Tuesday, June 15, 2010

Tuesday Mashup (6/15/10)

  • I gotta tell ya’, Mark Halperin of The Page really knows how to bring teh funny (here)…

    The President's current priorities are all liable to make a now bad relationship that much worse (with big bidness). The financial regulation bill is viewed as a typically ignorant Washington overreach.
    So many directions I can go with this, but so little time…

    Let’s just take one supposedly courageous example of a Democrat standing up to the corpocracy, and that would be a certain Blanche Lincoln of Arkansas, who recently dispatched primary challenger Bill Halter with the help of the DLC establishment which, as usual, remains utterly disconnected from the party’s core constituency.

    Matt Taibbi brings us the gory details (from here)…

    When all the backroom obfuscation doesn't work, of course, there is always one last route in Congress to killing (financial) reform: the fine print. And never has an amendment been fine-printed to death as skillfully as the proposal to reform derivatives.

    Imagine a world where there's no New York Stock Exchange, no NASDAQ or Nikkei: no open exchanges at all, and all stocks traded in the dark. Nobody has a clue how much a share of IBM costs or how many of them are being traded. In that world, the giant broker-dealer who trades thousands of IBM shares a day, and who knows which of its big clients are selling what and when, will have a hell of a lot more information than the day-trader schmuck sitting at home in his underwear, guessing at the prices of stocks via the Internet.

    That world exists. It's called the over-the-counter derivatives market. Five of the country's biggest banks, the Goldmans and JP Morgans and Morgan Stanleys, account for more than 90 percent of the market, where swaps of all shapes and sizes are traded more or less completely in the dark. If you want to know how Greece finds itself bankrupted by swaps, or some town in Alabama overpaid by $93 million for deals to fund a sewer system, this is the explanation: Nobody outside a handful of big swap dealers really has a clue about how much any of this shit costs, which means they can rip off their customers at will.

    This insane outgrowth of jungle capitalism has spun completely out of control since 2000, when Congress deregulated the derivatives market. That market is now roughly 100 times bigger than the federal budget and 20 times larger than both the stock market and the GDP. Unregulated derivative deals sank AIG, Lehman Brothers and Greece, and helped blow up the global economy in 2008. Reining in derivatives is the key battle in the War for Finance Reform. Without regulation of this critical market, Wall Street could explode another mushroom cloud of nuclear leverage and risk over the planet at any time.

    The basic pillar of derivatives reform is simple: From now on, instead of trading in the dark, most derivatives would have to be traded on open exchanges and "cleared" through a third party. Last fall, Wall Street lobbyists succeeded at watering down the clearing requirement by pushing through a series of exemptions for "end-users" – that is, anyone who uses derivatives to hedge a legitimate business risk, like an airline buying swaps as a hedge against fluctuations in jet-fuel prices. But the House then took it even further, expanding the exemption to include anyone who wants to hedge against balance-sheet risk. Since every company has a balance sheet, including giant insurers like AIG and hedge funds that gamble in derivatives, the giant loophole now covered pretty much everyone except a few megabanks. This was regulation with a finger crossed behind its back.

    When it came time for the Senate to do its version, however, the lobbyists were in for a surprise. Sen. Blanche Lincoln of Arkansas – best known as one of the few Democrats to vote for Bush's tax cuts – suddenly got religion and closed the loophole. Facing a tough primary battle against an opponent who was vowing to crack down on Wall Street, Lincoln tweaked the language so derivatives reform would apply to any greedy financial company that makes billions trading risky swaps in the dark.

    Republicans went apeshit, pulling the same tactics they tried to gut the Consumer Finance Protection Bureau. Sen. Enzi, back at the lectern after his failed attempt to claim that the CFPB was a government plot to control the orthodontics industry, barked to the Senate gallery that Lincoln's proposal would harm not millionaire swap dealers at JP Morgan and Goldman Sachs, but "a wheat-grower in Wyoming." Unmoved by such goofy rhetoric, the Senate shot down an asinine Republican amendment that would have overturned Lincoln's reform by a vote of 59-39.

    Then reform advocates started reading the fine print of the Lincoln deal, and realized that all those Wall Street lobbyists had really been earning their money.

