Health Care: GOP and Mark Levin are Both Wrong

Today on Meet the Press David Gregory was interviewing Gov Tim Kaine (D-VA) and the RNC Chairman Michael Steele about a broad range of topics. Health care is one of the most important issues facing America today and was presented just long enough for the summary of the opposing views. My summary follows: (here's the entire transcript):

Tim Kaine: 46 million at any given time do not have access to health care and that needs to be fixed. We need to figure out a way to pay for it. and also give people a choice between public and private plans.

Michael Steele: We have to look at tort reform and we have to make sure that pharmaceutical companies and insurance companies are at the table. (My addition: "huh?")

This is really the basic message that points out the priorities regarding health care and the place of the federal government. Conservatives, as embodied by the Republican party, do not even understand the problem. Their short view of the priorities shows that they really do not get it.

First of all, health care is a de facto right in the USA. Even the staunchest conservative (and I'll talk about him below) can write chapters on health care, but never do they even intimate that health care should be withheld based on some one's immediate ability to pay. It's not a question of mushy feelings of compassion or empathy, it's always about economics, i.e., the allocation of scarce resources and the conservatives do not want to make tough choices.

Hypothetical case (that plays out is some version every minute): Lydia is a 25 y/o waitress who has 2 kids and no health insurance. She has acute onset of left lower quadrant pain at 2 pm on a Saturday and her last menstrual period was six weeks ago. She has delayed seeking birth control because of the cost and waits to see if the current pain will subside on its own. At 8 pm she begins to feel dizzy and lightheaded and her friend from work encourages to leave work and go to the hospital. Lydia instead goes home to "sleep it off." The pain increases and she calls an ambulance at midnight and her neighbor come over to watch the kids.

At the hospital, the emergency protocols are triggered and she is seen immediately. A blood count shows she is acutely anemic and a stat ultrasound show a belly full of blood with the presumed diagnosis of a ruptured ectopic pregnancy. The gynecologic surgeon is called at 1:30 am, an operating room team is assembled, surgery is performed and she goes home two days later and back to work in 10 days.

The emergency physician, gynecologist, radiologist and anesthesiologist are never paid. Hospitals are required as a provision of getting federal Medicare money to provide emergency services. The hospital passes this requirement onto physicians by requiring emergency coverage for uninsured patients in order for the doctor to keep his or her hospital privileges. In practice, hospitals will often pay for such coverage with funds from other services, but not always.

Practical view: Nobody should die from a treatable illness. Provision should be made to pay for this care, and more importantly, provision should be made to prevent the need for the acute care of a life-threatening illness.

Current Republican platform: The system works the way it is and they give a long list of things that they will not do. They want to make sure that the doctors are not sued if they commit malpractice, which completely misses the point of the issue. Malpractice insurance premiums have not gone up significantly in recent years and tort reform has not been shown to improve quality or increase access for the indigent. GOP is off on a tangent here. I may dislike trial attorneys as much as the next guy, but the evidence shows that the costs of the current tort system is not the main driver of health care costs. If lawsuits were limiting access to care in particular situations, then federal risk pools could be set up to pay out for damages in extreme no-fault situations such as cerebral palsy or neurosurgical procedures. This has been done with vaccines with great success; but I hear no conservative thinkers presenting a case for another such federal program.

Libertarian conservative view (although I've never heard it actually voiced): Lydia is going to die. Nobody can be compelled to provide labor and expertise without compensation and since she has no ability to pay for the care, she will die.

Is this the optimal solution? Nobody would argue that it is. The provision of care to uninsured patients is a form of endenture. I would at least understand the conservative view on health care if they were consistent and said, you know on that fateful night the woman would die. She has no insurance and no means to pay for it, so I'm sorry, but nobody is available to treat her. In fact, even if a gynecologist is empathic enough to be willing to perform the operation, he would still need to assemble a team to also work for free and pay for the nursing care, pharmaceuticals, etc. Conservatives don't face that reality; instead they try to ignore the real circumstances.

