Sunday, January 31, 2010

A "consensus" sans democracy?

Katrin Bennhold reports in the International Herald Tribune  (as noted today by Thomas Friedman):
And as developing countries everywhere look for a recipe for faster growth and greater stability than that offered by the now-tattered “Washington consensus” of open markets, floating currencies and free elections, there is growing talk about a “Beijing consensus”...

Some suggest that China’s lack of democracy is an advantage in making unpopular but necessary changes. “It is more challenging for democratic systems because every day they come under public pressure and every short period they have to go back to the polls,” said Victor Chu, chairman of First Eastern Investment Group in Hong Kong, the largest direct investment firm in China. “China is lucky to have the ability to make long-term strategic decisions and then execute them clinically.”
During the last great crisis of Western capitalism, many people felt the same way about the Soviet Union and Nazi Germany.  The current Chinese government is a far more rational and accountable steward of the common weal than either of those monstrosities.  But I imagine that the advantages of dictatorship will eventually once again prove illusory -- or more accurately, the costs of repression will in the fullness of time be revealed to outweigh the benefits, and democracy will emerge once again as the worst form of government except for all the alternatives. As Gideon Rachman observed this past fall, the Chinese government relies currently relies on a social contract that will likely at some point show its fragility:

The government’s neurotic obsession with achieving its totemic figure of 8 per cent growth a year hints at the country’s continuing political fragility. Without a democratic mandate, the Communist party relies on rapid growth to keep the system stable. Somehow the country needs to make the transition to a system in which the government can draw upon alternative sources of legitimacy. Twenty years after the Tiananmen massacre, the Communist party shows no outward sign of contemplating a transition to a more democratic system. Meanwhile, the Chinese media speculate openly that social unrest could rise to dangerous levels, if economic growth slackens.
As the government moves now to "clinically" put the brakes on an overheating economy, here's hopeful for managable crises, and peaceful transformations.

If you think that Obama's open dialogue with House Republicans was remarkable,

check out the dialogue between Leah Farrall, a former a former intelligence analyst for the Australian federal police and current Ph.D. student and blogger on intelligence matters, and Abu Walid al Masri, a legendary jihadist with close ties to the Taliban and at least past intimacy with the top leadership of al Qaeda. 

al Masri's responses to Farrall's questions can be found in the right margin of her blog. Perhaps the most important takeaway is his claim that the Taliban today, to the extent that it regains power, will keep al Qaeda at arm's length (see this post).  Most recently, however, Farrall has posted her responses to al Masri's questions. And this exchange is remarkable too. How often does a westerner engaged in counterterrorism get a chance to respond publicly to the grievances and world view of a skilled mouthpiece of Jihad? (al Masri wrote for Taliban publications when they were in power and writes for their magazine now.) 

al Masri's question-set is a broad indictment of U.S. and western interaction with al Qaeda, the Taliban, Afghanistan, Iraq, and by his constant implication with the Muslim world generally. He asks for Farrall's "personal opinion" regarding a litany of Bush-initiated imprisonment and interrogation practices, some of which have been continued by the Obama Administration -- along with broader charges  that the U.S. and its allies are waging colonial war in Afghanistan and civilizational war against Muslims generally.

Farrall concurs with al Masri's implicit condemnation of torture, rendition to countries that torture, military commissions and other extra-judicial means of treating terrorist suspects-- concessions that highlight the strength of these abuses as jihadist recruiting tools.  But she counters with admirable moral clarity al Masri's whitewash of Taliban crimes and assertions that the U.S. and allies have acted against Muslims generally.

A couple of representative excerpts (with al Masri's questions in italics) below. But read the whole thing.

Saturday, January 30, 2010

A health care strategy in Obama's pregnant pause?

Two days ago, I started a post in which I was planning to contrast this intrepid declaration by Nancy Pelosi with what I viewed as mixed messages from Obama:
"You go through the gate. If the gate's closed, you go over the fence. If the fence is too high, we'll pole-vault in. If that doesn't work, we'll parachute in. But we're going to get health care reform passed for the American people."
Paraphrasing Steve Benen, I wrote, "Compare Pelosi's strength and determination with the ambiguity emanating from Barack "identify those core elements of this package" Obama" (Benen's comparison was with Mary Landrieu).  The epithet came from Obama's Jan. 20 interview with George Stephanopoulos, in which the President had seemed to me to be pulling in two directions -- first suggesting that a health care bill might have to be stripped down to win some Republican support, and then explaining why the core elements of the bill could not be pulled apart.

But a funny thing happened on the way to "publish post."  I reread the interview, searching for the wording for my epithet, and began to think I had misread it the first time.  That's partly Obama's fault; his language was unclear.  But his thinking at that point was, I think, completely consistent with his presentation of the health care reform task in the State of the Union address a week later. In both cases, he studiously avoiding speaking as a tactical party leader. He gestured toward one more reach-out to Republicans.  He left the door open to picking up a Senate Republican vote or two and therefore going back to negotiating a merged Senate-House bill, rather than trying to navigate the much messier process of the House passing the Senate bill and negotiating fixes to be achieved through reconciliation.

But also in both, he asserted that the HCR bill had been misrepresented, that its key parts were interdependent,  and that a full-scale bill must be passed. In the interview, when he said, " I would advise that we try to move quickly to coalesce around those elements of the package that people agree on," he was not talking about a scaled-down package. "People" may have nominally included Republicans (or not nominally, if he thinks that his own advocacy may pull in a Republican or two). But essentially, Obama meant that Democrats need to recognize that the core elements in both bills cannot be pulled apart, and that they therefore need to find a way to negotiate or live with whatever parts of the bill they find objectionable and get the core elements -- i.e., in all likelihood, the Senate bill -- passed.

Friday, January 29, 2010

Did Nate Silver miss the big picture for once?

Nate Silver's numbers-crunching so often brings causal clarity to the fog of events. But today, seeking causes for Obama's popularity decline, I suspect he missed -- or rather dismissed too easily -- the likely primary cause.

Silver lays out the cause-and-effect question as follows:
There were two periods that account for most of the decline [in Obama's poll numbers]. One was the period immediately following his inauguration until about the first week in March; Obama's ratings fell by about 5 points over this interval. The other was a longer period from the end of May through mid-August, during which time Obama's approval declined by 9 points or so. Those two periods collectively account for about 14 points of the roughly 17-point decline that Obama has experienced.

He  quickly writes off the economy as a prime driver:

Was it the economy? Undoubtedly, the economy is a significant part of the story. The employment reports that came in during this period showed the economy losing about 300,000 jobs per month, which is really, really bad. Still, it wasn't as bad as the reports that came in during April and May, which had the economy losing 500-600K jobs per month, and during which time Obama's numbers were rather steady. (A more robust indicator, perhaps, is consumer confidence, which had a bit of a reversal in June and July before picking up again, but the correlation there is still fairly weak.)

Thursday, January 28, 2010

Grade for the great test of leadership: Incomplete

In a 7,000-word speech, Obama devoted 500 words to health care, beginning at almost the exact mid-point. So it may seem perverse to assess the whole speech on the basis of the health care portion.  But it's not. Health care remains the fulcrum, the keystone, the hinge, the pivot point, the centerpiece of Obama's domestic agenda, for these reasons:
  • He says the deficit keeps him up at night. Well, as he used to remind us frequently, say nine months ago, health care reform is entitlement reform. Bend the health care cost curve, and the Federal government's core commitments are affordable; fail to, and they're not. But those magic seeds of cost control packed into the Senate bill that Atul Gawande catalogued so lovingly will not become law unless the House passes that bill.

