; and our children and grandchildren will now face a national debt that is hundreds of billions of dollars higher.

For another interesting tidbit on how we got into this mess, check out this post at The Big Picture. Extract:

On that bright spring afternoon, the five members of the Securities and Exchange Commission met in a basement hearing room to consider an urgent plea by the big investment banks.

They wanted an exemption for their brokerage units from an old regulation that limited the amount of debt they could take on. The exemption would unshackle billions of dollars held in reserve as a cushion against losses on their investments. Those funds could then flow up to the parent company, enabling it to invest in the fast-growing but opaque world of mortgage-backed securities; credit derivatives, a form of insurance for bond holders; and other exotic instruments.

Guess who was the CEO of Goldman Sachs, one of the five banks making this request: Henry Paulson. I think that makes him particularly unqualified to repair the damage.

Update (Oct. 5)

Barry Ritholtz provides a succinct explanation of the financial crisis, then analyzes Fannie Mae’s (and Freddie Mac’s) role in the mess. Excellent reading.

October 1, 2008

There’s Still Plenty of Hypocrisy

Filed under: Uncategorized — BrianB @ 4:10 am
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(This was written on Sept. 23 but somehow did not get published then.)

Even though we should all be busy wondering how things will go now that the clever financiers, their lobbyists, and the lax regulation overseen by ex-financial-company-CEO’s have brought the economy to a manufactured disaster, there is still plenty of hypocrisy to make fun of.

First a note on the bonuses paid to the people asking for the big bail-out. From ABC News:

In 2007, Wall Street’s five biggest firms — Bear Stearns, Goldman Sachs, Lehman Brothers, Merrill Lynch, and Morgan Stanley — paid a record $39 billion in bonuses to themselves.

That’s $10 billion more than the $29 billion loan taxpayers are making to J.P. Morgan to save Bear Stearns.

Those 2007 bonuses were paid even though the shareholders in those firms last year collectively lost about $74 billion in stock declines — their worst year since 2002.

As MojoBlog (how I discovered the story) points out, the bonuses paid by these five firms averaged $201,500 per employee. Can there be any question about whether the bail-out plan should limit the salaries and bonuses paid to these financiers?


Now to the naked hypocrisy. First we have Rush Limbaugh in an op-ed piece in the Wall Street Journal complaining that out-of-context quotes make him look like a racist bigot, so he provides the full paragraphs from these quotes to supposedly prove that he is not. Again, from MojoBlog.

Supposedly out-of-context quote:

“…stupid and unskilled Mexicans.”

Supposedly exculpatory context:

“If you are unskilled and uneducated, your job is going south. Skilled workers, educated people are going to do fine ’cause those are the kinds of jobs Nafta is going to create. If we are going to start rewarding no skills and stupid people, I’m serious, let the unskilled jobs that take absolutely no knowledge whatsoever to do — let stupid and unskilled Mexicans do that work.”

Second supposedly out-of-context quote:

“You shut your mouth or you get out!”

Supposedly exculpatory context:

“And another thing: You don’t have the right to protest. You’re allowed no demonstrations, no foreign flag waving, no political organizing, no bad-mouthing our president or his policies. You’re a foreigner: shut your mouth or get out! And if you come here illegally, you’re going to jail.”

Yeah, Rush, that really proved something.


In the looking stupid while trying to prove how smart I am department, we have Sarah Palin claiming that, once elected, she and McCain are “going to do a few new things also. For instance, as Alaska’s governor, I put the government’s checkbook online so that people can see where their money’s going. We’ll bring that kind of transparency, that responsibility, and accountability back.”

That’s a great idea! In fact, it’s such a good idea that Senators Barack Obama and Tom Coburn created the Federal Funding Accountability and Transparency Act to do exactly that in 2006 and 2007. You can see it at USASpending.gov. No other candidate can match your spending transparency kung-fu, Gov. Palin!


Maybe I should just link my whole blog to MojoBlog. Here is a telling sequence of quotes from MojoBlog regarding McCain campaign manager Rick Davis.

John McCain, yesterday [Sep. 21] on CNBC:

My campaign manager has stopped [lobbying for Fannie Mae], has had nothing to do with it since, and I’ll be glad to have his record examined by anybody who wants to look at it.

The New York Times, today [Sep. 22]:

Senator John McCain’s campaign manager was paid more than $30,000 a month for five years as president of an advocacy group set up by the mortgage giants Fannie Mae and Freddie Mac to defend them against stricter regulations, current and former officials say.

The McCain campaign, today, in response to the Times:

“Whatever the New York Times once was, it is today not by any standard a journalistic organization…. [it is] an organization completely, totally 150-percent in the tank for the Democratic candidate.”

