Salamander MIA

I apologize for the light posting over the last two weeks. I’m preparing for a major move and it’s kept me away from the keyboard. Thing should be picking up from here.

I had more things I wanted to say about the focus on the AIG bonuses, but instead, I’m going to outsource it to XKCD.

Published in: on March 31, 2009 at 11:55 pm  Leave a Comment  

Where is Feinstein on the EFCA?

The Courage Campaign is asking people to tell Senator Feinstein to join the rest of the California Democratic Congressional delegation and co-sponsor the Employee Free Choice Act. From their email:

The Employee Free Choice Act is an essential piece of our national economic recovery program. It allows workers to organize a union more easily and free from employer interference, giving them the power to more successfully negotiate with large corporations to protect the middle class during this severe recession.

This is one of the most important pieces of legislation this year. President Barack Obama supports it, as do most Democrats, including Senator Barbara Boxer. A Gallup Poll last week found that a clear majority of Americans support the Employee Free Choice Act.

Senator Feinstein, however, has refused to take a position on the bill — even though she co-sponsored it and voted for it in 2007.

It is nice that the Senator co-sponsored the bill when it didn’t have a chance of getting out of the Senate. Things have changed, though, and her silence is deafening. Go sign the letter, here.

Published in: on March 24, 2009 at 2:47 pm  Leave a Comment  
Tags: , , , ,

AIG Bonuses: Misplaced Rage?

I’m not going to try to, in anyway, usurp the discussions of AIG over the past weekend by any number of progressive blogs. Firedoglake has had particularly extensive coverage.

Having said that, I want to ask if we are focusing on the wrong thing. Yes, the bonuses are entirely outrageous, but I can’t say I’m particularly surprised. These are the exact same issues we’ve been encountering with the bailed out banks over the last few months. More importantly, I think our anger over the bonuses is distracting us from a far more interesting issue: the flow bailout money from AIG to its counterparties.

Over the weekend, AIG released the list of its counterpartiesthat have received bailout money. Of the money thus far distributed, only 35% of it has gone to American institutions. Not to get excessively protectionist, but why are we bailing out European institutions, while Europe appears to lack the political will to address its own problems? This is especially true of Germany, whose idiocy is endangering the entire EU and whose Deutsche Bank has received billions.

Let us be perfectly blunt about what this is: money laundering. We are laundering money through AIG to other institutions that benefit from the bailout without any of the restrictions put on banks that have received money directly. This situation should not continue.

Instead, we should complete our takeover of the company, wiping out the remaining shareholders. The normal insurance divisions, which appear to still be both profitable and sufficiently capitalized, can be sold to private investors. The financial products division should be allowed to enter some kind of controlled bankruptcy. The counterparties should receive whatever monies they would be entitled to in the course of a normal bankruptcy, which would be significantly less than the face value of monies owed. Then, at the end of the day, we can choose which, if any, of the counterparties deserve or require a bailout on their own merits.

Of those counterparties, I don’t see why any hedge fund profiteering from rank speculation should be bailed out, though I’m willing to be convinced on that issue. However, for those financial institutions who require and merit a bailout, let that money be delivered directly and openly, in the sterilizing light of day.

This is a much worthier goal than obsessing over the 0.1% of AIG bailout money that was spent wasted on bonuses. That said, we own the company, maybe there is a derivative lawsuit for fraud somewhere in here. I’ll take the money back, but we shouldn’t spend too much of our political focus on it.

Update:Professor Jonathan Turley was on Countdown tonight talking about the bonuses. First, he is concerned that attempts to get the money back from executives may run afoul of Constitutional prohibitions on bills of attainder. Second, he pointed out that much of the blame lies with Congress, noting:

When you give billions and billions of dollars to the pirates of Penzance you can hardly be surprised if they spend it on women and grog.

Well said.

Update 2: At the request of a reader I’ll make my point about money laundering more clear. Goldman Sachs, for example, has been proud to claim that it has received no bailout money from the government. And yet it has received bailout money washed clean by AIG. Criminals launder money so that it appears legitimate. The AIG bailout is proving to be a money laundering enterprise because it makes the money received by AIG’s counterparties appear to be unconnected to bailout funds.

Published in: on March 18, 2009 at 12:19 am  Comments (1)  
Tags: , , ,

Reality Disconnect: Los Angeles Times Edition

In a bizarre editorial yesterday, the Los Angeles Times evaluated the arguments for and against the United States joining the International Criminal Court. Unfortunately, the arguments seemed grounded in a different reality.

The arguments against joining the International Criminal Court are rooted in fear that Americans might one day face prosecution and judgment by foreigners in The Hague, and insecurity about our own legal and political systems being strong enough to prevent that from happening. But the ICC has jurisdiction only in cases in which a suspect’s home government is “unwilling or unable” to investigate or try him itself. The court is designed to try genocidal dictators and war criminals from countries in which the rule of law is nonexistent or the courts are in thrall to the regime. The notion that this could apply to the United States is laughable, yet it was the basis of Bush administration objections.

