Just in case you need a reference point to how much the bailout was, consider the number to the right, the cost of the War in Iraq thus far. Yes, the bailout that was passed last week surpasses the amount of money spent on that mistake by leaps and bounds. So, when history is written, how should this period be judged? Where were our priorities? Did we ensure that every child in America had access to primary health care? Were we more concerned about finding a cure for cancer, or spending money on making sure that phone calls and emails didn't contain terrorist-related content?
The bailout and its effects in the market place, in a nut shell. Apparently, today the chaos continues as the first market to open after Bush's signature, the Israeli Tel Aviv Stock Exchange tumbled like a rock going down a sheer slope.
The fundamental source of the entire financial crisis has been the opaque nature of the books of the biggest financial institutions. The fact that they refused to value assets which, if shown in the light of day, would be revealed to have little revenue potential, will probably end up costing the companies billions in dollars is only being papered over by the bill that the various branches of the federal government approved on Friday. This is further reinforced by new rules from the Securities and Exchange Commission stating that corporations no longer have to price these assets on a 'mark-to-market' basis. That is to say, they no longer have to value them at the price they would likely fetch in a free and open market, but rather can just pencil in whatever they want and use these assets as capital, or as collateral for the various short-term lending programs offered by the Federal Reserve. However, the hanging $55 trillion question in the air is what happens when the Credit Default Swaps start becoming unbundled. For instance, you may remember A.I.G. which met its fate and an $85 billion bailout from the Federal Treasury because of these insurance policies, but has yet to sell a single asset, despite blowing through $61 billion of the money provided in the bailout. Yet their executives party like Nero in Rome. Party on, Wayne. Why worry when none of those responsible for the lending practices will ever be prosecuted?
So, with some banks saying that they won't even participate in the No Bank Left Behind program and banks that will still fail regardless of their participation, what are we left with? A budget problem that will hamstring the domestic and foreign policies of the next President, whoever it may be, an IRS with undercover investigative powers which will be on the prowl to make sure that every dollar Uncle Sam has coming is brought to the Treasury, and good, old-fashioned ragealmost everywhere other than Wall Street.
As always, the world keeps spinning, and people will keep being people. So, by way of briefing, here are a few developments, like how a Recession is inevitable. Bush is optimistic.
Ben Franklins are increasingly worthless, compared to most foreign exchanges. The Dollar has gone below 100 yen for the first time in more than a decade, and keeps hitting new highs against our poor greenback. Inflation, though, reportedly didn't go up by very much in February, perhaps signifying a leveling out of prices, in the wake of consumer prices not properly reported in the Consumer Price Index. Any hope that inflation will be ameliorated by flattening or perhaps falling consumer demand is probably, at best, naive with oil on its march up to $125 a barrel. Fannie Mae and Freddie Mac may have been thrown a lifeline by Fed chief Ben Bernanke, but should he have? Is it enough? $200 Billion is a lot of money to be financed by Treasuries, yet not very much compared to the size of the mortgage market. Speaking of which, is going into dire straits as the crisis is beginning to move into the more traditional branch of mortgages, those whom enjoy good credit histories. In truth, the Fed has now set a course to assume all risk to the global financial system from the mortgage crisis.
Treasury Secretary Henry Paulson has announced new financial guidelines that are already market practice, which mostly center around risk assessment and the documentation required to receive a mortgage. Any notion of adjusting accounting requirements to allow banks to free up capital on their balance sheets, however, seems extremely misguided.
Fanning the entropy further, a pair of large financial institutions have collapsed in the wake of the problems in the financial sector. Bear Sterns, just after appointing a new head of East Asian operations, found its liquidity destroyed almost overnight. Thankfully for them, JP Morgan is riding in to the rescue. The Carlyle Group may come to the rescue of its stepchild, not-really subsidiary Carlyle Capital Corporation, as its assets have been seized. In a branding effort, David Rubenstein, Carlyle co-founder, wants to make sure that investors break even. This effort, like almost all of the efforts of the Fed and Treasury, are aimed at helping large banks and financial institutions recover their capital outlays lost as a result of inordinate risk assumption.
First, in answer to the "Case for Telecom Immunity," specifically: "2. Beyond the theoretical case for the warrantless program’s legality, the telecoms here specifically relied on written representations from the administration that the program had been reviewed by the president and determined to be legal." The question of the legality of this program is anything but theoretical, and the argument so often so cleverly invoked to defend this insidious assault on the very freedoms that Bush notionally seeks to defend.
Addressing the National Association of Attorney Generals, the debate surrounding the FISA renewal and telecom immunity was Bush's primary topic. In a case of misrepresentation, W says the target of the whole program of the big bad jihadis sitting in the mountains of Afghanistan, dialing their favorite operatives in Anywhere, Homeland. I would imagine being so far away from home, in a land where no one can speak their language, they would be pretty homesick.
