A Pie Chart

(Via Investors.com. Click to enlarge.)

Nobody Goes to Jail

Over drinks at a bar on a dreary, snowy night in Washington this past month, a former Senate investigator laughed as he polished off his beer.

"Everything's fucked up, and nobody goes to jail," he said. "That's your whole story right there. Hell, you don't even have to write the rest of it. Just write that."

I put down my notebook. "Just that?"

"That's right," he said, signaling to the waitress for the check. "Everything's fucked up, and nobody goes to jail. You can end the piece right there."

— Excerpt from Why Isn't Wall Street in Jail? by Matt Taibbi.

That Rolling Stone article is a must read. Matt Taibbi explains how the entire system that is designed to monitor and regulate Wall Street is so fucked up that it actually serves to protect financial criminals. This is how the system works for the richest:

Criminal justice, as it pertains to the Goldmans and Morgan Stanleys of the world, is not adversarial combat, with cops and crooks duking it out in interrogation rooms and courthouses. Instead, it's a cocktail party between friends and colleagues who from month to month and year to year are constantly switching sides and trading hats. At the Hilton conference, regulators and banker-lawyers rubbed elbows during a series of speeches and panel discussions, away from the rabble. "They were chummier in that environment," says Aguirre, who plunked down $2,200 to attend the conference.

And these super-wealthy elite criminals are amazingly skilled at whipping up a distracting frenzy of populace rage against... unbelievably... health care, socialism, and unions. I don't know what will convince them to re-aim their pitchforks.

Our Sputnik Moment

Senator John Kerry was on Meet the Press with a message that all Democrats should be pushing every day in front of every camera:

Visit msnbc.com for breaking news, world news, and news about the economy

Kerry pointed out the difference in the economic return of tax cuts versus unemployment insurance. Why hasn't this fact caught on with people? Because it's not being said loud enough.

But the next part about us, the U.S., not even being in the game with solar technology despite the fact that it was invented at Bell Labs 50 years ago is downright frightening. We're not even investing in green tech and China is. Where are our new jobs going to come from? You know, those high-tech, high-paying jobs that many people would like their children to have a shot at one day.

Sorry but the success of the iPad isn't going to fuel our economy.

Government Oversight

I don't have anything much to add to that.

Trillion Is the New Billion

The New York Times has a nifty treemap to help us visualize Obama's 2011 budget proposal. I can't seem to hack that app onto my own blog, so you'll have to click that link to get a look at it. Green squares indicate an increase in spending for a function. Orange squares indicate a decrease in spending.

The 2011 budget is only $100 billion more than Bush's final budget. But here's the crazy thing I'm hearing from analysts: Obama's budget includes Iraq and Afghanistan war funding. Bush's budget did not. How the hell did Bush get away with that? Not including funding for wars that he knew would continue for another 5 or 10 years?

Bush funded the wars, as well as the prescription drug program, through $8 trillion in supplementals. These accounting tricks are not subject to the congressional oversight process. The Bush Administration claimed this was necessary because they could not predict the costs of a protracted war on terror. However, Rep. Jane Harman (D-CA) noted that "both the Korean and the Vietnam Wars were almost entirely financed through the regular appropriations process - not emergency supplementals."

On the campaign trail, Obama said he would end the abuse of supplemental budgets for war, and he is keeping that promise.

Anyway, back to the chart on NYT, did you notice what kind of funding has been decreased? Unemployment insurance programs, education for the disadvantaged, school improvement, Indian education, railroads, mass transit, Corps of Engineers, Federal Housing Administration loan programs, civil and criminal prosecution and representation, and space operations to name a few. It takes a mighty leap of logic to say President Obama is a socialist creating a welfare state.

Looks more like the US is equal parts welfare and warfare. We need to keep our debt in perspective. Some of our allies are in even worse debt traps. It's been going on for a long time. So when Republicans open their mouths to complain about this budget, we must realize it's all choreographed knee-jerking.

O, What A Rogue And Peasant Slave Am I!

I never knew how much a dead peasant could be worth.


(YouTube video)

Apparently dead peasants can be worth millions. It's an investment scheme in fact. "Dead peasant insurance" is officially known as corporate-owned life insurance and was originally intended to insure corporations against the death of key employees and executives, but it is sometimes used for general employees. Bank of America holds $17.3 billion in such policies.

