Look here, here, here, here, here, and here. [Update: the hosting site has locked the page. You can get the general idea from Wonkette.] [Update 2: Here we go. Thanks TPM!] Steele is pulling it off at least as well as this guy:
(HT: Marc Ambinder)
Hip to be Square
Is it possible that Michael Steele is only being the RNC chair ironically?
Look here, here, here, here, here, and here. [Update: the hosting site has locked the page. You can get the general idea from Wonkette.] [Update 2: Here we go. Thanks TPM!] Steele is pulling it off at least as well as this guy:
(HT: Marc Ambinder)
Look here, here, here, here, here, and here. [Update: the hosting site has locked the page. You can get the general idea from Wonkette.] [Update 2: Here we go. Thanks TPM!] Steele is pulling it off at least as well as this guy:
(HT: Marc Ambinder)
From "Yes We Can" to "Eh."
Rolling Stone's Matt Taibbi has another must-read column out. Taibbi is perhaps best known to political circles for describing Goldman Sachs as "a vampire squid wrapped around the face of humanity, relentlessly jamming its blood-funnel into anything that smells like money."
The new article is about Obama's big sellout. In brief:
What Taibbi doesn't really get at is why Obama hired Wall Street insiders as advisors. Obama came up so quickly from the Illinois state legislature to the presidency that he didn't have much time to form the corrupt relationships with lobbyists that many national politicians have. I suspect Obama made a strategic decision soon after the election to spend absolutely everything in his political warchest on health care reform. He could have done financial reform first, but this would have taken months and a lot of political capital to do right. What's more, reform while the banks were still financially weak might have caused a lot more turmoil and short term damage. The resulting economic dislocation would have made health care reform impossible.
Obama chose instead to try to fulfill the Democratic party's long-time dream of universal health coverage. We'll see how that goes.
The new article is about Obama's big sellout. In brief:
What's taken place in the year since Obama won the presidency has turned out to be one of the most dramatic political about-faces in our history. Elected in the midst of a crushing economic crisis brought on by a decade of orgiastic deregulation and unchecked greed, Obama had a clear mandate to rein in Wall Street and remake the entire structure of the American economy. What he did instead was ship even his most marginally progressive campaign advisers off to various bureaucratic Siberias, while packing the key economic positions in his White House with the very people who caused the crisis in the first place. This new team of bubble-fattened ex-bankers and laissez-faire intellectuals then proceeded to sell us all out, instituting a massive, trickle-up bailout and systematically gutting regulatory reform from the inside.
What Taibbi doesn't really get at is why Obama hired Wall Street insiders as advisors. Obama came up so quickly from the Illinois state legislature to the presidency that he didn't have much time to form the corrupt relationships with lobbyists that many national politicians have. I suspect Obama made a strategic decision soon after the election to spend absolutely everything in his political warchest on health care reform. He could have done financial reform first, but this would have taken months and a lot of political capital to do right. What's more, reform while the banks were still financially weak might have caused a lot more turmoil and short term damage. The resulting economic dislocation would have made health care reform impossible.
Obama chose instead to try to fulfill the Democratic party's long-time dream of universal health coverage. We'll see how that goes.
Inflating away the debt
The Wall Street Journal ponders whether the US will deal with its debt via intentional hyperinflation. This is just one of many pieces coming from the Right about the horrible, terrible consequences of "Obamanomics" and the "porkulus bill."
On its face it makes sense, right? If we print more money, inflation will happen. But of course it's a question of degree, and inflation/deflation will always depend on what happens in the rest of the economy, not just the government's fiscal policy. I would like for any new Chicken Little article to address the following questions:
1. If inflation is so likely, why is the 30-year Treasury rate at just 4.5%, near its historic lows? If inflation were going to occur at a fairly mild 5% annually, why would the hyper-sophisticated trillion-dollar bond market lock in 30-year loans for less than that?