  • Obama's core campaign promise, reiterated in an email to supporters following the speech, was "restoring economic security for struggling middle class families."   That cannot be done as long as losing a job means exposure to catastrophic medical cost, or as long as having the wrong job can make insurance an impossible dream, or as long as millions of "insurance" policies leave holders exposed to catastrophic costs. 

  • He said that change is not easy, that he wanted to tackle the hard stuff, . In the health care reform process, Americans got full frontal exposure -- overexposure, according to conventional wisdom -- to the mammoth difficulties and not-always-destructive competitive tradeoffs of moving major legislation through the United States Congress. That leaves Obama with a double message: let's fix the process/let's make the process work. Both messages will spiral to massive fail if a comprehnsive bill does not pass.

Wednesday, January 27, 2010

Is it already too late?

It's the height of folly to prognosticate about a high-stakes speech a half hour before it's delivered.  But I have to confess this sick feeling before the event.

The stakes have been eloquently framed by the TNR editors, Andrew SullivanEzra Klein, and House members and Senators literally crying out for leadership.  What bothers me is that a failure of leadership from Obama has already occurred. It's not irreversible -- many have said that a powerful appeal for comprehensive health care reform in the State of the Union address would be enough to stiffen Democrats' resolve to pass the Senate bill in the House and negotiate fixes through the reconciliation process. But I don't see that happening. I see Obama trying to thread a rhetorical needle -- expressing "commitment" to "comprehensive" reform without saying how, or when.  Here's an excerpt from his speech released by the White House:
By the time I’m finished speaking tonight, more Americans will have lost their health insurance. Millions will lose it this year. Our deficit will grow. Premiums will go up. Co-pays will go up. Patients will be denied the care they need. Small business owners will continue to drop coverage altogether. I will not walk away from these Americans. And neither should the people in this chamber.

That is by way of fleshing out an earlier promise from Dan Pfeiffer:
“There will be additional details that he will share tonight, and he will make it clear that his commitment to addressing this challenge in a comprehensive way is as strong today as it was when he stood in the same spot in September to address the nation on health care.”
I am not reassured.  As Ezra Klein points out, Obama's own statements since the Massachusetts debacle have pulled in two directions, probably reflecting a divided White House. He suggested in one interview that Democrats might have to go back to the Republicans once more to see what elements of the reform package might win bipartisan agreement -- and then stated eloquently -- in the same interview -- that the core elements of reform -- community rating, individual mandate, subsidies, cost control -- cannot be pulled apart.  What that spells to me, given the vagueness of Pfeiffer's reassurance, is a gesture toward trying to find bipartisan consensus, followed by a belated effort to go with the so-called "Plan B" -- passing the Senate bill and adding reconciliation fixes.  That would mean trimming tonight -- not saying what Democrats have literally been crying out for him to say. And not striking before the iron shatters into a hundred pieces.

What unambivalent supporters of reform want Obama to say is really quite simple: both the House and Senate passed strong, comprehensive bills, either of which would vastly improve the nation's health care system. The task before Congress now is the same task they were focused on before the Massachusetts election: combining the best elements of both bills. The logistics of doing so are now much harder -- but passage of an end product is assured if Democrats can muster the will.  And this is circular: they would muster the will if the message from the White House was clear were clear and strong.  So far it hasn't been. If that changes tonight, I'll be delightedly surprised.

UPDATE 9:55: Could have been worse. He defended the broad outlines of the bill eloquently, and per preview, said he would not walk away and that Congress has to find a way. But he did not say how. There was the gesture/invitation to bipartisanship I anticipated, but it seemed designed merely to put Republicans on the defensive. His prescription pointed toward the House passing the Senate bill without calling for it. Will he now help to drive Democrats that way?  Jury's still out.

As a case for the HCR bills already passed addressed to the American people it was effective.  To move the needle in Congress, he will need to do more.

Update 10:05: In context of "changing our politics," an oblique swipe at Democratic panic on health care (which he's done nothing to stanch): "People expect you to solve problems, not run for the hills."
In peroration: "Remember this - I never suggested that change would be easy, or that I can do it alone." Yes, but how about leading for change -- in Congress, by insisting that Democrats pass the damn bill?

I think in retrospect that supporters of health care reform set impossible expectations for the health care portion of the speech. There was no way, while speaking to the entire nation, that he was about to tell Democrats to "pass the damn bill." You don't talk about "reconciliation" (of the technical legislative variety) in a SOTU address. The time to do that was before -- and after.  He defended the bill's basic architecture and said that the task would get done. That was all he could do in this forum. The test of leadership continues.

Then too, his calm, humor and perspective may ease the panic a bit.

Incidentally, I thought it was a nice touch for Obama to explain that his budget freeze would not kick in until next year, when the recession will presumably be over. He ad-libbed a bit of humor into the prepared remarks below, paraphrased  from memory in brackets. This is emblematic of the needles he has to thread, both in policy and politics -- making a down payment on deficit reduction while continuing stimulus to combat 10% unemployment.
I know that some in my own party will argue that we cannot address the deficit or freeze government spending when so many are still hurting.  I agree, which is why this freeze will not take effect until next year, when the economy is stronger. [That's how a budget works.]
Postscript: My own Congressman, Bill Pascrell, D-NJ (8th District) is working to kill comprehensive health care reform. My message to fellow Pascrell constituents is here, on South Orange Patch.

Quell Pascrell, who'd kill the bill

On Monday, I was dismayed to learn that my own Congressman in New Jersey's 8th District, Rep. Bill Pascrell, is leading a posse of House Democrats who want to kill the effort to pass comprehensive healthcare reform.

On South Orange Patch, a local news website, I've asked my neighbors to send Pascrell a message -- fast.

Tuesday, January 26, 2010

Quote of the Day

It is simply astonishing that the GOP is now posing as a party of fiscal responsibility. It's like Bristol Palin campaigning against teen pregnancy.
 Andrew Sullivan

Meanwhile, the drumbeat of core progressive voices urging the House to pass the Senate HCR bill cotinues.    Andy Stern is threatening. Steve Benen is warning. The New York Times is importuning. And Paul Begala is begging.

Monday, January 25, 2010

Plouffe offers political clarity on health care reform

It's amazing how two-sided statements by Obama, Pelosi and Axelrod about the way forward on health care reform have been to date. Obama has managed to suggest simultaneously that piecemeal health care reforms can't work and that he's receptive to a scaled-back bill; Axelrod has done the same. Pelosi has been subtler, suggesting that she doesn't have the votes this moment to pass the Senate bill and work fixes by reconciliation, but that she wants them.

Into this haze comes a ray of clarity (in a Wash Post op-ed) from David Plouffe, newly brought aboard to lead White House political operations. Here's the first plank of the platform he sketches out for Democrats:
-- Pass a meaningful health insurance reform package without delay. Americans' health and our nation's long-term fiscal health depend on it. I know that the short-term politics are bad. It's a good plan that's become a demonized caricature. But politically speaking, if we do not pass it, the GOP will continue attacking the plan as if we did anyway, and voters will have no ability to measure its upside. If we do pass it, dozens of protections and benefits take effect this year. Parents won't have to worry their children will be denied coverage just because they have a preexisting condition. Workers won't have to worry that their coverage will be dropped because they get sick. Seniors will feel relief from prescription costs. Only if the plan becomes law will the American people see that all the scary things Sarah Palin and others have predicted -- such as the so-called death panels -- were baseless. We own the bill and the health-care votes. We need to get some of the upside. (P.S.: Health care is a jobs creator.)

