Monthly Archives: June 2009

Food and Politics

I was listening to Micahel Pollan on the radio last night (yes, on NPR; I was drinking chardonnay and eating sushi too) do his usual spiel on food, although this time it involved him promoting his new film “Food, Inc.” And although I know his viewpoint already — the American diet is unhealthy and politicians don’t care because they accept money from food corporations — this time I got  angry.

Maybe it was because this time Pollan told a story I hadn’t heard before: about how in 1977 Senator George McGovern led a committee that called for Americans to eat less red meat, until the meat industry threw a hissy fit and forced the committee to water its position down to “eat less saturated fat.” I just hate the fact that a single industry gets to throw money at politicians and thereby screw the American public.

Or possibly it’s because Pollan was speaking in the middle of the debate over health care reform. Politicians are feuding over the cost of health care and insurance, but they continue to throw subsidy money at the corn farmers and beef ranchers whose products are what make our diet so unhealthy. Hell, even the Wall Street Journal ran a column yesterday in which a doctor said that preventing obesity would save enough money to cover everything and everyone else.

So politicians, I ask you, again, please try to do what is right for the American people, and stop doing what some lobbyist pays you $2,000 to do.

Austin, TX Sticks it to Wall Street

The Wall Street Journal ran a great article on Thursday about how a small investment firm in Austin made a clever trade at the expense of some of the biggest Wall Street firms. Amherst Holdings wrote credit default swaps on a specific pool of mortgages, which had $29 million in loans outstanding out of an original pool of $335 million. Because these remaining loans were the dregs of the pool, everyone assumed they would default. So JP Morgan and Bank of America and their pals were willing to pay 80-90% of the face value for insurance that would give them 100% on default, apparently assuming that their own genius would allow them to book a risk-free 10-20% return.

Because people can buy these swaps without owning the underlying bonds, Amherst wrote about $130 million of the swaps, pocketing $104 million to $117 million. With the proceeds, Amherst went and paid off all $29 million of the mortgages. Therefore, there were no defaults, the swaps expired worthless, and Amherst got to keep all the proceeds. Genius! According to the WSJ, the big banks are “seething” at being outwitted by a Texas runt, and are complaining to various authorities. Wait, aren’t these the same banks who are lobbying against regulation of credit default swaps? And now they are complaining to the authorities? Stop crying like whiny little babies and take your losses. Welcome to the new world, masters of douchebaggery.

Gitmo Prisoner in US: Run, Run for Your Life!

Just a few hours after I posted yesterday regarding the ridiculous fear surrounding the transfer of Gitmo prisoners to the United States, a story comes out that Ahmed Khalfan Ghailani, a suspect in the 1998 embassy bombings, was moved from Gitmo to the federal detention facility in New York City so that he can stand trial in federal court. Yes, you heard that right: the federal lockup in Manhattan, not the Supermax prison in Colorado. The same facility that currently houses Bernie Madoff. Are New Yorkers leaving town to avoid this horrible danger? Will the authorities order the evacuation of Manhattan? No, of course not. Ghailani (oddly close to Giuliani, don’t you think?) is under massive guard, and nobody thinks he will escape. The only person worked up about this is notorious douchebag John Boehner, who called the move ”the first step in the Democrats’ plan to import terrorists into America.”

Supreme Court Agrees With Thoughtbasket

OK, the justices didn’t exactly mention me in their decision, but they did unanimously (according to Scotusblog) rule against the Indiana pension funds who were whining that they hadn’t gotten enough money for their secured debt. The highest court in the country has thus decided that the Obama administration did not violate the rule of law in pushing through the Chrysler bankruptcy. Read here my post saying just that. Of course, some argue that this issue is too political for the Court to be focused just on the law, but if that were the driving issue here, wouldn’t this conservative court be likely to rule against Obama, not for him?