Let's just get to the creepiness factor. It's bloody insane to give corporations a financial incentive to see anybody dead. I hope I don't need to review the last year of stories about arrogant bailout recipients and blatant fraud. We've all been thoroughly schooled in the lessons of greed.

But I predict it's going to get worse. Stranger originated life insurance is yet another insidious practice where investors pay senior citizens to apply for life insurance, pay the premiums for the policies, and then resell them to speculators. Investment banks are planning to package hundreds or thousands of these policies together into bonds. The investors will receive the insurance money when the insured people die.

If these slick, complicated, risky, idiotic games to turn money into more money sound familiar to you, it's because that's how we got into this financial mess in the first place! Subprime mortgage securities, credit-default swaps, structured investment vehicles, collateralized debt obligations... here we go again.

But now Wall Street is not just betting on the peasants' mortgages -- it's wagering on their lives.

Oh Rio, Rio, Hear Them Shout Across The Land...

So Chicago lost its bid to host the 2016 Olympics. The winning bid went to Rio, and I'm not going to lose any sleep over it, because, as my friend Trung pointed out on his blog, there is no economic benefit to hosting the Olympics in your city. In fact, it may actually hurt a city economically along with bringing police repression.

But what does irk me are the wingnuts who are so against President Obama that they cheer over the lost bid. Yes, the assholes actually cheered over the loss. Despite the economic burden, hosting the games has always been considered a point of pride. This blatant stupidity prompted Rep. Alan Grayson to comment "Someone should remind them what team they're really on."

Well, it's certainly not the American team that the wingnuts are now playing for. In a recent article, Matt Osborne opined that conservatives are trying to delegitimatize President Obama with the ridiculous idea that Obama claims to be God:

This meme is a form of wishful thinking from the party of faith-based policy: if Obama is illegitimate in the eyes of God, then it is a Christian's duty to oppose him, no matter what he actually does. Thus questions of policy, like scientific studies, are no longer argued on their own merits, but on the sole merit of opposition to the evil president.

This delegitimating of a president -- and, by extension, his agenda -- explains the odd crowing reaction of Republicans to the failed Chicago Olympic bid. It is as if Obama has lost some sheen of idolatrous perfection and been "revealed" as a fraudulent prophet; but only a wingnut would ever think of a politician as a prophet.

So anyway, can't we all just say "Yay, Brazil!" They will be the first South American country to host the Olympics, and plus, this historic event gives me the perfect opportunity to play the best music video ever:

Duran Duran - Rio

The American Free Market System

I thought the American Free Market System was based on supply and demand. That's what they taught me in school, but in an excellent article for Rolling Stone, Matt Taibbi explains how Goldman Sachs, a bank holding company, has been behind every financial bubble in the last century: The Great Depression, the internet stock bubble, the housing craze, and rigging the bailout. But the one thing I didn't think any financial institution could do was turn the oil market into a betting parlor:

While the global supply of oil will eventually dry up, the short-term flow has actually been increasing. In the six months before prices spiked, according to the U.S. Energy Information Administration, the world oil supply rose from 85.24 million barrels a day to 85.72 million. Over the same period, world oil demand dropped from 86.82 million barrels a day to 86.07 million. Not only was the short-term supply of oil rising, the demand for it was falling - which, in classic economic terms, should have brought prices at the pump down.

So what caused the huge spike in oil prices? Take a wild guess. Obviously Goldman had help - there were other players in the physical-commodities market - but the root cause had almost everything to do with the behavior of a few powerful actors determined to turn the once-solid market into a speculative casino. Goldman did it by persuading pension funds and other large institutional investors to invest in oil futures - agreeing to buy oil at a certain price on a fixed date. The push transformed oil from a physical commodity, rigidly subject to supply and demand, into something to bet on, like a stock. Between 2003 and 2008, the amount of speculative money in commodities grew from $13 billion to $317 billion, an increase of 2,300 percent. By 2008, a barrel of oil was traded 27 times, on average, before it was actually delivered and consumed.

If you've been following the revelations about regulators destroying regulations, then you won't be surprised that there is a government agency, the CFTC, in charge of protecting the market from fraudulent conduct in the trading of futures contracts. But of course, Goldman Sachs convinced the CFTC that regulations were bad, and the agency gave Goldman and other companies exemptions.

So when you read about the recent volatile swings in oil prices, and you start paying $4 a gallon at the pump again, don't believe it when Wall Street insiders say "who knew?" I think they know exactly what they're doing.