Here's hoping that Plouffe is speaking with what will be Obama's voice.  The political logic is incontrovertible, and that's Plouffe's bailiwick. As for the long-term policy imperative, no one understands it better than Obama.

UPDATE (from the Dept. of taking credit for the sunrise): further down Plouffe's column, there's this fighting sentiment:
Instead of fearing what may happen, let's prove that we have more than just the brains to govern -- that we have the guts to govern.
That chimes with a bit of xpostfactoid-ese, highlighted in The Daily Dish on Jan. 19:
"We have one party that has not got the brains to govern. Will we now learn for certain that we have another party that hasn't got the guts?
 And of course, The Dish does have its readers:
As for what Obama reads online, his advisers said he looks for offbeat blogs and news stories, tracking down firsthand reporting and seeking out writers with opinions about his policies. Obama was particularly interested in Atlantic Online's Andrew Sullivan's tweeting of the Iranian elections last year, said an aide, who requested anonymity to discuss what influences the president. 

Sunday, January 24, 2010

Frank Rich wrote his column too early this week

Credit Frank Rich with warning Obama early and often to get "in front of the anger roiling a country where high unemployment remains unchecked and spiraling foreclosures are demolishing the bedrock American dream of home ownership," as he puts it in today's column. He's been sounding this note since last spring. The event has proved him right. He may be our most astute reader of media memes, popular mood, and political posturing.

Today he's at it again. But he seems to have written his column before Obama proposed his "Volcker rule" banning proprietary trading and internal hedge funds - and then gone back and just inserted a brief allusion to it after the event, without at least partially recasting the column as the Thursday event required.

Here's Rich's brief acknowledgement of the turn to Volcker:
Obama needs more independent economists like Paul Volcker, who was hastily retrieved from exile last week after the Massachusetts massacre prompted the White House to tardily embrace his strictures on big banks.

Saturday, January 23, 2010

Hillary puts the Chinese government in strange company

Say what you will about the conceptual architecture and core message in Hillary Clinton's speech on Internet freedom -- and I agree that both are impressive -- she also put "authoritarian governments" in some strikingly noxious company:

Violent extremists, criminal cartels, sexual predators, and authoritarian governments all seek to exploit these global networks.

Government censorship of Internet access and expression deserves to be condemned. But this particularly grouping strikes me as maladroit in a particularly HIllaryesque fashion. Strike that line -- and a similar association or two elsewhere in the speech -- and I wonder whether the Chinese response would have been as vehement.

Here is the more substantive -- and unexceptionable -- part of Clinton's case for an open flow of information and challenge to the Chinese:
To use market terminology, a publicly listed company in Tunisia or Vietnam that operates in an environment of censorship will always trade at a discount relative to an identical firm in a free society. If corporate decision makers don’t have access to global sources of news and information, investors will have less confidence in their decisions over the long term. Countries that censor news and information must recognize that from an economic standpoint, there is no distinction between censoring political speech and commercial speech. If businesses in your nations are denied access to either type of information, it will inevitably impact on growth.

Friday, January 22, 2010

The staggering Narcissism of House progressives

Brian Beutler interviews Sherrod Brown:
Based on his conversations with House progressives, Brown says the mood right now is fairly dour."They're very unhappy," Brown admits. "Their viewpoint is it can't be just the Senate version because, first of all, it's not what they want in terms of the substance, and second it really writes them out of having any impact."

Let me get this straight. House Progressives would rather write some dismembered, scaled down piece of crap that will cover maybe 1/3 of the uninsured and leave the dysfunctional rules by which health insurers now play more or less intact than sacrifice a bit of impact and pass a bill that overlaps 90% with the one they wrote?

Regardless of how much they can or can't be promised in advance of a reconciliation bill, these progressives, if they pass the bill, will have until 2014 to strengthen subsidies, amend taxes designed to pay for those subsidies, and make any other changes that can be related to the budget. Or they can let the Senate bill die and see how much "impact" they have -- either when their sorry butts are voted out of office or they're flailing in the minority or with a radically diminished majority.

Meanwhile, Brown claims that Obama continues to hold off from engaging with the House and trying to set a course  -- while supporters of Obamacare yearn to have him gather the House children together as a hen gathers her chicks under her wing and tell them to pass the Senate bill.  It seems that he "would not." Supporters can only hope that this is some kind of tough love/shock therapy and that the House will somehow be nudged to do the right thing.

Paging John McCain

Quick question, though I'll confess to not yet looking at the fallout from the Supreme Court strike-down of McCain-Feingold in any depth: where does McCain stand on McCain-Feingold II?  Not to mention on Obama's proposed "Volcker rule," a lighter version of McCain's proposed Glass-Steagall II.

Historical accident would seem to have put McCain on the Dems' side of the ledger on two key fronts just as the Democrats have lost their 60-vote supermajority.

Will the worm in John McCain's soul turn once more and turn him left? I wouldn't bet on it. But still.

UPDATE 1/23: The WSJ has this reaction to Obama's bank reform proposals from McCain:
But in a political environment decidedly hostile to big banks, Democrats might need only a few Republican votes to enact a variant of what Mr. Obama called "the Volcker rule." Sen. John McCain, the Arizona Republican, said the White House appears to be moving closer to a proposal he is co-sponsoring that would reinstate restrictions on banks that were repealed in the late 1990s. "It seems to me that a number of the proposals [Mr. Obama] has move in that direction," Sen. McCain said, "but I haven't had a chance to examine the details."
Most recent post: Frank Rich wrote his column too early this week

One more chilling Cohn crie de coeur

He rends my heart because he is so right and recognizes the stakes:
Now is the time to write stories about how strategically and politically insane it would be for the House to not find a way to pass the legislation.

If they fail to do so, the Republicans will be the writers of history--because the victors, not the vanquished, get the pen and the paper to do so. They will get to define what was in it and why it died. And this will have implications not just about the past but the future. Republican will say, and more effectively (but no less inaccurately) than ever, that, given the chance, the Democrats will be right back at it again with their "evil, secret fantasy to take over the health care system."  They will more successfully (and inaccurately) define "it" as being a deficit busting, government take-over that will ration care and harm seniors.

Democrats have to understand that virtually all of them have already voted for a bill that will therefore be defined by the Republicans.  As such, they--and even those Democrats who did not vote for the bill--will be linked to that party that embraced to "Obamascare." And, for those who are completing embracing a fall-back, small-ball approach, think again. That seductively tempting option won't come to pass either. Why?  Because the Republicans will work to ensure it does not.

One bitter irony in this meltdown -- one that highlights the impotence of the left generally -- is that as far as I can see there are no progressive interests groups, except perhaps the unions, pressuring House and Senate Democrats to find a way forward on comprehensive HCR.  I get emails from and pushing fantasies that Democrats can somehow now be pressured to go for the full Monty - strong public option, more generous subsidies, no excise if the House is now dealing with a Senate more inclined to give the party's liberal wing what it wants instead of one empowered to block any bill other than the one they just passed, and as if their majority is not on the brink of being blown to pieces.  So we in the broad majority of Democratic voters who want the Democrats to pass an HCR bill they have the power to pass have no one sending those 'call your Senator/rep" emails with the numbers popped up right in front of you.

Paging Jonathan Cohn: ready to start a PAC?