2. The US' debt-to-GDP ratio is roughly 50%. Many conservatives are concerned it might rise to 100% in 10 years. Yet Japan's ratio is 250%, yet the Yen has continued to strengthen and Japan has struggled with deflation, not inflation. Why has Japan not suffered any consequences for its huge debtload?
(HT The Daily Chuck)
On its face it makes sense, right? If we print more money, inflation will happen. But of course it's a question of degree, and inflation/deflation will always depend on what happens in the rest of the economy, not just the government's fiscal policy. I would like for any new Chicken Little article to address the following questions:
1. If inflation is so likely, why is the 30-year Treasury rate at just 4.5%, near its historic lows? If inflation were going to occur at a fairly mild 5% annually, why would the hyper-sophisticated trillion-dollar bond market lock in 30-year loans for less than that?
2. The US' debt-to-GDP ratio is roughly 50%. Many conservatives are concerned it might rise to 100% in 10 years. Yet Japan's ratio is 250%, yet the Yen has continued to strengthen and Japan has struggled with deflation, not inflation. Why has Japan not suffered any consequences for its huge debtload?
(HT The Daily Chuck)
Volcker?
"Who is a clear alternative to Bernanke? Hubbard? Taylor? Svensson?"
Paul Volcker. In retrospect, he's the best chairman the Fed ever had. In the early 1980's, he raised interest rates to historic highs to kill off inflation that had been growing for more than a decade. This was incredibly unpopular in the short term -- mortgage rates went to 25% and unemployment rose 5% -- but it ended the stagflation of the 1970's and set the stage for 25 years of strong economic growth.
Consequently, Volcker has credibility that no one else has. Like Nixon going to China, if Volcker thinks it's prudent to keep rates at 0% and continue quantitative easing, no one will argue with him.
The only knock against him is that he's old -- 82. But it's not like he's been sitting in a rocking chair for the past 10 years. He's continued to be active at the highest levels in international finance and politics. Conservatives will like him because of his record of taming inflation in the early 80s. Liberals like him because he endorsed Obama in 2008 and heads the president's Economic Recovery Advisory Board.
Today, Volcker has strategically raised his political profile by giving an aggressive speech to bankers and regulators. Key lines: "I wish someone would give me one shred of neutral evidence that financial innovation has led to economic growth — one shred of evidence." The "single most important" contribution of banking in the last 25 years was the ATM.
This is commonsense, popular stuff, which no one else, not Obama, not the Republicans, seems to take seriously. If I were Paul Volcker, and I saw Bernanke getting in trouble and wanted to take the chairmanship again, this is exactly the approach I would take.
Paul Volcker. In retrospect, he's the best chairman the Fed ever had. In the early 1980's, he raised interest rates to historic highs to kill off inflation that had been growing for more than a decade. This was incredibly unpopular in the short term -- mortgage rates went to 25% and unemployment rose 5% -- but it ended the stagflation of the 1970's and set the stage for 25 years of strong economic growth.
Consequently, Volcker has credibility that no one else has. Like Nixon going to China, if Volcker thinks it's prudent to keep rates at 0% and continue quantitative easing, no one will argue with him.
The only knock against him is that he's old -- 82. But it's not like he's been sitting in a rocking chair for the past 10 years. He's continued to be active at the highest levels in international finance and politics. Conservatives will like him because of his record of taming inflation in the early 80s. Liberals like him because he endorsed Obama in 2008 and heads the president's Economic Recovery Advisory Board.
Today, Volcker has strategically raised his political profile by giving an aggressive speech to bankers and regulators. Key lines: "I wish someone would give me one shred of neutral evidence that financial innovation has led to economic growth — one shred of evidence." The "single most important" contribution of banking in the last 25 years was the ATM.
Mr Volcker argued that banks did have a vital role to play as holders of deposits and providers of credit. This importance meant it was correct that they should be "regulated on one side and protected on the other". He said riskier financial activities should be limited to hedge funds to whom society could say: "If you fail, fail. I'm not going to help you. Your stock is gone, creditors are at risk, but no one else is affected."