What world is the LA Times Editorial Board living that it is “laughable” that the United States would never be unwilling to prosecute its own war criminals? President Obama and the Congress have repeatedly shown themselves to be staunchly against war crimes prosecutions for former Bush officials. This even as a leaked report from the Red Cross, the official arbiter of the Geneva Conventions, states that 14 detainees were tortured while in CIA custody.

I am strongly in favor of joining the International Criminal Court, and eight years ago I made arguments similar to those presented in the editorial. Unfortunately, the last eight years have changed the reality on the ground. The United States is becoming the kind of outlaw regime that the ICC is designed to target. I now believe that in addition to any and every other reason for joining the ICC, we should do so in the hope that it will force us to respect our own laws and international obligations.

Disappointed in Dianne

From Calitics, Dianne Feinstein is the only member of the California Congressional delegation not to have co-sponsored the Employee Free Choice Act. The senator has an unfortunate history of caring more about corporations than about her constituents. Feel free to call her offices and ask them why she is putting corporations before Californians.

Published in: on March 13, 2009 at 12:04 am  Leave a Comment  
Tags: , ,

Not the Change We Need: Part V in a Continuing Series (Updated)

When President Obama ordered executive officials not to rely on Bush-era signing statements on Monday, I decided to take the optimistic view that this was a good sign. Emptywheel was not so optimistic.

Savage (who of course wrote the book on this stuff) goes on to explain the background of Bush’s abuse of signing statements, and to note that Obama says he will use signing statements, “with caution and restraint” (whatever that means).

Clearly, my optimism wasn’t warranted.

President Obama on Wednesday issued his first signing statement, reserving a right to bypass dozens of provisions in a $410 billion government spending bill even as he signed it into law.

In the statement — directions to executive-branch officials about how to carry out the legislation — Mr. Obama instructed them to view most of the disputed provisions as merely advisory and nonbinding, saying they were unconstitutional intrusions on his own powers.

However, there isn’t a consensus that the provisions really are unconstitutional limitations on his powers. For example, Jonathan Turley, a professor at GW Law School, has concerns regarding the provision relating to UN peacekeeping missions. He makes the point that the Constitution gave Congress the ability to restrict “foreign entanglements and adventures” through the power of appropriations. This is true whether or not we agree with Congress’s limitations.

More broadly, however, the use signing statements that alter the meaning of provisions would seem to undermine the constitutional balance of powers. When combined with the Obama Administration’s defense of the state secrets privilege, the delay in releasing the contents of additional Bush-era OLC memos, and the adoption of certain rhetoric about the war on terror, this paints the disturbing picture that the Obama Administration is not serious about rolling back the Bush Administration’s executive overreach. While they have taken some symbolic steps, there doesn’t seem to be a serious commitment to either revealing Bush-era abuses of executive power or halting all such future abuses. Rather, they appear inclined to reserve the ability to abuse power in more limited ways.

This is not the change we need.

Update: The Obama Administration has moved to dismiss another civil case involving torture, on the grounds that the right of prisoners at Guantanamo not to suffer abuses was not established at the time. Unacceptable.

Climate Change and California

The LA Times has an article on recommendations made by the state’s Climate Action Team to prepare the state for the consequences of global warming. Among the suggestions are limiting coastal development, phased abandonment of certain coastal areas, and relocating state infrastructure inland. Orange County and the San Francisco Bay area are particularly hard it. Notably, both the Oakland and San Francisco Airports will be under water.

Sea levels along California have risen nearly 8 inches in the past century, although this varies with coastal dynamics. According to the Pacific Institute report, 260,000 Californians already live in flood zones, but are assumed to be protected by existing structures, such as levees and sea walls.

A 1.4-meter sea level rise would increase the population at risk to 480,000. Currently, 1,900 miles of roads and highways are at risk of flooding, which would grow to 3,500 miles under the sea level rise projections.


Impact of Rising Sea Levels on Orange County

Rising sea levels are, of course, only one of the consequences of global warming. Some others include increased frequency of wild fires, drought, and inconsistent or nonexistent water supply from glacial/snow melt. Mitigating all of these will cost considerable money which is why I’ve suggested using mileage taxes for infrastructure and retasking gas taxes to climate change mitigation.

Impact of Rising Sea Levels on the Bay Area

Impact of Rising Sea Levels on the Bay Area

The full report can be found here, while a map of the impacted coastal areas is here. The images in this post are screen shots of the impact on Orange County and the Bay Area taken from the map.

More Edward Glaeser on Environmentally Friendly Development

I have previously written about Edward Glaeser, in the context of an article in the LA Times arguing that California should relax restrictions on development because households in California have a smaller carbon footprint than households in other areas of high growth. In this post at the Economix blog on the New York Times website, he makes an argument that we should support urban, rather than suburban, development.

