Summer time reading

The 10th and final installment of Walter Russell Mead's essay: "The Top Ten Things We Learned From the Global Economic Meltdown".

10. The politicization of economic governance is dangerous business.


The economic system we’ve built depends heavily on a small number of global financial firms who necessarily enjoy close links to national governments. Because of their power and their wealth (and also because they are sometimes ‘too big to fail’), these firms can potentially control the laws that govern their behavior and the regulators who enforce them. In the United States there has been a lot of attention paid to the close relations between current and former executives at Goldman Sachs and the Clinton, Bush and Obama administrations. The finance-government nexus in the US has its counterparts in other countries as well. These close connections, and the obvious danger of conflict of interest, have gotten a lot of attention — as well they should.

But the problem of regulatory capture is much greater and more deeply entwined with our current economic structure than this one case. The rise in the economic importance of the state during the twentieth century–however necessary and in many ways benign this role may have been at various points along the way–inevitably brings politicized governance and regulation in its wake in ways that make bubbles, panics and crashes both more destructive and more likely.

To take one important example, when government workers make up a substantial portion of the electorate, they can influence their own wages and pensions by voting as a bloc. They can — and they do. California, Illinois and Greece have a lot in common.

But even this is just the tip of the iceberg. The increased economic role of the state naturally and inevitably multiplies conflicts of interest and creates moral hazard. American housing policy, widely and correctly blamed as a major contributing factor to the crisis of 2008, was an outstanding example. The combination of interest groups — consumers who wanted cheap loans and rising house prices, banks who wanted a safe and profitable business model, contractors and other businesses with a stake in the home-building industry, cities and towns whose tax bases increase with rapid growth, advocates for the poor who wanted to improve the access of marginalized groups to the Great American Wealth Machine of home ownership — put them all together and there was an irresistible political force driving the United States real estate market and the financial system into more and more dangerous territory. The housing bubble wasn’t an accident; it was the result of decades of national policy and we worked very hard and spent lots of money to make that bubble as big and as dangerous as it turned out to be.

“Vote yourself a farm!” was a slogan of those who campaigned for the Homestead Act that gave free farmland in the west to anyone willing to settle it. Farm subsidies from the Homestead Act through price supports helped cause the Dust Bowl catastrophe and the great agricultural depression of the 1930s by encouraging over-investment in farming and the creation of marginal farmsteads. The crash was more brutal because government support had inflated the bubble past what would otherwise have been its ‘natural’ size.

“Vote yourself a home!” has been our national motto for the last fifty years and today Americans are as addicted to the home mortgage deduction (and the even less justifiable deductions for second mortgages and home equity loans) as Greeks are to early retirement and government employment. Political popularity makes the policies harder to change — but no less damaging and destructive.

There is no easy way out of these problems. Global markets need sophisticated firms and large firms can manage risks and survive shocks that smaller ones can’t. Civil servants do not and should not lose the right to vote when they take government jobs. The decision to favor home ownership on social and political grounds is one that politicians can properly make, and there is a lot to be said for policies that have helped millions of American families acquire substantial equity over the years.

Yet it is clear that the mix of democracy and capitalism is a dangerous if necessary brew; after decades in which we failed to think the costs and risks through, we are now suffering the consequences of policies that create dangerously perverse incentives in both political and economic spheres. Reducing damaging but popular forms of state intervention in the economy while ensuring the state retains the authority and the ability to provide the effective legal and regulatory frameworks without which no modern economy can flourish is the fiendishly difficult and delicate task which Europeans and Americans alike must now undertake.

(italics, ours)

Don't count on this Wall St. reform bill to come anywhere close to striking that fine balance. We hate to look like Know Nothings but really... what more do you need to know about this particular piece of legislation than the fact it was written by Chris Dodd and Barney Frank?

Look for crony capitalism and "corporatism" once hated by that near-extinct animal known as "liberal" to become further entrenched by this bill.