    That same day the GOP amendment failed, the derivatives expert Adam White was at his home in Georgia, poring over a "redline" version of the Lincoln amendment, in which changes to the bill are tracked in bold. When he came to a key passage on page 570, he saw that it had a single line through it, meaning it had been removed. The line read, "Except as provided in paragraph (3), it shall be unlawful to enter into a swap that is required to be cleared unless such swap shall be submitted for clearing."

    Translation: It was no longer illegal to trade many uncleared swaps. Wall Street would be free to go on trading these monstrosities by the gazillions, largely in the dark. "Regulators can't say any longer if you don't clear it, it's illegal," says White.

    Once he noticed that giant loophole, White went back and found a host of other curlicues in the text that collectively cut the balls out of the Lincoln amendment. On page 574, a new section was added denying the Commodity Futures Trading Commission the power to force clearinghouses to accept swaps for clearing. On page 706, two lines were added making it impossible for buyers who get sold an uncleared swap to void the deal. Taken altogether, the changes amount to what White describes as a "Trojan Horse" amendment: hundreds of pages of rigid rules about clearing swaps, with a few cleverly concealed clauses that make blowing off those rules no big deal. Michael Greenberger, a former official with the Commodity Futures Trading Commission who has been fighting for derivatives reform, describes the textual trickery as a "circle of doom. Despite the pages and pages of regulations, violating them is risk-free."
    So the only ones guilty of “overreach,” on this and so many other issues, are our corporate “betters” pulling the proverbial strings of political puppets like Dame Blanche and pushing the buttons of media automatons like Halperin.

    I will give “The Page” poster the benefit of the doubt on one point, though. When it comes to “ignorant,” Halperin’s a subject matter expert.

  • Also, for some reason, the New York Times did its impression of The National Review last Sunday and granted column space to Ramesh Ponnuru to weave some more “pro life” fairy tales (here)…

    The number of pro-life women running for office has increased, perhaps paradoxically, because of the social changes of the last few decades. The first generation of women to become active in politics strongly identified as feminist and considered abortion rights central to their feminism. Pro-life women were more likely to be full-time homemakers. Their invisibility on the public stage contributed to an impression that the vast majority of women were pro-choice.

    Pro-life women can also soften the message: Ms. Fiorina has said, “I myself was not able to have children of my own, and so I know what a precious gift life is.” It’s hard to imagine a male politician making that comment. These women will make it easier for pro-lifers to discuss the issue in the terms we want to discuss it: as a plea for justice for a vulnerable group.
    I must tell you that I read that last sentence and I wanted to throw up.

    Where the hell is the “justice” from these people towards women who have made a decision that surely must be the most tortuous one that could be made by any woman?

    This tells us that, while thus far Ponnuru and his pals have not been able to overturn Roe v. Wade (which, let us not forget, is still the law of the land), they have had a great deal of success on the state level. The Think Progress post tells us that Florida governor Charlie Crist quite rightly vetoed a measure requiring women to view an ultrasound of the fetus before undergoing an abortion. However…

  • 14 states have introduced laws this year that ban or limit abortion coverage,

  • 18 states have introduced legislation this year that requires abortion providers to offer their patients an ultrasound.

  • 14 states have introduced legislation or ballot initiatives this year to amend the state constitution to establish that legal personhood begins at conception, which would limit access to abortion, contraception, fertility treatments, and other medical services.

  • 9 states have introduced bills this year that would criminalize abortions done purportedly because of the sex or race of the fetus.* Only Oklahoma’s bill has thus far become law.

  • 1 law has been enacted this year (in Utah) that define criminal homicide to include a “knowing” act by a pregnant woman that causes a miscarriage or stillbirth. This bill is so broad that it could apply to a woman who smokes cigarettes or takes prescription medication.
  • And in case anyone needs a reminder of how quickly the “pro life” forces can work themselves into a furor when they detect the slightest whiff of accommodation from any politician they see as doing the will of those who are pro-choice, all one needs to do is take a look at how quickly the life of Dem U.S. House Rep Bart Stupak was threatened when he gave ground on health care reform when he believed he had accomplished his “pro life” goal in the legislation (I didn’t like the original Stupak-Pitts pro-sepsis coat hanger abortion amendment, but I never would have threatened Stupak’s life over it, and neither did anyone else of my political persuasion).