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Cramer Vs. Not Cramer

Apparently my theme lately is whiny grown men (and one not quite grown boy). Today Joe Scarborough and Jim Cramer responded to a Daily Show segment titled In Cramer We Trust. Scarborough and Cramer proved that they don't get it. Jon Stewart mocks anybody who is hypocritical regardless of political party. He's a comedian. It's his job.

It's not his job to pick out stocks, so he doesn't. Stewart points out lies and hypocrisy and he does it well.

But on another note, if Jim Cramer thinks his stock show is an example of journalistic integrity, then I'd like to remind him of the very serious allegations that he uses his show to manipulate the market:

This rabbit hole involves the thugs surrounding Jim Cramer and some of the top financial "journalists" from the New York Times, WSJ, Fortune magazine and BusinessWeek, top hedge funds, the Mafia, and the DTCC. It also includes "blackmail, smear campaigns, espionage, fraud, harassment, extortion, bribery, rumor-mongering, sabotage, off-shore money laundering, political cronyism, frivolous lawsuits, witness tampering, biased financial research, false identities, bogus credit ratings, bribery, libelous blogs, bad science, forgery, wiretapping, counterfeiting, collusion, lying, cheating, threats and theft."

And if that wasn't fun enough, it may be the underlying story of what collapsed the entire, global banking system or at least served as the catalyst for the collapse.

The whole skirmish doesn't seem so frivolous now, does it?

Jon Stewart had another response tonight. Are these things choreographed like professional wrestling?

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Boom to Bushville

Behold the Internet version of the angry mob in this flickr album's comment section! Over on YouTube the crowd is slightly less frightening, but it's amazing anybody has the stamina to view the 10 minute dull prattle of an oppressed wealthy man and still post incensed yet witty comments. See if you can pass the endurance test:



I really only gathered a few things from the above video. TigerHawk sees himself as a member of the Better Class, looks down on people who make less money, and thinks small businesses create "lame jobs." Bizarre threats of Going John Galt are beyond belief because if these presumably educated tycoons were so bloody smart they would understand how our tax system works. All of your income is not taxed at the same rate. The TigerHawks of the country will only pay another 3 cents on the dollar for the income they earn over $250K! To shut down your business or even turn away customers is absurd.

You want to know who I feel sorry for? The families living in Bushvilles. These are the new shanty towns -- named after George W. Bush just like Hoovervilles were named after President Herbert Hoover. Hey, if we're going to relive history, let's make sure we understand it. There's a lot of bull going around that somehow FDR prolonged or even created the Great Depression. Writer Jonathan Chait tackles this new chapter of revisionist history:

Moreover, the classic right-wing critique fails to explain how the economy recovered at all. In one of his columns touting Shlaes, George Will observed that "the war, not the New Deal, defeated the Depression." Why, though, did the war defeat the Depression? Because it entailed a massive expansion of government spending. The Republicans who have been endlessly making the anti-stimulus case seem not to realize that, if you believe that the war ended the Depression, then you are a Keynesian.

I don't know what the Republicans will do when the public figures out that the Democrats' policies have been historically good for economic growth and all these Republican obstructionist battles over President Barack Obama's budget are a blatant sham.

Cue The Violins

Read. Scroll to the top of the page. Read a little more. Scroll up again. Double check. Check address bar just to be certain. Yes, I'm reading the NY Times not The Onion. The headline reads You Try to Live on 500K in This Town. I would gladly try it, and I wouldn't be half as whiny as this guy:

Sure, the solution may seem simple: move to Brooklyn or Hoboken, put the children in public schools and buy a MetroCard. But more than a few of the New York-based financial executives who would have their pay limited are men (and they are almost invariably men) whose identities are entwined with living a certain way in a certain neighborhood west of Third Avenue: a life of private schools, summer houses and charity galas that only a seven-figure income can stretch to cover.

Boo Hoo Hoo! Executives don't like rules. They certainly don't like the new rules that would limit their pay at companies that accept government bailout money. Vacation homes, chauffeurs, personal trainers, private schools and tutors. They may have to cut back. Maybe Bob Geldof can organize a benefit concert.

Just a couple of months ago the case was made not to bail out the ailing Big Three automakers. Labor costs were out of control we were told! Those union auto-workers -- with all those perks like health-care and pensions -- were earning close to $80 an hour! Except it was all misinformation. In 2006 a typical UAW-represented assembler at GM earned $27.81 per hour.