Our blog buddy, Harrison, has a nice round-up of quotes and goings ons from Frank and Dodd that will only prove our point, here.

P.S. The image we have been using for this series is an allegorical painting by Hendrik Gerritsz Pot circa 1940 depicting Tulip Mania which many believe to be the first speculative bubble.

Legislative analysis made easy

Weary lawmakers wrapped up their work minutes before sunrise. "It's a great moment," said a teary-eyed Sen. Christopher J. Dodd (D-Conn.), who as chairman of the banking committee led the effort in the Senate. "It took a crisis to bring us to the point where we could actually get this job done."

One of the last motions Friday was to name the bill after the two chairmen, Dodd and Rep. Barney Frank (D-Mass.), who had shepherded the legislation through the House over the past year. At 5:07 a.m., they agreed unanimously that it would be known as the Dodd-Frank bill, and the sound of applause echoed down the empty hallways.

We would sincerely like to thank the banking committee for having the graciousness to not have us waste our time in searching for the bribes, kickbacks, swindles, exemptions and general putridness in a bill for the fact of the convenience of its namesake.

Tales from Bailout Nation Pt. XXV

The indespensible Heritage Foundation does their usual fine work in making the dense and complex understandable because in the case of the Wall St. reform bill and like members of Congress who will be voting on it, we have no intention of reading it.

But in the interest of public service and being all-around good Joes, here it is in .pdf.


Reasons to hate:

1. Creates a protected class of “too big to fail” firms. Section 113 of the bill establishes a “Financial Stability Oversight Council,” charged with identifying firms that would “pose a threat to the financial security of the United States if they encounter “material financial distress.” These firms would be subject to enhanced regulation. However, such a designation would also signal to the marketplace that these firms are too important to be allowed to fail and, perversely, allow them to take on undue risk. As American Enterprise Institute scholar Peter Wallison wrote, “Designating large non-bank financial companies as too big to fail will be like creating Fannies and Freddies in every area of the economy.”[1]

2. Provides for seizure of private property without meaningful judicial review. The bill, in Section 203(b), authorizes the Secretary of the Treasury to order the seizure of any financial firm that he finds is “in danger of default” and whose failure would have “serious adverse effects on financial stability.” This determination is subject to review in the courts only on a “substantial evidence” standard of review, meaning that the seizure must be upheld if the government produces any evidence in favor of its action. This makes reversal extremely difficult.

3.Creates permanent bailout authority. Section 204 of the bill authorizes the Federal Deposit Insurance Corporation (FDIC) to “make available … funds for the orderly liquidation of [a] covered financial institution.” Although no funds could be provided to compensate a firm’s shareholders, the firm’s other creditors would be eligible for a cash bailout. The situation is much like the scheme implemented for AIG in 2008, in which the largest beneficiaries were not stockholders but rather other creditors, such as Deutsche Bank and Goldman Sachs[2]—hardly a model to be emulated.

4. Establishes a $50 billion fund to pay for bailouts. Funding for bailouts is to come from a $50 billion “Orderly Resolution Fund” created within the U.S. Treasury in Section 210(n)(1), funded by taxes on financial firms. According to the Congressional Budget Office, the ultimate cost of bank taxes will fall on the customers, employees, and investors of each firm.[3]

You can read the rest of the 14, here.

We blogged about #4 months ago. This is the idea floated originally by Barney Frank that would punish good behavior and reward bad behavior. We don't know about you, but we don't think we'd cotton to having a portion of our salary set aside to cover the poor performance of a co-worker.

We suppose we shouldn't be surprised that this good/bad response mechanism has been central to the entirety of Bailout Nation, whether it's bailing out poor performing auto manufacturers or financial institutions, or enticing people to stay in bad home loans.

Perhaps, we were already there, but Bailout Nation has cemented the notion of rewarding the bad at the expense of the good as the prevailing paradigm of this country aided, abetted and enforced by the federal government.

