Relevant and even prescient commentary on news, politics and the economy.

Word to be Eliminated: "Symbolize"

Several recent events have been described as “just symbolism,” which apparently is a method of dismissing uncomfortable statements of fact, such as ‘Sarah Palin is the nominee for Vice President’ or ‘Rick Warren will give the invocation at Barack Obama’s inauguration.’ Apparently, these moments are supposed to have a lifespan closer to that of Britney Spears’s first marriage than, say, Britney Spears’ [sic] Guide to Semiconductor Physics.*

Ladies and Gentlemen, I give you Symbolism Writ Large, in a manner to shame Christo himself:

US opens world’s largest foreign mission in Iraq

The $592 million, 104-acre compound that was dedicated in Baghdad’s fortified Green Zone on Monday is meant to symbolize a long-term commitment to Iraq.

That’s a lot of “symbolizing.”

Tell me again why we need to be cautious in investing in domestic infrastructure. (Yes, I get that it’s incrementally larger. So was the Federal-Aid Highway Transportation Act of 1956. Nu?)

*Since Rick Warren was the driving force behind the PEPFAR initiative, discussed by cactus here, response for tens of thousands of African illnesses and deaths, and so discredited that even popular television shows are lambasting it, the idea that he will Just Go Away on 20 January 2009 around 2:00pm is even more absurd than usual.

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"Ben Tre Logic" Redux: History Repeats Itself

Forty years ago, in 1968, an American major after the battle of Ben Tre in Viet Nam was quoted by Peter Arnett as having declared, “It became necessary to destroy the town to save it.”

Now, we have the contemporary version, from U.S. President George Walker Bush: “I’ve abandoned free-market principles to save the free-market system.”

This, apparently, is why banks are being paid not to make loans.

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English translation, or Kleptocracy Defined

Via CR, the Fed announcement this morning:

The Federal Reserve Board on Tuesday announced the creation of the Term Asset-Backed Securities Loan Facility (TALF), a facility that will help market participants meet the credit needs of households and small businesses by supporting the issuance of asset-backed securities (ABS) collateralized by student loans, auto loans, credit card loans, and loans guaranteed by the Small Business Administration (SBA).

Let’s go through this. The government is now insuring securities based on

  1. student loans,
  2. auto loans, and
  3. credit card loans*

Note that this is not support for schooling, the automobile industry, or credit card borrowers—just the people who buy (or bought) the paper.

In short, f**k the people who actually produced the underlying value of that financial asset. Save Wall Street with Main Street’s tax monies.

I give up. Yves Smith’s old description of Paulson’s “Mussolini-Style Corporatism in Action” seems so quaint by comparison to this abomination.

*SBA loans are omitted from discussion, since there is a reasonable argument that the government insuring SBA loans is has no net cash flow implications. (The argument will prove false when it is discovered that SBA loans are being made profligately to Bush Administration contributors, but that’s a side issue.)

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Felix Salmon Explains It All to You

Ken Houghton

There does indeed seem to have been a visible change in Treasury policy since the election. Until that point, it cared a little about optics. Now, it’s giving monster bailouts to the likes of AIG and American Express; it’s dragging its feet on homeowner relief; and in general Hank Paulson’s Wall Street buddies seem to be getting much better access than anybody in Detroit. And no one’s even trying very hard to defend these actions in public: they know they’ll be out of a job in January anyway, so they’re just doing what they want to do and what they feel is right, without caring much whether anybody else agrees with them.

Background at this link.

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"A Man With a Briefcase Can Steal More Money than any Man with a Gun"

Ken Houghton

I would prefer not to talk about AIG, especially since we already have two posts on it today: Robert brilliantly puts it into context, while DOLB goes for blood.

But the Gorgeous, Brilliant, and Talented BessNormally-not-this-astute-or-succinct Equity Private posted the perfect summary.

And Floyd Norris is on fire as to why this move, with the pathetic, lying excuse for corporate leadership the company now has, makes anyone taking out the perpetrators guilty of nothing more than Justifiable Homicide (not that I’m suggesting that; far from it*).

Clearly, the kleptocrats at the White House and Department of the Treasury are making certain that their lamest two months and ten days make the previous eight years appear to be the epitome of frugality.

*I’m thinking of something longer and slower, like public stockades.

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White House not slowed down by disaster in financials

Steve Benen at The Washington Monthly points to a WSJ article that cautions us:

THE ULTIMATE BUSH LEGACY FOR BIG BUSINESS…. Bush’s presidency may be winding down, but he’s not quite done with his conservative domestic agenda.

Bush administration officials, in their last weeks in office, are pushing to rewrite a wide array of federal rules with changes or additions that could block product-safety lawsuits by consumers and states.

The administration has written language aimed at pre-empting product-liability litigation into 50 rules governing everything from motorcycle brakes to pain medicine. The latest changes cap a multiyear effort that could be one of the administration’s lasting legacies, depending in part on how the underlying principle of pre-emption fares in a case the Supreme Court will hear next month.

This amazing piece, from the Wall Street Journal’s Alicia Mundy, hasn’t generated a lot of attention so far today, and that’s a shame. The administration’s efforts on this are likely to have a huge impact.

Corporate America has been calling for some mechanism to “preempt” product-liability litigation for years, and Bush had promised to deliver. The White House, however, had limited options in dealing with a Democratic Congress which cares about consumer protections.

So, the Bush gang is adding provisions to obscure federal regulations that will block product safety lawsuits by consumers and states. The scheme would affect products ranging from cars to prescription medication to railroad cars.

But a possible Obama administration can undo this, right? If Obama wins, he’d no doubt want to, but reversing these regulations would take a long while.

These new rules can’t quickly be undone by order of the next president. Federal rules usually must go through lengthy review processes before they are changed. Rulemaking at the Food and Drug Administration, where most of the new pre-emption rules have appeared, can take a year or more.

The article is online here, and an WSJ video with Mundy talking specifically about how this affects state lawsuits is here. Take a look.

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Brad DeLong Lets the Cat Out of the Bag

Responding to EconomistMom, he ends his breakdown of flows with:

Aiming for a balanced unified deficit over the business cycle would, I think, be a good thing economically–but I really do not see how we could possibly get there.

Apparently, spending eight years Serbing the budget has worked. As the current Administration surely knew it would from the outset.

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