MIT professor: US the new Russia?

This is not exactly a positive comparison but looking at the US banking system - even today, as it is treated with a double standard - it's a fair criticism. The American banksters have much too much power and authority, especially considering the fact that they are at the center of this global recession.

“In its depth and suddenness,” argues Prof Johnson, “the US economic and financial crisis is shockingly reminiscent of moments we have recently seen in emerging markets.” The similarity is evident: large inflows of foreign capital; torrid credit growth; excessive leverage; bubbles in asset prices, particularly property; and, finally, asset-price collapses and financial catastrophe.

“But,” adds Prof Johnson, “there’s a deeper and more disturbing similarity: elite business interests – financiers, in the case of the US – played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse.” Moreover, “the great wealth that the financial sector created and concentrated gave bankers enormous political weight.”

Keep reading because this is an important issue that is relevant to everyone. Whether the US is exactly like Russia or only has some of the negative aspects is up for debate. It also cuts to the heart of the argument that Ariann Huffington makes about the Republicans possibly capitalizing on the populist anger around the country. The Democrats are dangerously close to crossing the line (if they have not already crossed) and losing the public. Even though it's in everyone's best interest to keep the banking system functional, it's hard to support the forgive and forget policies that continue even today.

The banking report on solvency is due out next week and there will be some seriously confused people if the report gives a thumbs up for all of the major banks. There is still too much garbage out there and nobody really trusts the banks. Unfortunately there remains little trust in the Geithner approach as well. Read the rest of this post...

White House calls in credit card industry

Despite Larry Summers or even Geithner leading this discussion, it's a positive development by the Obama administration. Banks have had too much leeway with credit card lending for years and naturally the GOP Congress nor the Bush administration had any interest in asking questions. As long as the money rolled in and the banks had protections against those pesky folks who went belly up, everything was fine. With the general economy in a bad state and banks at the forefront of the recession, a grown up is asking questions and looking ahead.

It would be hard to imagine credit card not *not* becoming an even larger problem in this recession and as this CNBC post suggests, even for the positive quarterly earnings report from JPMorgan Chase, the credit card losses are mounting. More from CNBC:

The problem with the credit card debt issue is that it is fast looking like the tail that is wagging the dog, the dog being the U.S. economy. The banks – not just JPMorgan Chase , but all of those that are in the credit card business – are now, after 15 years of mismanagement of that business, trying to fix it fast and faster. The mismanagement came in the form of mindlessly and endlessly extending credit to uncreditworthy consumers. It was fiduciarily irresponsible. But it was hugely profitable - until the proverbial crud hit the fan.

Today the disastrously managed credit card business threatens to be a major impediment in the economic recovery because the only way the banks can extricate themselves from the mess they have created is literally to shut down the industry. They may not view it that way, but their customers do. When you punish your best customers, the ones who pay on time and pay far over the monthly minimum, by (1) forcing them to pay higher interest rates, despite the lowest interest rates in the country in over fifty years, (2) increasing their monthly payments (3) shortening the payment terms and (4) reducing or even cancelling their credit lines, you are saying you don’t want to be in the business.

Read the rest of this post...

The Citibank profit that wasn't

The last time I checked, paying off loans counts so it's incorrect to say that Citibank delivered a profit. Just because they had what appeared to be a profit and then paid down some of the loans doesn't mean they really had a profit. If you tried floating such a pile of bull as a customer at Citi, I doubt they would buy it. I'm not buying it either because it's bull. Playing accounting games hardly inspires confidence though Wall Street may very well run with this "success" today. Some believe these quarterly report surprises are no indication of a long term health of the banks and may be false starts.

Citigroup surprised Wall Street Friday as the company delivered its first profit in more than a year, helped by strength within its investment banking division.

The company reported net income of $1.6 billion during the first quarter, up from a loss of $5.1 billion a year ago.

Yet, after taking into account the conversion price of a $12.5 billion preferred share offering from January 2008, and $1.22 billion in preferred stock dividend payments to the U.S. government among others, Citigroup reported a loss of $966 million, or 18 cents a share.

In other words, it was a loss. Brace yourself for the "stress test" results coming out next week. Few believe Citi is healthy but if the government review shows them looking strong, the entire review will be considered suspicious if not worthless. Read the rest of this post...

