Month: March 2009

Smart Politics, and True

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In 1993, Bill Clinton went after Rush Limbaugh, and it proved a failure.

Between people claiming that it was in assault on free speech, and the absolutely bizarre spectacle of a sitting president going after a political shock jock, it flopped.

Well, times are different now, and the Republican party really does take its marching orders from him now, and there’s also the fact that he’s a drug addict and a sex tourist too, and that he’s no longer the new flavor of the week.

So, Democrats are bring up Rush again, but they are not going after him, so much as they are Rush Limbaugh is the intellectual voice of the Republican party.

This makes a lot more sense, because Rush Limbaugh can be relied to say something mind numbingly scary to 70% of the American population on a weekly, if now daily basis.

Unfortunately, the ‘Phants can’t walk away from him, because those 30% dead enders are something like 70% of the Republican party, just note Rep Phil Gingrey’s (R-GA) abject apology to Rush after he made a fairly innocuous comment defending the House and Senate leadership, and Limbaugh sicced His Evil Minions&trade on him.

It was reminiscent of the confessions at Stalin’s show trials, and Rush Limbaugh now owns the Republican party.

Pass the popcorn.

Europeans Want 50% Stake in Opel for GM Aid

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It looks like GM May divest itself of something around 50% of Opel in exchange for €3 billion in aid.

Note that this is a loans and loan guarantees primarily from from German federal and state governments, not a sale, but these nations are demanding that GM give up a significant proportion of its ownership shares.

I think that this comes down to the European governments believing that GM would otherwise use Opel as a unwilling organ donor.

Yeah, the VWRC is Back, Only It Ain’t So Vast

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I’ve been vaguely aware of CNBC D-Lister Rick Santelli, who let loose a torrent of abuse at people at risk of losing their homes, The government is promoting bad behavior! Do we really want to subsidize the losers’ mortgages?! This is America! We’re thinking of having a Chicago tea party in July, all you capitalists who want to come down to Lake Michigan, I’m gonna start organizing.”

That day, a website went live Chicagoteaparty dot com (top pic), which is awfully fast, only the first domain was actually registered in August of last year, and had lain dormant, but suddenly sprung to life, calling for protest with Santelli’s rant on the front.

We also had another domain, created and going live that day, Officialchicagoteaparty dot com (middle pic), which was owned by one Eric Odom, a long time ‘Phant political operative, who created astroturf groups to support offshore drilling, which would directly benefit the business interests of the Koch families.

So, what’s going on?

Well according Playboy* (and mirrored at the Exiled for those of you who have to deal with content filters), the Vast Right Wing Conspiracy (VWRC) is at it again, only it seems to be perhaps a few dozen people:

What we discovered is that Santelli’s “rant” was not at all spontaneous as his alleged fans claim, but rather it was a carefully-planned trigger for the anti-Obama campaign. In PR terms, his February 19th call for a “Chicago Tea Party” was the launch event of a carefully organized and sophisticated PR campaign, one in which Santelli served as a frontman, using the CNBC airwaves for publicity, for the some of the craziest and sleaziest rightwing oligarch clans this country has ever produced. Namely, the Koch family, the multibilllionaire owners of the largest private corporation in America, and funders of scores of rightwing thinktanks and advocacy groups, from the Cato Institute and Reason Magazine to FreedomWorks. The scion of the Koch family, Fred Koch, was a co-founder of the notorious extremist-rightwing John Birch Society.”

Added to this was the owner of Chicagoteaparty dot com is one Zack Christenson, who is a producer for a rightwing radio jock Milt Rosenberg, the man who came up with the bogus Barack Obama-Bill Ayers link.

It’s all a part of the “Sam Adams Alliance,” which has funding from the Koch family, though you have to go to cached copies connecting this to FreedomWorks, run by Republican House Majority leader Dick Armey and paid for by the Koch’s.

Note Santelli front and center on the FreedomWorks home page too.

Mr. Santelli’s contract with CNBC is up in a year, and getting a Youtube hit, even if it is AstroTurf, is likely to improve both his chances of renewal, and his chances for a big contract.

Not also that this has been going on for some time, as it’s also tied into angryrenter dot com, which has been registered for a year.

Seriously though, when you look at all these, there is a guy, his money, and perhaps a dozen other people, who were locked and loaded before the rant ever happened, and when the “grass roots” protests happened, they were lame and fake.

It’s kind of a metaphor for the Republican party as a whole.

H/T The Big Picture.

*Proving that Playboy, at least can do real reporting and cover real stories, in addition to being what the Brits call a “grumble mag”.

My Thoughts on Obama’s Iraq “Withdrawal”

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I think that he got played by the military. There are likely to be over 100K troops until year’s end, because General Ray Odierno wants them there for elections, and over 50K for a stabilization force until the 2nd half of 2010.

