Watching Life from the Periphery: Russell Brand's Booky Wook

Lately I've been quite fascinated with British comedian Russell Brand. I first became aware of him from an appearance on a late-night show, and since then he's been on my radar screen. I recently saw his performance in Forgetting Sarah Marshall and just finished reading his Booky Wook, a "memoir of sex, drugs, and stand-up."

He's not a very cuddly or tender man. His memoir is mostly a story about his nearly career-destroying descent into heroine and sex addiction, followed by his successful rehabilitation as a stand-up comedian and actor. Along the way he wises up to his detachment from his own life and the "amoral dream of commodified sex." Though he doesn't talk much about death, Brand is clearly driven by the sense of the fleeting and fragile span of life that we're given on earth, and yearns to connect with others who feel the same. More than once he recollects with happiness those rare moments when he found "one of those rare women who recognized that life is finite and saw orgasms as a wonderful distraction."

In his life, aside from his insatiable fancy "to have sex with adult human females," one thing remains the same: his relentless ambition to become famous. From the start he knew that comedy would be his ticket - his "cursed talent." It was the only way he could relate to others and cope with his sense of always being an outsider, watching life from the periphery, and only really living it on the stage. It also makes him tolerable and charming.

I like him because he has a poet's appreciation and ear for language—"you are in for a giddy, wild ride through language," he says of his book—combined with a preference for the grandiloquent and even grotesque phrase or gesture or act over the customary, conventional, and cliched. Like all comedians who get their material by watching life from the periphery, Brand also makes some prescient observations about humans. Like their tendency to change their mind about what they want to do that evening: "People do this a lot. They don't seem to realize that the future is just like now, but in a little while, so they say they're going to do things in anticipation of some kind of seismic shift in their worldview that never actually materializes. But everything's not going to be made of leather, the world won't stink of sherbet. Tomorrow is not some mythical kingdom where you'll grow butterfly wings and be able to talk to the animals—you'll basically feel pretty much the same way you do at the moment."

As a connoisseur of sex, he knows what's sexy: "She was sexy, in a lap-dancer sort of way, which many might think, incidentally, is the best way to be sexy; other ways include: sexy like a teacher, sexy like a police-woman, a mate's sister, a biblical character, Cher, Eva Braun, a Brontë sister, a babysitter, Madonna, or The Madonna."

Brand is a cocky, confident, cheeky man. I can't wait for his next book(y wook).

Cap and Trade= Carbon Tax + Corporate Welfare part 1 million and five

I have previously stated my preference for a carbon tax over a cap and trade regimen. What I see as the weakness of a Cap and Trade program proponents see as its strength: its opaque nature. It is true that a cap and trade, were the emissions permits to be auctioned off, would simulate a carbon tax. All well and good. But the reason most cap and trade advocates prefer a cap and trade is not because it simulates a carbon tax, but that it does so and reformers can avoid saying the word tax. But as its opacity is a double edged sword, it is also much more susceptible to rent seeking as is evidenced in the form of the proposed Waxmen-Markey bill whereby 85% of the emissions permits would be allocated as opposed to auctioned off. I can imagine how rigorous the allocation methodology will be: 1. Do you pollute extensively? Check; 2. Are you headquartered in or provide service extensively in a key congressional district? Check; 3. Have you donated to my (insert namer or party) campaign? Check; 4. Here is a free emissions permit which you can now use to defray the costs of your pollution by either keeping or selling at a premium to a less politically connected power company.

Some Wit from Russell Brand

"Life is not a theme park and if it is the theme is death."
—Russell Brand, My Booky Wook, p. 150.

The Jay Leno Show

It's not a talk show, it's a vehicle for advertisers: "Mr. Farella said he also liked NBC’s promise that Mr. Leno’s show would be 'advertiser-friendly,' offering sponsors opportunities like commercials delivered by Mr. Leno and the inclusion of brands in skits."

Chrysler

Chrysler will be a millstone around the Obama administration's neck.  It doesn't appear to do all that much about the cost structure of Chrysler, it will make any company that has a sizable union presence a credit risk in the eyes of investors, and there is a pretty good chance that Chrysler will fail again, just as it has twice already in the last two decades (I am considering the Mercedes merger/acquisition as a bailout).  Pairing Chrysler with Fiat will give Chrysler access to small cars and nominally a luxury marque in the form of Alfa Romeo.  However, both Fiat and Alfa Romeo, are renowned for reliability issues.  Just as Chrysler is.  I do think the Fiat 500 might be a real hit but outside of that Chrysler doesn't get much.  

The principle purpose behind this reorganization seems to be to preserve UAW pensions and health benefits.  But I think this will be viewed as a pyrrhic victory for the UAW and the union movement writ large.  I don't think the UAW is out of the woods yet.  What if Chrysler continues to make crappy cars that people don't want to buy?  I don't see how a tie-up with Fiat changes that trajectory.  If so, four or five years, I doubt Obama will be able to pull off the same hijinx and will probably just have to let them enter into a normal bankruptcy process which could very well result in liquidation whereby those UAW pensions are dropped onto the Pension Benefit Guaranty Corporation.  This is what should have happpened this time around.  There is in fact some value to be found in each individual brand (especially Dodge and Jeep).  It's not as if Chrysler were to go into liquidation that every job would be lost and those brands would be gone forever.  Nissan was just recently looking at having Dodge manufacture trucks for them to be rebadged.  If Chrysler went into liquidation wouldn't Hyundai, Nissan or potentially a Chinese manufacturer be interested in buying one of those brands, whether to supplement their offering in the case of a Hyundai or to get a foothold in the American market in the case of a Chinese manufacturer.

But I think the broader fallout for the Obama administration will not just be the needless waste of taxpayer money but will be the affect this has on unions.  The UAW has largely been identified as the culprit of Chrysler and GM, however, a lot of the blame has been misplaced.  While the UAW did cause a cost structure that made for some unsuitable compromises (such as the precluding the manufacture of a competitive small car) management deserves the bulk of the blame.   The cars that GM and Chrysler have made of the years have been crap.  Some of this is the result of cost cutting but it has also been to a large degree a function of design, concept and quality.  Most of those three things are ultimately the responsibility of management and Chrysler and GM management have failed on all three accounts.  However, by stiffing the senior creditors to reward the UAW with GM and Chrysler equity stakes and the preservation of their benefits, this would seem to create a substantial risk in the eyes of investors where it concerns union companies.  Why would you want to lend to a company with a union when there is a decent chance if things go south that the government will subvert your claims to those of their preferred special interest: the unions.  Now not only will a union company' exhibit a cost structure disadvantage but also a disadvantage from the perspective of borrowing costs.  

The Bidens and Ponzi Schemes

One of my favorite finance bloggers is John Hempton, an Australian.  He has been machine gun posting about a firm Paradigm Global, which happens to be owned/run by Joe Biden's brother and son.  He makes a fairly compelling case that the Biden's brother and son are at least entangled in a ponzi scheme, and possibly running one.

Anyway, here are his posts on Paradigm Global:

http://brontecapital.blogspot.com/2009/04/just-how-sloppy-is-paradigm-global.html

http://brontecapital.blogspot.com/2009/04/statement-by-paradigm-and-some.html

http://brontecapital.blogspot.com/2009/04/economics-of-paradigm-global-alleged.html

http://brontecapital.blogspot.com/2009/04/another-post-i-did-not-make.html

http://brontecapital.blogspot.com/2009/04/first-post-i-did-not-make-on-ponta.html

http://brontecapital.blogspot.com/2009/04/fraudulent-hedge-fund-associated-with.html

The difference between a Pandemic and an Epidemic

I don't have the source for this; probably something I wrote down from the NYT or NYRB:

Pandemic, an adjective from the Greek pandemos, "of all the people," becomes a noun to mean "the outbreak of a disease spreading over a large geographic area," now construed as "worldwide." Epidemic, disease visited on a large segment of a population, is now considered regional rather than global.