That’s only $1.8 million, probably not much as lobbying goes.

September 26, 2008

Must See Video – Money As Debt

Filed under: Uncategorized — BrianB @ 6:16 pm
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Canadian artist Paul Grignon created an amazing video that explains how our current system of money works, and why it is pretty much doomed to collapse eventually.

It is a 47 minute video, but it is well-worth the time spent in explaining why the current “Credit Crisis” is happening, and why the bankers and Federal Reserve have so much sway.

Watch it embedded below, or click here to view it in a new window.

September 21, 2008

Guest Posting – Re: Shill, baby, shill

Filed under: Uncategorized — BrianB @ 6:13 am
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My most loyal reader was inspired by my Shill, baby, shill post to do a bunch of research on oil drilling, and sent me this information. I had wondered in the post how much the graph in that post would change if ANWR and other areas around Alaska that oil companies want to drill were included. The answer to the question and citations are below.

As you will see, ANWR and other Alaskan areas hold more promise of oil than the outer continental shelf of the lower 48, but adding them in still only gives an eventual production increase of less than 10 percent of consumption. Unfortunately, this is probably posted too late to convince congress not to open everything the oil companies ask for.


Here are a thousand words, more or less, on the same topic with a little info on ANWR.

U.S. crude oil imports in 2007 were 10.03 million barrels/day from all countries, about 1/2 (5.39) from OPEC. A substantial amount comes from the Persian Gulf (not exactly a stable source) – 2.12 million barrels/day, and from Canada and Mexico combined – 3.30 million barrels/day. (We want (need?) Mexican oil, just not their workers, documented or not. This comment is not a part of the following citation!).

http://tonto.eia.doe.gov/dnav/pet/pet_move_impcus_a2_nus_epc0_im0_mbblpd_a.htm

U.S. Crude Oil Field Production in 2007 was 5.06 million barrels/day (lower 48 and Alaska). Production peaked at 9.24 million barrels/day in 1960.

http://tonto.eia.doe.gov/dnav/pet/hist/mcrfpus2A.htm

*Not sure of differences between US Oil “Consumption” and “production and imports”. The numbers above seem to agree closely to those on the chart on your blog yesterday.

For ANWR, a recent assessment by the Energy Information Administration (EIA) reports the mean of various development scenarios as peaking at 1.0 to 1.35 million barrels/day.

http://www.eia.doe.gov/pub/oil_gas/petroleum/analysis_publications/arctic_national_wildlife_refuge/html/analysisdiscussion.html

So between new offshore drilling and ANWR there might be 1.2 to 1.5 million barrels/day gained — way in the future.

OPEC just announced a production cut of 520,000 barrels/day (out of a total of 28.8 million barrels/day . That looks like 2 1/2 times the eventual projected production from proposed U.S. offshore drilling (if I’m reading the numbers and doing the math right). It looks like OPEC can wipe out gains from “Drill Baby Drill” and ANWR in the blink of an eye (although OPEC cuts don’t necessarily translate to a proportional cut in U.S. imports, they do impact prices). As long as we import a significant fraction of the oil we use, OPEC will remain the thousand pound gorilla in the room. In the past, OPEC has fiddled with quotas using much larger cuts than this latest one to control prices; between Sept 1, 2001 and January 2002 OPEC reduced quotas by 5 million barrels per day, and Russia joined the fray by promising cuts of an additional 462,000 barrels. http://www.wtrg.com/prices.htm Oil is a global commodity, and if OPEC cuts production to raise or stabilize prices the dinky contribution of new U.S. offshore drilling is going to have little impact on oil prices (assuming the current panic in many quarters is over the price rather than sustainability).

Palin has a big stake in expanded drilling in Alaska (ANWR). A 2004 EIA study reported by AP noted the importance of the refuge’s oil to Alaska. “Without the refuge’s development, oil flowing from the North Slope would fall to 500,000 barrels a day – half of current levels – by 2025 and approach levels at which the pipeline may no longer be economical to operate, the report said.”

http://www.msnbc.msn.com/id/4542853/

Bristol (Palin) Bay

Filed under: Uncategorized — BrianB @ 5:53 am
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Back in February I posted a blurb called Cleaner Gold, which discussed how even jewelers were opposing a planned gold mine that will likely cause environmental damage in Alaska’s Bristol Bay. This Mother Jones’ MojoBlog entry points out that Alaska Governor Sarah Palin publicly opposed a clean water ballot initiative that would have stopped the mine from proceeding. Here’s a quote:

In Alaska, it’s against the law for a governor to advocate for or against a ballot measure. But that didn’t matter much to Sarah Palin. […]

[…] a proposal to build one of the world’s largest open-pit gold mines at the headwaters of one of the Alaska’s most productive salmon streams could wreck the famed Bristol Bay (which is also the namesake of Palin’s pregnant daughter). With the measure to restrict the mine coming down to a squeaker at the polls, this is what Palin said: “Let me take my governor’s hat off just for a minute here and tell you, personally, Prop 4 — I vote no on that.”