This is commonsense, popular stuff, which no one else, not Obama, not the Republicans, seems to take seriously. If I were Paul Volcker, and I saw Bernanke getting in trouble and wanted to take the chairmanship again, this is exactly the approach I would take.
Bernanke as unpopular as Bush
A new survey asks Americans whether they have a favorable or unfavorable impression of Ben Bernanke. The results are horrible.
40% Don't Know
3% Strongly Favorable
18% Somewhat Favorable
23% Somewhat Unfavorable
15% Strongly Unfavorable
That's only marginally better than George W Bush at the end of his term. What's more, only 21% believe Bernanke should get a second term, while 40% believe the president should nominate someone else.
Why is this guy's confirmation a foregone conclusion?
(via The Big Picture)
40% Don't Know
3% Strongly Favorable
18% Somewhat Favorable
23% Somewhat Unfavorable
15% Strongly Unfavorable
That's only marginally better than George W Bush at the end of his term. What's more, only 21% believe Bernanke should get a second term, while 40% believe the president should nominate someone else.
Why is this guy's confirmation a foregone conclusion?
(via The Big Picture)
Republican Strategery: Block Bernanke
I'm not sure that Bernanke's confirmation for a second term as Fed chairman is a foregone conclusion like everyone else seems to think.
In my opinion, Bernanke has done a pretty good job. He was slow to realize a crisis was coming, but once he realized the severity, he got us through without a systemic collapse. To do that he had to shovel money out the door, and I'm sure he made a bunch of mistakes in the heat of the moment. He hasn't been particularly eager to reform the system to prevent this happening again. But overall, he was handed a timebomb by Greenspan, and used the tools he had to contain the damage.
That said, it would make tremendously good politics for the Republicans to oppose him. Bernanke is one of the few political/financial figures who has been in place for the entirety of the crisis. He can fairly be blamed for a lot of the decisions, and he helped to create the overall Massive Bailout strategy. As such, he is perhaps the best embodiment of the government's economic policy over the last 3 years, which is hugely, incredibly, awfully unpopular.
The Republican modus operandi over the past year has been to oppose, protest, reject, whether it's a stimulus bill, health care, or a war strategy in Afghanistan. I can't imagine a political issue where the ground is more favorable than opposing Bernanke.
What's more, they would have a decent chance of success. Bernie Sanders, a Socialist Vermont senator who caucuses with the Democrats, opposes Bernanke as well, and has put a hold on his nomination. This means Harry Reid will need 60 votes for confirmation. I think Reid will have a hard time rounding up the rest of the Democrats, let along getting Olympia Snowe or Susan Collins or George Voinovich to switch sides. Say what you want about the Republicans' philosophy, but their caucus discipline has been superb. And mounting a confirmation fight now would force Obama to spend political capital on Bernanke, rather than on health care.
Who would replace Bernanke? For the GOP, it doesn't matter -- whoever Obama comes up with, they can attack him or her just as viciously.
In my opinion, Bernanke has done a pretty good job. He was slow to realize a crisis was coming, but once he realized the severity, he got us through without a systemic collapse. To do that he had to shovel money out the door, and I'm sure he made a bunch of mistakes in the heat of the moment. He hasn't been particularly eager to reform the system to prevent this happening again. But overall, he was handed a timebomb by Greenspan, and used the tools he had to contain the damage.
That said, it would make tremendously good politics for the Republicans to oppose him. Bernanke is one of the few political/financial figures who has been in place for the entirety of the crisis. He can fairly be blamed for a lot of the decisions, and he helped to create the overall Massive Bailout strategy. As such, he is perhaps the best embodiment of the government's economic policy over the last 3 years, which is hugely, incredibly, awfully unpopular.
The Republican modus operandi over the past year has been to oppose, protest, reject, whether it's a stimulus bill, health care, or a war strategy in Afghanistan. I can't imagine a political issue where the ground is more favorable than opposing Bernanke.
