Links 8/9/09

Climate fixes ‘pose drought risk’ BBC

GM gets to dump its polluted sites Detroit Free Press

What Are They So Mad About? Steve Benen

Arbitration RIP Independent Accountant

Employment, Hours, and Estimated Output Menzie Chinn, Econbrowser

For Private Equity, a Very Public Disaster Louise Story, New York Times. On Cerberus. This could not happen to a nicer bunch.

Imperfect Politics of Pay Gretchen Morgenson, New York Times

Blackstone prepares for Hilton break-up Independent

CNBC slides as viewers get crunched Guardian. A sign sentiment is not as bullish as the rally suggests? Oh, but that would be a bullish sign!

Antidote du jour:

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  1. autodidact

    Re: What are they so mad about?

    This article is useless, thoughtless. The author doesn't grasp a fraction of the real reasons why ordinary middle class people I know do not want this health care reform.

    Has anyone on here read the House or Senate bills? I just started in on HR3200, and right off the bat I come to a section beginning on page 25 line 12 describing the manner in which health insurance will be dictated by the Secretary of HHS and a panel of Presidential appointees. This amounts to czar-like control over what you will be allowed to buy. When the freedom loving people of this country complain that it amounts to a government takeover of health care, this is absolutely true — that is the plan.

    When the President says, if you like your health care plan, you can keep it, he doesn't add that the House bill contains a provision that after five years, your plan, if it does not conform to the aforementioned czar-like rules, will be curtailed. You will be forced into a government plan or government approved plan.

    The reason people are revolting is because the plan is revolting. Sorry, facts are stubborn things.

  2. Keenan

    Affronts to the Constitution must now evidently be named to yield a feelgood acronym. See HR3510
    The HAPPY bill
    now in the House Ways & Means committee.
    So, essentially, the proposal is to get foreign creditors to provide for American's pets.

    Wonder how far this nonsense will go.

  3. Anonymous

    I skimmed the "What Are They So Mad About" article, but more importantly read some of the reader comments. An exceptionally stereotypical liberal bashing of all who would not see the light in HC reform.

    If you disagree enough with the plan for any reason (like, umm, the congresspersons didn't even read the bill!), you are a racist (even fomenting the equivalent of a new KKK), ignorant, stupid, irrational wingnut.

    The proposal put forth is considered essentially a perfect solution by the posters, who contort themselves to outdo each other in their praise and justification of it.

    The whole thing is absurd and not worthy of posting on this fine blog.

  4. Anonymous

    After just receiving a bill from my local hospital for $6538 for having three stitches removed from the hand I injured while using a kitchen knife, I welcome health insurance reform. No, the bill wending its way through both houses is not perfect but I truly do not understand how Americans can defend the system we have. It is broken and ANY reform would be better than the private insurance industry that scared Americans have to navigate every day, especially when they face a life-threatening health situation. And, unlike the poster above, I invite the future "czar-like" hand of government to beat down the private insurance companies for such moves as rescinding my friend's policy in her hour of cancer need because she forgot to list on a form three years ago that ten years previous she saw a doctor for planter fasciitis. That is criminal and anyone who doesn't see that our current system is completely broken has never had to seriously use their health insurance in the past three or so years.

  5. jest

    Re: What are they so mad about?

    these people aren't angry about healthcare; it has absolutely nothing to do with the matter at hand. case in point, when one of those angry citizens was asked why she was against it, she ended her tirade by saying "WE WANT OUR COUNTRY BACK." i think that is telling.

    these are just a bunch of irrational, immature, manipulated, & disenfranchised americans too inarticulate to describe what's really bothering them. so it manifests itself in wild arm flailing, the birther movement, tea parties, sarah palin, and the embrace of mediocrity in general. (i mean, come on people. birther isn't even a word.) the real angst is far more complex and deep seated than even these people say.

    that being said, i am against the current bill, b/c it follows obama's horrific habit of bending over to interest groups to the point where there is no point to the legislation. this reminds me of GLBA's promise to modernize and upgrade financial regulation. yeah, right.


    it's odd that this critique came from the UK; i find that CNBC Europe is actually quite good. the little i've seen is on par with, if not better than, bloomberg TV.

  6. Anonymous

    Hilton Break up

    Who gets Paris? She can't possible be an asset, the way she spends more likely on the other side of the balance sheet.

    Does she just disappear into a singularity? All of everything pink in the world disappears with her with a giant sucking sound in the background.

    My version of a perfect world.

  7. Anonymous

    I don't believe some of these comments on the 'What are they so mad about?' article.

    America is bonkers, if this was any other country, almost every citizen would be incredibly for it.

  8. cansarnoso

    hence, loathéd melancholy,
    of cerberus and blackest midnight born …

    it was the product line that let the dog of hell slip:
    ´mongst horrid shapes, and shrieks, and sights unholy!