Quotes of the day

Obama and the Democrats are running insane deficits for no business reason at all and he's going to puff himself up and preen before the cameras to yell at investors. Meanwhile, his cronies in Congress are planning to simply skip budgeting this year. Unreal.

That from KT

Precisely. But does the irony ever occur to them or are they so insulated and/or so arrogantly prideful that the notion is completely foreign to them. Even if they did, we doubt they would care.

But the tea partiers are just a bunch of racists, right?


And this:

I am no fan of the cozy relationships that allow the banks and other financial firms to get away with gambling with taxpayer backed dollars and then receiving bailouts when things head south. But the "Restoring American Financial Stability Act of 2010" does not such thing. Instead it grants the administration, of either party in power, the authority to take over any darn business it feels like.

That from B-Daddy.

We're not big fans of dumbing-down so let's just call this an exercise in the art of simplification. We realize some of this legislation, particularly with respect to Wall Street finances can get pretty dense, so consider this: in the absence of knowing anything else about the Wall Street financial reform bill, know that it was written by Chris Dodd. That's it. That's all you really need to know in order to quantify the crap-tastic nature of this bill.

Now, give yourself the rest of the week off and enjoy your weekend.

Quote of the day

...while the healthcare debate rages, there is still other business being tended to in D.C.

“Americans are frustrated and angry, as we all know, they've lost faith in our markets, and they wonder if anyone is looking out for them.”

That from the on-his-way-out-the-door, Connecticut Senator, Chris Dodd unveiling new sweeping financial regulations that came out of committee on Monday.

It is now confirmed that Congress has a special tailor on the premises solely for the purpose of fashioning the appropriately-sized pants required to house the basketball-sized stones possessed by the likes of Chris Dodd and Barney Frank.

How else does one explain a man sitting in the epicenter of the financial/housing meltdown and who was getting sweetheart deals on his own properties from Countrywide Mortgage, saying something like that and there not be such a person? Wouldn’t it be downright embarrassing for all involved for Dodd and Frank to be bouncing around Capitol Hill sans culottes?

It is duly noted that Dodd made his announcement at a news conference alone – not even accompanied by any of his fellow Democrats on the Banking Committee that he chairs. The man is that toxic. This could be the greatest piece of legislation ever written but the man has zero credibility on this or any other issue for that matter and no one wants to be associated with the man as he pushes for his legacy bill.

Happy Trails, Senator

Still coverin' after all these years

Chris Dodd: bye.


WaPo article reporting on Dodd’s retirement duly notes his “faltering poll numbers” but waits until the very last paragraph to (oh, by the way) mention Dodd’s scandalous involvement with Countrywide Financial.

The L.A. Times by comparison is a yellow rag by jumping on the Countrywide gravy train half-way through their Dodd retires article.

Chris Dodd: (Still) #1

Judicial Watch has compiled their 10 most corrupt politicians of 2009 and Chris Dodd, the prohibitive favorite coming off his title-winning campaign last year, claims his 2nd straight crown this year.

This marks two years in a row for Senator Dodd, who made the 2008 "Ten Most Corrupt" list for his corrupt relationship with Fannie Mae and Freddie Mac and for accepting preferential treatment and loan terms from Countrywide Financial, a scandal which still dogs him.

In 2009, the scandals kept coming for the Connecticut Democrat. In 2009, Judicial Watch filed a Senate ethics complaint against Dodd for undervaluing a property he owns in Ireland on his Senate Financial Disclosure forms. Judicial Watch's complaint forced Dodd to amend the forms.

However, press reports suggest the property to this day remains undervalued. Judicial Watch also alleges in the complaint that Dodd obtained a sweetheart deal for the property in exchange for his assistance in obtaining a presidential pardon (during the Clinton administration) and other favors for a long-time friend and business associate. The false financial disclosure forms were part of the cover-up. Dodd remains the head the Senate Banking Committee.

So, to one of the bright lights in the most ethical Congress ever, we salute you, Senator Dodd!