Currently, at the urging of a conservative friend, I am reading the #1 bestseller, Liberty and Tyranny: A Conservative Manifesto (1), by radio personality and lawyer, Mark Levin. The book does not merit a more lengthy review, but I will point out now that he never mentions a solutions to the health care problem, the foremost economic and social problem of our day, in his entire book. In his chapter titled On the Welfare State, Levin goes on about all the problems inherent in the economics of health care and the federal bureaucracies involved. He mentions the supposed deficiencies of the British system, as well as the US' Medicare and Medicaid plans, but he fails to solve the fundamental problem with the current US model.

History tells us that Medicare and Medicaid were instituted in 1965 to fill a need, but regardless of why these programs are here, we are stuck and we have to deal with them. If Edmund Burke, a true conservative, were alive today he would admonish pundits like Levin and political parties to act pragmatically instead of expounding theoretically. Without these programs, countless elderly, poor and disabled would have been without health care over the past 40 years and they are not going to go away so we may as well try to figure out a solution. The GOP, with all their complaining about Obama's so-called "socialism", were the architects of Medicare Part D which is the largest social program of my lifetime, dwarfing the original Medicare program and estimated to cost three-quarters of a trillion dollars over the next decade. Small government conservatism? Not.

Mark Levin, who for his part has been critical of both Republicans and Democrats, offers no concrete solution to access. He takes issue with the number of uninsured, and while he does not dispute the total of 47 million, he implies that this overstates the problem. Levin says that of the 47 million, "9.5 million are not United states citizens." So? They still require health care. Even with the best immigration enforcement conceivable some illegals will find their way here. Perhaps Lydia is a migrant worker here on visa, or even an illegal alien. Do we let her die? What's your solution, Dr. Levin?

He continues, "Another 17 million lived in households with incomes exceeding $50,000 a year and could, presumably, purchase their own health care coverage." Presumably? Sure, Lydia could very well be a waitress at Lawry's of Chicago dragging down six-figures, but she still has failed to secure insurance. Do the ER physicians withhold care until she can secure a home equity loan?

Levin goes on, "Eighteen million of the 46.6 million uninsured are between the ages of 18 and 34, most of whom are in good health and not necessarily in need of health-care coverage or chose not to purchase it" (italics mine). Most of whom are healthy? How do we decide who will necessarily need coverage this week and will they be able to buy a good health insurance on their way to the hospital? Was Lydia on the schedule to purchase a health insurance policy this week or next? Maybe the ambulance drivers can moonlight as insurance salesmen. Seriously, this is just more ivory tower bullshit from someone with no practical experience in economics or health care.

He continues: "Moreover, only 30% of the nonelderly population who became uninsured in a given year remained uninsured for more than 12 months. Almost 50% regained their health insurance within four months." Which means that 50% to 70% of these apparently healthy people are playing Russian roulette at any given time. But it's not a gamble with their own health necessarily or even their own money; instead it's Russian roulette with the scarce resources of the health care delivery system, the precious time of the trained professionals who are compelled to work for free and the other people's money who are insured and whose premiums subsidize the uninsured when they get sick.

Levin's prescription is that workers, instead of having payroll deductions, should be allowed to make the financial decisions for themselves. The market place should be allowed to work to lower the costs of insurance and health care. He says, "Perhaps they could find less expensive alternatives, invest the taxes deducted from their income to improve their overall financial situation... Most individuals know best how to use their money which they earned from their own labor. And most individuals are not self-destructive (p. 111)." Perhaps?

Really, Dr. Levin, you had me at perhaps. Are you sure you're not a comedian? What evidence does Dr. Levin have for any of these claims? My observations see 18 year-olds who do not use contraception, 22 year-olds who drive drunk, 35 year-olds who beat their spouses, 53 year-olds who smoke and drink to excess, 61 year-olds who fail to treat their hypertension or get mammograms. And don't even get me started on other economic time-bombs that we all ignored, like sub-prime mortgages and outrageous household debt. Even if "most individuals are not self-destructive", which is debatable, many are at least negligent... but when they get sick these people will still exercise their de facto right to health care when it is absolutely needed. That's the real world, Dr. Levin.