    I suppose there’s a lot more to be said about this, but I’ll leave this topic with this final remark. I’m sorry that Carly Fiorina was denied the opportunity to have her own children. But that doesn’t give her or anyone else the right to interfere in the most personal decision that can be made by a woman and/or her partner and health care provider.

    I’m sure the next brilliant idea that will come from a “pro life” legislator is to make a woman seeking an abortion listen to a tape of babies wailing before she consents to undergo the procedure.

  • Finally, this New York Times story Sunday told us the following (here)…

    Looking for the federal government to come to the rescue of newspapers? Don’t hold your breath.

    The Federal Trade Commission has set out on the somewhat quixotic journey of trying to identify ways to save journalism as we know it from possible extinction.

    Through a series of public forums, the last of which will take place in Washington on Tuesday, the commission has been gathering and analyzing an array of suggestions to help make the business of gathering and reporting news profitable again. A broad range of ideas — loosening antitrust statutes to allow news organizations to start charging for online content all at once; imposing a tax on iPads and other electronic devices to subsidize the cost of reporting; creating a public fund akin to AmeriCorps to pay young journalists — have been suggested.

    But the commission could easily sidestep making any recommendations to Congress or invoking its regulatory powers, and instead issue something along the lines of an analysis of its findings.

    The commission is expected to produce a final study late this year.
    This may sound hilarious coming from someone who opposes online fees as a source of revenue for news organizations, but I believe we should pay a modest fee to our government, if that is what it takes, to ensure the survival of designated news organizations (Which ones would be “designated”? I’m not 100 percent sure yet).

    I say this partly because the Times interviews “new media” guru Jeff Jarvis in the story (formerly of “dead tree” media, as it were), and Jarvis believes that the “entrepreneurial spirit” will save the Fourth Estate.

    All I know is this. I’ve been operating this blog, such as it is, for five years, and to make sure I sound somewhat knowledgeable about the topics I post about, I read as much as I can about this topic and others (not trying to pat myself on the back). I’ve been waiting for the glorious day to come when “citizens media” overtakes the corporate house organs who slice and dice the days’ events to make sure (most times, but not always) that they conform to the narrative of the moment (the prior post about Ponnuru is based on his Op-Ed about “the (supposed) year of the conservative woman” in politics, resurrected from the ashes of “the (supposed) year of anti-incumbency” narrative).

    And simply put, I don’t see that day coming (love to be wrong, though).

    And like it or not, government is the only force that can level the intellectual playing field to make sure designated news outlets receive funding that allows them to survive and report/editorialize on the news so that we make informed decisions.

    I know this isn’t the sort of thing you would expect to read from a blogger. And the thought of The Philadelphia Inquirer receiving so much as one thin dime of taxpayer funds that would allow them to continue publishing Rick Santorum, Kevin Ferris and John Yoo makes me gag.

    However, I have to owe up to the fact that I am not a salaried news professional. I supposed I am performing some type of a journalistic function, but I am not a journalist by occupation. And those are the people who are needed to report the news so that adults with brain matter who happen to be between 35 and dead can consume it and not automatically switch on Fix Noise instead. I simply cannot compete with these people for reader circulation, so if it’s a choice between our government supporting them or supporting me…well, I could give a selfish preference, but I know I’d be wrong.

    All I’m saying is that, sadly, we are at a point where we need to pay for intelligent media the same way we might pay for a night out at the ballpark, a pair of new whitewall tires, a pair of men’s slacks, a handbag, or a Happy Meal. And I’m sure this makes me a socialist at heart or something, but I actually would want a government bureaucrat making the decision of how my money would be spent based on predefined standards and criteria as opposed to a cash-poor media outlet shoveling money out the door to keep its creditors at bay.

    I believe the consequence of what I have in mind would be a more (and better) informed nation. The stakes are too high and the tasks before us too daunting to allow ourselves to settle for anything less.
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