Please Focus on Policy, Not on Fear

Opponents of President Obama’s plan to close the prison at Guantanamo Bay have recently seized on the tactic of asking “do you want these terrorists in your neighborhood?” and thus playing on people’s fears. This is purely a rhetorical feint, and it’s offensive. The president isn’t planning on installing the Gitmo inmates in your local condo complex, and his opponents know that. The inmates will go into military brigs or maximum security prisons: the same places that currently house murderers, rapists and drug dealers. Are Obama’s opponents saying that these prisons aren’t secure? If so, shouldn’t they focus on fixing the prisons, so that rapists aren’t wandering your neighborhoods?

The fact is that the opponents of closing Gitmo know perfectly well that moving the inmates to a US supermax facility is perfectly safe. They just disagree with closing the island prison on policy grounds. And that’s fine. There are reasons – cost, isolation from US courts, desire to maintain military control – for wanting to keep Gitmo open. But let’s discuss those actual reasons, instead of using fear mongering and mistruths to get people scared and worked up.

Speaking of mistruths, on the same day that Admiral Mike Mullen, the chairman of the Joint Chiefs, said that he has long wanted to close Gitmo because it “has been a recruiting symbol for those extremists and jihadists who would fight us,” Republican Senator John Kyl, who is a major league douchebag, claimed that “it’s palpably false to suggest that the existence of Gitmo created terrorists.” Who is a more reputable source – the career soldier or the sleazy politician?

Glenn Greenwald has an excellent piece in Salon describing how this is an ongoing pattern: Republicans use specious arguments to make voters afraid, and Democrats feel a need to act tough instead of pointing out the ridiculousness of the Republican arguments. The NY Times recently ran a piece showing how the Republicans were planning even before Obama’s inauguration to use this strategy. To me, this demonstrates that the strategy is purely political, with no basis in fact or policy.

Wall Street Has Gone Too Far

In the wake of the financial meltdown there has been continued tension between Main Street and Wall Street; between the working class (and the politicians who represent them) and the financiers (and the lobbyists who represent them). Despite the commentary from populists such as me who have been railing against Wall Streeters continuing to pay themselves huge bonuses, some of this tension has been between legitimate positions of free markets versus genuine concern about greed and income inequality.

But now the financiers have gone too far. First was an article last week saying that some big banks are looking at participating in the government’s PPIP (Public Private Investment Program) in order to buy their own toxic assets. Wait…so they are going to borrow cheap money from US taxpayers, and then use it to buy their own assets, with US Treasury backstopping on their losses? That is appalling without even considering the obvious conflict of interest regarding what price the assets are sold for. You have got to be kidding me.

Then today’s NY Times reports about the extensive lobbying effort that the big NY banks have launched to limit regulation of derivatives. You remember derivatives – the financial “weapons of mass destruction” that were a huge cause of the meltdown? The big banks make a ton of money on derivatives, and they don’t want that gravy train derailed. And since when they lose money, the taxpayers bail them out, they are clearly in support of the status quo. So they formed a lobbying organization and hired a big-name lawyer to lead the charge, paying him over $400,000 for four months of work. Now they are lobbying Congress to water down any sort of regulation of derivatives.

For banks that received taxpayer bailouts to now be spending money lobbying to avoid regulation on the very products that caused them to require bailouts? No way. It is time for Congress, and for the Obama administration to say “Fuck you, Wall Street.” The big banks make billions in profit on unregulated derivatives? Too damn bad. So maybe some traders will only make $2 million per year instead of $10 million. Tough shit. The Treasury Department-Wall Street axis of greed has to stop, and it has to stop now. President Obama, it’s time you step up to the plate on this.

Added bonus links: 1) Paul Krugman on how Reagan-era decisions on deregulation set the stage for financial catastrophe; and 2) a hilarious piece on Harvard Business School students taking a pledge to serve “the greater good” instead of their “narrow ambitions.” The money paragraph is the last one, with a quote about principles from a woman who is taking a job at Goldman Sachs, one of the leaders of the lobbying effort excoriated above. Oh, HBSers, it’s such a shame that you don’t understand irony.