Humans have two innate tendencies: they look out for their immediate self-interest, and they fear the unknown of death. A healthy nonelderly adult will often buy a boat or go on vacation if they have the money in their pocket, or they will eschew school or work for other fun things, because that is in their immediate self-interest. They often don't desire to buy an expensive health insurance policy that is perceived as unnecessary at the time. But when they have an "event", such as Lydia had, the second universal innate tendency kicks in and they run to the health care system to pull their cookies out of the fire. Is Levin true to his libertarian view? If he were he would candidly state that the hospital and doctors should be allowed, nee required, to say, "no, you did not know how to allocate your funds, you have failed to provide a source of payment for the scarce resources for which you are asking, therefore, you are going to die." Nope, Levin says no such thing. Instead, he says nothing.

Well, he does quote Edmund Burke (one of my favorite 18th century conservatives): "What is the use of discussing man's abstract right to food or to medicine? The question is upon the method of procuring and administering them. In that deliberation I shall always devise to call upon the farmer and the physician, rather than the professor of metaphysics." Burke thought that merely recognizing "abstract" rights was silly, rather he pursued a practical solution that involved charity on a society-wide scale, not mandated by law, but voluntary (2). If Levin is advocating this scenario, then I would expect a chapter requesting that physicians, lab techs, ultrasound techs, nurses, hospital administrators, drug companies, building maintenance engineers, housekeepers, nurse's aides, etc, continue to provide their products and labor for free to the increasing number of uninsured. Or, Levin should come out and say that the Lydias of the world will die at the curb of the hospital building.

Burke, for his part, was truthfully practical and did state unequivocally that participants in society had an Aristotelian moral imperative to voluntarily give back the fruits of their labor and he advocated a pragmatic system of charity giving. There is no evidence that our current society is willing or able to provide the largess necessary for the current mandate. Do today's conservatives recognize the gaping need? While charity programs are available, they are woefully inadequate to provide for the increasing numbers of needy and elderly. Guys like Levin want it both ways: they don't want to lower themselves to ask doctors and other skilled workers to provide charity that they themselves are unwilling to do, yet they will not level with us about the consequences of withholding life-saving care.

Michael Steele says to do nothing, and Mark Levin says to let the free market sort it out. The fact is that while these two yahoos twiddle their thumbs, the health care system is not going to allow Lydia to die because to do so would abrogate their human moral contract and so we go on with the burden being borne disproportionately by one segment of society and the moral hazard is never addressed. The problem is that the Lydias are crippling the system because her expensive surgery could have been avoided with a few dollars worth of contraceptive counseling and/or medication, but there is no organized system in place. Lydias fall through the cracks. Multiply this lack of preventive care by all the untreated hypertensives and diabetics whose arteries are being destroyed daily, the breast cancers growing without mammogram surveillance and the asymptomatic women who do not get Pap smears due to lack of insurance. They will all be consuming health care at some point, only by then it will cost more and have less optimal results.

Ignoring the problem of access and cost worked okay when there was fat in the system that could be boiled off, but now hospitals' budgets are tighter, doctors' reimbursement is lower and overhead costs are higher, and the numbers of under-insured and uninsured is growing. It cannot be ignored any more.

Insurance is based on the size and diversity of the risk pool. Currently, private insurers have the perfect situation: they cherry-pick the healthiest and wealthiest of the risk pool for their products, leaving the poor and infirm to be on the public plans. No wonder Medicare and Medicaid are in tough financial straits. In fact, since they provide care for the sickest, oldest, and least compliant patients on the tightest budget, it's really a testament to the efficiency of these federal and state systems that they are functioning at all.