On Miss California/Perez Hilton

You've all seen the video of Miss California at the Miss America competition expressing her belief that marriage should be between "a man and a woman," much to the visible chagrin of the gay judge, Perez Hilton. Many people have written in defense of Miss California, saying that she should not be "persecuted" for her views about gay marriage, views which many people in California and elsewhere also share. Fair enough. However, it seems that most people who are ready to offer their comments on the exchange between Miss California and Perez Hilton haven't paid attention to the question she was actually asked and to the answer she actually gave. Here is my transcript of the exchange:

Perez Hilton: Vermont recently became the fourth state to legalize same-sex marriage [crowd cheers]. Do you think every state should follow suit? Why or why not?

Miss California: Why I think it’s great that Americans are able to choose one or the other. Um, we live in a land that you can choose -- same-sex marriage or opposite marriage. And, you know what, in my country, in my family, I think that - I believe that - a marriage should be between a man and a woman. No offense to anybody out there [crowd cheers]. But that’s how I was raised and that’s how I think it should be between a man and a woman. Thank you.

First of all, and not to put too fine a point on it, Miss California was not asked whether she supports gay marriage or not. She was asked whether other states should legalize same-sex marriage. There are many ways she could have answered that question without making her own views public. She didn't want to offend anybody, and she could have done so, if she said, for example, that that question is a political question and should be left to each state to decide. Period.

Second, her answer suggests that she has no strong view about the issue. First she says that it is a "great" thing that gays can marry each other in America. Then she offers her now famous opinion that she believes that marriage should be between a man and a woman. Those two statements aren't necessarily contradictory. She may not support same-sex marriage, but she doesn't wish to condemn Vermont and the other three states for legalizing it either. In any case, she seemed to fail to fully register the fact that she was being asked a political question and that she should have responded accordingly. She only realized this after she had put forth her opinion, but by then it was too late. Many people "out there" were already offended and that offense wasn't remedied by the words "no offense to anybody." Her answer would have been better received if she didn't refer to her audience as people "out there" and to the source of her beliefs as "my country...my family."

A little bit of sympathy for persons like Perez (who was after all a judge in the competition) would have gone a long way. And that's why she lost.

Dear Gov. Perry:

I recently heard that you were contemplating Texas' ability to secede.  The right to secede has a storied history in the United States.  You may have heard of a thing called the Civil War, well as a fellow Southerner (though I am only one by technicality, hailing from Northern Virginia), it may have been called "the War between the States" or "the War of Northern Aggression".  Anyhow, this question was put into practice during the Civil War, that question being whether states could freely secede, and President Lincoln provided an answer: no.  Ironically, there is another gangly and inexperienced fellow from Illinois in the Oval Office just as there was then.  My suspicion is that his answer would also be no.

Tea Parties

I didn't realize teabagging was so popular.

The Political Facts of Torture in America

In the latest issue of the New York Review of Books, Mark Danner observers the politically convenient fact that most Americans are willing to "countenance" the use of torture against America's enemies. The pertinent passages from "The Red Cross Torture Report: What It Means" are as follows:

It is because of the claim that torture protected the US that the many Americans who still nod their heads when they hear Dick Cheney's claims about the necessity for "tough, mean, dirty, nasty" tactics in the war on terror respond to its revelation not by instantly condemning it but instead by asking further questions. For example: Was it necessary? And: Did it work? To these questions the last president and vice-president, who "kept the country safe" for "seven-plus years," respond "yes," and "yes." And though as time passes the numbers of those insisting on asking those questions, and willing to accept those answers, no doubt falls, it remains significant, and would likely grow substantially after another successful attack.

...

It is a regrettable but undeniable fact that torture's illegality, or the political harm it may do to the country's reputation, is not sufficient to discourage the willingness of many Americans to countenance it. However one might prefer that this be an argument about legality or morality, it is also an argument about national security and, in the end, about politics. However much one agrees with President Obama that Cheney's "notion" that "somehow...we can't reconcile our core values, our Constitution, our belief that we don't torture, with our national security interests," the fact is that many people continue to believe the contrary, and this group includes the former president and vice-president of the United States and many senior officials who served them.

The Bush Administration knew then what is still quite true today: for many Americans, America is regarded as a privileged torturer.

Building Anew

There's a lot of truth to Ilya's post but I have to quibble with it.  It is clear that over the last decade there was significant overbuilding in housing, excessive capacity in auto manufacturing, etc. Ironically, it is now that I appreciate Galbraith's old bit about the private sector being rich and the public sector poor.  Much of our resources over the last decade or so have been misallocated due to poor tax incentives, easy credit, regulatory arbitrage, and rampant stupidity on the part of the entire finance industry.  Our schools do a piss poor job of educating the next generation, our health care system is incredibly expensive yet an ungodly amount of people are uninsured, come summer parts of the country will experience rolling blackouts (not to mention the fact that the grid could come down entirely as it did a couple of years ago), and people lose more and more of their time wasted commuting (and thus their standard of living decreasing as both their disposable income and time diminish).  We need more mass transit, a smarter grid, cleaner energy generation, etc.  That requires building and should have been built a long time ago.  Instead we built McMansions in the exurbs financed by easy credit extended on the basis of foolish models and fraud.

Why Not Hatchbacks

In Europe hatchbacks are prevalent whereas in the U.S. they are more of a niche item.  Americans opt for sedans and car manufacturers are reluctant to bring hatchbacks over here.  I don't understand this.  A hatchback is a sedan that just has a little more cargo room (significantly more really) and is easier to load.  They're quite utilitarian and perform every bit as well as their sedan platform mates on the road.  I find them more attractive personally but I am apparently in a very small minority.  I wonder how much of the American buying public's aversion to hatchbacks is rooted in a hatchback's likeness to a station wagon (considered a baby mover and a dowdy one at that- yet again, I like station wagons).  Or, maybe Americans do secretly love hatchbacks and car manufacturers marketing departments are filled with dolts.  I hope it's the latter.

We Do Not Need to "Rebuild" Our Economy

I find Obama's vows to "rebuild" our economy misguided. Our problem is not one of building or rebuilding anything. If anything, there has been way too much building. "During a decade of easy credit and loose spending," begins this NYT article on empty restaurants, "American businesses built too many cars, houses, stores and factories. It turns out the country built too many restaurants, too." People need income, and thus jobs, not more building(s).

Bethesda

According to Forbes Bethesda is one of the most livable cities in America.  I couldn't agree more except for two facts: 1. Bethesda sucks; 2. Bethesda is in Montgomery County which sucks.  Other than that it rules.  Any sane person, which by definition excludes any resident of Montgomery County, knows that the commonwealth is vastly superior.

