Between the hedges

Click image for full Steve Greenberg cartoon.

Political bankruptcy

Republicans want to return to disastrous policies because they would then have to admit the emptiness of their ideas and their own uselessness in solving any national problem bigger than changing the diaper of some busted Wall Street institution:

The economy didn't just crash under a Republican president, it crashed under Republican policies. It crashed with low taxes. It crashed with deregulated markets. It crashed with huge restrictions on union activity. It crashed with massive cuts in environmental regulations. It crashed with lowered trade barriers. It crashed with big fat Pentagon spending.

They got what they wanted. They got CEOs with no limits on their wealth. They got banks with no limits on their "creativity." They got trade agreements that guaranteed manufacturing could be moved to the dirtiest, cheapest, most desperate source available. They got massive cuts in capital gains taxes and equally large boosts in the wealth they could pass along in estates. They got everything they said would make us all wealthy. They got record oil and gas drilling. They got record giveaways of public land. They got everything they said would create jobs. They got the middle class to shoulder more, more, more of the burden so that those beautiful job creators would be free to work their magic.

They can't say the economy crashed because taxes went up, because they didn't. They can't say that the economy crashed because there was a raft of new regulation, because there wasn't. They can't blame it on "union thugs" or Saul Alinsky or the guy who writes Happy Holidays cards at Hallmark. They can't blame it on a president who was elected when the world was already in free fall. Only, of course they do. They say it because they have no choice.

I've hit some of these themes for a long time, but I don't think I've ever hit them as well as Mark Sumner on DailyKos. Go read the whole thing.

The prudent along with the gamblers

Let's get the lead back into paint and gasoline

After all, anything that contributes to stupidity is good for Republimerica.

Signature madness

The louche douche Lyndon LaRouche has young people circulating petitions at the Massachusetts Democratic Party's annual convention.  The first is a call for restoration of Glass-Steagall - not such a bad idea, actually.  But it's a lead-in for their call to remove President Obama from office, on the grounds that he's "the same as George W. Bush."

Uh, no.

These are the same weirdos who held signs in 2008 portraying Obama as Hitler.  Credible!

Is that a mutation?

Click image for full Tom Tomorrow cartoon.

No learning from furriners

Click image for full Tom Toles/Washington Post cartoon.

Crash and burn

Click image for full Mike Keefe/Denver Post cartoon.

Not all they're screwing

Click image for full Bruce Plante/Tulsa World cartoon.

Cigarettes or eggs

Journalists like to think they write the first draft of history. More often, they write the first draft of "As the World Turns" (which in its time was my grandmother's favorite story - no wonder journalists are losing audience). All dialog, no resolution.

The New York Times had a long story yesterday about the possible regulation of salt in prepared foods. Mostly, it's a history of attempts to justify or forestall regulation of the amount of salt that food businesses use.

The article seems sympathetic to regulation, but it never provides its readers with a way to sort out the truth of one claim from another, even provisionally, as empirical claims of this type have to be sorted out. Instead, it spends vast arid salt flats (heh) on what a publisher might call news you can use - dissertations on Cheez-Its and chicken noodle soup and how good salt tastes.

This is really news you can relate to. It's not intended to edify but to draw you into a commonplace domestic narrative and make you feel you have expertise on the subject. Without helping you gain that expertise...

Not that there weren't glaring opportunities:

In 1982, [soup company] Campbell sponsored an American Heart Association symposium that included a study on calcium, which is now seen as having only a small role in reducing hypertension, and another that asserted that only some people were susceptible to hypertension from salt.

Thirty years later, I explain my own excellent blood pressure despite significant salt intake by guessing that I'm merely not susceptible. Still, I would expect something new from the intervening three decades. If there's a genetic link, I'd expect it to be confirmed by subsequent research and probably even available as a blood test by now. Instead, reporter Michael Moss simply drops the ball. Maybe scientists have too, but Moss owes readers the follow-up.

The Times story ran in the Science section. Is it too much to ask that it sort out the state of the science on the connection between salt and hypertension? If that connection really only affects a segment of the population, how can we tell whether we're in that segment? That would be news we could really use.

There are further hints at facts in the story:

Making deep cuts in salt can require more expensive ingredients that can hurt sales. Companies that make low-salt pasta sauces improve the taste with vine-ripened tomatoes and fresh herbs that cost more than dried spices and lower grade tomatoes.

Also dropped. It could be that my b.p. is good because so little of what I eat comes out of a box, highly processed. But you'd have to be a hippie or something equally dismissable to expect Americans to eat real fresh food.

American media consistently fail even to try to distinguish fact from self-interested argument. Is the prepared food industry fighting a fight like the cigarette industry, defending its merchandise of death, or like the egg producers, whose product contains cholesterol but has been shown to be healthy, leading the Heart Association to withdraw its advice to avoid eggs?

The methods that corporations use to defend their income are the same, whether they're scientifically justified or not. Media can't get to the bottom of them by reporting about how the industry is lobbying.

Somewhere, some reporter has to remember - or reinvent - getting to the bottom of the story. Finding out what's actually true...

Throwing cold water

In an old western, the Republicans here would get slapped in the face to stun them out of their consistent hysteria. But the Democrats are too gentle. Way too gentle.

Click image for full Matt Davies/Journal News cartoon.