However, evidence has emerged that the real target of this program may really be the e-mails. Which, makes me want to breath a sigh of relief, given the Bush Administration's track record of handling e-mail. It's not that the NSA, by means of this warrantless wiretapping program, invaded your privacy and cracked open a Pandora's box where probable cause and the very slim margin of institutional procedure that keep Americans from having to fear what goes bump in the night, but they probably wouldn't know how to manage it.
And if you were wondering how probable cause died, and if it will make a sound? I would say probably not. Our newest candidate for the vaunted 'Republicrat' status, Intelligence Committee Chairman Silvestre Reyes said that he hopes to bring the matter to a vote within a week. Also of interest, is the point that the House has seen and reviewed documents in relation to this matter, and they're "pretty much finished." So, what was in those documents? Or, were they mostly redacted? Some of the potential deals that are in discussion would continue to leave this entire matter beneath the lock and key of classification, away from the prying eyes of the interested or not public. The Senate version of the bill that has already been passed allows the Attorney General to wave his magic pen and pronounce everything legal and dismiss any and all related lawsuits.
For extra flavoring, try the aforementioned NPR coverage, now with audible delight. Or Senator Feingold issuing a public service warning about the already-passed Senate version.
Some editorialization from the Young Turks. Yes, the Democrats do suck.
And if you haven't seen Bush enough today, here he is addressing the National Association of Attorney Generals. And no matter how many times Bush said that his government told these telecommunications companies that the program that they were requested to participate in was legal, it clearly wasn't and every instance of him saying that the government said this program was legal before it saw the light of day could be used as evidence against him.
First, by way of introduction, here is a moving testimonial from a cop who doesn't understand the pharmacology of tetrahydracannabinol. (How many style points does that judge have?)
We've already talked extensively about police corruption and brutality. I would agree that there are law enforcement officers who are more than thugs with badges. Unfortunately for those who would like to have a rosy view of the state of law enforcement in America, there is an abundance of evidence that police officers aren't always the most upstanding citizens. But, also, there is a sense of helplessness in the face of power, demonstrated by the examples of police who are charged with brutality or some other criminal charge, yet are given the equivalent of a vacation with pay.
In this case,(with video) a police officer is caught on the camera of his squad car planting marijuana on a suspect. As the suspect already had a warrant out for his arrest, the additional brutality and charges seem rather spiteful.
In this case,(with video) a family from Hobart, Indiana catches their beating on their front yard surveillance camera. I can't help but wonder what that woman said to the police officer to receive that kind of treatment.
In the trial of the two officers charged with manslaughter in the 50+ bullet shootout that resulted in the death of Sean Bell, there has been some pretty startling testimony. I'm sure that the defense will try to destroy the credibility of the witness on cross examination, but the question remains whether or not officers identified themselves as such before they started shooting.
Of course, there is the question or racial discrimination in the enforcement of laws. In some cases, as is allegedly the case in Seattle, there are allegations that police officers arrest minorities on subjective charges, which will invariably tear communities apart through distrust. In other cases, law enforcement officials cover-up the actions of violent racist extremists, as allegedly is the case in North Carolina, which would appear to be a horrible example of officially legitimated violence against those protesting racism and injustice. As the records in question were allegedly destroyed in 2004 or 5, one has to wonder who is being protected by this?
While it may seem a foregone conclusion that our society must have police officers, it is not necessary that there be police officers who flagrantly violate the law. After all, if those entrusted with enforcing the law have no interest in following the law, why should the rest of us? (+ or -?)
Eliot Spitzer, the Governor of New York, yesterday weighed in on the ongoing financial crisis, with the unique perspective of one who was attempting to halt predatory lending practices before they were allowed to become the problems that we are seeing unfold today. The obscure bureaucracy, the Office of the Comptroller of the Currency (wiki), appears to have played a key administrative role in allowing this crisis to involve much more capital than would have otherwise been possible. As black has become white and white black, the Bush Administration has seemingly turned a bureaucracy dedicated to providing a degree of confidence in our banking system and protecting consumers, has become a tool for financial profiteering. Comptroller Dugan has this to say in response to the Governor's allegations, essentially pointing the finger of blame back at the states and arguing that the worst abuses came from institutions that do not fall under the purview of the OCC. Is this, perhaps, the next scandal to emerge from the Bush Administration?