Here's my brief against Montgomery County:

1. The roads are awful

2. The drivers are the worst in the country

3. Taxes are significantly higher than neighboring jurisdicitons such as Arlington, yet the level of service is lower.

4. Car insurance is goddawful expensive in Montgomery County (my car insurance was $2k annually while it was $800 annually at its highest in Virginia)

5. The housing stock is poor, and the lots on which the houses reside are stingy.

But I come from Northern Virginia and there is simply something that is hard to explain but we from Northern Virginia find Montgomery County unappealing and the feeling is reciprocated.  Bethesda is actually a pretty nice place.  It's very expensive but it does have close proximity to a lot of cultural amenities, it has convenient access to mass transit, it is right on the border of the city and has some wonderful dining options.  It feels sterile to me but sterile is better in my view than some crime-ridden shithole.

Was the Recession Caused by an Oil Shock?

That's James Hamilton's contrarian thesis.  He thinks the economy would be showing slow GDP growth presently if it weren't for the oil shock last year.  I am not sure I buy it but still worth reading.

Pepsi Natural

April Fools! Just kidding. This product has been available for some time, but I saw it for the first time in my local grocery store last week. Seeing the word "Pepsi "followed by "natural" left me a bit puzzled. Of course, by "natural" they mean that it is composed of "all natural ingredients" as opposed to traditional Pepsi, which is composed of artificial ingredients such as fructose corn syrup, sugar, artificial colourings, phosphoric acid, caffeine, citric acid, and so on. But isn't this a distinction without a difference? Natural Pepsi is just as much a part of a large industrial process of production as traditional Pepsi. And if natural Pepsi is natural, does that make regular Pepsi unnatural? Natural Pepsi is not a new product, it is merely a new ingredient in an old, unhealthy, artificial product. It's amazing how a company can add one ingredient - sugar - and market the product as new and natural.

Clover

Yesterday I visited the Intelligentsia coffee shop on Broadway (in Chicago) to get a taste of coffee made from a Clover machine. A few months ago that outlet got rid of its conventional drip machine and in its place installed 3 Clover machines. Which means that each cup of coffee--your cup of coffee--is made soon after you order it, and the whole process takes less than a minute. The Clover machine is slick and quick. It's like a high-tech French press. Unlike French press coffee, however, the coffee that the Clover makes is much smoother. I paid $2.60 for a 12oz cup. You pay for what you get, and it's worth it, especially compared to the price of 12oz of coffee at Starbucks. It is really a shame that the Clover machine (from what I understand) is now owned by Starbucks and they seem reluctant to use it in their own stores and to see it used by anybody else.

Pie-Eyed Pickle of the Week: Dennis Rodman

Dennis Rodman had a reputation--at least among those who didn't know him personally or care to be apprised of his criminal record--that was secured by his glorious days on the basketball court. But after his run on Celebrity Apprentice, the whole world now knows that he is an obnoxious, lecherous, aimless drunk. Dennis, for the sake of your own reputation, you should have stayed out of the public eye and in those Canadian strip clubs.

Payroll Tax Holiday

Rick Hertzberg pimps the idea of a payroll tax holiday as a stimulus option and then also advocates abolishing the payroll tax altogether.  Abolishing the payroll tax would be a step in the right direction policy wise.  It is a regressive tax and it is a tax on labor thereby reducing the returns to work.  That said, the payroll tax currently comprises about 1/3 of all federal revenues.  Even if you implemented some taxes such as a carbon tax and a securities transaction tax, you would only be a 1/3 if the way towards offsetting payroll tax revenues.  If you were to completely offset the payroll tax you would have to implement a VAT or consumption tax of some form in addition to a carbon tax/securities transaction tax.  Such a shift would probably have negligible distributional effects but it would be a lot more efficient.

Retention Bonuses

There is much furor over the AIG retention bonuses, and there will probably be more about Fannie and Freddie's, but I don't get why there is the need for them.   The financial industry has contracted severely, and will likely continue to contract.  Where are these folks, the "stars" of AIG and Frannie purportedly going. Are JPMorgan and Goldman Sachs hot after talent with a subject matter expertise in blowing up the world's economy?  It all just seems so odd to me.

AIG Bailout Recipients by Country

hat tip: ezra klein

Do Americans Secretly Harbor Big Government Desires?

That's the question Walter Shapiro attempts to answer and he answers in the affirmative.  I agree with this assertion and disagree simultaneously.  Most Americans support any number of "big government" interventions or programs with one very important caveat, it doesn't affect them by either depriving them of choices or their money in the form of increased taxation.  Reconciling these competing stances is what politicians are tasked to do and they typically don't succeed, in large part because it is impossible.  The biggest byproduct of this cognitive dissonance is our completely screwed up tax code which is everybody's preferred vehicle for enacting this or that social program which is ostensibly for lower income folks but the value of any "social program" related deduction correlates with one's tax rate.

Kristol's Replacement

Bill Kristol, embarassment of the NY Times, will be replaced by Ross Douthat of the Atlantic Monthly.  Douthat is infinitely better.

CNBC Sucks

Though, I actually like Jim Cramer (not that I would advise anyone to follow his advice: re: Bear Stearns). Anyhow, John Stewart has a brilliant segment ripping CNBC a new one: http://www.thedailyshow.com/video/index.jhtml?videoId=220252&title=cnbc-gives-financial-advice. This one is an instant classic.

D.C., Suburb of New York?

So says Richard Florida, Mr. Creative Class.  And in a sense, not the traditional sense, but nonetheless, he is sort of right.  Now New York is 200 miles away and nobody would actually commute to an from New York on a daily basis unless they had a private jet.

D.C. used to be exclusively a federal town.  However, a funny thing happened in the 90s.  It became something of a tech and media hub.  And at this point it has become something of a little brother to New York on media matters.  I think this will actually occur to a lesser extent with finance.

Detroit: New Hippie Commune Utopia Potential Part 2

The median home price in Detroit is $7,500. That is just insane to me. I am half serious about this whole commune idea. Why not? Instead of buying a warehouse loft in New York you can buy multiple warehouses. Once upon a time Detroit was hip, why not again. Or if not hip at least interesting.

The Taxpayer Will Pay

One of the undercurrents of the discussions of bank Nationalization is who should pay to clean up the banks' balance sheets.  I am of the view that regardless of how the bank cleanup is executed (whether it be a massive recapitalization a la TARP on roids, or a Swedish style bank nationalization) that the end result will be the same: the taxpayer will be on the hook for a couple trillion dollars.  In a nationalization you would see essentially what occurs in a bankruptcy.  The shareholder gets wiped out, the creditor takes a haircut and becomes the new owners or shareholders.   Seems clear enough, the taxpayer doesn't have to pay a dime.  

But I am skeptical of this proposition because the creditors are not some amorphous oligarchs.  Creditors come in the form of bond holders or owners of other fixed income instruments.  They are pension funds or the fixed income portion of 401(k)s.  If they take the hit instead of the taxpayer it will be retirees who are taking the hit.  After having just seen their stocks wiped out they will see their other revenue streams (annuities, bonds, etc.) reduced drastically.  You throw in people that are within a decade of retiring and you have a very powerful special interest.  These are people that vote and vote in large numbers.  Maybe they will be content to just live on their social security check, and take the hit.  But I am skeptical of this.  If you nationalize, I think there will be a massive movement to use social security as a vehicle to mitigate retirees and near retirees' losses. 

This is not an argument in favor of or against nationalization.  I think the taxpayer is going to be on the hook for a substantial sum of money irrespective of the method employed to fix the banking sector.  I think it's important to keep this in mind when we discuss fixing the banking sector.  There isn't a silver bullet that will protect the taxpayer.  For the purposes of planning a banking sector fix we need to assume that liability has already been booked and move on to other considerations.