UPDATE: Cohn hasn't started a PAC, but he's lent his Treatment blog to action by health care experts Harold Pollack (a regular Treatment contributor), Timothy Jost and 45 colleagues*:
Yesterday, Tim and I crafted a simple letter (shown below), which we emailed other health policy experts we know. Some are progressives who identify with a single-payer approach. Others are more politically moderate economists, sociologists, and political scientists. Still others identify with organized labor, medicine, or public health.

Within several hours, many outstanding scholars, activists, and practitioners signed on. Signers include Henry Aaron, David Cutler, Jon Gruber, Theda Skocpol, Paul Starr, and many others, including Anna Burger, Secretary-Treasurer of SEIU.

Read the Pollack-Jost* letter -- and call your Congressional rep (and Senators - they're punting but they could signal willingness to work on reconciliation fixes).

* Per the Anonymous comment below, I originally pegged this letter as a Cohn production. For a while, the post on TNR had his byline.  Apologies for the error.

Tory Hallelujah

Bulletin to those claiming that Obama's proposed ban on proprietary trading etc. for deposit-taking banks will drive major banking operations overseas (FT):

Tories ready to follow Obama’s lead

The UK opposition Conservative party is likely to follow the lead of Barack Obama , US president, and introduce similar trading curbs for banks based in the City if elected, George Osborne, the shadow chancellor, said Thursday night.

The Tories – widely expected to win a general election which is due within four months – fired a warning shot across the bows of financial institutions including Barclays, Deutsche Bank, Credit Suisse and UBS,saying the Obama crackdown on proprietary trading was “definitely something we think needs to be done”.

When the Brits slapped their giant tax on bank bonuuses, they were covered by similar action fom the French and Obama's proposed tax on bank liabilities.  If the Volcker rule gets traction, other major banking centers will probably follow suit.

Thursday, January 21, 2010

Quote of the Day

“Paul Volcker, a top economist in the Obama Administration and former Federal Reserve Chairman, wants the nation’s banks to be prohibited from owning and trading risky securities, the very practice that got the biggest ones into deep trouble in 2008.  And the administration is saying no, it will not separate commercial banking from investment operations.  Mr. Volcker argues that regulation by itself will not work.  Sooner or later, the giants, in pursuit of profits, will get into trouble.  The Administration should accept this and shield commercial banking from Wall Street’s wild ways..."
John McCain, Dec. 17, 2009
On the Banking Integrity Act of 2009

Quote of the Day II

When banks benefit from the safety net that taxpayers provide, which includes lower-cost capital, it is not appropriate for them to turn around and use that cheap money to trade for profit. And that is especially true when this kind of trading often puts banks in direct conflict with their customers’ interests.

The fact is, these kinds of trading operations can create enormous and costly risks, endangering the entire bank if things go wrong.

We simply cannot accept a system in which hedge funds or private- equity firms inside banks can place huge, risky bets that are subsidized by taxpayers and that could pose a conflict of interest. And we cannot accept a system in which shareholders make money on these operations if a bank wins, but taxpayers foot the bill if a bank loses.
Barack Obama, Jan. 21, 2010
On Additional Reforms to the Financial System (e.g., "The Volcker rule")

McCain's bill calls for a complete ban on investment banking activities by deposit-taking banks; Obama proposes simply to ban proprietary trading and internal hedge funds. So what excuse will McCain find to oppose the milder separation of bank functions?

Bad call of the month

WSJ, 1/15/2010
Volcker Voices his Views in a Vacum

Paul Volcker is talking. But is anyone listening? [snip]

The two speeches highlighted Mr. Volcker's predicament. Having been viewed as a crucial supporter of Mr. Obama during his presidential run, he appears to have diminishing influence in the White House. And while revered by Wall Street critics on the left and right, his most deeply held views are having limited influence among policy makers.

"It's clear that the ideas Paul Volcker is pushing now are not shared by the administration," said Douglas Elliott, an economic studies fellow at the Brookings Institution, a public-policy organization. Given the difficulty of hiving off bank-lending units from their trading operations, adds Mr. Elliott, "I agree with the administration on that one."

Obama, 1/21:
... I’m proposing a simple and common- sense reform, which we’re calling the Volcker rule, after this tall guy behind me. Banks will no longer be allowed to own, invest or sponsor hedge funds, private-equity funds or proprietary trading operations for their own profit, unrelated to serving their customers.
Actually, the Journal had a story  a few weeks ago which, while noting that Volcker's main ideas had not become Administration policy, also reported that Volcker was methodically, patiently building support for them. But WSJ online l has so eviscerated its search engine in the Murdoch era (and ditto for Factiva as offered through the Journal subscription) that I can't find it.

Perfect money storm?

Obama is proposing to downsize the megabanks and restrict their activities - on the very day the Supreme Court took the wraps off direct corporate spending on political ads - and the day after Democrats lost their chance to break a filibuster on any law creating new restrictions. Add the political gale winds blowing in Democrats' faces - and where do you think newly freed Wall Street dollars for political messaging are going to go this time? Will Goldman billions fund paid political attacks on the Administration? 

P.S. Since McCain's out there calling for a restoration of Glass-Steagall, how is he going to find a way to oppose Obama's more limited restriction on deposit-taking banks -- banning proprietary trading only rather than investment banking activity generally?

P.P.S. Perhaps this new assault is part of a political two-stroke.  Obama has said that he hasn't done a good enough job explaining how the health care bill will improve life for ordinary Americans. Meanwhile he's gotten on the wrong side of populist rage against the megabanks.  I expect that in the SOTU he will attempt to weave bank curbs and universal health care together as a platform that will bolster security and opportunity for the middle class -- and dare the Republicans to obstruct both measures.

UPDATE: The Times reports, 1/23:
His first big chance [to reconnect with voters] will come when he delivers his State of the Union address. Rather than unveil a laundry list of new initiatives, advisers said, Mr. Obama will try to reframe his agenda and how he connects it with public concerns. In particular, he will focus on how his ideas for health care, energy and financial regulation all fit into the broader economic mission of creating what he calls a “new foundation” for the country, the key words being “rescue, restore and rebuild.”

I disagree, Mr. President

Obama is offering another olive branch to Republicans -- or is he trying once again to outflank them?  His message, as always, is subtle -- I think too subtle. It may not be quite what it seems, but it doesn't satisfy. Here's his exchange with Stephanopoulos regarding partisanship:
OBAMA:...I noticed that some of the Republicans are saying well, we actually wanted to do health care. We just didn't want...

STEPHANOPOULOS: Michael Steele said that to me this morning.
OBAMA: Exactly. So now in fairness, I think it's important to remind everybody that part of this process was having conversations with Republicans for months and asking them what exactly they wanted to do and what their solutions were to these problems.

Wednesday, January 20, 2010

Did Obama read Ezra Klein today?

Obama this afternoon to George Stephanopoulos:
“If there’s one thing that I regret this year,” Mr. Obama said, “is that we were so busy just getting stuff done and dealing with the immediate crises that were in front of us that I think we lost some of that sense of speaking directly to the American people about what their core values are and why we have to make sure those institutions are matching up with those values”....

“I think, you know, what they ended up seeing is this feeling of remoteness and detachment where there’s these technocrats up here making decisions,” Mr. Obama said. “Maybe some of them are good, maybe some of them aren’t, but do they really get us and what we’re going through?”...

