Evaporation Nation

—through all these different crises, what you see is, the government wasn’t there at a time when it was supposed to be there.

There are different reasons in all those cases. In Iraq, certainly there was a lot of violence. Certainly, it was difficult to get people to go over to Iraq and pay attention. With Madoff, we’ll see what the Securities and Exchange Commission has to say about why they weren’t adequately regulating that issue. But time and again, the issue is, we’ve had a government which has been really shrunk and hollowed out in terms of its ability to oversee and regulate private businesses, private corporations and what it is they’re doing. And that is the function of government, is to make sure that everybody plays fair. They’re referees. And if there’s not enough referees around, the game gets ugly. T. Christian Miller on DN

You betcha

A reviewer of Robert Kuttner's new book, Obama's Challenge: America's Economic Crisis and the Power of a Transformative Presidency:

If it sounds like I'm angry, I am. I hate that most of my adult life has been lived in a country that has become the testing ground for so many hare-brained ideas and crack pot nostrums.

Between the poles of faceless regulation and unbridled markets, that's a good description: a testing ground, with human guinea pigs.

It's one thing to attempt creative approaches to finance; it's another to allow them to run amok throughout municipal, state and global economic systems.

Who gave us the dispensation to introduce the fraudulent language of marketeers and advertisers into the realm of governmental prudence and our derived sense of what actually works? At what instant did bullshit become normative evidence for critical decisions?

In the Rumsfeldian world of that which we don't know we don't know, we do not need Ms. Palin or Mr. Fuld supplementing the void with their inspirations. Kuttner was on Democracy Now today.

rules of the game

Today (2007) any wealthy individual can take $1 million and go to a prime broker and leverage this amount three times; then the resulting $4 million ($1 equity and $3 debt) can be invested in a fund or funds that will in turn leverage these $4 million three or four times and invest them in a hedge fund; then the hedge fund will take these funds and leverage them three or four times and buy some very junior tranche of a CDO that is itself leveraged nine or ten times. At the end of this credit chain, the initial $1 million of equity becomes a $100 million investment out of which $99 million is debt (leverage) and only $1 million is equity. So we got an overall leverage ratio of 100 to 1. Then, even a small 1% fall in the price of the final investment (CDO) wipes out the initial capital and creates a chain of margin calls that unravel this debt house of cards. roubini

More from The Great Crash 1929

...[Paulson] doesn’t dispute that he changed direction. Mr. Paulson said that by Oct. 2, as he was departing for a weekend getaway to an island with his family — his first weekend off in nearly two months — he told his staff, “We are going to put capital into banks first.”

Although the bailout bill still had not passed, the financial markets had deteriorated. He did not, however, inform Congress of his change of heart, and the House debate revolved almost entirely around the asset-purchase plan. media entity

Madison stands up for Net Neutrality

The local stubbornly refuses to become virtual media lard:

Just as creative initiatives on veteran rehab are happening in the coalminer country of Johnstown, PA, so Madison, WI is out in front on Net Neutrality and local regulation. Frank Paynter offers a series of good reasons, including:

carefully developed public policy regulation in the area of Net Neutrality will effectively thwart attempts by broadband behemoths to block, impair, or degrade a consumer's ability to access any lawful Internet content, application, or service; will protect the right to attach any device for use with a broadband connection; will ensure that phone and cable companies cannot favor themselves or affiliated parties to the detriment of other broadband competitors, innovators, and independent entrepreneurs; and will prohibit the broadband Internet providers from charging extra fees and warping the web in a multi-tiered network of bandwidth haves and have-nots;

Dane101, the collaborative blog of Madison (who knew Madison was in Denmark?), announces that the city will address the issue on March 20th. And there's a next step, says Jesse Russell:

If this passes on March 20, Madison needs to go one farther. We need to pass a regulation for localized protections of network neutrality and in order for a telecom to operate in the city limits, they need to respect those protocols.