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Category: Policy Page 9 of 35

Virginia Aims at Better ‘Burbs?

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On March 27, 2009

In Policy, Society

Like a blind squirrel finding a nut, Virginia adopts a smart policy with respect to future development:

Virginia is taking aim at one of the most enduring symbols of suburbia: the cul-de-sac.

The state has decided that all new subdivisions must have through streets linking them with neighboring subdivisions, schools and shopping areas. State officials say the new regulations will improve safety and accessibility and save money: No more single entrances and exits onto clogged secondary roads. Quicker responses by emergency vehicles. Lower road maintenance costs for governments.

Although cul-de-sacs will remain part of the suburban landscape for years to come, the Virginia regulations attack what the cul-de-sac has come to represent: quasi-private standalone developments around the country that are missing only a fence and a sign that says “Keep Out.”

Good move.  I hope this becomes a national standard.

British Gov’t Stupidity and Fearmongering

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On March 24, 2009

In Policy, Society, UK

Cory Doctorow points us to this new poster campaign by the London’s Metropolitan Police Service:

street_chemicals_cctv1

The text from that poster reads: “A bomb won’t go off here because weeks before a shopper reported someone studying the CCTV cameras.”  And there are others, including one that has a picture of a trashcan outside of a home, and reads: “These chemicals won’t be used in a bomb because a neighbor reported the dumped containers.”  Yes, folks, unless you report people that look up in public spaces and snoop in your neighbors garbage, the TERRORISTS WILL WIN.   Cory goes to town:

It’s hard to imagine a worse, more socially corrosive campaign. Telling people to rummage in one another’s trash and report on anything they don’t understand is a recipe for flooding the police with bad reports from ignorant people who end up bringing down anti-terror cops on their neighbors who keep tropical fish, paint in oils, are amateur chemists, or who just do something outside of the narrow experience of the least adventurous person on their street. Essentially, this redefines “suspicious” as anything outside of the direct experience of the most frightened, ignorant and foolish people in any neighborhood.

And I don’t think that’s exaggerating the baseline that this campaign is working to create.   Which brings us to the heart of it:

The British authorities are bent on driving fear into the hearts of Britons: fear of terrorists, immigrants, pedophiles, children, knives… And once people are afraid enough, they’ll write government a blank check to expand its authority without sense or limit.

This is one of the central reasons I think Labour deserves to lose the government.  But that is for another time.  Finally, Cory identifies one of the (many) things that makes this so disappointing:

What an embarrassment from the country whose level-headed response to the Blitz was “Keep Calm and Carry On” — how has that sensible motto been replaced with “When in trouble or in doubt/Run in circles scream and shout”?

Not only has the sun set, but we’re moving well into the night.

This is the Big Financial Plan?

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On March 21, 2009

In Policy, Politics, Society

So you’ve seen the leaked financial plan from Treasury?  Not good:

The Treasury Department is expected to unveil early next week its long-delayed plan to buy as much as $1 trillion in troubled mortgages and related assets from financial institutions, according to people close to the talks.

The plan is likely to offer generous subsidies, in the form of low-interest loans, to coax investors to form partnerships with the government to buy toxic assets from banks.

To help protect taxpayers, who would pay for the bulk of the purchases, the plan calls for auctioning assets to the highest bidders.

Look at that again.  To “protect” the taxpayer, they’re going to try to make sure that the highest possible price is paid for these assets.  But look at the paragraph before that for how that purchase price is actually paid – with generous subsidies (i.e., taxpayer money).  Clever, no?  No.  Paul Krugman:

To this end the plan proposes to create funds in which private investors put in a small amount of their own money, and in return get large, non-recourse loans from the taxpayer, with which to buy bad — I mean misunderstood — assets. This is supposed to lead to fair prices because the funds will engage in competitive bidding.

But it’s immediately obvious, if you think about it, that these funds will have skewed incentives. In effect, Treasury will be creating — deliberately! — the functional equivalent of Texas S&Ls in the 1980s: financial operations with very little capital but lots of government-guaranteed liabilities. For the private investors, this is an open invitation to play heads I win, tails the taxpayers lose. So sure, these investors will be ready to pay high prices for toxic waste. After all, the stuff might be worth something; and if it isn’t, that’s someone else’s problem.

Or to put it another way, Treasury has decided that what we have is nothing but a confidence problem, which it proposes to cure by creating massive moral hazard.

Krugman too shrill for you?  Let’s go to the folks at Calculated Risk:

With almost no skin in the game, these investors can pay a higher than market price for the toxic assets (since there is little downside risk). This amounts to a direct subsidy from the taxpayers to the banks.