“That I do think is a mistake of mine,” Mr. Obama said. “I think the assumption was if I just focus on policy, if I just focus on this provision or that law or if we’re making a good rational decision here, then people will get it.”

Here's Ezra Klein this morning, assessing Obama's first year:

But that candidate bears little relation to this president. The speeches are over, for one thing. Obama's use of the bully pulpit has been rare and restrained. He gave a major address on health-care reform when he needed to save the legislation in the Senate, but he didn't begin health-care reform with a big speech meant to explain the issue and his approach to voters. He talked up the passage of stimulus at his first press conference, but he never did what FDR did with the banks and explained clearly and slowly why stimulus was needed. A president who promised persuasion has instead offered legislation. And his speeches have been timed to affect the legislative process, not to convince the country of his cause and leverage popular support in his negotiations with Congress. It's been all inside game, pretty much all the time....

The White House has played an inside game, focusing on helping Congress pass legislation rather than helping the public understand it. That game was almost enough to pass health care -- and it may still succeed on that count. But Brown's election throws it into doubt.

Obama's diagnosis is accurate, perhaps, and fine for Obama to say. It's somewhat akin to confessing that you're overly zealous about helping old ladies cross the street. But then why not rally the troops, try to get the Senate bill through the House with pre-negotiated reconciliation patches, and then go do the Great Communicator thing?

I've left out, too, the more substantive part of Klein's critique - that Obama did not use the bully pulpit to push early and hard for elements of each piece of legislation that would have made it stronger -- a bigger stimulus, a public option.

Obama echoes Webb

Obama just pretty much echoed Webb:

"Here's one thing I know and I just want to make sure that this is off the table. The Senate certainly shouldn't try to jam anything through until Scott Brown is seated," Obama said. "People in Massachusetts spoke. He's got to be part of that process."

And nothing about the House passing the Senate bill. It's probably too late now, but the silence from the President was long. Instead, this salvage operation:
 "I would advise that we try to move quickly to coalesce around those elements of the package that people agree on. We know that we need insurance reform, that the health insurance companies are taking advantage of people. We know that we have to have some form of cost containment ... Those are the core, some of the core elements of, to this bill," Obama said.
 This had to have been gamed out before the election yesterday. I must confess I am dumbfounded.

My personal fantasy is that in his strangely long talks with Olympia Snowe, Obama roughed out a Plan B with her should the Democrats' bills run aground. She gets some pound of flesh; the Democrats get a bill he can live with. But it's just that, a fantasy. Perhaps in November, the deal could have included a party switch for Snowe. But now? 

Frank-ly disgusting

There's probably no point in continuing to howl at the moon as assorted Democrats rush for the exits on HCR. But I can't help myself. Barney Frank is the latest to cut off all chance of following through:

I have two reactions to the election in Massachusetts. One, I am disappointed. Two, I feel strongly that the Democratic majority in congress must respect the process and make no effort to bypass the electoral results. If Martha Coakley had won, I believe we could have worked out a reasonable compromise between the House and Senate health care bills. But since Scott Brown has won and the Republicans now have 41 votes in the senate, that approach is no longer appropriate. I am hopeful that some Republican senators will be willing to discuss a revised version of health care reform. Because I do not think that the country would be well served by the health care status quo. But our respect for democratic procedures must rule out any effort to pass a health care bill as if the Massachusetts election had not happened. Going forward, I hope there will be a serious effort to change the senate rule which means that 59 are not enough to pass major legislation, but those are the rules by which the health care bill was considered, and it would be wrong to change them in the middle of this process.
Respect for democratic procedures? It would be "wrong" to change "the rules by which the health care bill was considered"?  "Procedure" is the cross on which the Democrats have hung themselves. It's the procedure -- dragged out for the better part of a year by Republican bad faith and Democratic accommodation and infighting -- that has disgusted voters, not the substance of the two quite well-constructed bills now pending.
Whom does Frank think he's dealing with? Respect for "procedure" means acceding to concerted Republican malpractice - in the bad faith negotiations that Baucus allowed to drag on for months, giving the Republicans in the 'gang of six' most of what they wanted; in the relentless demagoguery of the summer; in Republican rejection of a bill that is as "Republican" as any Republican with any integrity (that is, today, none) could wish, in its privatization of near-universal care and deficit discipline; in the Republicans' successful obstruction of every step of the process until they breached the Democrats' filibuster-proof majority. And of course, there is absolutely no violation of proper Congressional procedure in the House passing a bill that the Senate has already passed.

Tuesday, January 19, 2010

Webb drops a bomb on his putative party

What kind of unspeakable crap is this from Jim Webb just minutes after Brown's victory was called?
"In many ways the campaign in Massachusetts became a referendum not only on health care reform but also on the openness and integrity of our government process. It is vital that we restore the respect of the American people in our system of government and in our leaders. To that end, I believe it would only be fair and prudent that we suspend further votes on health care legislation until Senator-elect Brown is seated."
What kind of game is Webb playing?  The HCR bill-creation process has been open ad nauseaum. Anyone interested has been able to follow every permutation of negotiation on every key permutation through a host of news sources. The whole of both Senate and House bills have been sitting on the web for weeks and months. The Senate has passed its bill, and the House is perfectly within its rights to pass it.

 Ezra Klein, Jonathan Cohn, Jonathan Chait, Josh Marshall have said it all. What is the point of taking office as a Democrat if you will not pass one of these both-more-than-credible health care reform bills  -- and put insurance in reach of tens of millions who currently can't get it while making a host of concerted, serious efforts to get costs under control? Who would not rather have a hand in passing it as a one-term representative or senator than rusticate for decades in either chamber after letting it die?

To state the obvious: Webb has no actual say on what the House votes on.  But it would seem that he's lending cover to those in the House who want to pause, and curl up, and die. Why is he undercutting the White House like this? What's the calculation? Motive?

We have one party that has not got the brains to govern. Will we now learn for certain that we have another party that hasn't got the guts?

Next post: Frank-ly disgusting

Chait's crucial warning to Democrats

Jonathan Chait offers up true wisdom as the Democrats stare at disaster in Massachusetts, pointing out that any party that's been in power for a year when there's 10% unemployment is going to get hammered; that in the face of major recession Obama's popularity has in fact proved remarkably durable; that commentators always underestimate structural factors moving popular opinion and find faux cause and effect in the parties' and politicians' strategic choices; that Republicans' political strength is their dogged willingness to "ignore establishment nostrums in the face of defeat" whereas Democrats tend to panic and stampede; and that Obama's supreme challenge now will be to play "George Bailey in the bank run" and calm his party's panic (a role, I would add, to which he's supremely suited and has played before).

The nub of Chait's insight is his critique of

Sunday, January 17, 2010

Who's thwarting 'the will of the people'?

Democrats need to start heading off this "argument" immediately:
And any Democratic move to slow-walk seating Brown in order to pass reform, [Republican strategist Phil] Blando said, is "just naked, pure power politics where, at that point, you're just thwarting the will of the people."

Our allies the Iranians?

The Daily Times in Pakistan reports:
ISLAMABAD: Pakistan, Afghanistan and Iran on Saturday agreed on a joint framework to meet the regional security challenges of terrorism and extremism.

The agreement was signed at a trilateral meeting between Pakistan’s Foreign Minister Shah Mehmood Qureshi, his Iranian counterpart Manouchehr Mottaki and Afghan Foreign Minister Rangin Dadfar Spanta.

“We acknowledge that terrorism poses a common challenge that can only be addressed through concerted efforts,” the three ministers said in the joint declaration issued at a press conference...

