Links 1/17/10

Apologies for no substantive posts from me tonight! Am scrambling in preparation for being out of town for two weeks (yes I will be working, this is mainly a change of venue).

The Right Testicle of Hell: History of a Haitian Holocaust Greg Palast

Flattery Will Get You Far Scientific American (hat tip Michael T). Clearly there is no hope for yours truly!

Book Salon: Too Big to Fail FireDogLake

Will China squeeze the West on rare earth metals in the coming decade? Market Mine (hat tip reader Crocodile Chuck) is going rogue CNet Asia (hat tip reader Michael T). Hhm, this is an interesting strategy, act compliant and pretend to retreat (as in say you are hiking out of China) but actually defy the government. Too bad Team Obama isn’t taking notes. Maybe I am missing something, but the official US action looks ill advised: Beijing seeks to limit Google fallout Financial Times. A diplomatic protest? This does not wash. The US has no business making a diplomatic protest over a commercial matter, nor does it have any business protesting internal Chinese policies, at least via this route (how would we react if China filed a protest over US political opposition to CNOOC’s attempt to purchase of Unocal? The backlash was a big, if not the big, reason that bid failed). The Chinese do all sorts of horrid things, like harvest organs from prisoners that are still alive (but we are far from models on the human rights front, our self image to the contrary: one of the biggest, maybe now the biggest, % of population in prison; pretty much the only country save places like Somalia that allows minors to be executed). In terms of either human rights issues there are much better fights to pick, as well as on the commercial front (how about threatening to impose tariffs to compensate for the fact that China’s near total lack of environmental standards is a de facto export subsidy?)

Forget Gum. Walking and Using Phone Is Risky. New York Times

Franklin Roosevelt’s First Inaugural Address: A Fitting Reminder For Our Crisis Today Jesse

Hoisted from the Comments Economists for Firing Larry Summers

Obama confidant’s spine-chilling proposal and Krugman, Gruber and non-disclosure issues Glenn Greenwald. I was completely gobsmacked by Krugman’s evident lack of a moral compass (this is “ends justify the means” in fancy dress), and was glad to see Greenwald do the heavy lifting of taking his argument apart.

Antidote du jour (a very nice reader sent this link, and I can’t find his message to provide the h/t! So please forgive me, will amend if you e-mail me or tell me in comments):

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  1. Human Head

    Why gob-smacked at Krugman’s ends justify the means BS? I thought that a general prerequisite to being invited to join the Nobel Prizer club?


  2. attempter

    Since I don’t think Krugman has yet reached the level of a complete hack, I’ll assume that he’ll recognize he was wrong.

    So then there’s three options for what to do. Since no one ever admits he was wrong anymore, we can probably rule that one out. So that leaves the two realistic options of digging in or running away. I wonder which he’ll choose.

    (This isn’t just some little spat by now. He’s already accused us of undermining the Republic:

    And here’s the thing: by claiming that there’s a huge scandal when nothing worse happened than insufficient care about disclosure, Greenwald and the people at FDL are actually reducing our ability to call foul on real corruption. After all, if everything is a scandal, nothing is a scandal. One of these days, perhaps soon, we’ll have a genuinely corrupt administration again — but when whistleblowers try to call attention to the misdeeds, you can be sure that there will be claims that “even liberals said that Obama did things just as bad or worse.” The crusade against Gruber is getting really destructive.

    Although “crusade” is silly Republican-style hyperbole. As Greenwald (I think it was him) pointed out, nobody even heard of this until Krugman started whining about the affront to his good buddy Gruber’s honor.)

    1. Cynthia

      Here is living proof that Chris Hedges’ liberal conscience outshines Paul Krugman’s by several solar masses:

      And I must say that if there were more Christians like Chris Hedges around today, I’d be more than willing to give up my atheist ways and become an honest-to-God, card-carrying Christian. But I doubt I ever will given that most Christians like him died shortly after the death of Christ, leaving only a handful of them around today to expose the fact that the Christians who are now in power are colluding with powers-that-be in Washington and in the Pentagon and on Wall Street to make America into a bipartisan, corporate-led, inverted totalitarian state. Here is how Hedges describes inverted totalitarianism:

      “The political philosopher Sheldon Wolin uses the phrase inverted totalitarianism to describe our distorted system of power. Inverted totalitarianism, unlike classical totalitarianism, he writes, does not revolve around a demagogue or charismatic leader. It finds its expression in the anonymity of the corporate state. It purports to cherish democracy, patriotism and the Constitution while cynically manipulating internal levers to subvert and thwart democratic institutions. Political candidates are elected in popular votes by citizens, but are beholden to armies of corporate lobbyists in Washington or state capitals who offer the legislation and get the legislators to pass it. A corporate media – in fact about a half dozen of them — controls nearly everything we read, watch or hear and imposes a bland uniformity of opinion or diverts us with trivia and celebrity gossip. In classical totalitarian regimes, such as Nazi fascism or Soviet communism, economics was subordinate to politics. ‘Under inverted totalitarianism the reverse is true,’ Wolin writes. ‘Economics dominates politics-and with that domination comes different forms of ruthlessness.'”

  3. DownSouth

    ► “Franklin Roosevelt’s First Inaugural Address: A Fitting Reminder For Our Crisis Today” by Jesse

    If we…ask what determines whether a challenge will or will not be met, the answer is that this depends upon the presence or absence of initiative and of creative individuals with clarity of mind and energy of will (which is almost a definition of genius), capable of effective response to new situations (which is almost a definition of intelligence). If we ask what makes a creative individual, we are thrown back from history to psychology and biology—to the influence of environment and the gamble and secret of the chromosomes. In any case a challenge successfully met (as by the United States in 1917, 1933, and 1941), if it does not exhaust the victor (like England in 1945), raises the temper and level of a nation, and makes it abler to meet further challenges…

    When the group or a civilization declines, it is through no mystic limitation of a corporate life, but through the failure of its political and intellectual leaders to meet the challenges of change.
    –Will & Ariel Durant, The Lessons of History

  4. Random

    I still agree with Krugman more than Greenwald. Gruber was being paid to provide scientific, quantitative analysis. (Spare me the jokes about how economics is not a science.) If Gruber is truly an untrustworthy hack, then show where his analysis is wrong. It shouldn’t be hard.

    I think the non-disclosure is certainly an issue, but not in the same way as the Republican generals or Maggie Gallagher.

    If there was a physicist producing anti-global warming papers who was getting funding from BP, I would say the same thing.

    1. Richard


      Nowhere did Glen Greenwald say Gruber was hack (i.e. a paid shill), or that his analysis was wrong. He is criticizing Gruber for not disclosing his relationship with the HHS and White House when appearing as an ‘objective analyst.’ That’s it.

    2. Yves Smith Post author


      There are two problems with your argument.

      First, there is a tremendous body of research that shows that the receipt of a gift as small as a can of soda predisposes a person to the point of view of the gift-giver. That is why some companies prohibit employees from receiving gifts or entertainment in any form. I’ve had clients like that. No joke, you cannot even buy them a cup of coffee.

      And it is borne out in scientific research, particularly medical research. Various meta-studies have shown that company-sponsored research is consistently more company-favoring than independent research.

      Second, a physicist is not qualified to comment on climate research.

      1. IF

        I have not followed this discussion in detail and hence don’t know where this infighting is coming from. But Krugman’s arguments make a lot of sense to me. Getting a research grant is different from being a paid freelancer. No gift. You should know this.

        1. Osceola

          Gruber got a consulting contract for this work, not a GRANT. The two are very different whether the money for both came from HHS or not. This argument is getting tired; you can find more details of the difference at John Cole’s place or at Glennzilla’s.

    3. Steve S.

      Gruber himself seems to me to be a secondary issue. What’s most disconcerting is the Obama Administration’s public representations of what their health care reform policies were vs. what they actually were evolving into. Contracting with Gruber is at the very least suggestive that some of their stated campaign positions were about to be thrown overboard, and I think we should hold our public servants to be fully transparent on that sort of thing.

  5. DownSouth

    ► The Greenwald-Krugman imbroglio

    • 1) The good news is that these people like Obama and his minions, who believe the public is putty in their hands, typically fall on their own sword. Hannah Arendt put it beautifully in the chapter “Lying in Politics” in her book Crises of the Republic:

    The only limitation to what the public-relations man does comes when he discovers that the same people who perhaps can be “manipulated” to buy a certain kind of soap cannot be manipulated—though, of course, they can be forced by terror—to “buy” opinions and political views.