And at Naked Capitalism:

So presumably, the point of a competitive process (assuming enough parties show up to produce that result at any particular auction) is to elicit a high enough price that it might reach the bank’s reserve, which would be the value on the bank’s books now.

And notice the utter dishonesty: a competitive bidding process will protect taxpayers. Huh? A competitive bidding process will elicit a higher price which is BAD for taxpayers!

Dear God, the Administration really thinks the public is full of idiots. But there are so many components to the program, and a lot of moving parts in each, they no doubt expect everyone’s eyes to glaze over.

Now watch the noise machine go into full crisis mode, telling us that ThisIsTheONLYWAY.

Must Read: Josh Marshall on Obama, Geithner & the Public Trust

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On March 19, 2009

In Policy, Politics, Society

Marshall writes:

What is so damaging about this isn’t the money — which is almost trivially small compared to the many hundreds of billions we’ve already committed. The problem is what appears to be the president’s mortifying impotence in the face of bankers and financiers who created the problem. The president speaks and acts for the federal government, which is to say, the American people, who have mobilized more than a trillion dollars and all powers of the state to repair the damage emerging out of the financial sector. And with all that, he’s jacked up on a employment agreement between a company the government now owns and derivatives traders who sank the world economy and may quite likely be looking at criminal charges for their activities in the not too distant future?

Anyone can look at that and see that the equation of power and accountability is all screwed up.

Quite.   And really, I hope you’ll click over and read the whole thing.  It nails the current state of affairs.  Here’s the end:

Whether Geithner and Summers are too close to the people on Wall Street, either through interest or affinity, is an interesting and possibly important question. But fundamentally Obama needs to start showing that he’s in charge, that he’s operating as the American people’s advocate and that he has the power to do it — which these stories of getting jacked up by some Gordon Gecko wannabes in London just terribly undermines. But to do that, to show that, it has to be true. And that might require some real changes in policy and possibly in personnel too.

Only Little People Pay Taxes

By

On March 19, 2009

In Policy, Politics

The hits keep on coming:

Just when you thought it was impossible to find more proof of the bungling of the bailout … Rep. John Lewis (D-GA), chairman of the House Ways and Means oversight subcommittee, announced this morning that his panel had found 13 of the top 23 recipients of TARP owing the government $220 million in back taxes.

Making matters worse was the fact that any company getting TARP aid had to certify to the Treasury Department that they didn’t owe back taxes before getting their share of the bailout, as Lewis explained. It appears that Treasury took the bailed-out businesses at their word rather than asking to actually see their tax records.

This was a foul-up under Bush/Paulson, but the Obama Administration needs to turn around and look at those posters that put them there.   They need to take that CHANGE a bit more seriously, or they’re going to take it on the chin.  To be clear, they’re not approaching the financial sector in any fundamentally different way than did the Bush and Clinton Administrations, so it would be unfair to say that they’re any worse than what came before.  But that’s not the measure they’ve set for themselves, nor is it one that anyone should be willing to let them skate on.

Another Pint, Gordon?

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On March 19, 2009

In EU, Policy, Politics, UK

I have so little good to say about the UK’s Labour Party these days that I might as well get in a compliment where I can.  Prime Minister Gordon Brown has, against all reasonable expectations, struck a blow for common sense and decency:

Gordon Brown today rejected controversial proposals from the chief medical officer to establish a minimum price for alcohol, which would double the price of many beers and spirits.

The prime minister said that he would protect the interests of the “sensible majority of moderate drinkers” when responding to proposals from Sir Liam Donaldson for a minimum charge of 50p per unit of alcohol to be imposed on beer and wine.

And Scotland, well, how do you like that devolution now?

The Scottish government is planning to introduce minimum prices for alcohol and these could come into force by the end of the year. It would make Scotland the first country in Europe to introduce minimum pricing, which would be accompanied by a ban on certain drinks promotions.

Cheers.

The Financial Clusterfsck: Exploiting the Knowledge Gap

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On March 17, 2009

In Policy, Society

I’ve been thinking a bit about the exchange that went down in the Time Bomb post over at TPM, where they reprinted a readers claim:

You’re missing the point on AIGFP’s bonuses. The reason the government has no bargaining power is that failure to pay the bonuses — which, like it or not, AIG is contractually obligated to pay — would constitute a “cross-default” under AIG’s derivative contracts. Cross-default is considered an “event of default” under the standard ISDA Master Agreement (see sec. (5)(a)(vi)), which means that failure to pay the bonuses would allow AIG’s counterparties to terminate the CDS contracts and demand a full payout from AIG. With a derivatives portfolio of over $1.5 trillion, this is no small deal. Venting over AIGFP’s bonuses is fine, but urging the government to take an action which would result in hundreds of billions in losses to AIG (and thus the taxpayer) just because it would make you feel better is bad policy. Don’t let cheap populism become expensive populism.