In other news, Freddie Mac has announced plans to ease the financial liability of of its private mortgate partners. At issue is the liabilities said partners are burdened with incidental to the protection afforded by the mortgage agency. In tandem with this, the stimulus proudly signed by Bush into law the day before yesterday, increases the maximum value of a mortgage that the twins Freddie Mac and Fannie Mae may take onto their books, up to a maximum of $729,750. These two actions, in different ways, accomplish the same financial objective: to shield the private investors from the risk that they themselves took on by means of regulated governmental entities, which will inevitably mean that the taxpayer or, more likely, the purchasers of U.S. Treasuries will be stuck with the consequences of the ballooning crisis. Of particular note to the Presidential Election, some of the markets that would fall into the category to receive the largest margin of protection are in New York and California.
MBIA, Inc. executive said in Congressional testimony that they are in a position to withstand the financial crisis and no new regulation is required. The other contender for who rejected Warren Buffet's offer, FGIC Corp. announced intentions to be split up into two separate corporations, one for municipal bond insurance and another for the subprime mortgage liabilities, to cope with a new rating from Moody's at below investment grade.
On the legal front, the SEC is looking at revising financial transparency in response to more than three dozen investigations underway by the agency. The FBI is investigating a total of 16 corporations for fraud in relation to the financial crisis. I'm sure that this type of indeterminate liability will weigh heavily on the minds of investors who are desperately needed to provide all-important capital. The latest figure, produced by an analyst at UBS, forecasts the potential loss resulting from the ongoing financial crisis at $203 billion, which is likely to go up as other sectors of the credit market and municipalities become less safe investment choices.
This news, of course, makes Ben Bernanke's assurances of adequate insurance from risk sound like a flight of fancy. In light of Bernanke's precarious position, one must look to figures that measure confidence in U.S. monetary policy, like foreign exchange rates (Updated Dollar-Euro Exchange Rates). Considering the fall in the dollar in response to the Fed Chairman's comments, it would appear that the investment community does not share his opinions on the long-term outlook for the greenback. Considering his acknowledged position as the foremost authority in central banking, one might ask if Ben Bernanke is second guessing the Fed's dovish rate policy with the European Central Bank taking a more hawkish policy, keeping interest rates above 4%.
Below, is Bernanke's testimony yesterday, a song inspired by the Fed Chairman, and hot video from Reuters. Enjoy!
To touch upon the John McCain issue, I would like to present a few video examples. Over the course of four years, Sen. McCain flipfloped in the worst way, and became a sound machine for the very political machine that tried to destroy his reputation in South Carolina and defame his character for a singular act of kindness. Maybe if John McCain can win in the state that still flies the stars and bars of the confederacy, then there really is hope for humanity after all. My guess is that McCain's neoconservative credentials appealed to the deeply conservative southern states. The real test for the Republicans is Florida, but more on that later. Enjoy some video goodness!
He's winning acclaim for his opposition to the war. In my reasoned opinion, he's the only candidate on the Democratic side of the Presidential ticket that has any credibility on the issue. My only criteria, of course, being that they have some kind of plan to pull the country out of the war, regardless of Mr. Bush's best intentions.
Another policy worth noting is that he is the only candidate addressing the failures of our representative government, and the secrecy surrounding the Bush administration. Again, he is the only candidate with any credibility on this issue, as he is responsible for makingthe Pentagon Papers public in the 1970s. They may call him the dark horse of the field, but I might remind that it took only one horse to take down Troy. However, instead of a horde of Greek soldiers, within lies a large group of people who do not typically vote, but are newly motivated by the war and the various other misguided polices of the Bush administration.
I, for one, hope that Mike Gravel continues to campaign (with video goodness!) as though this presidential race matters. So, after the mainstream media pushes Ron Paul and Mike Gravel out of the presidential races on either party ticket, perhaps their supporters can find common cause in an independent Paul/Gravel '08 ticket. "We're more credible than Stewart/Colbert!" So, although Dodd and Biden have dropped out (by the way, Richard Adams of the Guardian, fuck you, because you can't edit this commentary), some will continue to care that Mike Gravel is still out fighting for freedom. $400,000 will go a long way, I am sure.
Here's a list of his upcoming sightings in New Hampshire, along with those of a few other people that feel they can contribute to the national dialogue.
By the way, why did Keith Olbermann fallaciously announce Sen. Gravel's departure from the race? Did he try to FOX News the Democratic race?
As always, there is a firestorm of news and protest surrounding U.S. foreign arms sales. And, of course, the countries involved are potential flashpoints for future conflicts.
From Iraq comes news that the Defense Department is bolstering its foreign military sales staff in Baghdad. In a program that was already plagued with problems of corruption and mismanagement, the problems were further compounded when the program realized the ridiculous leap in funding levels, from $200 million to $3 billion in only one year. The corruption in the acquisition process already has the potential to sour relations with our NATO ally, Turkey, as weapons bound for Iraqi troops have showed up in the hands of militant fighters fighting for an independent Kurdistan. However, due to the personnel shortage that accompanied the increased workload, the Iraqi government was forced to buy weapons from other countries. Now, members of Congress reportedly want to know whether American money was used to buy Chinese weapons for the Iraqi Army.