Green Stimulus

Obama has proposed a cap and trade in his most first budget. I think increasing taxes during a recession isn't necessarily wise. However, at some point in the near future we will need to increase taxes. I think that for the time being Obama can use the cap and trade revenues to offset the employer portion of the payroll tax which would effectively diminish the cost of labor (thus hopefully stemming the unemployment tide). Once the economy has stopped cratering the payroll tax cut can be phased out and the revenues from the cap and trade can be directed towards deficit reduction.

OMBlog

It has arrived.

Cannabis Tax

I think the chances of marijuana being legalized are virtually nil in my lifetime. I would be happy with decriminalization which I think is unlikely to happen anytime soon. However, my pessimism aside, a California lawmaker is proposing the legalization of marijuana. I am sure this is nothing out of the ordinary but the motivation appears to be for revenue. I would love to see California lead the way.

A "News" Story that Isn't Anything At All

The biggest non-issue of the day is this story ("Questions raised about Rahm Emanuel's housing arrangement in D.C.") about some Republicans who are spending their time blogging about whether Rahm Emanuel should be paying taxes for living, rent-free, in the basement of a home owned by Rep. Rosa DeLauro (D-Conn) and her husband, with whom Rahm has worked. When you get to the end of the article, it becomes clear that there is no real "debate" about whether he owes taxes - he doesn't. Reporting on those Republicans who say he does is not giving a "neutral" or "objective" account, it is clearly stirring up charges against Emanuel that are clearly false, and the article should make that clear up front.

Create or Save 4 Million Jobs

Greg Mankiw has a post on Obama's promise to "Create or Save" 4 million jobs.  He thinks it's a brilliant political tool, which is another way of saying it is a rather slippery formulation.  The two notions are distinct.  If we were to measure job creation we would use the employment baseline that exists today.  Thus, a year hence if there were 4 million more jobs than there are today the president has delivered on his promise.  This is a measurable task.  Saving four million jobs isn't because it requires us to assume the counterfactual presented is valid.  In other words, one could argue that if there are four million fewer jobs a year from now the president saved four million jobs because if his various policy initiatives had not been enacted there would have been eight million jobs fewer than there are today.  I wish the press wouldn't constantly recite this talking point as it is essentially garbage.

Top Chef

Emeril is a guest judge on Top Chef. I love Emeril. Some folks find him annoying but I think he is the shit.

Obama's Housing Plan

Obama rolled out his plan to stop foreclosures which is promising but has a couple of major flaws. Of course, I still reject the premise, some folks that couldn't afford a house in the first place probably shouldn't be living in that house, there is a wonderful alternative called renting. Foreclosure just may be a good thing.  Moving on, though, I find the absence of one detail particularly troubling.  Obama does seem to be broadly articulating a Bailie Mae strategy that I have detailed on this blog before but with one critical ommission: shared reward.  Obama proposes paying servicers and banks to reduce principal and interest down to a certain percentage of the borrowers income.  This is fine, but what is troubling is that the government, nor the bank, gets any share of the upside if the house is sold for a profit at a later date.  So the moral of the story to all of you readers is: Go fuck up something financially, get bailed out for fucking up, and profit handsomely*.

*I suppose one could make the argument that this is only fair since this has been what the government has done with the private sector for the last year, why not extend that principle to households.

Detroit= the New Utopia

I gather that Detroit is complete and utter crap.  Evidence of this appears in the form of land/houses that are essentially selling for whatever it costs to process the title at a courthouse, quite literally.  Isn't that an ideal scenario for an artist colony?  Just a thought.

Judd Gregg=Daft

Judd Gregg is withdrawing his nomination to be Secretary of Commerce. He has apparently discovered that his views are different from Obamas. Well no shit. But it is not like Commerce plays a terribly ideological role. It has a couple component agencies that are important but semi-autonomous: NOAA and the Census. Other than that it basically organizes trade junkets so that American businessmen (read campaign contributors) can shill their products abroad. Whoopty shit. You could shift the Census into the department of Labor or make it a stand alone organization and put NOAA under the EPA and get rid of the rest of the department without anyone knowing any better. It is one of the lowest profiles cabinet appointments.

Update: Brad DeLong speculates that something tawdry must have come up in the vetting process. This seems to be the only plausible explanation, or that he really is that daft.

Bank Bailout: Nationalization

With regards to what to do with the banks I heartily agree with Megan McCardle's recommendation: triage.  Find out which banks are clearly have no hope of returning to solvency, seize them and liquidate them.  At that point, I think those banks that are marginal will attempt to either sell off assets/raise private capital to boost their balance sheets as opposed to waiting for more TARP money.  What I don't get is why this isn't considered as the default option.  We have an institution that does this and does this well: the FDIC.  In fact, said institution was created in response to the last time we saw such a banking panic, the Great Depression.  To some degree it seems that both Hank Paulson and Tim Geithner have formulated their bailout plans with the main goal of ensuring that Vikram Pandit and Ken Lewis can remain as CEOs.

Phenomenal News

High Speed Rail got $9.3 billion in the stimulus bill.

Bankers Bonuses

This is old news but it still amazes me.  I have always thought that bonuses are tied to performance, and in the context of banking, that would be specifically in the form of profits, or at least performance relative to your competitors. How does one rationalize doling out billons of dollars in bonuses when you have lost tens of billions of dollars and had to be bailed out by Bank of America and by extension the taxpayer?  I think the decent thing for Merrill Lynch to do would be to replace those bonuses with Mortgage Backed Securities that they are currently holding at whatever their current book value is (as opposed to what they would actually sell for).

And when Republicans stammer that some sort of compensation caps for those that get taxpayer monies will drive away good talent from the financial industry I want to scream.  Where are these people going to go?  Have these brilliant politicians not noticed that the financial industry has contracted severely.  And by the way, has the question ever occured to them that some of this "talent" was not that talented in the first place, or at the very least their talents were misdirected.  These bankers make the Bush administration prosecution of the Iraq war and response to Katrina look almost adequate by comparison.

What is the value proposition that these bankers have that can enable them to command such bonuses?  Clearly it is not there ability to manage risk.  Have they threatened society collectively "let us get fat and happy in the financial sector or else we will start to run your health care and prosecute your wars"?

I have been always squeamish about the meddling with executive compensation but I think it is nigh time to have that conversation.  The levels of compensation are so great that the incentive or temptation to engage in corporate looting have pushed society to a fragile state.  I think there has to be something that aligns the compensation with the long term health of the company. Brad DeLong has suggested bonuses that are redeemable if the company meets certain thresholds ten years out as opposed to one quarter out.   I would also like to see clawback provisions for salaries once they get into the F-U money range- maybe 8 digits.

My Preferred Stimulus

Obviously this is a moot issue at this point but I would have liked to see an extension of unemployment benefits, bail out the states/local governments, a cut in the employer portion of the payroll tax (finance this by implementing a carbon and a gas tax two years out), and massively expand the number of H1B Visas.

Obama's Press Conference

My goodness what a change. Having a President who knows the English language is such a marked improvement. Helen Thomas just asked if any country in the Middle East has nukes, I think she was egging him on to acknowledge that the Israelis have nukes. I don't know why that is such a bugaboo.

Tax Reform

Equity Private over at Dealmaker makes an argument for tax reform.  I agree that the time is ideal for tax reform in the sense that those interests typically aligned against tax reform are currently quite weak, such as tax preparers, accountants, and especially the mortgage industry (which accounts for one of the largest deductions/perversions of our tax code in the form of the mortgage interest tax deduction).  That said, I am doubtful anything will happen anytime soon, and that's a shame.