Saturday, January 16, 2010

The U.S.-Israeli-Nazi-al Qaeda-Saudi plot against Iran

Over the past seven months -- or for that matter, over the past thirty years -- the most casual reader of news from Iran will have grown familiar with the regime's fulminations about the U.S.-U.K.-Israel nexus. But what about the U.S.-Israel-Nazi-Saudi-al Qaeda nexus?

While some western analysts suggest that U.S. military involvement in Muslim countries plays into al Qaeda's hands, lending credence to their narrative of Western crusaders seeking to occupy sacred Muslim soil, Ahmadinejad flips that story line on its head, suggesting that al Qaeda provides a pretext for U.S. military adventure.

Ahmadinejad bait

Ahmadinejad, following in the august footsteps of the Ayatollah Khomeini, is fond of blaming all of Iran's woes on Israeli-led machinations.  But of course the paranoid often have reason (and generate reason) to be paranoid, and demonized enemies do act as enemies.

The Jersusalem Post reports that an Egyptian paper has lionized the head of the Mossad, Meir Dagan, for effective covert action against Iran on various fronts: 

Without Mossad director Meir Dagan, the Iranian nuclear program would have been successfully completed years ago, Egyptian daily Al-Ahram claimed in an op-ed published Saturday.
"Over the past seven years, he has worked in silence, away from the media," the op-ed read. "He has dealt painful blows to the Iranian nuclear program … he is the Superman of the Jewish state."

Among the steps taken by Dagan against Teheran, Al-Ahram listed diplomatic action to embarrass the Islamic republic, action to fuel opposition protests, assassinations and covert attacks against nuclear facilities.

Friday, January 15, 2010

Wise men,'s Democrats?

Appalled by the prospect that a Brown victory in the Massachusetts Senate race could scuttle health care reform -- and Obama's presidency -- Andrew Sullivan fumes:
What you see here is the fathomless awfulness of the Democrats. Too fractured and listless to get a solid health insurance bill through both Houses in anything like the time they wanted, too disorganized to make a strong and coherent case for their proposal...

But losing Kennedy's seat is a near-epic failure. If health reform fails, it will be because of a fatal combination of Democratic hubris and Democratic weakness. They just won the presidency and both Houses. And this is what they manage? Really, who wants to belong or support a party this goddamn useless?

Wednesday, January 13, 2010

Question for Fallows: Can the U.S. "muddle through" to structural change?

As someone who's mused at length over whether the United States retains its capacity for self-correction, I lapped up James Fallows' panoramic and even-handed exploration of "How American Can Rise Again" (or not). Fallows' broad points:
  • Worries about American decline are a constant in our culture and a sign of societal health.

  • Current problems, e.g., the structural deficits and infrastructure decay, are serious but manageable.

  • More endemic and threatening than the problems that require policy solutions is our current political paralysis -- bequeathed to us by a Constitution that has not proved sufficiently amenable to amendment and that has stuck us with steadily less representative government:
Fallows sees no clear path to fixing the paralysis caused by the nonrepresentative nature of the Senate (where Wyoming has the same clout as California with 1/69 the population), the fiercely Gerrymandered Congressional districts, the multiple layers and local government, etc.   His conclusion is really a non-conclusion: our only hope for bringing about sufficient constructive change is to "muddle through." That is, we need leaders like Theodore Roosevelt and Dwight Eisenhower who "worked within [the system's] flaws and limits...that is the bravest and best choice for us now."

That conclusion is a bit circular, since Fallows' core question is whether the United States retains the capacity to muddle through, given the dysfunctions of the political system.  Perhaps the missing link is a discussion of whether the U.S. can "muddle through" to incremental systemic change, i.e., change in the political system.

Tuesday, January 12, 2010

Is the Iranian regime Sistani-able?

Those who doubt the force or staying power of Iran's Green movement often characterize the movement as essentially leaderless and unfocused in its goals. It's true that putative leaders Mousavi, Karroubi and Khatami are presently focusing on reform platforms; they condemn violence and assert that they want to work within the Constitution of the Islamic Republic.  As the regime and hardline establishment figures repeatedly retreat into recalcitrance, arresting and terrorizing demonstrators, intimidating the reformist leaders, calling for executions of demonstrators and sometimes death sentences for the leaders, it's hard to imagine the old establishment reformists finding a path toward meaningful compromise with a regime that has (as they sometimes themselves assert) has lost legitimacy. And it's true that there is no high profile leader calling for a full-scale regime change - which would be impossible from within the country.

At World Politics Review, Masoud Shafaee suggests a possible source of galvanizing leadership for those seeking change in Iran.  In an article tracing divisions between Iranian clerics, including recent assaults on close Montezari associate and presumptive spiritual heir Grand Ayatollah Yousef Sanei, Shafaee speculates:
Yet ironically, the regime may face its greatest threat not from within, but from outside the country. Ever since June's contested election, observers have been keeping a close watch on Grand Ayatollah Ali al-Sistani (who hails from Iran but resides in the holy city of Najaf, Iraq), considered the highest living authority in all of Shiite Islam. Sistani comes from the "quietist" tradition of Shiite theology, one that, unlike the Islamic Republic's ruling doctrine of velayat-eh faqih, holds that clerics should abstain from becoming directly involved in politics. So far, he has refrained from condemning the regime's actions. But his clout is so strong in the Shiite world that, were this to change, the Islamic Republic would arguably no longer face just a political crisis within Iran, but also a crisis of religious confidence among all Shiites.

For now, the influential cleric has shown no signs of weighing in on the unrest. As Ashura came and went, Sistani issued a statement only inviting followers to attend memorial services for the "martyrs" who died in recent terrorist attacks in Karbala and Kazemein, Iraq. Yet there is little doubt that Sistani is watching events unfold in his native land. In November, he met with Ali Larijani, the speaker of Iran's Parliament, and more recently, he defended Sanei in the aftermath of Yazdi's attack.

Verbal noun mash-up dazes headline reader

Quick: decode this WSJ headline:
New Breast Screening Limits Face Reversal
A headline as dense as my compost heap! Am I confused because references to body parts distract the attention, or because the headline strings together four words in a row that are either verbs or verbal nouns (five, if you count "breast," as in "breast the waves"), or because "facing a reversal" is inherently paradoxical, or because after reading the apparent subject phrase "new breast screening" it's very difficult not to read "limits" as a verb (rather than as the completion of the subject phrase)?
I'd have to say my confusion is overdetermined.

P.S. the political backlash to the public health finding that women in their forties don't need yearly mammograms is a perfect microcosm of the dysfunctions of both our political and health care systems.

More on this score:
From what planet comes this one?
Verbal noun mashup dazes headline reader
Newspaper taxes readers' decoding chops
Five noun run spurs brain freeze

Monday, January 11, 2010

Who uses credit cards in Nigeria (or Ghana)?

TPM's Justin Elliott reports that contrary to widespread reporting, Umar Abdulmutallab was not traveling on a one-way ticket -- one of three alleged standard red flags.