  9. Hugh

    Private insurance healthcare plans have failed the country utterly. Fifty million are left without access to healthcare. All but the top say 5% of the population are one job loss, debilitating or expensive disease away from being in the same boat. Prices are out of control.

    We have public systems that work, are cheaper, and produce better health outcomes, in Medicare and the health plans of most other industrial countries to model a new and universal plan on. So what do we have? Those who want to keep the current untenable system that will collapse of its own financial weight. And those who want to use this same failed system as the centerpiece for a more extended plan.

    There is no reality in any of this.

    I found the article on Cerberus schizophrenic. Feinberg is allowed to spin his story with only the occasional "some say this is BS" rejoinder. Private equity firms take over a company and carve it up. They keep the best pieces and sell off the dreck. It's what they do. Cerberus wanted Chrysler's financial division that was where the profit center was pre- everything hitting the wall. The auto company was to receive a few dabs of paint and be sold off to some gormless rube. All this talk of patriotism and wanting to make the auto company really work is more pap for clueless reporters and the public. Cerberus, however, got caught flatfooted by the general downturn. The auto company started out as dreck and was getting dreckier by the moment. Despite all the fine talk, Cerberus never did offer real money to float the automaker. It constantly was looking for ways to dump that responsibility on the government. At the same time because of the economy hitting the skids, the decision to keep the financial arm wasn't looking so great either. However if I recall correctly GMAC was able to get access to government bucks. So you can probably chalk Cerberus up as another worthless company, along with Goldman, MS, AIG, Citi, and BoA, the government saved from extinction.

  10. Hugh

    One further note because I may be the only one to remember but the housing bubble burst 2 years ago today when BNP Paribas froze payouts from some funds heavily involved in subprimes. This created a major panic in financial markets aroung the world and marked the end of the housing bubble. Some may want to date the bubble bursting earlier but I think this is mistaken. There were signs of problems for more than a year and even impending failure such as when the Bear Stearns funds froze up in June 2007 but it was the BNP Paribas action that blew things sky high. It is really rather amazing, I think, that one of the defining moments of our times doesn't rate a mention 2 years on, not from Obama, not from politicians, not from Wall Street, and not from the media.

  11. Skeptical Economist


    In anyone really wants to understand the health care debate, go look up the hysteria the Democrats whipped up in opposition to Bush's modest Social Security proposal. The point isn't whether Bush's ideas were good or bad. Just compare the radically overheated rhetoric (against) to the modest scope of what Bush actually proposed.

    Payback is hell.

  12. Anonymous

    @skeptical economist

    What Democrat hysteria!?!?

    I've seen claims about social security town hall meets and the same behaviour occurring with health care, but no where in news archives can I find a single example. There were even demonstrators arrested in Denver for not being Bush supporters.

    And if you're talking about social security privatization, it was sold on false pretences – it never needed to be privatised financially and made peoples lives worse. If anything, it was privatized because it was such a success and want it to fail.

  13. Anonymous

    An example: As once-powerful investment banks crumbled, it became clear that the Securities and Exchange Commission, charged with supervising these businesses, had never bothered to scrutinize the hundreds of billions of dollars of esoteric securities the bankers had accumulated. When the home mortgages anchoring the securities went bad, the banks suffered grave losses and could no longer obtain the short-term loans they needed to survive. The S.E.C., drained and demoralized throughout the Bush administration, remained willfully blind to all of it. Wessel brings this dereliction to life by reconstructing scenes like one in March 2008, when Geithner, then chief of the Fed’s New York outpost, convened a 4:45 a.m. phone conference with Bernanke, Paulson and a crew of other officials. The topic was the fate of Bear Stearns, but no one bothered to awaken the notoriously ineffectual S.E.C. chairman, Christopher Cox. “Top officials at both the Fed and the Treasury had decided the S.E.C. and its chairman weren’t up to the job of coping with the collapse of an investment bank,” Wessel observes. Hours later, an S.E.C. aide sent plaintive e-mail messages, begging someone who had been on the call to contact Cox and fill him in.

    Also alarmingly absent from critical debates was George W. Bush. Wessel reinforces the impression that the former president failed to engage with the financial crisis, with devastating accounts of White House gatherings where Bush displayed little interest in the debacle. At one meeting on the initial $85 billion bailout of the insurance giant American International Group, Bush blandly told Bernanke and Paulson, “If you are comfortable with this, then I am comfortable with it.”

    If there’s a villain looming over the Wessel version of why the government was so overwhelmed, it is Greenspan, who led the Federal Reserve from 1987 until 2006. As Wessel explains, Greenspan’s strong libertarian leanings led him to scorn the ability of government employees to keep track of bonus-crazed bankers and traders. Greenspan preached a free-market theory that the self-interest of large financial players would cause them to drive hard bargains with one another and prevent the sort of mischief that could bring markets crashing down. He encouraged the “financial engineering” that created securities no one fully understood, and he helped shield the mad scientists of Wall Street from government restraints.