A Great Saying

"When shit acquires value the poor are born without assholes."  It's a Brazilian saying so I am sure the translation could be better, but nonetheless, quite good.

Japan's Lost Decade

Japan had a decade of economic stagnation.  They cut the interest rate to zero, propped up insolvent banks, and paved over half the country.  We have cut the interest rate to zero, propped up insolvent banks (and are currently contemplating ways to do so on a grander scale), and are debating how to best pave over half the country.  It's all a bit unnerving.

update: I should add though the infrastructure spending I don't view as problematic.  We have let our infrastructure decay and haven't made any improvements in ages.  I do wish there was a more rational process in allocating these monies.  The infrastructure enhancements, which by and large, won't be going out the door anytime soon should be considered under separate legislation.  Maybe we could even come up with a capital budget.

The Bailout and Nationalization

I am opposed to releasing the TARP money for any more bank bailouts.  What we appear to be doing is propping up insolvent banks, which remain insolvent, until the situation becomes sufficiently dire again that they need more taxpayer funds.  This seems like a process without an end.  Some of these banks, such as a CitiGroup, actually have good assets but are loathe to part with them.  What rational CEO would?  Given the choice between selling off the good assets to cover the losses on your core business (effectively being the CEO of the rump of what's left over) and or sitting pat, waiting for a fresh (and seemingly recurring) injection of capital which would you choose?  I think the answer is obviously the latter.  I think what's necessary is to remove the appearance of a choice.  The government can use the TARP money to buy more agency debt or whatever it likes to ensure credit flows and in the meantime let the FDIC do what it does, determine if a bank is insolvent, if so, shut it down, and sell it off in pieces.  

BTW

I think Barbara Mikulski's amendment, which passed, to provide a tax deduction for auto loan interest and a deduction for the sales tax on an auto purchase is phenomenally stupid. We need to be stop favoring automobiles over other forms of transit.

What to Do with Poplar Point

Clark Realty has told D.C. that they will no longer develop Poplar Point. Greater Greater Washington has a good post on part of the proposal for Poplar Point's development, namely, a massive park. They make the point that a massive park is really nothing more than an invitation for crime and a waste of space. Obviously Central Park is an example of the contrary but I do tend to agree with the basic thrust of their argument (and arguably Central Park's success is a function of Manhattan's tremendous density and policing techniques). San Francisco is a city that does seem to strike a nice balance between green space and city space and they achieve this through constant distribution of small green spaces. A really cool way of implementing this at Poplar Park would be to do the Urban beach thing. Anyhow, my two cents.

Update: Another exception might be the Tiergarten in Berlin.

This is a farce.  The House Republicans invited Joe the Plumber to a house meeting on the stimulus package.  This is simply amazing.  What a bunch of twits.

Daschle Withdraws

Good for him, that's the decent thing to do.

Wise Words from Andrew Samwick

"Second, as I will continue to blog until I am blue in the fingers, the appropriate course of action when the economic downturn appears like it will be unusually severe is to bring planned capital projects forward in time.  Doing so allows them to be done more cheaply.  That politicians cannot make sensible policies under the pressure to be timely is obvious.  But the warning signs (and the idiotic mantra of temporary, targeted, and timely) have been evident for over a year.  Had we started to accelerate capital projects then, we would be seeing those projects kick in by now, and we would be on our way out of this mess.  Instead, we are repeating this year -- on a grander scale and with a leftward tilt -- the lunacy of last year's stimulus package."

It is amazing to me that we are having this discussion at the moment. This is another failure on the part of the Bush Administration, and specifically of Mary Peter's tenure as DOT secretary.  Recessions, whether they be long in character like this one or shorter in nature, do occur.  When recessions occur labor and materials are typically cheaper and it is a good time for the government to forge ahead on infrastructure projects it has in the pipeline.  During recessions the government can pursue planned infrastructure investments at a lower cost, accomplishing two objectives simultaneously: 1) using the taxpayers' money efficiently in implementing necessary infrastructure projects; 2) providing stimulus.  All of this is incumbent on planning which appears to have been nonexistent.

Pie-Eyed Pickle of the Week

The Pie-Eyed Picayune hasn't seen such a perfect candidate for this award in years.

ROD "Blago" BLAGOJEVICH

Governor of Illinois (2003-2009), impeached for being more concerned
with what he could get from the people of Illinois
than with its good.

2 Points for Honesty

Here is Michael Kinsley on the looming entitlement crisis.  His basic response for the generation entering the workforce is to "Let them rob their own children, just as their parents did."

The Stimulus Bill Sucks

That is my informed opinion.  The tax cuts in the bill are horrible.  To the extent tax cuts are included, a cut in payroll taxes would do much more to save/create jobs.  However, what irritates me more than anything is the paucity of infrastructure investment.  We should really be focusing on Mass transit, Intercity Rail, and High Speed Rail.  The bill doesn't do that.  There is an absurd amount going to higher education, which, given that there is already money going to State and local governments seems superflous.  I know everybody thinks what we need to do is do something big and do it now, but I actually disagree on the latter point.  This will be an extended recession.  We should make at least some effort to make sure that our spending is directed towards worthwhile investments.

Why Cramdowns Are a Bad Idea

There is something of a populist sentiment that says we need to do more for struggling homeowners. To some degree I agree but I think what Speaker Pelosi and others are proposing of full cramdowns is a complete disaster. In their current form, bankruptcy judges would be given the authority to cram down the mortgage to the current appraised value (ostensibly you would have to either be delinquent by a certain period and/or underwater).  End of story.  Why is this bad one might ask?  Well, one, there are terribly perverse incentives.  I think a lot of homeowners will be musing to themselves how their mortgage payments are terribly high and wouldn't it be nice if they missed a payment or six so they too could get a cramdown.  

But this is comparatively trivial.  If you were a bank and you were forced to cram down your mortgages with no share of the upside how would you make money?  Well, by raising interest rates on new homebuyers.  What effect will this have on home prices?  If you raise the cost to borrow appreciably, which cramdowns would likely do, you would depress home values further, as people would be able to afford less then can even now.  By the way, this might put more houses underwater.  

A better route would be a policy where there is shared risk and shared reward.  A homeowner who gets a cramdown should forgo some of the upside, not all of the upside.  An own-to-rent proposal a la Dean Baker where the undewater owner is reduced to a renter in lieu of foreclosure would give the owner no incentive to maintain the property.  

If we are going to piss away more TARP money this would be a good area to spend it.  Create a program: Bailie Mae.  Bailie would facilitate cram downs by purchasing part of the mortgage.  In order to have your mortgage purchased, the lender must agree to a cramdown.  When the house eventually sales, any profit is split into thirds, one third to the gummint, one third to the lender, and one third to the home owner.

Crap Subsides but Does Not Vanish

While Bill Kristol will no longer plague the NY Times op-ed pages, he will be a monthly fixture of the Washington Post op-ed pages.  At least the frequency is diminishing.  Between Fred Hiatt, Richard Cohen, and Charles Krauthammer the Washington Post already has enough columnists covering the "we gotta invade more countries" angle.