Sometimes I get the distinct feeling that arrogant, under-worked executives think they're better than everybody else. Who wouldn't feel superior when you're better off than royalty of old?

Madoff Mess

"It is only when the tide goes out, that you know who was swimming naked." — Warren Buffett

Last year as we lurched from one financial crisis to the next, we learned painful lessons about what happens when regulators destroy regulations. So I hardly blinked last December when some guy named Bernie Madoff was charged with perpetrating what may be the largest investor fraud ever committed by a single person.

But how messy could it be? How did it go on? Was some regulator asleep at his desk maybe? Nobody answered the phone at the SEC? Here are a few crazy articles that summarize the mess:

Bernard L. Madoff Investment Securities LLC was examined at least eight times in 16 years by the SEC and other regulators. Regulators failed to uncovering the alleged $50 billion Ponzi scheme that may have begun in the 1970s.

In 2003, a team from France's Société Générale’s investment bank spotted the risks and put Madoff's firm on their internal blacklist. The bank kept the discovery to itself though.

In 2005, Harry Markopolos, an independent financial fraud investigator, submitted a report to the SEC which listed 29 red flags and stated it was highly likely that "Madoff Securities is the world's largest Ponzi Scheme."

Madoff's "official" three-person based auditing firm, Friehling & Horowitz, had only one active accountant. An employee from a nearby business claims the only man using the Friehling & Horowitz's building stays "for 10-to-15 minute periods, and wears tight pants and tie-dyed shirts."

Finally in 2008, Madoff confessed to his two sons that his investment advisory business was indeed “a giant Ponzi scheme.” The sons, Andrew and Mark, turned Madoff in to U.S. authorities on the night of Dec. 10.

So this week, the House Financial Services Subcommittee is holding hearings on the investment scheme. You can watch Markopolos's testimony on the CSPAN web site, but here is a rather interesting bit (if video doesn't show, click here):



The scary part is in the last minute. Could it be true that WSJ reporters feared Madoff so much that they would not get on a plane to interview Markopolos regarding the fraud? And Markopolos also feared for his own safety. Wow.

But I admit that I'm viewing this investigation from such a remote position. Putting aside six degrees from Kevin Bacon jokes, I don't know anybody on Madoff's investors list. Many of those clients are charities. Banks have been hit hard too. But I can't feel sorry for those who invested because they knew Madoff was cheating.

Certainly there is no shame in being rich. But what if you get rich by cheating the poor and the elderly? Or by running sweatshops, waging wars, selling poison or any of a million other evils. Why is there no shame in that? Of course somebody profited from this mess, and I predict those people will go on to sell books and give expensive lectures regarding ethical and legal quandaries. A small group gets rich, while the whole country bails them out.

In other news, Bill Gates released a jar of mosquitoes at the Technology, Entertainment, Design (TED) conference in Long Beach, Calif. If the room had been full of bloodless Wall Street investors, those poor mosquitoes would have starved to death.

Head Rush

I really thought the attention being given to Rush Limbaugh lately was ridiculous. I wanted him and Palin and Joe the Plumber to slip into oblivion. They're irrelevant... to me at least. But to some segments of the population, they still rule.

Hearing Republican congressman Phil Gingrey beg Limbaugh for forgiveness after offending the beast was the most pathetic thing I've heard in years. But it was also an eye-opener. A right-wing talk radio host has filled the vacuum of leadership in the Republican Party.

As usual, it takes a comedian like Stephen Colbert to rip Limbaugh and all the meek Republicans who grovel at his feet (if video doesn't show, click here):

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I love the way Colbert can get away with calling Limbaugh a pig. And let's not forget this bullet point: "And whatever Glenn Beck is." What is that guy? His television performances are completely maudlin. I think even Tammy Faye Bakker would feel embarrassed for him.

The GOP is becoming a sitcom of loony characters. But it's a tired and worn out show with a hypnotized audience willing to obstruct any governing that might actually help them and their families.

Christmas: Paid In Full

Yippee! I don't have to pay my Christmas bills if I just download this sheet of stickers from Benny Hinn and follow his simple instructions:

CLAIM YOUR DEBT CANCELLATION TODAY BY USING THESE STICKERS!