Her nod-and-wink endorsement was immediately seized by mining companies to create this ad, which ran in papers around the state as part of an $8 million media campaign–one of the most expensive ballot measure ad blitzes in Alaska history. Six days later, the Clean Water Initiative was voted down.

Another loss for the environment, another win for big business. With Sarah Palin’s help.

The Giant Pool of Money

Filed under: Uncategorized — BrianB @ 5:42 am
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While it is still not clear what the big government bailout of all the “toxic waste” mortgage derivatives really means, there was a radio program on This American Live back in May that is very helpful in understanding how we got into this economic mess. Click here to open the page in a new window. You can click “Full Episode” on that page to listen to the whole hour-long program. It starts a little slow, but is worth listening to if you have time.

Meanwhile, a friend has pointed out that it may not have been coincidence that just weeks after Elliot Spitzer openly accused the Bush administration of helping foster the sub-prime loans and predatory lending practices that led to the current crisis in his Feb. 14 Washington Post Editorial he was politically destroyed by an unusual investigation. Was he targeted and politically destroyed for making the accusation? There is what seems like a balanced article at the Huffington Post with an analysis.

September 10, 2008

Shill, baby, shill!

Filed under: Uncategorized — BrianB @ 9:39 pm
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Here’s a nice graphic showing why opening currently restricted US off-shore areas to more oil won’t make much of a difference.

Graph showing estimated Lower-48 OCS oil drilling results compared to annual US oil consumption

Graph showing estimated Lower-48 OCS oil drilling results compared to annual US oil consumption

The graph was created by Architecture 2030 based on an analysis by the Energy Information Administration. Post title stolen from a similar post by After Gutenberg.

The graph helps make it clear why the “Drill, baby, drill” doctrine espoused so enthusiastically at the Republican National Convention won’t really make much of a difference compared to our nation’s current or projected oil consumption. Trading the risk of oil spills and other environmental damage for a less than two percent increase increase in available oil is a stupid idea, and it won’t do much to reduce costs at the gas pump.

Note, however, that the “new” portion shown in the graph is based on estimates of untapped reserves from the Lower 48 Outer Continental Shelf. It doesn’t include ANWR and the other Alaskan areas that the McCain campaign, I mean Republicans, I mean oil lobby wants to open to drilling. I couldn’t find numbers for those areas in the time I have available today, but I would be interested to see if including Alaskan areas would make a significant difference in the graph.

September 6, 2008

More About Sarah Palin

Filed under: Uncategorized — BrianB @ 5:15 pm
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Lots of people are searching for more information about McCain’s pick for Vice Presidential candidate, Sarah Palin. Here are a few interesting links:

  • An open letter from Anne Kilkenny, a Wasilla, Alaska resident.
  • “So Sambo beat the bitch!” This is how a waitress reports that Sarah Palin greeted the news that Obama had received enough votes to win the Democratic Primary.
  • Some fact checking of Palin’s speech at the RNC, and excerpts from other RNC speeches
  • Palin’s speech included the line, “I guess a small-town mayor is sort of like a community organizer—except that you have actual responsibilities.” This was a dig at Obama’s community work with the Catholic Campaign for Human Development. The RNC crowd seemed to think it was funny, but Palin apparently doesn’t realize that women’s suffrage came about as a result of ‘community organizers.’ Martin Luther King was a ‘community organizer.’

To wrap up with a little humor, I haven’t watched the Late Show in a long time, but Jay Leno has apparently been offering up a few gems lately:

  • “Governor Sarah Palin gave her speech tonight at the GOP Convention, and it gave people who didn’t know anything about her the chance to finally meet her, you know, like John McCain.”
  • “I gotta admit, she looked very comfortable at the podium ’cause it’s kinda like Alaska: you look out on that convention floor, nothing but white as far as the eye can see.”
  • “I don’t know if you noticed this, but at the GOP convention, the cameramen are desperately trying to find minorities in the audience they could zoom in on, ’cause this is what they do. Finally, after an hour, they found one. It was a Presbyterian standing in a group of Methodists.”
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