    Arendt wrote that 40 years ago, and there’s lots of new research on this, such as this:

    According to the “social brain” theory, the evolution of human brain size and intelligence during Pleistocene was largely driven by selective forces arising from intense competition between individuals for increased social and reproductive success (Alexander 1990, Byrne and Whiten 1988, Dunbar and Shultz 2007, Gavrilets and Vose 2006). One can view language as a tool that originally emerged for simplifying the formation and improving the efficiency of coalitions and alliances.

    Thus, humans may have pretty good bullshsit detectors.

    But isn’t the proof in the pudding? From the latest Gallup poll:

    Do you approve or disapprove of the way Barak Obama is handling healthcare?

    August 2009:

    January 2010:

    The bad news is that guys like Obama and Bush can do a tremendous amount of damage before the public catches onto their perfidy.

    • 2) In his rebuttal to Greenwald Krugman made one statement that goes to the heart of how clueless he is:

    That is, he (Gruber) was hired as an economist, paid to provide technical analysis — not as a pundit, paid to promote policies to the public. Maybe Glenn Greenwald can’t see any difference between the two — and the more of this I read, the more sense I have that the attackers are deliberately obfuscating the difference — but they really aren’t the same.

    I suppose that Krugman, as an economist, feels compelled to defend his profession. But surely he must realize that orthodox economists, both those of the classical and neoclassical faiths, have spent over two centuries arguing that morality doesn’t matter, that humans are rational, P1 maximizers driven purely by self-interest.

    Neurobiology has now evolved to the point to where its practitioners are starting to poke holes in this rather simplistic formulation of human nature. In reading Moral Sentiments and Material Interests by Herbert Gintis et al, what their experiments have found is that there is a certain element of the population that can be classified as being totally driven by self-interest. “Self-regarding” is how they define these individuals, and their experiments show about 20 to 25% of the population typically falls into this category.

    But 75-80% of their subjects are not self-regarding. Instead, they are either “benevolent” or they are “strong reciprocators.” As they explain: “Strong reciprocity is a predisposition to cooperate with others, and to punish (at personal cost, if necessary) those who violate the norms of cooperation, even when it is implausible to expect that these costs will be recovered at a later date.”

    But here’s where it really starts to get interesting. For the defenders of orthodox economics, and their New Atheist allies in the fields of psychology and biology, don’t challenge these findings. Instead, they argue that those 75-80% who aren’t self-regarding should be self-regarding:

    Moreover, the alternative (put forth by orthodox economists and the New Atheists allies) suggests that agents can use their intellect to “learn” to behave selfishly when confronted with the results of their suboptimal behavior.

    There is evidence that there may be some truth to this claim:

    An empirical study of the educational effects of neoclassical teachings might well show that the students become somewhat more self-oriented and pleasure-seeking than they were before they were so exposed, just as they become more rational in their purchase and investment decision. Such effects are evident in a series of free-ride experiments conducted by Marwell and Ames (1981). In eleven out of twelve experimental runs most participants did not free ride and contributed from 40 percent to 60 percent of their resources to a public good (the “group pot”). However, a group of economics graduate students contributed only an average of 20 percent. And while the other subjects were motivated by a strong sense of fairness, and a near unanimous definition of what it is, economics students refused to define the term, or gave very complex answers, and those who did respond stated that making little or no contribution was fair.
    –Amitai Etzioni, The Moral Dimension

    Imagine the layer upon layer of irony involved in some orthodox economist being touted as someone we should look to for moral guidance.

    1. Toby

      Wonderful stuff DownSouth. Truly we are a fascinating, malleable, easily led species, capable of a level of group-think so profound it takes an atomic explosion to wake us from ourr received wisdoms and ideologies.


    2. Anonymous Jones

      Agreed that this is another in the long line of wonderful and insightful comments by DownSouth. One quibble is that I do not equate having “non-self-regarding instincts” with having “morals.”