Reverse Robin Hood

Without substantial regulation of Wall St., the fall 2008 bailout of irresponsible and bankrupt titans of finance amounts to theft from the middle class for the benefit of the rich.

Click image for full Bruce Plante/Tulsa World cartoon.

Ride of your life

You'll love the loan terms, too!

Bonus babies

Wall Street spends billions in bonuses for its mostly (entirely?) random top performers. What does billions of dollars buy? For their customers, not a goddamn thing. Their margin over the cold boring average is eaten up in taxes and in fees. Of course, fees are what the street actually cares about. They're playing with other people's money to enrich themselves. Sweet!

This of course is why scam artists investment professionals are so obsessed with three things:

• Lowering already low capital gains taxes
• Finding new "innovative" investment vehicles, many or most of which innovate only in sleight of hand with risk
• Deregulation
  

Conclusion: To a first approximation, there is no smart money.

Incenting the pump and dump

Timothy Geithner may have, uh, misfiled his taxes, but he hits the bullseye here:

“Excessive executive compensation that provides inappropriate incentives,” Mr. Geithner said, “has played a role in exacerbating the financial crisis.”

CEOs with captive compensation committees have been ripping off their shareholders. Legally.

If they did it with guns, everyone - not just us liberals - would be outraged. Why is it that conservatives forgot that their best trait was the ability to watch the money?

Sound of inevitability

In a lightly regulated financial market, a meltdown is inevitable.

The equity markets hold corporate officers in any sector to the standards of profitability and thus stock price performance in their sector. Corporate officers of publicly traded companies who fail to deliver lose their jobs.

These incentives are short-term incentives. The executives who are sensitive to them - all executives - want most of all not to be left behind, lest they not meet the metrics for their bonuses. They measure their numbers quarter to quarter.

There are no corresponding short-term disincentives. Paper gains made today are compensated immediately irrespective of their endurance past the fiscal year.

This means that any "innovative" investment vehicle that provides strong returns will quickly spread throughout the financial sector. It doesn't matter whether it hides risk which guarantees that eventually it will hide risk. The temptation to pump is too great without the restraints of law.

The dump to come? Who cares? That's years away, and they'll have theirs. Besides, as executives, they're convinced by their own forward-looking optimism that nothing will go wrong, anyway. This business cycle is different. This business cycle is weightless.

Financial services companies also have to satisfy their clients or they'll move their capital elsewhere. This is the so-called free market mechanism for constraining risk in the market. Some clients should be more risk averse and thus should accept smaller returns for lower risk.

The irony is that these clients have less information about their risks than those who are selling them on the risk-hiding investment vehicles, and yet the free market relies on the relatively ignorant to take less money by being smarter than their professional advisers. It's human nature in any case (probably animal nature, too) to underestimate long-term risk to gain short-term reward.

Financial "innovation", so beloved by Phil Gramm and his libertarian ilk, is in fact often a path to danger for all of us with only a few reaping the benefits. The correct role for government is to make risk transparent and to constrain short-term operators from leveraging too much of it.

The consequences of having to relearn these lessons of the Great Depression surround us. Smart people are trying to figure their way out of the mire created by other smart people without too much pain - painless exits were all boarded up years ago. It's anyone's guess whether they'll succeed.

For instance, will the Chinese still have enough surplus from their manufacturing economy to lend us another trillion dollars ($1,000,000,000,000!) for use as an economic stimulus? Where are they going to get it if our consumers are cutting back?

At best, this is going to be one hell of a hangover.

Update: Common threads from Andrew Leonard in Salon, notably:

We now know that dereliction of duty ran rampant at every step of the chain. Mortgage borrowers lied about their income. Mortgage lenders failed to check the credit-worthiness of borrowers. Banks restructured loans into derivative instruments that obscured the underlying liabilities. Credit rating agencies -- dependent on fees from the very institutions whose products they were supposed to be judging -- gave the newfangled securities gold-plated ratings. Government regulators looked the other way. We now know that the incentives built into the system encouraged every individual actor to act in defiance of economic rationality.

We now know, in other words, that left to themselves, economic actors do not pursue rational, sustainable courses of action. Greed and self-interest will steer you into the ditch every time.

Yeah, I'd say that Leonard and I are on the same page.

Too late for a shredder

The AP awakens from its slumber long enough for Matt Apuzzo to slap down the Bushist deregulators and their favored lobbyists at the root of the mortgage crisis:

The Bush administration backed off proposed crackdowns on no-money-down, interest-only mortgages years before the economy collapsed, buckling to pressure from some of the same banks that have now failed. It ignored remarkably prescient warnings that foretold the financial meltdown...

Careful there, you might commit journalism!

(h/t R. Neal at KnoxViews)

Oops, my bad

Click image for full Bruce Plante/Tulsa World cartoon.

Best bullshit money can buy

Manipulation of an unregulated market? I'm shocked, shocked!

(h/t Paperwight)

Me and my Wall St. homies

... gunned down you mortgage suckas!

Or wasn't McCain in Washington the whole time, advocating the deregulation of the financial system? If only he were running against himself, he might have a chance. Now it looks as though he's trying that.

And I thought all he had left was fear. I forgot about absurd ridiculous bullshit that counts on the inability of those last witless undecideds to remember Monday, much less the cowboy economics leading to our current crisis.