Schakowsky On Torture: "Just Following Orders" A Historically Bogus Argument

Huff Post:

Rep. Jan Schakowsky (D-Ill.), a top Democrat on the intelligence committee, dismissed President Obama's defense of CIA officials who tortured detainees under orders from the White House....

Schakowsky, in an interview with the Huffington Post, says she's heard that argument before. "This notion that 'I was just obeying orders' -- I don't want to compare this to Nazi Germany, but we've come to almost ridicule the notion that when horrific acts have been committed that people can use the excuse that, 'Well, I was just following orders,'" she says.

Schakowsky is chairwoman of the House Permanent Select Committee on Intelligence's Subcommittee on Oversight and Investigations.

Read the rest of this post...

Stiglitz has more harsh words for administration on economy

Let's just say Stiglitz is not making an effort to suck up and win new friends in the White House, which is OK. It's not such a bad idea to hear opposing views because there does appear to be a refusal to listen to fellow Democrats on the matter of the economy. It's a concern that Obama places so much trust in the likes of Geithner and Summers as well as the teams of people from Citi and Wall Street. There's plenty of reason to struggle with trusting this team even if you don't want to accept the likelihood of conflict of interest and that's a big "if" in this case. More from Bloomberg and Stiglitz:

“All the ingredients they have so far are weak, and there are several missing ingredients,” Stiglitz said in an interview yesterday. The people who designed the plans are “either in the pocket of the banks or they’re incompetent.”

The Troubled Asset Relief Program, or TARP, isn’t large enough to recapitalize the banking system, and the administration hasn’t been direct in addressing that shortfall, he said. Stiglitz said there are conflicts of interest at the White House because some of Obama’s advisers have close ties to Wall Street.

“We don’t have enough money, they don’t want to go back to Congress, and they don’t want to do it in an open way and they don’t want to get control” of the banks, a set of constraints that will guarantee failure, Stiglitz said.

Intertwined with this is the story in today's Washington Post about the big banks who are complaining about TARP but are noticeably silent on the FDIC billions that they have received. The incredibly cheap loans have helped fluff the numbers at some banks despite their refusal or inability to pass along loans to individuals or business.

Somehow the banks never manage to properly address this FDIC money and of course, the Obama team is too involved or too close to these organizations to say much. In the case of JP Morgan - who just released above forecasted numbers for the quarter - they have borrowed $40 billion from FDIC which does not impose any executive pay restrictions. Call it a loophole or whatever you want, but it's free money without strings. Read the rest of this post...

A little Friday dog blogging

Mom and dad's new dog. The yappy yet lovable Koukla (formally known as Angel). She's, I think, half Bijon Frise and half Maltese. And she knows how to bark. Dear God. High pitched, never ending. But she is adorable. I'm trying to break her of the barking habit. Mom and dad find it adorable (of course, having 80 year old ears probably helps). Anyway, here are the four faces of Koukla, for your enjoyment.

Yappy Koukla:



Begging Koukla:



Demure Koukla:



Curious Koukla:

Read the rest of this post...

Stephen Colbert takes on gay marriage, and the Mormons

The anti-civil-rights groups of the religious right recently launched an ad campaign warning that gay people were going to somehow convince all heterosexuals to get divorced. Not that Newt Gingrich or Dennis Prager need any help in that regard. Well, Steven Colbert takes them on in his own ad. It's a joy.

The Colbert Report	Mon - Thurs 11:30pm / 10:30c
The Colbert Coalition's Anti-Gay Marriage Ad
colbertnation.com
Colbert Report Full Episodes Political Humor NASA Name Contest

Read the rest of this post...

Top McCain presidential campaign aide comes out in favor of marriage for gay couples

Wow. Steve Scmidt is kind of a big deal. He wasn't just some flunky on the campaign. He drove us mad on a regular basis. And today he's giving a speech to a gay Republican group and arguing why the party should embrace marriage rights for gay couples.

Schmidt argues that, first, there's a moral reason to embrace marriage for gay couples, and compares being pro-gay to being pro-life (that should spin some heads). Then Schmidt argues that politically the party needs to grow its coalition, not shrink it - and that embracing gay civil rights will help the party attract more voters. Schmidt also notes, implicitly, that by wooing the religious right the Republicans are alienating lots of other voters.