More Food Blogging

If you are looking for some bistro style French food, the place to go is Bistrot Du Coin.  The ambience is terrific and the food is great.  The rabbit stew is delicious.  My old favorite Montsouris has unfortunately closed.  Do not, DO NOT under any circumstances go to Brasserie Beck unless somebody else is paying.  Even then, suggest an alternative.  It tries to be too many things at once, a fine dining establishment and a yuppy watering hole.  These two things are not mutually exclusive but it is difficult to manage and Brasserie Beck does not pull it off.  It's a great place to get a drink in the company of attractive people, but the food leaves quite a bit to be desired.

New Tyler Cowen Ethnic Dining Guide

Tyler Cowen, he of Marginal Revolution and he who should be the next NY Times columnist, has updated his dining guide and has created an html based guide to complement his blog based guide.  

I've been to a couple of Tyler Cowen's "SOME PLACES YOU MUST TRY" list:

Hong Kong Palace- this place is incredible. Always packed.  Get the lamb with cumin.

Horace & Dickie’s Seafood Carryout- I don't share Cowen's enthusiasm for Horace & Dickie's but then again I am not such a fried fish fan.  The Macaroni is mediocre, the Collard Greens are average.  It definitely has character, though. Surprisingly, D.C. does not have a good offering of reasonably priced soul food.  Georgia Brown's, which is a good deal more expensive is supposed to be quite good.  Though Georgia Brown's is really a higher end low country cuisine place.  I have also heard good things about the Florida Avenue Grill.

Shamshiry- This place always hits the spot.  Persian food is simple and a bit bland, but tasty nonetheless.

Fogo de Chao- Don't eat for days in anticipation.  Fogo de Chao is a massive meat orgy.  The salad bar alone is worth it.  This place is simply excellent.

Using the Internets for Public Health

Megan McCardle links to an article about using eCards to inform people they have the clap.  I think this would make for a killer facebook app.

New Development Blog

Bill Easterly of "The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good" has started a new blog: "AidWatch".

Why We Should Do Infrastructure Now

Ryan Avent has a good rundown:

1. Borrowing Costs for the Government are LOW!

2. Commodities prices are LOW!

3. Shipping costs are LOW!

4. Labor costs are LOW!

Tyler Cowen to Replace Bill Kristol at the NY Times

Actually, there is no rumor of such a thing taking place, but I believe it should.  He writes well, is a very interesting thinker, and would provide a unique viewpoint.  All of these things distinguish him from Kristol, who really sucked.

Kristol is Gone

Bill Kristol will no longer be writing for the NY Times.  This is excellent news.  He is a piss poor writer and his only novel contributions to public discourse are suggestions of which Middle Eastern countries to invade next (I said novel not good). 

Good News

Now that Fiat is "bailing-in" Chrysler there is a good chance that the cute but cool Fiat 500 will be coming stateside.

President Obama on Public Service

“Public service is a privilege. It’s not about advantaging yourself. It’s not about advancing your friends or your corporate clients,” Mr. Obama said. “It’s not about advancing an ideological agenda or the special interests of any organization. Public service is simply and absolutely about advancing the interests of Americans.”

Resourcefulness on the Hudson

Give people credit, stop calling it a "miracle".

Citi, Bank of America, and GM

If we are going to own Citibank and Bank of America, can't we just nationalize them and sell them off?  It seems part of the mess we are in is the convergence of allowing institutions to become to "too big to fail" and also failing to regulate them adequately.  Why don't we address the whole "too big to fail" issue when it presents itself, namely, as Citibank and BofA appear to be failing and are asking the taxpayer to prop them up?  We can nationalize them and sell them off into little tiny pieces.

And GM is apparently getting ready to ask for yet more money.  Chapter 11 time, yet?

Man Down

It looks like Mary Schapiro, Obama's nominee for the SEC, may not survive her confirmation hearings.  Among other things, her firm, FINRA, was one of many that miffed on Madoff.  Felix Salmon has the goods.

Ezra Klein Hearts Peter Orzag

And so do I.  Klein has a good profile on Orzag and the role the CBO and OMB will play in health care reform.

Consumption Taxes

Alan Krueger proposes implementing a consumption tax in a couple years for deficit reduction. It will be interesting to see what happens with regards to tax reform. At this point there are several different moving pieces that will or could affect taxes: the expiration of the bush tax cuts, climate change legislation, and health care (what to do with the tax exemption for employer provided plans). Add to that mix there will be some desire to increase revenues above and beyond what the current tax structure allows, obviously allowing some of the Bush tax cuts will do something but not as much as one thinks (provided Obama maintains his pledge not to raise income taxes for those who earn less than $250k).

Ads on This Site

So I put up google ads awhile back with the thoughts of making beer money. But with a readership of 5 not even that has come to fruition.  Anyhow, we are now getting ads from a russian dating site (russianeuro.com): classy.  Click on it- maybe you can find your next green card marriage partner.  Reeks of mail order brides.  

All of this reminds me of a co-worker who happens to very well informed on Russian dating sites in general and mail order brides in particular.  Sort of disturbing, at least the latter part, the former too considering he is an older gentlemen and is angling for early 20 somethings.  But nonetheless, this simply adds to office intrigue.

Securities Transaction Tax

Bob Herbert has a column pimping a securities transaction tax.  I blogged the tax earlier, though, the revenue estimates I quoted were purely for revenues raised from stock transactions.  Herbert, citing Dean Baker, estimates that a tax on all manners of securities transactions (bonds, commodities, futures, derivates, etc.) would raise in excess of $100 billion.  One of the challenges for the foreseeable future will be to raise revenues and it is important to do so in an efficient manner as possible.

More Chrysler Woes

Toyota is now #3 in truck sales, passing Dodge.  What does Chrysler have going for it exactly?  Maybe the approach on the auto bailout should be Chapter 11 for Ford and GM, Chapter 7 for Chrysler.

Great Qoutes

"People say, 'How can I help on this war against terror? How can I fight evil?' You can do so by mentoring a child; by going into a shut-in's house and say I love you."

-GWB

You can find more of these golden oldies over at Slate where Jacob Weisberg has compiled his list of top Bushisms.

Jobs Credit

Bruce Bartlett has a good column on why the Jobs Credit is a stupid idea.  Namely he points out that it has been tried before and has been ineffective.

Update: Obama is apparently ditching the jobs credit.

When Generations Clash

Before the stock market crash, state and local pensions nationwide were already severley underfunded.  In many cases this was a result of overly generous pension promises in the first place (consider the New York Metro strike from a couple years ago).  It will be interesting to see how this pans out.  Places like New York, California, and New Jersey, have absurdly generous pension plans, you can join the police department or fire department work for 20 years and retire and collect 60% of your highest salary.  Granted, this is a great deal for public sector workers but residents of such jurisdictions will probably chafe at the notion that they will be paying ever higher taxes and an ungodly portion of those taxes will be going to people who are no longer providing services.  I anticipate in some jurisdictions you will see situations where residents are paying a higher share of their taxes on current pensioners than education.  Such a situation is untenable.  I think this will ultimately result in a wave of municipal bankruptcies throughout the next decade.

Mazda on Crack

The design team for Mazda should be drawn and quartered.  The Mazda 3 is probably the best value/most fun economy car out there and it is also a good looking car to boot.  The smiling fascia just destroys the design of an otherwise good looking car.

CitiCorpse?

It looks like CitiGroup is about to die. This will be the first big task/indicator of the Obama administration. It will be interesting to see if the Obama administration nationalizes CitiGroup (something akin to the Swedish model) or bails out Citi again.

update: this is all presuming Citi survives till next week.

Rare Good News

The TED spread is down.