Uh, yeah.  A subsequent reader (and really, TPM has some very smart readers, who contribute much to the discussion*)

This is simply not true. The bonuses are owed to AIG’s employees, not its counterparties. AIG’s employees are not parties to its ISDA agreements.

Furthermore conditions such as the payment of bonuses are not anywhere near what a “cross default” is. A “cross-default” would be if AIG failed to satisfy its obligations to Counterparty A, then Counterparty B could claim it was in default even if technically it wasn’t.

The contractual obligations that AIG are under are employee contracts…not ISDAs.
There’s no doomsday scenario here. The worst that can happen to AIG is that its
employees could sue it to obtain their promised bonuses.

Now, I don’t work in finance, but the first commenter’s claim that non-payment of bonuses would, on its own, trigger some cross-default provision struck me as absurd on its face.  And so I went to the cited model agreement section itself and saw that yes, there was no such provision and that the original commenter was full of shit.  But how many people would do that? His/her email to TPM is just another example of someone willingly exploiting the gap in knowledge (between the larger public and his/her specialized industry) for that industry’s benefit.  And it was intentional, to be sure – anyone who can cite a provision of the model agreement understands that it’s not relevant, here.  It’s disgusting, yet I see this sort of shameless exploitation replayed over and over again, in mass media discussion of the issue.  It’s a not faint echo of the approach that got us here in the first place – a belief that you can ignore the facts if you show enough confidence in your pronouncements.  Appalling.

*Like here!

Thank You, Sir, May I Have Another?

By

On March 16, 2009

In Law, Policy, Politics

Josh Marshall’s analysis here gets at why the situation with AIG bonuses is appalling:

We’re collectively taking our country’s future in our hands, spending vast sums of money to keep these companies from suffering the consequences of their own folly and (in many cases) criminality. And in return we’re receiving cavalier dictates about pay-outs and bonuses from executives who by any reasonable measure work for us — dictates we promptly accede to. There’s a beggars can’t be choosers problem there. And the disconnect is so mighty that it fuels the impression that the whole enterprise is not what it seems, not what we’ve been told, that in addition to picking up the tab we’re being played for fools.

Obviously, AIG and its ilk can’t be shamed, and aren’t at all worried about public perception or pressure.  You know who should be more worried than they seem to be?  The Obama Administration.   Their willingness to eat the shit sandwiches AIG keeps feeding them is nauseating.

The (Geo)Politics of Food

By

On March 4, 2009

In Policy, Politics

A very interesting (and hopefully alarmist) overview of the state of food production across the world, from Der Spiegel:

[Environmental] trends are taking a significant toll on food production: In six of the last eight years world grain production has fallen short of consumption, forcing a steady drawdown in stocks. World carryover stocks of grain (the amount remaining from the previous harvest when the new harvest begins) have dropped to only 60 days of consumption, a near record low. Meanwhile, in 2008 world grain prices have climbed to the highest level ever.

[ . . . ]

Today we are witnessing the emergence of a dangerous politics of food scarcity, one in which individual countries act in their narrowly defined self-interest and subsequently accelerate the deterioration of global equilibrium. This began in 2007 when leading wheat-exporting countries such as Russia and Argentina limited or banned exports in an attempt to counter domestic food price rises. Vietnam, the world’s second-largest rice exporter after Thailand, banned exports for several months for the same reason. While these moves may reassure those living in exporting countries, they create panic in the scores of countries that import grain.

[ . . . ]

The current surge in world grain prices is trend-driven; some of these trends expand demand and others restrict growth in supply. On the demand side, these trends include world population growth of 70 million people a year, a growing number of people consuming more grain-intensive products, and the massive diversion of US grain to ethanol-fuel distilleries. During the last few years, the United States’s use of grain for ethanol has nearly doubled the annual growth in world grain consumption from 19 million metric tons to more than 36 million metric tons.

This isn’t theoretical.

Criminals at the CIA?

By

On March 2, 2009

In Law, Policy, Society

Well, of course there are.  Just ask ex Executive Director Dusty Foggo, soon to be settling down for a 37 month stint.  Plenty more there, though, if this is any indication:

New documents show the CIA destroyed nearly 100 tapes of terror interrogations, far more than has previously been acknowledged.

[ . . . ]

“The CIA can now identify the number of videotapes that were destroyed,” said the letter by Acting U.S. Attorney Lev Dassin. “Ninety two videotapes were destroyed.”

This isn’t something we ought just pass over.

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