From CNN:

Schmidt makes both policy and political arguments for a Republican embrace of same-sex marriage.

On the policy front, Schmidt likens the fight for gay rights to civil rights and women's rights, and he admonishes conservatives who argue for the protection of the unborn as a God-given right, but against protections for same-sex couples....

Politically, he will say that becoming more open and accepting is critical to reversing an alarming trend for Republicans — a shrinking coalition. He will note that Republicans should be especially concerned that McCain got crushed by Barack Obama among voters under 30, who are generally more accepting of gay couples and at odds with the GOP.

"Some Republicans believe the period of self-examination within the party necessitated by the loss of our majority status is mostly a question of whether the party should become more moderate or conservative. I think that's a false choice. We need to grow our coalition, but as I said, that's hard to do if we lose some votes while gaining others," says Schmidt.

Think about it. In 2000, Howard Dean was a maverick for endorsing civil unions. It was thought by many that this made Dean too liberal to win the presidency. Now civil unions is the fallback position that bigots use to prove that they're not homophobic. More and more mainstream conservatives, including John McCain's own daughter, are coming out for marriage. This is about far more than gay civil rights. It's about the Republican party trying to figure out what it wants to be in the future, with the far-right in control, and the moderate left finally starting to show signs of life. Read the rest of this post...

It's time to pick a new name for Texas

As you know, Texas is now talking about seceding from the Union. Tom Delay, the former House Majority Leader who lost his job after being exposed as a criminal, is suggesting that Texas split into five separate states (which he says Texas is permitted to do), and then Democrats in Washington would be so incensed by the notion of ten new Texas Senators coming to DC that they'd kick Texas out of the Union.

My friend Chris has a great idea. Let's welcome dividing Texas up. It will be the biggest gerrymander in the history of the country. And along those lines, what should we call the five new Texas states, or five new Texas countries? What do you think? Feel free to leave your thoughts in the comments, but you have to register with a real email address (it's the only way to stop the crazies, sorry).

More from Chris:

You know, the weird thing is that Delay’s right about Texas having joined the Union with permission to divide itself into as many as five states if it chose to do so.

I actually wouldn’t have a problem with it – but oh the games one could play with drawing the boundaries. It could be the most epic gerrymander in history. The area around Austin could potentially be a liberal Nirvana.

And, honestly, one of the biggest barriers to statehood for D.C. and Puerto Rico has been the fact that we’ve been stuck on a round number of states for 50 years. LOL.

So, what the heck? Let’s split Texas into five states (West Louisiana, South Oklahoma, East New Mexico, Nirvana, and Hell – the last of which would be Houston or wherever Tom Delay is living at the time).

And actually, that suggests the idea of a naming contest for the five Balkanized states of the former Republic of Texas.

So that gets us to 54. Then we could add Puerto Rico, D.C., the Virgin Islands, the Northern Marianas, American Samoa and Guam.

Which puts us at 60 – another nice round number that will make us feel all warm and fuzzy again.

Palau, of course, is completely screwed in this scenario, since they’d be 61, but if you want to make an omelet….

You have Chris' suggestions above for the new names of the five balkanized states of Texas. He of course left out Jesustan. Read the rest of this post...

"We’re American seamen. We’re union members. We stuck together and did our jobs."

Corporate leaders and the U.S. Chamber of Commerce are on a multi-million dollar mission to defeat the Employee Free Choice Act, even as many of them, like Bank of America, take federal bailout money. The Wall Street crowd, with their private jets and huge bonuses, almost destroyed the American economy. People like Bank of America's Ken Lewis represent the worst in America. They've conspired to destroy the financial security of working Americans.

But, if you want to meet real union workers, the people who make the economy function and the people Lewis and his fellow CEOS wants to screw, meet the men from Maersk Alabama over at the AFL-CIO NOW blog:

The AFL-CIO Maritime Trades Department (MTD) salutes the courageous efforts of the all-union crew aboard the Maersk Alabama for maintaining control of their vessel, as well as the heroic efforts of the U.S. Navy in rescuing Capt. Richard Phillips from his Somali captors.