Arms sales, in fact, also provide one of the main sticking points between the United States and China, mainly weapons sales to the island of Taiwan. The economic problems that are the most prominent in the domestic, national discourse in U.S. relations with the PRC have been "underlined by the U.S. for years." However, the issue of Taiwan and the foreign arms sales are the basis for the other point of contention between the two superpowers. In fact this year, Section 1206 in the National Defense Authorization Act of Fiscal Year 2007, the House of Representatives Armed Services Committee establishes some pretty firm policies. Emphasis has been added by author.
More importantly, the committee believes that maintaining a balance of power across the Taiwan Strait is critical to ensuring deterrence and preserving peace, security, and stability in Asia. China’s National People’s Congress adopted an anti-secession law that essentially authorizes China’s Central Military Commission to use non-peaceful means against Taiwan if the latter declares independence. The committee is concerned that this law, in conjunction with an excessive military build-up by China, may signal a weakening of deterrence across the Taiwan Strait. The committee believes that the exchange program, by helping to strengthen Taiwan’s defenses, would help preserve and strengthen deterrence, thereby encouraging China and Taiwan to resolve their differences peacefully.
Considering that Chinese military spending is growing to make the PLA one of, if not the, strongest land forces in the world, the logic of the policy is almost self-defeating. The amount of equipment and money necessary to maintain the vision of deterrence expounded by this doctrine is well beyond the means of the United States. Look for this policy to cause problems in the future, as the U.S. is left groping for a new tact to maintain the stability in the region that is so vital to the international shipping lanes. The real question that would help one in thinking of this problem is, what event could happen that would leap the PRC's political elite to abandon the current Nash Equilibrium enjoyed by all parties in the region, in favor of a military strike? To which, the U.S. is bound under law to look upon with "grave concern," as per the 1979 Taiwan Relations Act.
There is a new arms race brewing in South Asia, although not the usual type. In this case, the developed countries of the world are falling over themselves to provide India with the next generation of military equipment. Looking at potential spending reaching $40 billion dollars, it's not hard to imagine why countries would feel interested in the competition. Nicholas Burns, the Undersecretary of State for Political Affairs feels so strongly about the subject of U.S.-Indian ties that he wrote an article for the current issue of Foreign Affairs. I particularly enjoy who he actually tries to make the article sound sincere in believing that ideology trumps the buying power of the Indian rupee. Again, the subtext to the entire discussion is long-term ties with India, in the fact of a emerging threat from China in Asia.
Before going onto the next topic, enjoy a little video goodness.
Now, the JDAM is going on sale to countries in the Gulf region, specifically Saudi Arabia, which has caused quite a bipartisan reaction on Capital Hill. One should consider, though, that Israel and its lobby aren't protesting the sale in and of itself, only the fact that sales of this type reduce the strategic and technological edge enjoyed that enforced deterrence and brought stability to the region. The sale is practically dead on arrival.
Finally, in Pakistan, an assassin has taken the life of former Prime Minister Benazir Bhutto, but that shouldn't stand in the way of ever-stronger ties developing between the U.S. and Pakistan. In particular, this event will not interfere in anyway with the proposed $2.1 billion arms deal in progress. Pakistan is slated to purchase18 F-16s of the C and D variants.
The end result of all of this is that American foreign policy, especially in the case of Pakistan, is being pulled into a cycle of arming one side to counter another threat that may or may not be of its own creation. And while arms sales and military relations reach new highs, things such as civil society and rule of law tend to be left by the way side. The Military Industrial Complex isn't exactly a democratic institution, after all. Those who are in a strong position to regulate this very important facet of foreign policy are focusing on other priorities, to say the least. Instead of controlling the number of arms distributed internationally, they are worried about the transfer of sensitive information, and the ramifications of Globalization on the MIC, but more on that later.
In one of the surest signs yet that the "opposition" party is firmly in the pocket of W and his administration, Congressional Republicans are more upset about the federal spending bill under consideration than the Democrats are. The interested onlooker might note that the bill includes most of what Bush asked for, and also some extra money to spend on developing coal power sources. Because that's real progressive legislative policy in keeping with the preferences and long-term interests of the American voter. As of press time, I hadn't heard back from the article's author on whether or not the Congress was really planning on spending $195 billion to fix that bridge up in Minnesota, see the video goodness below.
Over at Youtube today, Mike Gravel's campaign has caused another minor internet sensation. Perhaps the grass roots can cause trouble for the established media system yet.