What's more, they would have a decent chance of success. Bernie Sanders, a Socialist Vermont senator who caucuses with the Democrats, opposes Bernanke as well, and has put a hold on his nomination. This means Harry Reid will need 60 votes for confirmation. I think Reid will have a hard time rounding up the rest of the Democrats, let along getting Olympia Snowe or Susan Collins or George Voinovich to switch sides. Say what you want about the Republicans' philosophy, but their caucus discipline has been superb. And mounting a confirmation fight now would force Obama to spend political capital on Bernanke, rather than on health care.
Who would replace Bernanke? For the GOP, it doesn't matter -- whoever Obama comes up with, they can attack him or her just as viciously.
UIGEA and the prospects for US internet gambling
A couple pieces of news on the internet-gambling front. Implementation of the Unlawful Internet Gambling Enforcement Act (UIGEA), which kind-of sort-of makes online gambling illegal in the US, was delayed for another 6 months. The main section of UIGEA directs the Treasury Department to draw up regulations which restrict banks from processing deposits and withdrawals to and from offshore gambling sites. The banks hate this, because they don't want to be made into enforcement agents. In effect, UIGEA would force the banks to scan every transaction to see if it were gambling-related, with civil penalties if they failed.
UIGEA was passed in 2006, with the intention that the regulations be put in place by December of that year. Obviously that hasn't happened, and won't until 2010 at the earliest. UIGEA's main consequence was to give George Bush's Department of Justice moral support to pursue the owners and managers of offshore casinos and sportsbooks. Several prominent owners were arrested at US airports as they switched planes en route between two non-US countries. Neteller, the pre-eminent gambling money-transfer site, stopped accepting US business, and froze the assets of US customers for several months. Pinnaclesports, the most highly regarded sportsbook, closed its doors to US customers. PartyPoker, then the biggest poker site, also refused US business. The net effect has been to drive US customers to shadier sites with higher fees.
Barney Frank (D-MA), the chairman of the House Financial Services Committee, has been a vocal critic of UIGEA. In May of this year, he introduced legislation to repeal UIGEA and legalize and regulate internet gambling in the US. The bill hasn't moved since then, but tomorrow, December 4th, Frank will hold committee hearings. Those who wish can watch them live here. I don't expect many fireworks.
The next step in passage would be committee markup, which may be scheduled for the next week or two. It's an open question whether this bill will pass before the 2010 elections. Intrade's contract on it, UIGEA.AMENDED.DEC10, has flat for quite some time. I just put out a bid at 30 if anyone's interested.
UIGEA was passed in 2006, with the intention that the regulations be put in place by December of that year. Obviously that hasn't happened, and won't until 2010 at the earliest. UIGEA's main consequence was to give George Bush's Department of Justice moral support to pursue the owners and managers of offshore casinos and sportsbooks. Several prominent owners were arrested at US airports as they switched planes en route between two non-US countries. Neteller, the pre-eminent gambling money-transfer site, stopped accepting US business, and froze the assets of US customers for several months. Pinnaclesports, the most highly regarded sportsbook, closed its doors to US customers. PartyPoker, then the biggest poker site, also refused US business. The net effect has been to drive US customers to shadier sites with higher fees.
Barney Frank (D-MA), the chairman of the House Financial Services Committee, has been a vocal critic of UIGEA. In May of this year, he introduced legislation to repeal UIGEA and legalize and regulate internet gambling in the US. The bill hasn't moved since then, but tomorrow, December 4th, Frank will hold committee hearings. Those who wish can watch them live here. I don't expect many fireworks.
The next step in passage would be committee markup, which may be scheduled for the next week or two. It's an open question whether this bill will pass before the 2010 elections. Intrade's contract on it, UIGEA.AMENDED.DEC10, has flat for quite some time. I just put out a bid at 30 if anyone's interested.