Rounding out the Top 10:

Senator John Ensign (R-NV)
Rep. Barney Frank (D-MA)
Secretary of Treasury Timothy Geithner
Attorney General Eric Holder
Rep. Jesse Jackson, Jr. (D-IL)/ Senator Roland Burris (D-IL)
President Barack Obama Oh, my
Rep. Nancy Pelosi (D-CA)
Rep. John Murtha (D-PA)
Rep. Charles Rangel (D-NY)

It should be noted that this list is in alphabetical order and Chris Dodd really isn’t #1 but we couldn’t resist the convergence of a great photo op and him being listed first. To prevent any confusion in future years, perhaps we could advise the Senator to stay off this list altogether. As someone who’s taken an oath to uphold the law and represent the people, that’s probably not asking too much.

With straight faces all around

The senior Senate Democrat shepherding legislation to overhaul the nation's financial system is planning to propose the merger of four bank agencies into one super-regulator, an idea that is significantly different from what President Barack Obama envisions.

The legislation being prepared by Sen. Christopher Dodd of Connecticut, who heads the Senate Banking Committee, would also differ from the Obama plan by blah, blah, blah.

blah, blah, blah, ours... but it should not have been.

Seriously? Is there anything Dodd could say regarding reforming financial regulation that would carry any credibility whatsoever?

That this article made it to the front page of Sunday's fish wrap demonstrates that either the U-T has a great sense of irony or is completely clueless.

Quote of the day

“I don't want the folks who created the mess to do a lot of talking... I want them to get out of the way so we can clean up the mess. I don't mind cleaning up after them, but don't do a lot of talking."

For reals?

Sweet!
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Bye.
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Later.

Choices to be made

As you may know, Chris Dodd has been diagnosed with prostate cancer. Our thoughts and prayers are with the Connecticut Senator and we believe that with the health care availed here in the states and, in particular, to members of Congress, the treatment of this cancer should be a relative formality.

Having said that, we don’t think anyone in there right mind, were they in a similar situation as the senator would opt for any other health care system than what we have here, let alone one managed by the government which is what Dodd will be voting on in the fall.

Secular Apostate has more, here.

The obligatory "most ethical Congress in history" update.

From the AP:

House Democrats have declined to subpoena available records that might reveal whether other members of Congress got discounted VIP mortgages from subprime lender Countrywide Financial Corp. similar to the sweetheart deals given Democratic Sens. Chris Dodd and Kent Conrad.

Republicans were willing to press for this even though it might expose members of their own party as receiving sweetheart deals.

And this is a shame because…

Despite their denials, influential Democratic Sens. Kent Conrad and Chris Dodd were told from the start they were getting VIP mortgage discounts from one of the nation's largest lenders, the official who handled their loans has told Congress in secret testimony.

Both senators have said that at the time the mortgages were being written they didn't know they were getting unique deals from Countrywide Financial Corp., the company that went on to lose billions of dollars on home loans to credit-strapped borrowers. Dodd still maintains he got no preferential treatment.

Knowing precisely what interest rate we were paying or fees we were on the hook for was not something we paid a whole lot of attention to either. Honestly, what's a point or two between "friends"?

Chuckie knows best

So, how’s that credit card reform working for ya? About as well as one would expect when the credit card companies are being faced with restrictions on pricing and other rules that prohibit setting credit terms based on the borrower’s individual risk profile.

Banks such as Chase, Bank of America, Capitol One, and Citigroup are doing everything from raising balance-transfer fees and expanding who gets hit with a penalty interest rate to establishing higher minimum APRs and raising card rates for certain borrowers.

Of course, Senators Charles Schumer (pictured) and Chris Dodd are shocked, absolutely shocked that banks would attempt to recoup potential losses in anticipation of tightening down revenue streams that will take effect in February of 2010. They have been unsuccessful to date in getting federal regulators to impose an “emergency freeze” on rate increases.