      Morality, its existence, and any normative judgments made about one’s morality are subjects way too big for my comment (or my intellectual capacity!), but I do want to point one thing out…

      Yes, human instincts are not always what economists would regard as solely in the actor’s short-term self interest. But showing this is not the same thing as proving that these instincts are more or less moral than the other instincts. They are just instincts. You may prefer them. I probably do too. But are they better or worse from a universal perspective? I don’t know. They may in fact be somehow “morally superior,” but that has to be proven rather than assumed.

      I don’t mean to bog this wonderful idea down with a useless philosophical debate. I would definitely prefer to live in a world in which we encouraged people to be strong reciprocators and mostly benevolent. I’d love to see ideas on how to put policies in place that would make that happen.

      1. DownSouth

        Anonymous Jones,

        You are correct about there being no moral absolutes, but the Classical Economists/New Atheists theories are flawed based on their own definition of “morality,” which is two pronged: 1) Maximize production, and 2) Survival of the fittest.

        1) Maximize production. As Reinhold Niebuhr points out:

        Practically every moral theory, whether utilitarian or intuitional, insists on the goodness of benevolence, justice, kindness and unselfishness. Even when economic self-seeking is approved, as in the political morality of Adam Smith, the criterion of judgment is the good of the whole.
        –Reinhold Niebuhr, Moral Man & Immoral Society

        Smith argued that “the private interests and passions of men” are the “most agreeable to the interest of the whole society.” As Robert Heilbroner observes, according to Smith:

        [S]elf-interest acts as a driving power to guide men to whatever work society is willing to pay for. “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner,” says Smith, “but from their regard to their self-interest. We address ourselves, not to their humanity, but to their self-love, and never talk to them of our necessities, but of their advantages.”
        –Robert Heilbroner, The Worldly Philosophers

        The dissident theory is that in groups where cooperation and cohesion is high, production is high. Overly selfish behavior, especially is it goes unpunished, destroys cooperation and cohesion, and thus decreases production of the group.

        2) Survival of the fittest. While selfish behavior may indeed enhance the survival chances of a particular individual over other individuals within his same group, the dissident theory holds that the survival chances of the entire group are diminished by selfish behavior. It destroys group cooperation, cohesion and morale. What good does it do to have greater survival chances than your neighbor if your entire tribe gets wiped out because of infighting and bickering, or just because it lacks the morale to compete?

      2. Toby

        Hi Anonymous Jones,

        I feel there is much still unexplained in the word “instinct.” It seems to say much when we use it, but how exaclty does instinct work? This reminds me of the way people think of human nature as being genetic, as if saying “genetic” in that context actually means something definite. But what are the precise ways in which genetic activity becomes settled human behaviour? Where does gene end and environment begin? What is instinct made of? What would a human be like if kept alive in a dark box from birth to age ten with zero contact with anything of the world beyond the box? What would happen to its instincts, its ambition, greed, selfishness, morality?

        Things derive meaning and function from their relationships with other things. To seek the truth of the universe in the smallest particle, be it genetic or subatomic, to seek to understand humans in isolation, in some pure market or other perfect realm, is to miss out on the most important processes.

      3. DownSouth

        Anonymous Jones,

        What this whole thing shows is that the “New Atheists” really aren’t atheists at all, and the classical and neoclassical economists really aren’t scientists at all. What they are are people pushing an ideological agenda that has little to do with atheism or science.

        With the advent of the Renaissance, and even more so with the Enlightenment, truth was not to be found in divine revelation, but in nature, science being the method of revealing nature. Morality was not to be found in God’s law or commandments but in nature, in natural law and natural rights.

        As Stephen Nadler explains, the quintessential scientific and atheistic principles were articulated by Baruch Spinoza, and he sets out those beliefs as following:

        Spinoza’s God has none of the requisite psychological and moral characteristics required for the exercise of providence. Above all Spinoza’s God is numerically identical with nature. God is nature. Therefore God has no will, intentions or plans. God is not wise, just, good or providential in any sense whatsoever. There is no supernatural. The only thing that is is nature. And God is identical with this nature. And whatever happens in the universe, happens necessarily simply as a result of the laws and processes of nature. Spinoza in other words complete rejects the personal anthropomorphic conception of God that grounds traditional sectarian religions, which Spinoza regards simply as organized superstition….