Russia: Liberal Autocracy or Illiberal Democracy

Stories like this foretell an interesting political future in Russia.  Dmitry Medvedev, Russia's President (and heretofore thought as Putin's puppet) has been feeling his oats lately.

Stimulating Packages, Pt. II- Packages of Another Sort

A college student is auctioning off her virginity.  The bids have reached up to $3.7 million.  Mizuage!  Life imitates art (which in fact was an accurate imitation of life in a different era).  I love this little part from the article: 

"It's shocking that men will pay so much for someone's virginity, which isn't even prized so highly anymore."

Really, it's not highly prized anymore!?!?!  It's a damn good thing she is going into therapy not research.

Stimulating Packages

hehe, I said package.  Anyhow, Paul Krugman worries that the stimulus package as it is currently contemplated is too small and conservatives will swoop in and blame Obama for the economy and use the failed stimulus as evidence that keynsian economics is discredited.  I think the problem with making the stimulus as big as Krugman would like (in excess of $1 trillion) and in the manner he would like it (government spending on bridges and stuff) is that it is simply not tenable.  I do not mean that we have everythig that we want already, just that those things that are worthwhile (medical health records, a smart grid, rail-intercity and high speed rail, mass transit) all need some lead time.  Any building will require substantial lead time as there will be eminent domain issues, rights of way, and environmental impact statements.  I think this is why the stimulus package is tax heavy, taxes are one way of putting money into the system now.  One can certainly argue that the taxes as proposed are less than ideal.  

With regards to infrastructure spending we should sear into our minds the old saying "haste makes waste."  I think it would be much better for Obama to deliver a smaller fiscal stimulus in the current year but plan infrastructure expenditures in the out years.  Liberals may decry that postponing spending is a waste of recession.  However, I fear that this criticism will ultimately be undermined by a prolonged recession, thus giving rise to plenty of opportunities for clamoring for more spending.  In the meantime, it would be better to wait for some of the worthier projects to become "shovel-ready" than plow ahead and repave all of West Texas in search of the vaunted fiscal multiplier.

update: I retract what I said about Krugman.  Here is an op-ed where he also advocates spending over the next several years.

The New Surgeon General

Dr. Sanjay Gupta has been appointed the next Surgeon General, he of CNN fame.  Several bloggers seem to think that this indicates that the Surgeon General position will be used in the Obama administration as a point person on the public education of Obama health initiatives.  I suspect this is right.  Gupta is ostensibly qualified for the position in its current structure and is ideally suited for this added public education role.  My real gripe with him is he is a patsy on pot.

Quotes to Live By

"A lot of people like to fool you and say that you're not smart if you never went to college, but common sense rules over everything. That's what I learned from selling crack."~Snoop Dogg

What I learned from selling crack is you best be packing heat.

Essential Reading on Israel/Gaza

1. The LRB has made available an old article by Henry Siegman on how to understand Israel's relationship to Gaza and what would need to be done to provide Israel a sense of long-term security.

2. Rashid Khalidi's recent op-ed in the NYT, "What You Don't Know About Gaza," rehearses many of the points made in Siegman's article, but is worth reading nonetheless.

The Bush Presidency

"UNEMPLOYMENT RATE
Then: 4.2% (Bureau of Labor Statistics, January 2001)
Now: 6.7% (Bureau of Labor Statistics, November 2008)

DOW JONES INDUSTRIAL AVERAGE
Then: 10,587 (close of Friday, Jan. 19, 2001)
Now: 9,015 (close of Tuesday, Jan. 6, 2009)

BUSH FAVORABILITY RATING
Then: 50% (1/01 NBC/WSJ poll)
Now: 31% (12/08 NBC/WSJ poll)

CHENEY FAVORABILITY RATING
Then: 49% (1/01 NBC/WSJ poll)
Now: 21% (12/08 NBC/WSJ poll)

CONGRESS APPROVAL RATING
Then: 48% (1/01 NBC/WSJ poll)
Now: 21% (12/08 NBC/WSJ poll)

SATISFIED WITH THE NATION'S DIRECTION
Then: 45% (1/01 NBC/WSJ poll)
Now: 26% (12/08 NBC/WSJ poll)

CONSUMER CONFIDENCE (1985=100)
Then: 115.7 (Conference Board, January 2001)
Now: 38.0, which is an all-time low (Conference Board, December 2008)

FAMILIES LIVING IN POVERTY
Then: 6.4 million (Census numbers for 2000)
Now: 7.6 million (Census numbers for 2007 -- most recent numbers available)

AMERICANS WITHOUT HEALTH INSURANCE
Then: 39.8 million (Census numbers for 2000)
Now: 45.7 million (Census numbers for 2007 -- most recent available)

U.S. BUDGET
Then: +236.2 billion (2000, Congressional Budget Office)
Now: -$1.2 trillion (projected figure for 2009, Congressional Budget Office)"

From MSNBC's First Read

Sentences That Make Me Smile

“We expect that discussion around entitlements will be a part, a central part” of efforts to curb federal spending, Mr. Obama said at a news conference. By February, he said, “we will have more to say about how we’re going to approach entitlement spending.”

The Inside Scoop

I view my task as a douchebag occasional blogger to provide my readers (all five of you) with ground breaking, earth shattering information.  Well, check yourself before you wreck yourself, the OED (the Oxford English Dictionary) is considering including the word- conversate, as in we be conversating.

"TNC: Will conversate be included after the next revision of the OED?

JS: It's very likely to go in."

You read it here first, well, unless you read Ta-Naheisi Coates' blog, in which case you probably read it there first.

More on the Big Four Sucking, KPMG edition

Some of KPMG's accomplishments over the last fiver years, courtesy of wikipedia:

• In 2004, KPMG agreed to pay $115 million to settle lawsuits stemming from the collapse of software company Lernout & Hauspie Speech Products NV.^[10]
• In 2005, the U.S. member firm admitted criminal wrongdoing in a multi-billion dollar tax shelter fraud.^[11]
• In 2006, Fannie Mae sued KPMG for malpractice for approving years of erroneous financial statements.^[12]
• In February 2007, KPMG Germany investigated for ignoring questionable payments in Siemens bribery case.^[13] (Siemens agreed to pay a record $1.34 billion in fines to settle the case in December, 2008.)
• In October 2007, KPMG's member firms in the UK, Germany, Switzerland and Liechtenstein merged to form KPMG Europe LLP. They now have joint Chairmen, John Griffith-Jones and Ralf Nonnenmacher.^[3]
• In March 2008, KPMG accused of enabling “improper and imprudent practices” at New Century Financial, a failed mortgage company.^[14]
• In March 2008, KPMG agreed to pay $80 million to settle suits from Xerox shareholders over manipulated earnings reports.^[15]
• In November 2008, Siemens Supervisory Board recommended changing auditors from KPMG to Ernst & Young.^[16]
• In December 2008, two of Tremont Group’s Rye Select funds, audited by KPMG, had $2.37 billion invested with the Madoff "Ponzi scheme."^[17] Class action suits were filed

The Big Four Suck

The Big Four (the big four accounting firms- KPMG, PriceWaterhouseCooper, Ernst and Young, and Deloitte Touche) are getting embroiled in the Madoff scandal. Basically it seems they were incompetent. This doesn't surprise me having worked with (not for) one of the four a decent amount and having some exposure to the other three. I saw an amazing number of fuckups and idiots, but I had always attributed this to being exposed to private firms public sector practices.

New CBO Director

Doug Elmendorf is the new director of the CBO.  Hopefully he keeps the Director's Blog up and running.