In a statement Monday, Schumer slammed issuers for trying to "wring more dollars out of their customers." Some of the changes in card terms, Schumer says, are "against the spirit of the law and ... just plain wrong."

In Chuckie’s fantasy world, the Banks will tell their board members and shareholders that they are voluntarily accepting a cut in revenue and profit margins because “it’s in the spirit of the law…. and is the right thing to do.”

This represents another example of counter-productive congressional meddling into affairs in which they have no business. It’s the law of unintended consequences that will dictate the cost of protecting bad credit risks being borne by the proverbial little guy who is a responsible credit card holder.

Look, we fully realize that credit card companies haven't exactly behaved like angels in this whole affiar, so as ones who have managed a very solid middle-class lifestyle here in San Diego without the assistance of a credit card for 12 years… we highly recommend it.

There are just some episodes of folly that were too much fun to be left in the scrap heap of history

In an article here of which we otherwise did not agree with much, there was one paragraph that did strike us as, hey, great point and yeah, we had completely forgot about that one.

· Under the guise of preventing "systemic risk", counterparties to Wall Street firms, even those surviving on government bailouts, were made whole via TARP funds. That's in stark contrast to how the automakers' creditors were treated. Similarly, the Obama team hid behind the "sanctity of contract law" amid the uproar over AIG bonuses but felt no compunction in redoing contracts between Chrysler, GM and their creditors; in the process, the administration overturned the way secured vs. unsecured creditors have historically been treated in bankruptcies.

You all remember those AIG bonuses that couldn’t possibly be revoked because they were already written into the executives' contracts and which everyone from the President and Chris Dodd knew about? Alas, not being ones to waste a crisis, though, the most ethical Congress in history sprung into action like a pack of crazed dogs and made like night-riders anew in order to demonize and track down those ingrate fat cats who refused to part with their bonuses. Ah yes, the good ol' days.

Chris Dodd is #1! (UPDATED with video of Dodd, himself)

Senator Chris Dodd tops the list of AIG campaign contribution recipients for 2008. Amid the faux rage of Congress over the AIG bonuses, the obvious question is whether or not the folks below will return the money.

1. Sen. Chris Dodd, D-Conn., $103,100
2. Sen. Barack Obama, D-Ill., $101,332
3. Sen. John McCain, R-Ariz., $59,499
4. Sen. Hillary Clinton, D-N.Y., $35,965
5. Sen. Max Baucus, D-Mont., $24,750
6. Former Gov. Mitt Romney, (R) Pres $20,850
7. Sen. Joe Biden, D-Del., $19,975
8. Rep. John Larson, D-Conn, $19,750
9. Sen. John Sununu, R-N.H., $18,500
10. Former Mayor Rudolph Giuliani (R) Pres $13,200
11. Rep. Paul Kanjorski, D-Pa., $12,000
12. Sen. Dick Durbin, D-Ill., $11,000


In other news today, people are scratching their heads and wondering how it is that AIG was allowed these bonuses in the first place.

But though some lawmakers did move to prevent bonuses in the stimulus bill last month, the final language actually makes an exception for pre-existing contracts, effectively exempting AIG.

Senate Banking Committee Chairman Chris Dodd, D-Connecticut, who originally proposed the executive compensation provision, said he did not include the exemption clause, which said new rules "shall not be construed to prohibit any bonus payment required to be paid pursuant to a written employment contract executed on or before February 11, 2009."

In an interview with CNN, Dodd denied inserting that exemption at the 11th hour, and insisted he doesn't know how it got there.

"When I wrote the language there was no such language like that," Dodd told CNN Tuesday.

So….. there are only two ways to play this. At worst, Dodd is a bald-faced liar who did indeed write that language to protect a significant campaign benefactor. At best, he was asleep at the wheel on a section of porkulus for which he was responsible. Additionally, this speaks to just how hurried, rushed, haphazard and just what a “cram-down” the fashioning of porkulus was.

It’s either one or the other. And either way, if Dodd had a shred of decency about him, he would step down from chairmanship of the Senate Banking Committee. Of course, he doesn't, so he won't.