        My claim is that Spinoza is truly an atheist in the following sense. If there is any difference between a pantheist and an atheist, it’s not going to be in the ontology if they both agree that all there is is nature. So the differences are going to have to lie in the proper psychological attitude to take towards nature. And as far as I can tell, what the pantheists must mean when they claim that God is nature or God is in nature, is that nature is therefore deserving of worshipful awe, a kind of religious attitude, perhaps even fear or dread. And nature might be the object of religious experience. And nothing, there is no room whatsoever in Spinoza’s philosophy for worshipful awe or any type of reverential attitude towards nature. The proper attitude to take towards nature is scientific understanding, a deep investigation of its secrets, the laws that operate and why things come about with the necessity that they do. To stand in front of nature with an attitude of worshipful awe for Spinoza, he likens that to gaping at it like a fool. And that is simply the path to the irrational passions of hope and fear. The minute you stand in front of nature with worshipful awe, you start to be overcome, you’re overcome by perhaps fear of what might happen or hope for what might come, and these for Spinoza are harmful passions. And the way to diminish the force of these passions in our lives and achieve some modicum of wellbeing and tranquility and peace of mind is through intellectual understanding, not through the passions. So Spinoza is not a pantheist, he is an atheist. There’s no room whatsoever for any religious attitude in the face of God or nature.

        There’s also nothing whatsoever that is moral about God or nature. Because Spinoza’s God lacks the proper psychological characteristics, God can make no commands or judgments upon us. There’s no way in which God can literally issue commands to act or proscriptions against acting in any way whatsoever.

        There’s more, but I think you get the idea. The New Atheists and classical/neoclassical economists, when they discover that nature doesn’t conform to their beliefs, then shift their morality from being justified by what is to being justified by what ought to be. They’ve gone from being atheists and scientists to being preachers.

      4. DownSouth

        And what they preach is selfishness and greed, and it matters little that it can be observed or demonstrated that selfishness and greed can ultimately be self-destructive behaviors. So their ideology defies reason.

        So they embrace neither nature nor reason, and operate completely outside any moral code which reason or nature would oblige.

  6. Richard


    Nowhere did Glen Greenwald say Gruber was hack (i.e. a paid shill), or that his analysis was wrong. He is criticizing Gruber for not disclosing his relationship with the HHS and White House when appearing as an ‘objective analyst.’ That’s it.

  7. Ronald

    Franklin Roosevelt was an experienced politician who understood what was necessary unlike Obama who is learning on the job.

  8. wawawa

    I am speechless.

    This is HR 4173, The Wall Street Reform and Consumer Protection Act of 2009. (Italic is my hi-light)

    “(1) IN GENERAL.—In unusual and exigent circumstances, the Board of Governors of the FederalReserve System, upon the written determination, pursuant to section 1109 of the Financial Stability
    Improvement Act of 2009, of the Financial Stability with BILLS Oversight Council, that a liquidity event exists that could destabilize the financial system (which determination shall be made upon a vote of not less than two-thirds of the members of such Council then serving), and with the written consent of the Secretary of the Treasury (after certification by the President that an emergency exists), may authorize any Federal reserve bank, during such periods as the Board may determine and at rates established in accordance with the provision designated as (d) of section 14, to discount for an individual, partnership, or
    corporation, notes, drafts, and bills of exchange when such notes, drafts, and bills of exchange are indorsed or otherwise secured to the satisfaction of the Federal reserve bank and in conformance with regulations or guidelines issued by the Board of Governors regarding the quality of notes, drafts, and bills of exchange available for discount and of the security for those notes, drafts and bills of exchange, unless a joint resolution (as defined in paragraph (5)) is adopted. Upon making any determination under this paragraph, with the consent of the Secretary of the Treasury, the Financial Stability Oversight Council shall promptly submit a notice of such determination to the Congress. The amounts made available under this subsection shall not exceed $4,000,000,000,000.”

    Basically this bill allows future $4 Trillion backstop to WallStreet casino.

  9. Roger Bigod

    My impression was that Krugman put much more effort into sliming Marcy Wheeler than defending Gruber. It looked like he has a little list and Marcy and FDL are on it.

    Her correct statements about Gruber were his pretext, like Reid’s accurate statements about Obama’s racial indicia, which Michael Steele used as an opportunity to go on the attack. Krugman comes across as an even bigger clownboi than Steele.