Bulletin on red flag #2: Nigerian colleagues of my wife, a nurse-midwife at Newark Beth Israel Hospital, say that everyone in Nigeria pays cash for airplane tickets (and virtually everything else). According to the website CreditCards,  at the end of 2007 there were an estimated 95,000 credit cards and 512,000 debit cards in Nigeria, a nation of 150 million people. The site also reports that according to research firm The Lafferty Group, in Nigeria "credit cards are rarely accepted beyond a few upscale hotels" - language identical to that which appears on the State Department web page for Nigeria, which warns more broadly:
Nigeria is a cash economy, and it is usually necessary to carry sufficient currency to cover the expenses of a planned visit, which makes travelers an attractive target for criminals.  Credit cards are rarely accepted beyond a few upscale hotels.  Due to credit card fraud in Nigeria and by cohorts in the United States, credit card use should be considered carefully. 
So while the son of a banker might indeed own a credit or debit card, he would probably not use it to buy a plane ticket -- and would certainly raise no alarms by paying cash.

Makes a person wonder: do we know for sure that Abdulmutallab had "no luggage" as well?  Would that include carry-on?  Lots of people take long trips these days without checking a bag.

UPDATE and CORRECTION, 4:45 ET:  Thanks to commenter Along, below, for pointing out an important error on my part: though Abdulmutallab flew from Lagos, "The round-trip ticket was purchased in Accra, Ghana, not in Nigeria. But Ghana has a similar credit card atmosphere according to the State Dept.: 'Use of credit cards in Ghana should be avoided if possible, as a growing number of travelers have been victims of credit card fraud.'"  A detailed account in the Nigerian publication The Nation confirms that Abdulmutallab bought a round-trip ticket (in Accra, on Dec. 16, without leaving a home address or phone number) and adds, "The passenger did not check in any baggage but was spotted with a shoulder bag."

The battle for a national health insurance exchange

Good news (or good rumor) from E.J. Dionne on a likely outcome of Senate-House negotiations on health care reform:
Over the last week, I've been talking with key figures in the House, Senate and White House, and the outlines of a deal are becoming reasonably clear. The public option is, alas, dead. But the idea of setting up a national insurance exchange -- alongside state exchanges -- where the uninsured can purchase coverage is very much alive. The House is demanding this as the price for giving up on the public plan, and a national exchange would provide for much more consumer-friendly regulation of health insurance policies.
David Herszenhorn also reports that "House Democrats are pushing hard for a national insurance exchange, or marketplace, rather than the state exchanges proposed by the Senate."

Sunday, January 10, 2010

Obama's healthcare priorities

Ezra Klein brings into sharp focus an aspect of Obama's approach to healthcare reform that he has repeatedly noted in its component parts:
This is one thing that the Obama administration doesn't get enough praise or criticism for. The only ideas they've introduced into the debate, and the only ideas they've really stood and fought for against serious opposition, are cost-control ideas. Namely, the excise tax, the Medicare Commission, the insistence on deficit neutrality and the $900 billion price tag, none of which have a natural majority on the Hill, and all of which the Obama administration has kept in the game through direct advocacy.
I see this focus as an instance of Obama's propensity for "the long game."  The Administration probably calculates that Congress will inevitably expand coverage and subsidies as the inadequacies of the initial allotments become obvious -- whereas the architecture for beginning to bend the cost curve has to be in place from the start or the whole package will swiftly become unaffordable. Atul Gawande's vision -- of a potpourri of cost control measures, pilots and demonstration projects out of which at least a few will have a dramatic impact -- is also Obama's.  Here is how Obama described the process to Fred Hiatt, focusing on one potential meta-enabler of such methods, the MedPAC commission:
At this point, I am confident that both the House and the Senate bills will contain what we've been calling MedPAC on steroids, the idea that you continually present new ideas to change incentives, change the delivery system, understanding that because this is such a complex system we're not always going to get it exactly right the first time, and that there have to be a series of modifications over the course of a series of years, and we have to take that out of politics and make sure that an independent board of medical experts and health economists are providing packages that are continually improving the system. So I think there's general consensus that that is one of two very powerful levers to bend the cost curve.
I can see two strong objections either to Obama's strategy or my understanding of it.

Saturday, January 09, 2010

Two ways of looking at a Hellfire

Leah Farrall, a former intelligence analyst for the Australian federal police and current Ph.D. student, muses:
In regard’s to Jarret [Brachman]’s comment about ensuring hellfire missiles rain down, I’d point out that this is exactly what al Qaeda wants. I wrote about this in relation to Afghanistan in an op-ed I wrote for the Australian last year.  The same risk is present in dealing with AQAP, especially in Yemen.  They want a reaction, they want those hellfire missiles because they want a jihad.  Of course they aren’t likely to come out and say this, but at the end of the day their  attacks don’t give them that jihad, our reaction does.  That is, attacks are primarily designed to provoke a reaction, just like any other terrorist group. A reaction then provides legitimacy because it becomes a self-fulfilling prophecy.  On that note I’d, point out that  armed responses to al Qaeda have, throughout the organisation’s history, generated far more recruits than its attacks or its propaganda efforts.
In a different post, Farrall points to a piece "well worth reading" by Pakistani columnist Irfan Husain, who retails the claims of a scholar, Farhat Taj, who is native to Waziristan and claims that the people there welcome U.S. drone attacks:

Friday, January 08, 2010

A cliff note for deconstruction

Deconstruction, the literary theory that "attempts to demonstrate that any text is not a discrete whole but contains several irreconcilable and contradictory meanings" (Wikipedia - a definition as good as any) has been popularly regarded as an arcane, perverse bit of wizardry on the border between fraud and rocket science. I always felt that it demonstrated itself pretty well empirically (though logically, it should also unravel its own propositions...).

One Shakespeare sonnet, No. 24, always seemed to me to capture the idea in a line - the one bolded below.

Mine eye hath played the painter and hath stelled
Thy beauty's form in table of my heart.
My body is the frame wherein 'tis held,
and perspective it is best painter's art.
For through the painter must you see his skill
To find where your true image pictured lies,
Which in my bosom's shop is hanging still,
That hath his windows glazed with thine eyes.

Thursday, January 07, 2010

"Move your Money" -- if convenient and profitable

There is some merit in Arianna Huffington's Move Your Money campaign to induce individuals to transfer their funds from the megabanks so many of us use to local community banks. The plan is greatly strengthened by providing an online tool by which we can all check the financial strength of local community banks.

Like most Arianna productions, though, this one is an oversimplified morality play: big bank bad/small bank good. It's telling that one of her co-sponsors is a filmmaker and that she's openly inviting all of us to enact a real-life rerun of "It's a Wonderful Life." A few caveats:
  • I thought we'd all got over "It's a Wonderful Life" rapture in the wake of the savings and loan crisis of the late eighties/early nineties, when over 700 S&Ls failed, costing U.S. taxpayers something like $150 billion. Thanks in part to deregulation in the early 80s that expanded S&Ls' lending authority and weakened accounting standards, many were subsequently run more by Potter principles than by George Bailey principles.  For that matter, consider the movie itself. But for the extreme virtue and fortitude of the hero, the angelic Building and Loan would have been absorbed by Potter's bank (which might have remained a community bank to this day, unless Potter proved more able than a handful of SuperPotters).

  • Community banks are not exactly politically unconnected Davids going up against the industry Goliaths. The industry's trade association, the Independent Community Bankers of America (ICBA) was very effective in weakening the  Consumer Financial Protection Agency created by legislation passed in the House.  The ICBA succeeded in exempting community banks from CFPA examination and in preventing the CFPA from mandating that community banks offer "plain vanilla" loan products.