We remain incredulous that news item after news item quotes Dodd fulminating on the banking and housing crisis as some sort of paragon of wisdom and integrity without even a hint of irony.

UPDATE #1: Thanks to commenter, Pro, we’ve liberated a link to a site that has a nice wrap-up of everything AIG bonuses-related and where we discovered the video below of none other than Chris Dodd.

Bumper sticker version in case you don’t have the time nor the stamina to watch the whole thing: Everybody kind of knew about the bonuses a while back and everyone kind of knew they would get their pants sued-off by AIG if they did anything to prevent the bonuses so everyone just kind of allowed the bonus exemption language into the porkulus bill.

One could almost see Rahm Emmanuel, though, whispering to the President: “Boss, this is perfect. While the Treasury prints another $1 trillion it doesn’t have we can use this next “crisis” to express our outrage to the American people over these AIG fat cats.”

How’s that working for ya, Rahm?

Embed no worky - please click here for video.

"Uh, sorry about that whole 'nationalize' thing"

Sen. Chris Dodd is apologizing today for his comments Friday suggesting that it might be necessary to nationalize some banks for a short time.

The Connecticut Democrat, who chairs the Senate Banking Committee, told reporters in Washington that he was surprised by the market’s reaction.

If Chris “Onions” Dodd does not possess the common decency to at the least, step down from the chairmanship of the Senate Banking Committee, would it not be too much to ask then that one of the stalwarts of “the most ethical Congress in history” keep his freaking mouth shut?

Just asking.

It's a 'Taxable Moment'

The Tax Guys, hosts of the call-in show “Hey, Tax Guys” on OBAMA 1260 have added none other than President Obama’s Director of Health and Human Services nominee, Tom Daschle to its lineup that already includes Treasury Secretary Tim Geithner and House Ways and Means Committee Chairman, Charles Rangel (D-NY).

Today’s show features “Mail call”. Let’s dive right in shall we:

Dear Tax Guys:
I've had a lot on my mind lately, and when I was going through some old receipt boxes in my filing cabinet I suddenly realized I haven't paid my income taxes for the past 8 years. Am I in trouble? Please help!
Forgetful in Fort Worth

Dear Forgetful:
Here at the IRS, we realize that many well-meaning taxpayers like you can be distracted by various family illnesses, baseball pennant races, political campaigns, and so on. The rules for late filing can be surprisingly flexible if you have the right qualifying circumstances. According to IRS guidelines, you are eligible for the 306(b)(19) "I Forgot" amnesty if the following applies:
(1) Your total adjusted gross income in the "I Forgot" years was equal to or greater than $8,528,000; and
(2) You are a nominee to head a cabinet-level federal agency.
If you answered "yes" to (2), or both (1) and (2), then you are in the clear. If you answered "yes" to (1) but "no" to (2), mail 10% of the total to the Democratic National Committee and request a cabinet appointment. If you answered "no" to both, then I'm afraid you are shit out of luck. Turn yourself into your local IRS authorities, who will assist you in computing appropriate penalties, interest, and parole terms.
Tim
PS - If you have any money left, buy a few jars of that 'Ginkgo Biloba' supplement from Walgreens. I hear it really helps with memory problems!

More here from Iowahawk.

… and tune in next week when special guest Senator Chris Dodd of Connecticut will be sharing some tips on how to find that killer mortgage deal that is just right for you.

Glorified radio personality gets Treasury post

The man who will be charged with flying around America and throwing money out of a helicopter to hopeful bank executives was confirmed by a 60-34 vote in the Senate today for what is now the second most powerful position in the federal government.

So, let’s get this straight: Linda Chavez, George W. Bush’s choice for Secretary of Labor, withdraws her name for consideration 8 yrs. ago because she allegedly employed and illegal immigrant when in reality she was doing what any good liberal would do by letting this women who was facing domestic abuse at home, stay at her residence while providing her some emergency cash on the side.