WORDS: "Taint"

Speaking in defense of Blagojevich's appointment of Roland Burris as Senator of Illinois, Bobby Rush said of him that "Roland Burris is worthy. He has not, in 40 years of public service, had one iota of taint on his record as a public servant." Rush's subsequent remarks were designed to distinguish Blagojevich's tainted name—tainted by the "allegations" lodged against him by Patrick Fitzgerald—from Burris's supposedly untainted record. TV commentators seized on the word "taint" to talk about what has become of Blagojevich's reputation in Illinois politics. Though they seemed to be doing so for lack of a better term, this one actually fits the bill pretty well. One definition in the OED of the verb to taint is "to accuse of crime or dishonour." In this regard Blagojevich is clearly a tainted man on both scores.

A Festivus for the Rest of Us

Here is Ta-nehisi Coates on Kwanzaa and the holiday season in general:

"Meh, I don't celebrate Kwanzaa. My Dad was a Black Panther, so I wasn't exactly brought up to think of Karenga (call that Negro "Ron") as heroic. I didn't celebrate Christmas either, and the general consensus in my home was that Kwanzaa was throw-away for people who couldn't deal with not getting gifts. 

But so what? Seriously, this idea that Kwanzaa is fundamentally different from other holidays is silly and unreflective. Debating the holidays, is like debating sex acts. Dude, there's no clean or dirty, only what you're into or what you're not. Do we really want to do the knowledge on Christmas here? Seriously??"

Debating sex acts would be an improvement over spending a couple pay checks on gifts people don't like. Engaging in the sex acts would probably raise social utility even more.  

The Debate over Festivus

A small debate is raging on the Internet over the worth of celebrating "Festivus" in the wake of a Festivus pole that was put up in the Illinois capital. Critics (e.g. here) say it's not a real holiday because it was invented to mock Christmas. They say it's meaningless, not about anything, indeed, invented in a 1997 episode of Seinfeld ("The Strike"), a show that is itself about nothing (FYI: it was really invented much earlier; read the details on Wikipedia's festivus page).

Most of these critics have in mind some idealized image of what Christmas is supposed to be all about. To wit, "a good, merry winter celebration with the tree, the turkey, and the presents, customs mostly borrowed from pagan traditions." Compare Bill McKibben's description: "Christmas is a school for consumerism—in it we learn to equate delight with materialism. We celebrate the birth of One who told us to give everything to the poor by giving each other motorized tie racks.” This reflects a certain cynicism, but at least it is not blind to the way in which Christmas is super-saturated with the imperative to buy, buy, buy. The point is put with neutral understatement on Wikipedia's page on Christmas: "Christmas has become a major event for many retailers."

Against this frenzy of consumerism Festivus was born according to the Seinfeld episode:

Frank Costanza: Many Christmases ago, I went to buy a doll for my son. I reached for the last one they had, but so did another man. As I rained blows upon him, I realized there had to be another way.

Cosmo Kramer: What happened to the doll?

Frank Costanza: It was destroyed. But out of that a new holiday was born: a Festivus for the rest of us!

Festivus, like all holidays, is what you make of it.

The Next Move

Brad DeLong links to a post from the Baseline Scenario on the Glen Hubbard article in the WSJ. The Hubbard plan is basically two plans: 1 part freddie/fannie nationalization, 1 part Bailie Mae. The plan is to reduce mortgage rates to 4.5% for everyone, new home buyers and those who want to refinance. Basically, we are going to subsidize housing to get us out of the mess that we got into in large part because housing was generously subsidized. I tend to think a better way of bringing housing supply and demand into balance would be to increase immigration, both skilled and unskilled, massively. Unskilled immigration might be a difficult sell, though, we could always re-encourage illegal immigration by returning to more lax enforcement. However, increasing skilled immigration shouldn't be as tough a sale.

To the People of Illinois: There is No Presumption of Innocence in the Court of Public Opinion

"To the people of Illinois, I ask that they wait and be patient, sit back and take a deep breath, and please reserve judgment. Afford me the same rights that you and your children have. The presumption of innocence. The right to defend yourself. The right to your day in court. The same rights that you would expect for yourselves."
—Rod Blagojevich, 12/19/08

The legal right to be presumed innocent until proven guilty does not apply outside the courtroom. Let me repeat that: if you are not the judge or the jury in Blagojevich's criminal case, the presumption of innocence doctrine is irrelevant and has no bearing on what you say or think. Outside the courtroom, you are allowed to make judgments about the guilt or innocence of the accused, and to profess your views any way you like, make signs, go on television, whatever. The presumption of innocence, as Dick Cavett reminds us, "has nothing whatever to do with you and me. We can talk, write, broadcast and even put up a billboard (if so foolish) stating that the accused is the one who did it. It has to do with our system. If you find yourself accused of a crime, you do not have to prove your innocence. The burden is on the other side. The prosecution has to prove your guilt. That’s about it. And it is not even a rule of law. It is a rule of evidence, relevant only to the judge and the jury."

Auto Bailout

Bush is going to release TARP money for GM and Chrysler.  The terms are actually pretty good for the taxpayer and it appears that the conditions set for receiving the money are similar to what would occur in a Chapter 11 Bankruptcy:

"—Reduce debts by 2/3 via a debt for equity exchange. 
—Make one-half of VEBA payments in the form of stock. 
—Eliminate the jobs bank. 
—Work rules that are competitive with transplant auto manufacturers by 12/31/09. 
—Wages that are competitive with those of transplant auto manufacturers by 12/31/09."

This is probably better than the unions would have gotten in a bankruptcy in so far as it requires the automakers to pay into the VEBA fund (as a result of contract negotiations between the unions and the automakers last year health care benefits for retirees were taken over by the unions but the automakers had to make significant one time contributions to the health care trust fund- VEBA).  I am guessing in a bankruptcy proceeding the judge would tell the unions that there is a neat thing callled medicare and to go enroll.  So this is maybe a little more even handed.

Bonuses

This is brilliant!  Credit Suisse is giving their executives bonuses in the form of Mortgage Backed Securities.  Seems fitting.

This Plutocracy and Nepotism stinks to everybody

It's a good sign for small-d democrats that more and more people are voicing their concern over the rampant nepotism and plutocracy in American politics. Whatever happened to skill and merit? Look for more posts on this issue in weeks to come.

Nicholas Kristof takes account of the scene in these words:

And frankly it is discouraging to see the way the system so often elevates particular families into politics, generation after generation, because of their names, bank accounts and Rolodexes. Bill Clinton and Barack Obama are self-made exceptions, but we now have a president who rose in part because of who his father was, and there are many such cases. After all, Beau Biden seems poised to succeed Joe Biden in the senate from Delaware, once his military service is completed. Ken Salazar’s senate seat from Colorado may be filled by his brother John. And here in New York State, we have a governor who is a second-generation politician who is choosing a senator from among such front-runners as a woman who is the daughter of a former president and a man who is the son of a former governor.

Here's a Letter to the Editor worth noting from a reader of the NYT on the subject:

To the Editor:

It is amusing that Andrew M. Cuomo, who owes his whole career to his dad, may not get the Senate seat of Hillary Rodham Clinton (who owes her whole career to her husband) because David A. Paterson (who owes his whole career to his dad) may give it to Caroline Kennedy (who owes her whole career to her dad).

You would think a state as large as New York could find someone who deserves something on his or her own.

David Machlowitz
Westfield, N.J., Dec. 16, 2008