In almost every metropolitan area, we found the central city residents emitted less carbon than the suburban counterparts. In New York and San Francisco, the average urban family emits more than two tons less carbon annually because it drives less. In Nashville, the city-suburb carbon gap due to driving is more than three tons. After all, density is the defining characteristic of cities. All that closeness means that people need to travel shorter distances, and that shows up clearly in the data.

While public transportation certainly uses much less energy, per rider, than driving, large carbon reductions are possible without any switch to buses or rails. Higher-density suburban areas, which are still entirely car-dependent, still involve a lot less travel than the really sprawling places. This fact offers some hope for greens eager to reduce carbon emissions, since it is a lot easier to imagine Americans driving shorter distances than giving up their cars.

But cars represent only one-third of the gap in carbon emissions between New Yorkers and their suburbanites. The gap in electricity usage between New York City and its suburbs is also about two tons. The gap in emissions from home heating is almost three tons. All told, we estimate a seven-ton difference in carbon emissions between the residents of Manhattan’s urban aeries and the good burghers of Westchester County. Living surrounded by concrete is actually pretty green. Living surrounded by trees is not.

Overall, I find this argument a great deal more convincing than I did the last one. We should shift toward higher density development. However, the issue I raised in my previous post remains, would changing our sources of energy provide a greater or similar benefit to changing our type of development? In the previous post, that referred to improving energy efficiency and renewable sources in other areas of the country to match California’s standards. In this case, would improving energy efficiency and renewable sources in, say, suburban Texas provide more benefit than relocating from Westchester County to New York City. From a policy point of view, this seems like the bigger question. That said, adopting the point of view that we must do everything we can to prevent climate change, clearly we should do both.

I do have a second quibble, though, especially with the last sentence quoted above, and the entire tenor of the post. Living surrounded by concrete is only more ‘green’ than living surrounded by trees given the existent types of development we have. There are all sorts of air quality and meteorological impacts to the lack of plant life in cities. Concrete and asphalt retain much more heat than countryside, to the point that Atlanta affects its own weather. Equally importantly, plant life is important to people’s psychological and emotional well-being. Rather than simply replacing actual forests with concrete jungles, we should try to make the concrete jungle a little more forested. There is more to being green than having a small carbon footprint. If we do decide that part of the solution to climate change is high-density development, we will need to invest considerable thought into minimizing the other environmental impacts of cities.

I don’t mean to say that Professor Glaeser would disagree with this point. I do, however, think that his articles may seek to make a rhetorical point that carries his argument too far.

Banks Returning Bailout Money (Updated)

This New York Times article made me scream. Loudly.

Some bankers say the conditions have become so onerous that they want to return the bailout money. The list includes small banks like the TCF Financial Corporation of Wayzata, Minn., and Iberia Bank of Lafayette, La., as well as giants like Goldman Sachs and Wells Fargo.

They say they plan to return the money as quickly as possible or as soon as regulators set up a process to accept the refunds. On Tuesday, Signature Bank of New York announced that because of new executive pay restrictions in the economic stimulus package, it notified the Treasury that it intended to return the $120 million it had received from the government only three months ago.

The bailout money never should have been lent to banks that didn’t require it. There were many deficiencies in the Paulson bailout plan, one of which is that it didn’t impose conditions from the very beginning. One of the benefits of the Swedish model was that the restrictions placed on banks that sought help were so stringent that the banks looked for private capital first. The government was, quite seriously the lender of last resort, which was the point. That banks took federal bailout money that they can afford to return (presumably because they aren’t insolvent or can find private capital), means that the government wasn’t acting as a lender of last resort. The Fed and the Treasury Department need to disclose what the criteria were for determining whether a bank qualified for bailout money, because clearly these banks shouldn’t have.

And, as a final note to Republicans, socialism is patriotic.

C. R. Cloutier, the president of MidSouth Bank of Lafayette, La., and a survivor of the savings and loan debacle, said that his institution received $20 million from the rescue fund because he and his board believed it was patriotic and would help them offer loans during a recession. [Emphasis added.]

Addendum: I agree with some of the bankers complaints, in that it may be unfair to now impose conditions on banks that received bailout money when there were no conditions. However, as long as the participating banks can escape the conditions by returning the money, I don’t think this poses a significant moral problem. The fault for the lack of conditions lies with the Congress, not with the banks.

Update: The idea that we didn’t collect FDIC premiums from banks for a decade makes me scream too. If only Geico were so accommodating as to accept my argument that I needn’t pay premiums because I hadn’t been in an accident recently.

Published in: on March 11, 2009 at 5:07 pm  Comments (2)  
Tags: , , , , ,

Tuesday Evening Progressive Music Blogging

In honor of the forthcoming fight over the Employee Free Choice Act, I present Ed Miller’s “The Prince of Darkness”.

Published in: on March 10, 2009 at 9:38 pm  Leave a Comment  
Tags: , ,