I think that Obama did not want to deal with the “death by 1000 leaks,” that Clinton saw on gays in the military, and felt that some senior army officials, particularly Ordierno, who have already pretty much said that they would ignore the status of forces agreement.

This should have been fixed in 1993, by Bill Clinton firing Colin Powell for insubordination, and could be fixed now by firing Ordierno if he steps out of line.

Truman’s precedent with MacArthur stands, and should be enforced.

In the short run, Obama needs to start pulling out the extensive infrastructure at the “superbases,” such as maintenance and communications, so as to reduce the military utility of these facilities for use outside of Iraq, as quickly as possible.

Not Just AIG, But the Entire Financial System

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Seriously, this New York Times article on AIG, is a quick and layman accessible recounting of what went wrong there, and now that the Taxpayer is laying out another $30 to prop them up, with the approval of the ratings agencies who made this problem possible in the first place, it bears reading.

What we see is a metaphor for the entire rotten “Anglo-Saxon” system of unregulated hyper-capitalism.

AIG does not exist any more, what’s there is a simulacrum of a going business, fueled by zombie juice amounting to over $150 billion of taxpayer dollars, with the promise of more federal support, but that’s not the important part.

The important thing is are not just talking recklessness and incompetence here, we are talk real and deliberate crimes, and even now the authorities don’t have the slightest inclination to prosecute.

What took AIG down was a division that wrote credit default swaps (CDS), lots of them, and then, when they came due, they were bankrupt.

A CDS is a piece of paper that allowed them to insure all sorts of dodgy documents, but lacked the regulation, and the reserve capital requirements, of real insurance.

They wrote them because people were willing to pay them to write them, and people were willing to pay them because it allowed them to “lease” AIG’s AAA rating (see the ratings agencies linked above) for their financial instruments.

The result is that if AIG is allowed to die, instead of remaining in its undead state, everything blows up:

…. Yet the government feels it has no choice: because of A.I.G.’s dubious business practices during the housing bubble it pretty much has the world’s financial system by the throat.

If we let A.I.G. fail, said Seamus P. McMahon, a banking expert at Booz & Company, other institutions, including pension funds and American and European banks “will face their own capital and liquidity crisis, and we could have a domino effect.” A bailout of A.I.G. is really a bailout of its trading partners — which essentially constitutes the entire Western banking system.

I don’t doubt this bit of conventional wisdom; after the calamity that followed the fall of Lehman Brothers, which was far less enmeshed in the global financial system than A.I.G., who would dare allow the world’s biggest insurer to fail? Who would want to take that risk? But that doesn’t mean we should feel resigned about what is happening at A.I.G. In fact, we should be furious. More than even Citi or Merrill, A.I.G. is ground zero for the practices that led the financial system to ruin.

“They were the worst of them all,” said Frank Partnoy, a law professor at the University of San Diego and a derivatives expert. Mr. Vickrey of Gradient Analytics said, “It was extreme hubris, fueled by greed.” Other firms used many of the same shady techniques as A.I.G., but none did them on such a broad scale and with such utter recklessness. And yet — and this is the part that should make your blood boil — the company is being kept alive precisely because it behaved so badly.

They fail because if AIG fails, then their CDS contracts are worthless, and they have to account for their assets at their actual value, and overnight they become insolvent.

So, AIG is Sheriff Bart from Blazing Saddles, holding the gun to his own head, saying, “Hold it! Next man makes a move, the n***** gets it!”

Of course, this isn’t criminality (though it should be), this is Republican economics, privatizing the profits while socializing the losses.

The criminality is further down in the article:

….A.I.G. didn’t specialize in pooling subprime mortgages into securities. Instead, it sold credit-default swaps.

….But it also saw the fees as risk-free money; surely it would never have to actually pay up. Like everyone else on Wall Street, A.I.G. operated on the belief that the underlying assets — housing — could only go up in price.

That foolhardy belief, in turn, led A.I.G. to commit several other stupid mistakes. When a company insures against, say, floods or earthquakes, it has to put money in reserve in case a flood happens. That’s why, as a rule, insurance companies are usually overcapitalized, with low debt ratios. But because credit-default swaps were not regulated, and were not even categorized as a traditional insurance product, A.I.G. didn’t have to put anything aside for losses. And it didn’t. Its leverage was more akin to an investment bank than an insurance company. So when housing prices started falling, and losses started piling up, it had no way to pay them off. Not understanding the real risk, the company grievously mispriced it.

(emphasis mine)

So they sold insurance, and never had any intention on paying off, because if they had, and remember that AIG is (was) at its core an insurance company, even absent regulatory demands, they would have put aside something in the way of capital reserves.

This is the same as selling phony stocks. AIG, or more at least its everyone in a position of responsibility in its financial practices unit in London, where the swaps were written and sold, and everyone involved in supervising these activities, up to and including the CEO, and probably the board of directors, knowingly sold a fraudulent product.