Timothy Geithner did indeed briefly employ an illegal immigrant after her visa expired. An honest mistake. We get it. You wouldn’t believe the admin. nightmare it’s become to stay up with the paperwork of the staff here at BwD headquarters.

The bit with not paying taxes, on the other hand, leaves us dumbfounded that not more of a stink was made when this is the guy that is now tax collector-in-chief.

And to be sure, not paying taxes for the years he was audited (’03-’04) is bad enough but his most egregious offense was that he knew he had shorted the IRS by essentially the same amount in ’01 and ’02 and didn’t come clean about it until informed of this other little oversight by the Obama vetting team.

Sorry – this is an outrage. The man responsible for collecting this nation’s taxes is a cheat and a bald-faced liar.

But, it’s cool. You wanna know why? Because Chris Dodd said it is.

"To suggest that Tim Geithner is unqualified because of this tax issue is to fail to understand his contribution to this country," said Sen. Chris Dodd, D-Conn., the chairman of the Senate Banking Committee.

To suggest that Chris Dodd has any credibility whatsoever in this matter is to fail to understand his contribution to this country's financial crisis.

Chris Dodd must find it very difficult to be able to walk around carrying those basketball-sized onions of his.

You might be interested to know that one of the crown jewels of the “most ethical Congress in history” has his own clock. As of this posting, it has been 186 days, 2 hours, 48 minutes and 40 seconds since Dodd promised to release his mortgage documents that would detail the extent to which he received a sweetheart deal from Countrywide back in ’03… and for which he attempted to arrange a financial bailout as chairman of the Senate Banking Committee.

So, you can see how it is that Dodd felt an immediate kinship and affinity towards wacky Tim, right off the bat.

After all, what good is sacrificing your professional life to public service when you can’t game the system.

Change: you better believe in!

"Ready, Fire, Aim"

OK, we get it. We get that he’s the chairman of the banking committee that is responsible for holding these hearings but isn’t Chris Dodd the last person on the face of the planet who should be taking a leadership role in a bailout hearing?

Fortunately, a new term has entered the socio-political lexicon that is making it tough sledding for the Detroit 3 to get their mitts into the public till: “Bailout Fatigue.”

Awesome.

And Michael Barone argues here that the structure of the American auto industry is outdated, antiquated and well… totally not cool.

McArdle, native of a similarly bedraggled industrial area (Upstate New York) and an Obama supporter, further argues that the capital invested in keeping the hulk of the Detroit Three operating pretty much as they are, unprofitably, will not be available to those whose startups could morph into the Microsofts and FedExes of the future. We don't know who today's Bill Gateses and Fred Smiths are, but markets sure have a better chance of finding them than the federal government.

Obama's presidential campaign was an entrepreneurial enterprise whose success owed much to harnessing individual initiative through an innovative management structure and creatively using emerging technology. The campaign, as well as the candidate, helped inspire under-30 voters, who preferred Obama by an unprecedented 66 percent to 32 percent margin — as opposed to his 50 percent to 49 percent margin in those 30 and over.

But keeping the Detroit Three in their present form, with their extravagant health care benefits and the union's 5,000 pages of work rules, is an exercise in preserving in amber the America of the past.

And lastly, Bailout Sleuth doing that voodoo that they do so well: naming names – has the latest roundup of banks who have been partly nationalized.

P.S.Post title is a from a quote from Republican senator, Richard Shelby, on the somewhat haphazard approach being applied to the this financial crisis.

Line of the Day

"They sound like pimps complaining about the prevalence of STDs among prostitutes."



- Jonah Goldberg on Congressional leadership that should've been minding the lending and finance stores but weren't. Full article which we may have more on, here.

Bonus line (because we're givers): "When a reporter for Forbes magazine asked a Treasury spokesman last week why Congress had to lay out $700 billion, the answer came back: "It's not based on any particular data point." Rather: "We just wanted to choose a really large number."