Union members like John Cronan, third engineer and son of a merchant sailor, who summed it up this way on NBC’s “Today” show:

We didn’t have to retake the ship because we never surrendered it. We’re American seaman. We’re union members. We stuck together and did our jobs.

Think Progress has a clip of Cronan and his colleagues from NBC News last night:
I'd side John Cronan and his union brothers and sisters over Ken Lewis and his crooked corporate cronies any day. Read the rest of this post...

Texas Gov. Perry blasted for "Anti-American sentiment" on secession as Tom DeLay jumps on the secession bandwagon

Burnt Orange Report has the statement from Texas State Rep. Jimmie Dunham blasting Texas Governor Rick Perry's crazy talk about secession:

Talk of secession is an attack on our country. It is the ultimate anti-American statement. Serious discussion that we would even contemplate dividing our country, the greatest country in the world, shows lack of judgment -- and any words from the Texas Governor will be taken seriously. Finally, such statements -- particularly in a time when we are at war overseas, with over 4,000 American lives lost, and thousands in combat as we speak -- are both offensive, irresponsible and not the words of a patriot.

I am surprised that Governor Perry would reinforce a sentiment that is so clearly anti-American. He should choose his words more carefully unless they are intentional, and if his words were intentional, they should be condemned.

Perry is anti-American and if his words are intentional, he should be arrested.

But, Perry has supporters including one of the Republicans who led us into the economic quagmire, Tom DeLay, who thinks secession is a valid option. Even Chris Matthews said this is "nut talk." DeLay, on the other hand, thinks Governor Perry is "standing up for the sovereignty of Texas."

Tom DeLay should be in jail for all of the corrupt dealings that drove him out of Congress. If he keeps up the secessionist talk, charge him with seditious conspiracy or insurrection. [UPDATE: There are federal law governing both:"Rebellion or insurrection" (18 USC § 2383) and "seditious conspiracy" (18 USC § 2384).] If the situation were reveresed, if a Democrat was threatening secession, you know the GOP would be hold hearings and drawing up indictments. Read the rest of this post...

Olbermann says Obama is wrong not to prosecute CIA interrogators for torture

Olbermann makes one hell of an argument. It's worth watching. One of his best, I'd say. The problem? Olbermann's argument is moral, not political. He explains why we should proceed with prosecution, rather than how this president CAN proceed safely. Democrats are notoriously ham-handed. A Democratic president is going to prosecute Republicans for going too far in trying to protect our country? Fat chance. While owning the moral high ground, that kind of charge takes a political dexterity that Democrats simply don't have.

I don't criticize Olbermann for his argument. He's right. I criticize everyone responsible for making the Democratic party so poor at messaging, and thus so necessarily spineless, that politics would trump morality when talking about war crimes. Read the rest of this post...

Friday Morning Open Thread

Good morning.

Your president leaves Mexico and heads to Trinidad and Tobago for the Summit of the Americas.

Today is the last day of the recess so Congress goes back in session next week. No doubt, the Republicans are going to be all charged up after their teabagging sessions. Teabagging is the only idea the GOP has had in years.

And, can you believe that the word "secession" is even being used? It just shows how extreme the GOP is. Seriously. Secession? It's beyond shocking -- and so 1861.

Yesterday, Obama was talking about high speed rail to insure the U.S. is a leader in the 21st century. Top Republicans are trying to figure out how to bring the U.S. back to the mid-1800s.... Read the rest of this post...

AIG fights blind amputee

This company is sick to the core. Never shy with handing over millions in bonuses or billions to friends such as Goldman Sachs to bail out their ridiculously bad deals, it appears as though AIG is less generous with individuals who deserved more. AIG deserves all of the harsh criticism that they receive and then some. From ABC News:

An Oklahoma man who lost an eye and a leg in Iraq says the giant insurance company AIG refused to provide him a new plastic leg and fought to keep from paying for a wheelchair or glasses for the eye in which he has 30 percent vision.

"They bought the cheapest thing that they could get away with," said 51-year old John Woodson, a truck driver for the KBR contracting firm who lost his leg when his truck hit a roadside bomb in Iraq.

"Everything's been a struggle, a constant fight," said Woodson, injured in Oct. 2004. "It's been hell since."

If you click through, you can also read the full story as well as see the interview. Read the rest of this post...