Place a sticker on your mortgage, loan, and credit card bills, as you ask God to give you a financial breakthrough.

As you send in your seed-gifts and prayer requests, place a sticker on the reply form, which Pastor Benny and Dr. Oral Roberts will lay hands on, and believe that you will receive a mighty outpouring.

Hey, if Benny knew about supernatural debt cancellation all along, why didn't he save Washington Mutual, IndyMac or any of the other failed banks? It probably wasn't God's will or something. That's it.

By the way, if I pay my bills online, do I just stick these to my monitor?

Subprime Marriages

'You loser!" screamed Katie, aiming a vase at her husband. "You've destroyed my life,'' she continued, hurling it. "Just look at my hair, look at my nails! You loser, you jerk, you nobody."

I don't feel sorry for the rich men and their gold-digging wives described in this recent Telegraph UK article. Both sides are selfish and materialistic: the women who marry men for money and then leave them when the property portfolios shrink, and the stupid shallow men who want trophy wives and can't recognize real love. Maybe they deserve each other.

Whether these stories of toxic wives are a real trend or not, I think the super-wealthy are deserving of some kind of comeuppance. These are the people who enabled the current financial crisis. Using Citigroup as one example, the New York Times exposes how some of these millionaire bankers either had no idea what they were selling or took no responsibility for it:

According to a former Citigroup executive, Mr. Prince started putting pressure on Mr. Maheras and others to increase earnings in the bank’s trading operations, particularly in the creation of collateralized debt obligations, or C.D.O.’s — securities that packaged mortgages and other forms of debt into bundles for resale to investors.

Because C.D.O.’s included so many forms of bundled debt, gauging their risk was particularly tricky; some parts of the bundle could be sound, while others were vulnerable to default.

“Chuck Prince going down to the corporate investment bank in late 2002 was the start of that process,” a former Citigroup executive said of the bank’s big C.D.O. push. “Chuck was totally new to the job. He didn’t know a C.D.O. from a grocery list, so he looked for someone for advice and support. That person was Rubin. And Rubin had always been an advocate of being more aggressive in the capital markets arena. He would say, ‘You have to take more risk if you want to earn more.’ ”

It appeared to be a good time for building up Citigroup’s C.D.O. business. As the housing market around the country took flight, the C.D.O. market also grew apace as more and more mortgages were pooled together into newfangled securities.

Of course, it wasn't impossible to predict the meltdown. Meredith Whitney, an obscure analyst of financial firms for Oppenheimer Securities, understood the mismanagement of Citigroup and predicted the company would go bust:

From that moment, Whitney became E.F. Hutton: When she spoke, people listened. Her message was clear. If you want to know what these Wall Street firms are really worth, take a hard look at the crappy assets they bought with huge sums of ­borrowed money, and imagine what they’d fetch in a fire sale. The vast assemblages of highly paid people inside the firms were essentially worth nothing. For better than a year now, Whitney has responded to the claims by bankers and brokers that they had put their problems behind them with this write-down or that capital raise with a claim of her own: You’re wrong. You’re still not facing up to how badly you have mismanaged your business.

Pair these idiot bankers with the regulators who destroyed regulations, and you have one big dysfunctional relationship which is, sadly, a very real trend. Although I'd personally prefer the cathartic act of smashing a vase across their skulls, we are instead expected to bail them out.

Cutting Red Tape

I wish I could say it was photoshopped, but this outrageous picture of regulators destroying regulations was taken at a 2003 press event. Yesterday's Washington Post article titled Banking Regulator Played Advocate Over Enforcer mentioned this unfortunate image:

In the summer of 2003, leaders of the four federal agencies that oversee the banking industry gathered to highlight the Bush administration's commitment to reducing regulation. They posed for photographers behind a stack of papers wrapped in red tape. The others held garden shears. Gilleran, who succeeded Seidman as OTS director in late 2001, hefted a chain saw.

The other men in the picture were identified by CalculatedRisk: John Reich (then Vice Chairman of the FDIC and later at the OTS), James McLaughlin of the American Bankers Association, Harry Doherty of America's Community Bankers, and Ken Guenther of the Independent Community Bankers of America.