Medicare actually works quite well with relatively low administrative costs, certainly no worse than private insurance for comparable patient populations. In addition, Medicare pays 100% of the educational expense for all residents in training. If the Medicare risk pool included healthy nonelderly people in addition to the current pool of elderly and sick, the system would work even better. In short, it would be immediately solvent and sustainable. Private insurers, for their part, offer no value to the product of health care: no training, no valuable guidelines, no new information; same doctors, same CT scanners, same hospitals; but insurers do skim 12% or so in profit. Private insurance does nothing but act as a middle-man, collecting premiums and paying out (or denying) claims. A federal utility can do that just as well, and without extracting a large profit.

Guys like Steele and Levin appeal to the majority of citizens who love simple answers to complicated problems. But health care is one of the most complicated issues we face in regard to our economic stability. As Levin pointed out, we spend 17% of our GDP on health care, while other industrialized nations get by on half that expense. The US' employer based health insurance model is a huge drag on the economy where employers are reluctant to hire workers due to the burgeoning cost of insurance. Companies are reluctant to build plants here because of this cost. The Detroit-based auto industry has been decimated largely because of the cost of retiree health care. Sure, the younger, non-union Honda and Toyota US workers are willing to work at age 30 without the promise of health care when they are 60 because, referring to my previous premise, this is consistent with their immediate self-interest. When they are 55 or 60 years-old, after working 30 years at a laborious job, how will they pay for health care? Answer: they will either still be working full-time (doubtful) or they will not have insurance (possible)... or they will be on some public plan (most probable). I would argue that a large number will be on some public plan. Sure, they could be allowed to make decisions now about providing health care for themselves later, but how many will actually do it? It only takes a small percentage of Lydias to bring the system down.

Levin cites a Gallup poll that shows that 57% of Americans are satisfied with their health care coverage, and Levin concludes that we should not change the private insurance system. The problem with Levin's interpretation is that 33% of the participants in the poll had Medicare or Medicaid! And since the poll did not differentiate between privately insured people and those in public plans, no such conclusion can be drawn. In fact, a large five nation study shows that US patients are the least satisfied of similar industrialized nations.

Elections recently have been a referendum on the dissatisfatction with the Republican leadership on a whole host of issues, but health care reform is near the top in polls that ask a reason for a person's vote. My thesis is that polls show that Republicans as a group are less worried about health care reform because these numbers are skewed with over-65 voters who are more likely to identify as Republican. They are satisfied with their health care because they have Medicare!

In conclusion, the US health care system suffers from poor access, increasingly high costs, and it is not sustainable in its current form. Without a solution, the structure will start to fragment as employers are increasingly burdened with costs and hospitals and physicians are forced to deal with an increasing number of the uninsured and lower reimbursement from the poorly insured. Market forces can be implemented to control costs, but the bottom line is that the risk pool needs to include everybody: the healthy as well as the sick. All citizens should be required to have insurance and cover premiums based on their ability to pay. Disengage insurance from employers; my boss doesn't pay for my auto insurance, why should he pay for my health insurance? Private policies should be required to cover the same things as Medicare and Medicaid and follow the same standards of allowable services.

The least imperfect solution was Hillarycare as presented last year. Obama's is next best, but his lack of a mandate for health insurance is a weakness. Neither Levin nor the GOP offer a solution that has any meat or merit.

(1) Liberty and Tyranny: A Conservative Manifesto, Mark Levin, 2009.

(2) Edmund Burke, Volume II (biography), by F. P. Lock, p.318-9

Michael Monsoor and duty

Tonight I watched the Mike Huckabee show only because the White Sox had played a day-game which found me surfing for a few minutes.  The first segment was about Petty Officer Michael Monsoor, the Navy Seal and posthumous Medal of Honor recipient, who instinctively fell on a grenade in Ramadi, Iraq in 2006 in order to save his fellow soldiers.