  14. Anonymous

    Jeez–even the FT has gone loco

    US must reappoint chairman Ben

    Published: August 9 2009 22:15 | Last updated: August 9 2009 22:15

    A central banker must combine the technocrat’s virtues with those of the politician. Ben Bernanke, chairman of the US Federal Reserve board, possesses both. He should be reappointed when his current term expires in January.

    Mr Bernanke devoted his unimpeachable academic career to topics that, uncannily, groomed him for heading the Fed during this crisis. Had one not known better, one would have credited the Bush administration with extraordinary foresight for his appointment.

    His work on the Great Depression is widely known; among economists he is also respected for his research on the role of credit markets in the business cycle and the transmission of monetary policy. Both fields of knowledge are central to navigating this recession.

    The imperfect art of monetary policy requires more than hard technical skill. Mr Bernanke’s fine judgment has stood him and the economy in good stead. Decisions to lower interest rates in early 2008, excoriated by many other central bankers at the time, have since been vindicated.

    His tenure is not flawless. Like others, he overestimated financial markets’ ability to regulate themselves. But he has proved a pragmatic crisis manager not hostage to dogma. Playing God and forcible matchmaker for individual banks leaves him open to criticism, as does the subsidisation of financial groups by taking risky assets on to the Fed’s balance sheets. Nonetheless, these decisions were made with the financial system on the brink of collapse and in a legal framework limiting the tools available. Mr Bernanke’s decisiveness and creativity were appropriate.

    He must now finish the job – of combating the crisis and of containing the consequences of how he does so. The Fed’s independence is in jeopardy, as dismayed lawmakers watch this unelected body put taxpayer money at risk. Mr Bernanke sees the need for unprecedented openness and explanation. But he must go further.

    Naturally keen to expand the Fed’s authority, he must also clarify what powers it should eschew to minimise future political entanglement. Support for a resolution regime for banks “too big to fail” – which would reduce the need for Fed interference – is crucial.

    Confirmation hearings should be used to probe Mr Bernanke’s views on these issues, which will influence how central banking is being recast. But uncertainty about his tenure will harm the economy. President Barack Obama should

  15. Hugh

    Listen anonymous, Bernanke is a great guy. If you look past the fact that he favored the easy credit Fed policies which fueled the housing bubble, didn't see that bubble until it had burst, was consistently behind the curve in his reaction to it and all the shoes falling that led to the meltdown, didn't do his basic homework on who had exposure to Lehman, refused to move aggressively to restructure the banks, took a trillion plus of their crap on to the Fed's balance sheet, failed to put a dent in casino capitalism, indeed gave with Treasury some $7 trillion for it to continue the same games that got us into this mess, and to top before I forget has written a lot about the Great Depression in which he conclusively proves he didn't really understand what went on it. I mean seriously if you forget about his career and everything he has done he really is an exemplary choice.

  16. Anonymous


    I have no idea how to reply (other than thanks for the laughs). It's one thing to say that market manipulation or technicals are taking the market higher. But to have anyone seriously consider Uncle Ben for reappointment is absolutely astonishing–let alone one of the premier financial papers in the world.

    I have absolutely no idea how historians are going to try to make sense out of this era. If it was the 70's, at least you could say that Krugman and FT, etc were on drug-induced delusions.

  17. jest

    @Anon 10:44

    If not Ben, who would you recommend?

    It's probably the one of the worst jobs one could have right now (Treasury Sec'y is probably the worst), & even if we could find someone suitable, I doubt they'd be dumb enough to take the job.

    I'm not crazy about BB, but we could have far worse. At least he's not a parasite from Goldman, like many others.

  18. skippy

    @jest said…If not Ben, who would you recommend?

    E. Warren or her ilk, me thinks. Is it not time to take the financial out of the economic paradigm and go social, the herd needs a bit of love, eh.

    skippy…just a thought mate.

  19. Skeptical Economist


    "And if you're talking about social security privatization, it was sold on false pretences – it never needed to be privatised financially and made peoples lives worse. If anything, it was privatized because it was such a success and want it to fail."

    Social Security was privatized? I didn't know that. When did this happen?

    For fun type 'Bush social security destroy' into Google. Look at the hyperbolic rhetoric and compare it to Bush's proposed modest changes.

    The point here isn't the merits or demerits of Bush's concept of allowing young people to optionally put money into a private savings plan in exchange for lower benefits later. That may or may not have been a good idea (I opposed it).

    However, the language used to attack Bush's ideas was quite divorced from anything he advocated. Sound familiar?

    For the record, I supported (and still support) mandatory private savings in addition to SS.

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