As we lurch from financial crisis to financial crisis, we would all like a simple explanation. Unfortunately, life is complicated:

As Congress and the incoming Obama administration prepare to revamp federal financial oversight, the collapse of the thrift industry offers a lesson in how regulation can fail. It happened over several years, a product of the regulator's overly close identification with its banks, which it referred to as "customers," and of the agency managers' appetite for deregulation, new lending products and expanded homeownership sometimes at the expense of traditional oversight. Tough measures, like tighter lending standards, were not employed until after borrowers began defaulting in large numbers.

The agency championed the thrift industry's growth during the housing boom and called programs that extended mortgages to previously unqualified borrowers as "innovations." In 2004, the year that risky loans called option adjustable-rate mortgages took off, then-OTS director James Gilleran lauded the banks for their role in providing home loans. "Our goal is to allow thrifts to operate with a wide breadth of freedom from regulatory intrusion," he said in a speech.

At the same time, the agency allowed the banks to project minimal losses and, as a result, reduce the share of revenue they were setting aside to cover them. By September 2006, when the housing market began declining, the capital reserves held by OTS-regulated firms had declined to their lowest level in two decades, less than a third of their historical average, according to financial records.

With no end in sight for this financial crisis, some are perceiving a fundamental flaw in capitalism which will leave us all relying on the barter system. I guess now is a good time to learn how to hunt and fish?

What Does This Mean?

I first saw the above footage on The Daily Show, and it was offered without the usual wisecracks. I watched in mild disbelief, but concluded that our President Numb-Nuts was simply oblivious to the fact that it was hand-shaking time again. After all, as the Daily Show noted and Whitehouse.gov documented, Bush had already greeted every world leader at the commencement of the Global Economic Summit in Washington, D.C., and the two day event was probably boring Bush to tears!

However, in the above CNN video, anchorman Rick Sanchez thinks Bush looks like "the most unpopular kid in high school that nobody liked."

So which is it? Was Bush oblivious, bored, and rude, or did all the G20 leaders conspire to snub Bush as some kind of response to his catastrophic presidency? If so, why didn't Bush even extend his hand? Why didn't he hold his head up or make eye contact? If he didn't make a single gesture, then you can't say the others rejected him.... Unless Bush was tipped off ahead of time that he was going to be snubbed, and so he decided he would rather whistle pass those guys.

Another possibility is that all these adults are in some kind of snit over something somebody said, but it's hard to tell. The consensus among key politicians, commentators and economists is that nothing extraordinary was accomplished but nothing extraordinary was expected.

Maybe the whole event was irrelevant due to the lame duck host and the absence of president-elect Barack Obama.

Still, I'm left with the impression that if these world leaders are indeed ostracizing Bush, then they are ostracizing the whole United States. Even if you hate Bush, you shouldn't be gloating over this possible snub. This situation is alarming. I think we will suffer many years for Bush's mistakes.

Open Secrets

I was reading this article entitled Predatory Scapegoating and learned a few things I'm surprised I had not yet heard. Nine months ago, before Eliot Spitzer was forced to resign as governor of New York, he published this op-ed about the marked increase in predatory lending practices by mortgage lenders and how the Bush administration stopped the states from helping consumers:

In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.

But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation.

Bush and his friends really know how to break a government, but unfortunately it was our government. And unfortunately the MSM is too easily distracted by a SEX SCANDAL!

But here is another interesting fact from the Predatory Scapegoating article. George Herbert Walker IV is a second cousin to George W. Bush and is also a managing director at now-bankrupt Lehman Brothers. Obviously that family has a certain gift for finance.

Plate of Pork

So is the Emergency Economic Stabilization bill a bailout, a bribe, a rescue, or a rape?

The legislation that aims to save Wall Street was originally criticized for costing $700 billion. How did lawmakers make it more appetizing? By adding pork! (About $100 billion in pork also known as earmarks.) Congress then overwhelmingly passed it and Bush quickly signed it.

What are we getting for our money? I'll just cut and paste a few portions of the bill:

TITLE III--EXTENSION OF BUSINESS TAX PROVISIONS

• Sec. 301. Extension and modification of research credit.
• Sec. 302. New markets tax credit.
• Sec. 303. Subpart F exception for active financing income.
• Sec. 304. Extension of look-thru rule for related controlled foreign corporations.
• Sec. 305. Extension of 15-year straight-line cost recovery for qualified leasehold improvements and qualified restaurant improvements; 15-year straight-line cost recovery for certain improvements to retail space.
• Sec. 306. Modification of tax treatment of certain payments to controlling exempt organizations.
• Sec. 307. Basis adjustment to stock of S corporations making charitable contributions of property.
• Sec. 308. Increase in limit on cover over of rum excise tax to Puerto Rico and the Virgin Islands.
• Sec. 309. Extension of economic development credit for American Samoa.
• Sec. 310. Extension of mine rescue team training credit.
• Sec. 311. Extension of election to expense advanced mine safety equipment.
• Sec. 312. Deduction allowable with respect to income attributable to domestic production activities in Puerto Rico.
• Sec. 313. Qualified zone academy bonds.
• Sec. 314. Indian employment credit.
• Sec. 315. Accelerated depreciation for business property on Indian reservations.
• Sec. 316. Railroad track maintenance.
• Sec. 317. Seven-year cost recovery period for motorsports racing track facility.
• Sec. 318. Expensing of environmental remediation costs.
• Sec. 319. Extension of work opportunity tax credit for Hurricane Katrina employees.
• Sec. 320. Extension of increased rehabilitation credit for structures in the Gulf Opportunity Zone.
• Sec. 321. Enhanced deduction for qualified computer contributions.
• Sec. 322. Tax incentives for investment in the District of Columbia.
• Sec. 323. Enhanced charitable deductions for contributions of food inventory.
• Sec. 324. Extension of enhanced charitable deduction for contributions of book inventory.
• Sec. 325. Extension and modification of duty suspension on wool products; wool research fund; wool duty refunds.

I've only highlighted the ones I found most crazy. But the craziness doesn't end there.

TITLE V--ADDITIONAL TAX RELIEF AND OTHER TAX PROVISIONS

Subtitle A--General Provisions

• Sec. 501. $8,500 income threshold used to calculate refundable portion of child tax credit.
• Sec. 502. Provisions related to film and television productions.
• Sec. 503. Exemption from excise tax for certain wooden arrows designed for use by children.
• Sec. 504. Income averaging for amounts received in connection with the Exxon Valdez litigation.
• Sec. 505. Certain farming business machinery and equipment treated as 5-year property.
• Sec. 506. Modification of penalty on understatement of taxpayer's liability by tax return preparer.

Subtitle B--Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008

• Sec. 511. Short title.
• Sec. 512. Mental health parity.

TITLE VI--OTHER PROVISIONS

• Sec. 601. Secure rural schools and community self-determination program.
• Sec. 602. Transfer to abandoned mine reclamation fund.

Again, I'm just highlighting the ones I found most crazy. They are all crazy because they have little or nothing to do with bailing out Wall Street! They were thrown in without any debates. I think something like mental health parity should have been discussed.

This bill was rushed because we were told it was urgent. I heard very few voices questioning the urgency. We were told something needed to be done. When the original bill failed, the Dow lost a record 777 points. But after the new bill was approved by Congress, the Dow ended down 157 points. We're so fickle!

What doesn't the bill have? There is little about new oversight, little to rescue families facing foreclosure, and little to curb executive pay.

Can you remember back about a month ago when John McCain and Sarah Palin wrote a piece for the WSJ titled We'll Protect Taxpayers from More Bailouts? Can you remember back when McCain vowed that as president he would veto every single bill with earmarks? But by casting his first vote in months, he broke those vows.

I guess he shouldn't criticize Obama now for voting on that earmark-laden energy bill that included tax breaks for oil companies while also providing investment for alternative energy.

There are many reasons to criticize this bill and the politics that brought it to us, and I just can't bring myself to call it a bailout or a rescue. That only leaves my other two choices.

A Smart President

I'm ready for a smart President again.

Tonight as I watched The Daily Show, I saw the glaring contrast between George W. Bush and Bill Clinton. I'm not even certain if the comedy show intended the comparison, but here's how it went. They opened with a clip of Bush giving an inarticulate explanation of the financial crisis. Bush seemed almost surprised himself that parts of the economy are connected! Then he fumbled through a childish metaphor about a house of cards.

Then Jon Stewart interviewed Bill Clinton, and intellectually there is no competition between our 42nd and 43rd presidents (if videos don't show, they can be found here and here):







I wish Stewart asked Clinton about his opinion on the situation with Russia, and while they were on the subject of the economy, he probably should have asked Clinton why he signed the Gramm-Leach-Bliley Act in 1999... too bad it's only a 30 minute comedy show. But hearing Clinton made me reminisce about happier days with a president who had something intelligent to say.