Wednesday, January 06, 2010

Writhing in the budget strait jacket

I have always worried that David Brooks had a point here, back in April '08:
He made a sweeping read-my-lips pledge never to raise taxes on anybody making less than $200,000 to $250,000 a year. That will make it impossible to address entitlement reform any time in an Obama presidency. It will also make it much harder to afford the vast array of middle-class tax breaks, health-care reforms and energy policy Manhattan Projects that he promises to deliver.
Clive Crook, long an advocate for a U.S. VAT,  made a similar point in Feb. '09:
In this "new era of responsibility", as the budget document is called, it would have been better for Obama to signal that huge and desirable initiatives like universal health care will impose at least some costs on all Americans. It is literally impossible to make the rich pay for everything, and telling 95% of voters that they can have all these things at no cost is not good leadership. It has even less to do with shared responsibility.

Tuesday, January 05, 2010

A matter of perspective

Here's today's Wall Street Journal headline regarding the suicide attack that killed 7 CIA officers and contractors in Khost, Afghanistan:

CIA Blast Blamed On Double Agent 

Shouldn't "Blamed on" be "Credited to"? That was a devastatingly effective piece of spycraft, reminiscent of the assassination of Northern Alliance leader Ahmad Shah Massoud by a suicide bomber disguised as a journalist two days before 9/11.   According to the Times, the agent, a Jordanian physician named Humam Khalil Mohammed, won the trust first of the Jordanian General Intelligence Directorate, which works closely with the U.S.,  and then of the CIA officers -- but was also a highly influential Jihiadi.  According to terrorism expert Jarret Brachman, cited in the Times, the bomber, using the online persona Abu Dujana al-Khorasani, was "one of the most revered authors on the jihadists’ the top five jihadists... one of the biggest guns out there.” The Times also reports:
The attack at the C.I.A. base dealt a devastating blow to the spy agency’s operations against militants in the remote mountains of Afghanistan, eliminating an elite team using an informant with strong jihadi credentials. The attack further delayed hope of penetrating Al Qaeda’s upper ranks, and also seemed potent evidence of militants’ ability to strike back against their American pursuers.
 Imagine what a hero this guy is in jihadist circles.

Monday, January 04, 2010

Old dogs, old tricks, tired people

Americans and Zionists are the sole audience of a play they have commissioned and sold out.
                - Mahmoud Ahmadinejad, Dec. 29, 2009, explaining the Ashura Day antigovernment protests
US President Barack Obama and the leaders in Israel have revealed their agenda by supporting the Iranian opposition.
              -  Iranian Intelligence Minister Heydar] Moslehi, paraphased by PressTV (Iranian government media), Jan. 4, 2010
Israel does not wish the Qur'an to exist in this country. Israel does not wish the 'ulama to exist in this country. It was Israel that assaulted the Fayziyeh Madrasa by means of its sinister agents. It is still assaulting us, and assaulting you, the nation; it wishes to seize your economy, to destroy your trade and agriculture, to appropriate your wealth. Israel wishes to remove by means of its agents anything it regards as blocking its path...In order for Israel to attain its objectives, the government of Iran has continually affronte us in accordance with goals and plans conceived in Israel.
            - Ayatollah Ruhollah Khomeini, June 3, 1963, "The Afternoon of Ashura," speech denouncing a raid by the Shah's police on the Madrasa from which Khomeini habitually delivered his speeches, in which several students were killed.    
"Not Gaza, not Lebanon. I die only for Iran."
  - Green movement protesters, Tehran, Sept. 18, 2009   (Quds Day, the anti-Zionist extravaganza)

Sunday, January 03, 2010

Under the dull surface at Iran's PressTV

In its tortuous, indirect way, official Iranian media seems to be reflecting a move by some in the Iranian  establishment to read Mousavi's ringing affirmation of citizens' rights and denunciation of government response to the June elections as something of an olive branch. 

While Mousavi's Jan. 1 statement challenged the Iranian government to roll back all its repressive actions following the June elections, PressTV today chooses to read his statement as a retreat from challenging the government's legitimacy - echoing an interpretation to that effect from fellow presidential candidate Mohsen Rezaei, (who first joined Mousavi and Karroubi in protesting the June election tally but later caved) reported yesterday.

Saturday, January 02, 2010

Back from the cliff's edge: Rory Stewart hails Obama's limited goals in Afghanistan

There is perhaps no one writing about U.S. and allied policy in Afghanistan who exhibits a subtler and more comprehensive grasp at once of the realities on the ground and of the dominant conceptual frame of Western policy there than Rory Stewart. Armed with that understanding, he has taken the measure of Obama's policy review and redefinition and put his finger on the extent to which Obama has revolutionized U.S. aims and therefore, over the long haul, the likely means of fostering those aims.

In some ways, Stewart's latest assessment of U.S. policy and likely outcomes seems like a course reversal of his analysis prior to Obama's speech (in Senate testimony in September  and in The London Review of Books in July). Then, he warned that the U.S., gearing up for a troop surge, was preparing to drive off a cliff and pondering only details akin to whether or not to wear a seatbelt.  Then, too, he deployed a withering ventriloquism to expose what he regarded as circular logic in maximalist counterinsurgency aims:

Friday, January 01, 2010

Iran admits that June uprising was spontaneous, indigenous

PressTV, the Iranian regime's English-language media outlet, reports these "findings" from a statement by Intelligence Minister Heidar Moslehi:
"The Intelligence Ministry has obtained good clues in respect to the elements who had a role in the recent riots," Moslehi said in a televised interview on Thursday.

"This unrest is different from that of the past and is a prearranged counter-revolutionary movement, designed by agents of sedition," he added. 
 "Different from that of the past"? Such as the outpouring of hundreds of thousands of protesters in June, when the government asserted the following?

"We believe this is an organized network which is most probably affiliated to foreign-related groups and deliberately disturbs the peace and security of the public. Of course we have already ordered the law enforcement forces to deal with the issue," read the letter.

Krugman calls for a trade war with China

When the financial meltdown was in full career, a mantra voiced by a chorus of economists, central bankers and world leaders was to avoid a cascade of protectionist measures like the round of retaliatory tariffs that magnified and prolonged the Great Depression.  "Beggar thy neighbor" -- as in protect your own market, destroy your trading partners' -- had to be the most-employed phrase on the Financial Times Comment page in 2009. Obama, a calming influence at the G-20 in late March, struck this note calling for a measured trade rebalancing on April 3:
Now, the U.S. will remain the largest consumer market, and we are going to make sure that it's open. One of the principles that we very clearly affirmed in London was that protectionism is not the answer. It's not the Germans' fault that they make good products that the United States wants to buy. And we want to make sure that we're making good products that Germans want to buy. But if you look overall, there is probably going to need to be a rebalancing of who's spending, who's saving, what are the overall trade patterns.

For the most part, the warnings held, and major economies held off from imposing major tariffs.  Yet the danger, as framed by Martin Wolf a year ago (Jan. 6, 2009), is a prolonged one, with the pressure to protect national markets increasing over time:
Now think what will happen if, after two or more years of monstrous fiscal deficits, the US is still mired in unemployment and slow growth. People will ask why the country is exporting so much of its demand to sustain jobs abroad. They will want their demand back. The last time this sort of thing happened – in the 1930s – the outcome was a devastating round of beggar-my-neighbour devaluations, plus protectionism. Can we be confident we can avoid such dangers? On the contrary, the danger is extreme. Once the integration of the world economy starts to reverse and unemployment soars, the demons of our past – above all, nationalism – will return. Achievements of decades may collapse almost overnight.
Now comes Nobel Laureate Paul Krugman, ringing in the New Year by demanding...our demand back.