ISPs doing their best to turn back the clock, destroy competition

Are they really promoting a floating rate that punishes users from well, using the internet? Isn't that the purpose?

This sounds like the old fashioned telephone calls charged per minute of yesteryear. When I first arrived in France everyone still paid per minute for calls and for using the internet (or minitel) but now it's difficult to find anyone who pays more than the standard flat rates per month which includes internet (fiber optic or regular broadband), phone to at least 50 countries in the world plus piles of TV stations. France Telecom, who charged per minute to landlines until very recently, led the world with compression technology (it's a country of math wizards, after all) so now with the exception of one remaining coaxial "cable" offering, everything comes through the phone lines.

It doesn't matter if you are watching TV or online, it comes through the phone lines. Charging extra for watching TV whether online or on your TV is not the future. It's the past. If a country like France can offer more competition than the US there's something seriously wrong in the US. The problem is political lobbying and not technology because obviously it exists. Washington needs to bring back the competitive environment that was thrown to the dogs during the GOP years and let the ISPs learn how to compete again. Consumers deserve it and Congress should demand it.

From MSNBC:

If Internet service providers' current experiments succeed, subscribers may end up paying for high-speed Internet based on how much material they download. Trials with such metered access, rather than the traditional monthly flat fee for unlimited connection time, offer enough bandwidth that they won't affect many consumers — yet.

But as more people use the Internet to watch TV and stream movies, they could bump up against the metered rates' caps, paying expensive over-use fees. Watching a movie may then require paying two fees: one for the movie, another to the cable company.

Time Warner Cable is now playing both sides of the debate so who knows what that's supposed to mean back on planet earth. Read the rest of this post...

Nissan targets 2010 release of zero emission car

The future may not be zero-emission cars run on batteries but it's still impressive to see Nissan forging ahead with something new. It's easy to sit back and use the recession as an excuse for standing still and stopping innovation but if anything, now is the time to invest in the future. The recession won't last forever and when the situation changes, businesses who are planning for that improvement will prosper. Those who sit still will only drop to the end of the pack if they're not already there.

There's a reasonable environmental argument against batteries since they are difficult to recycle in a clean way but it's a start. Maybe recycling will become easier or perhaps this is only an in between period in cars. My cousin used to work for one of the European auto manufacturers and swore that the new clean diesel was a more environmentally friendly option and he's very green. Either way, innovate today or be gone tomorrow.

Nissan Motors CEO Carlos Ghosn said the company has the technology and the capability to produce cars that will not only be zero emissions, but also also cost-friendly by 2010.

“Somebody’s got to bring zero emission cars into the market—we think we can do it,” said the CEO in an interview with CNBC. “We have the batteries and we are at the point where in 2010, cars that we will be putting in the U.S. market will be totally attractive to the consumers.”

Read the rest of this post...

Do you haggle?

More and more I've been reading articles about haggling coming into fashion again during the recession.

My dad used to haggle on everything, much to our collective family embarrassment, so I avoided it until a few years ago. When Joelle and I traveled around Southeast Asia, every day was about negotiating something or other. During our visits to North Africa and the Middle East it was a must or else we would end up paying more than what we would pay in Paris. On more than one occasion I was pushed to the limit with carpet sellers and others in the souks of the region. I made it my mission to either play the game and not buy or play the game harder than the sellers. In fact it did become fun to a degree though not something I wanted to do every day.

More recently I wanted to purchase a bike and take advantage of the great bike paths of Paris but I didn't want to pay full price. The plan was to visit a shop and test the waters and voila! it worked. After laughing and making a joke about it - keeping the tone light and joking is always important so everyone can save face - the bike shop dealer agreed to knock 10% off. I was happy and he was happy. He asked why I wanted a discount so I said I wanted a recession discount. My own customers beat me up on a daily basis for extra discounts citing the recession so this was my chance to get my own. The owner then talked about how the Americans, Germans and English are too embarrassed haggle but not the Spanish, Italians or French. Must be the Mediterranean culture. What's the worst think that they can say? If he said "no" I would have gone elsewhere and tried again. Even if the second or third place said "no" I probably would end up buying at the last place I visited after trying.

So do you try to haggle? Does it work? If so, what kind of stores or products go for haggling? Read the rest of this post...