    The background here is that for years medical journals published papers by physicians whose clinical studies were funded by drug companies, without disclosure of the conflict of interest. It was a totally rotten situation. After some do-gooder agitation, the journals, in particular the high-prestige NEJM, put their foot down and take disclosure seriously. Gruber made a disclosure about a NEJM paper, so he’s well aware of the policy.

  10. Freethinker

    Re: Krugman’s response to Glenn Greenwald’s critique:

    Krugman tells us that, per Gruber, Gruber was contracted: “with HHS for technical modeling assistance.”

    OK, and where is a copy of that contract? Was HHS directly paying for his “modeling assistance?” Why was this “modeling assistance” valued at $220,000?

    If CBO has insufficient resources to provide modeling data to policy makers, why was Gruber’s contract with HHS and not CBO? Might there be potential ethical and factual problems arising from the Legislative arm reliant on “modeling” provided by a consultant who was paid by the Executive Branch? And who was the supplier of data for Gruber’s modeling? Which consultant independently verified Gruber’s data and Gruber’s analysis? Was Gruber the only well-established health care modeler (real authority / obvious person to fill the modeler role) contacted to provide this consulting? Were there other modelers selected for this monumentally important endeavor by the current Administration? If not, why not?

    When a consultant who has been contracted out at a high fee by the Executive Branch to provide only technical services also opts to “voluntarily” and frequently indulge in voicing defense and support of Executive Branch policies, does not such consultant display a conflict of interest?

    If politicians promote the mass media airing of the long-standing opinions about health reform from this important technical consultant (particularly when mass media is simultaneously deficient in airing perspectives of other health reform experts and public debates), is this a fake or real scandal? Is propaganda for personal and political profit scandalous or not?

    If disclosure of potential political conflicts of interests is a good idea, is non-disclosure not then scandalous/objectionable/immoral?

    The crusade to defend the current political and economic status quo is really destructive. Krugman appears to be continuing his loyality to this crusade.

  11. IF

    Right testicle of hell: German media ran an article describing how the US military is actively preventing the use of the airport for use by first responders (which have to be diverted to Santo Domingo and take the land route). Bidens brief visit alone closed the airspace for 3 hours to anybody else. The US clearly are behaving as if it is their New Orleans.

  12. Cynthia

    I’ve known for quite some time, as many of us have, that pigging out on fossil fuels will eventually leave us energy-less. But it never occurred to me that the same thing will happen to us if we were to pig out on renewable fuels. Then again, I had no idea that so many rare earths and relatively rare metals go into the manufacturing of hybrid cars, wind turbines and solar panels, as they do digital and wireless equipment. And not only did I not know that these gems from the Earth’s upper crust are fast becoming scarce, but I also didn’t know that enormous amounts of energy are required to extract them from rock, making them not so green after all.

    And since China controls about 95% of the global supply of rare earths and is making plans to block all exports of these metals, whatever trace of supply and demand there was in the rare-earth market has gone out the window, putting our high-tech and alternative energy industries at the mercy of the Chinese. So from this I predict that China will face a robot-controlled dystopia, while a Mad Max World is in the cards for us.

    1. attempter

      Yup. One of the basic concepts of Peak Oil is that any significant conversion to a renewable energy infrastructure (i.e. one which uses energy in amounts even remotely approaching the fossil fuel economy) can only be done on a foundation of cheap plentiful oil and a generally sound economy. (And it was always doubtful whether there could ever be a system where renewables produce sufficient energy to sustain themselves at a large scale without the fossil fuel subsidy.)

      So much for that. It was never likely to be politically possible even under far more favorable economic circumstances than those which will prevail from here on.

  13. dearieme

    “a physicist is not qualified to comment on climate research.” Oh, Yves, most climate research is just a little corner of physics, though pursued by duds who evince a striking lack of propriety.

  14. MichaelC

    I came a across an awful story that’s timely now as a rebuttal to the ‘sophisticated investor’ sophistry of Lloyd B and others.

    At least 500million of synthetic CDOs were sold to Asian retail investors in the form of Lehman Minibonds, DBS High Notes, ML JUbilee Notes and MS Pinnacle notes. They weren’t available for sale in the US, which in retrospect should have been a clue to them, but .. They lost their shirts.

    When Lehman fell, there was widespead horror in Asia when it became apparent that these notes were really insurance on CDOs and not notes guaranteed by Lehman, et al, which had been the general assumption.

    If these investors were some of the “sophisticated” investors demanding to write insurance on subprime CDOs that GS and others needed to satisfy, who were the others?

    Till now this has been an Asia story, I think, and noone in the US has connected the dots between the longs on these bonds and the shorts. So far we’ve become aware of the shorts, thanks in large part to efforts here.

    Now’s the time to ask: If GS and others were short this stuff, who was buying it? Who are the sophisticated investors who ended up on the other side of these deals?
    If I hear that the sophisticated buyers were the SPEs that issued notes to other investors (which is what I expect to hear), then we need to move on and ask who the investors in the SPEs are, until we get to the actual buyers of this drek. I expect they’re less sophisticated than we’ve been led to believe.

    Here are some useful links:

    The comments are pretty heartbreaking, and they’re worth a read to remind us of the human dimension to this looting.

  15. S Brennan

    A good subject by Jesse, something I addressed last month

    S Brennan 7 Dec 2009,

    According to many an Obama revisionist FDR was forced to act by near Revolution, Obama has a totally different situation, because people are not angry and therefore he can not take any action other than uphold the policies of Bush with the tiniest of changes.

    I say bullshit, the difference is that FDR rallied the populace to action, whereas Obama at a year in says he’ll “study the problem in a series of seminars”.

    Contrast that with; Day One: FDR calls for action….

    “…the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance….This Nation asks for action, and action now…Our greatest primary task is to put people to work. This is no unsolvable problem if we face it wisely and courageously. It can be accomplished in part by direct recruiting by the Government itself, treating the task as we would treat the emergency of a war…

    There are many ways in which it can be helped, but it can never be helped merely by talking about it….

    We must act and act quickly…in our progress toward a resumption of work we require two safeguards AGAINST A RETURN OF THE EVILS OF THE OLD ORDER there must be a strict supervision of all banking and credits and investments; there must be an end to speculation with other people’s money..There are the lines of attack. I shall presently urge upon a new Congress in special session detailed measures for their fulfillment…we now realize as we have never realized before our interdependence on each other; that we can not merely take but we must give as well; that if we are to go forward, we must move as a trained and loyal army willing to sacrifice for the good of a common discipline, because without such discipline no progress is made, no leadership becomes effective.

    [and this is important for the Obama (his hands are tied) crowd]:

    “But in the event that the Congress shall fail …I shall not evade the clear course of duty that will then confront me. I shall ask the Congress for the one remaining instrument to meet the crisis—broad Executive power to wage a war against the emergency, as great as the power that would be given to me if we were in fact invaded by a foreign foe.”

    In this speech he calls the people to support him, to stop running away in shame and disgrace, he tells the Republicans left in congress and the Supreme court, work with me or face the US Army, not a revolution, but rather he plans to lead a revolt to “provide for the general welfare”…as is his duty by oath!

    [Les/Lex, you’re just repeating talking points you have heard others put out for you to repeat, while I despise your manipulators, I bear you no ill will unless you coconsciously working as a minion.]

    We should not allow one our greatest leaders to be compared to the current Bush/Obama administration.

    FDR did not fear revolution, he may have feared coup*, but he was undeterred by his fears.

  16. Pete

    Krugman is right:

    “Yes, Gruber has been commenting on health care while doing technical consulting for the administration. But there is nothing wrong with that. More disclosure would have been a good idea — but there is no scandal whatsoever.”

    Glenzilla and Wheeler who passed on the info from Daily Kos are trying to derail health care reform with a phony scandal. Why?

    So Gruber had different views before he got the contract? And then changed them to shill for the plan after getting the contract? No.

    1. Roger

      How misguided you are. Open your eyes. The issue, as has been spelled out a dozen different ways, here and by Greenwald, isn’t that Gruber may have changed his views! It’s the non-disclosure! And the FACT that Gruber has been held out as an “objective” voice on the health care modeling when he was receive massive payments from the administration. If Bush had been doing this exact same thing you would have screamed bloody murder. But it’s ok, I guess, if our side does it, because our hearts are in the right place. Right. That’s a dangerous and warped view for you to have.

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