Monsoor's sister was interviewed and gave a poignant biography of a young man who dedicated his life to the service of family and nation.  He was a loving brother, son and uncle who never hesitated to do the right thing, volunteering for military service and attaining additional training in the special forces.

Lt Commander Seth Stone summarized the details of the fateful day.  Just days before he was to come home after a long deployment, Monsoor's unit came under attack and the highly trained Seal was hit with a live hand grenade tossed by insurgents in the midst of a fire fight.  Instead of running for cover, which was still an option, he covered the live ordnance to shield his comrades standing a few feet away.  The platoon mates, who had wives and children at home, were saved by the heroic act of Michael Monsoor.

I am a 48 year old man who has had a wonderful life.  Michael Monsoor was 25 years old when he died.  I try to remember what I thought 20 years ago; what my world view was; my goals; my feelings of what the future would bring.  I remember that I trusted the system... the status quo, and I imagine that Michael Monsoor did likewise. Maybe not so much naively, but I remember that I respected older wiser adults who counseled me to work hard and trust that rewards will come based on merit.  I trusted that my work would not be in vain, and it has not been.

Now I am the older, supposedly wiser, adult.  When I see stories like Michael Monsoor's I cannot help but feel that my responsibility is to ensure that trust for the system, our system, is not misplaced.  Michael Monsoor, and countless other heroes, bought into this nation's mission, a mission that my tax money has suppported and a mission to which my acquiescence is implied.  Michael Monsoor is not here today largely because of the status quo to which I am a party.  And it breaks my heart.

Lt. Commander Stone said something that truly overwhelmed me.  He said that Petty Officer Monsoor, like all Navy Seals, was trained to care for his brothers.  He was trained to care for his brothers.  And he was merely acting in accordance with his training.

How many of us can say that we have been trained to care for others?  How much of what we do is consistent with any modicum of such training.  I have sat by to watch my nation elect and support leaders who have not exhibited anything close to the notion of caring.

If we cared for Michael Monsoor as much as he cared for us, would we have blindly entered a war that was as unjustified and as unnecessary as the war in Iraq?  Would we have sat by to watch as that war was waged so imprudently?  I have no idea about the political views Michael Monsoor or his family, and I am certainly not trying to co-opt his death to elevate my soapbox.  My hunch is that his sister supports the war since she was so gracious to Mr. Huckabee who has been a staunch supporter of the invasion and occupation of Iraq, and I can respect Ms. Monsoor's stance regardless.

I remember the Tehran, Iran US embassy attack in 1979 and remember the rage and know that my 18 year old self would have run-- not walked-- to the nearest military recruitment office if a war had broken out over that greivous action.  At that time the sense of duty to my tribe likely would have overwhelmed my latent wisdom about the situation and my future could have been much different.  I was fortunate. The wise men of my nation decided not to wage war in 1979 and the situation resolved peacefully when I was was ready to act violently.  I joke that Jimmy Carter saved my life, but it's not a joke... his wisdom saved the lives of countless people-- men, women and children-- who would have needlessly died had a justified shooting war broken out.

I wonder where the wise men are now?

I do not cast blame on anyone else in this travesty, and the loss of any man is indeed a travesty.  I am supposedly one of my tribe's wise men now, but for all my ersatz wisdom I did not learn the lesson that Officer Monsoor, who acted instinctively based on his training, had learned even before his 25th birthday.  From the account of his life, there is no doubt that Petty Officer Monsoor would repeat his self-less act of caring for his teammates again and again if faced with that choice again. 

The nagging issue I continue to have is that I did not care for Michael Monsoor like he cared for his platoon.  The war that took his life was waged on my watch.  Unlike the young Navy Seal, I have not been trained to care for my brother.  And I let Michael Monsoor down.

Somebody Explain Cavuto to Me

Neil Cavuto on Fox News tonight admonished Nancy Pelosi to heed the example of former boxing champ Joe Frazier regarding the fleeting of glory (video is here because Fox is too lame to make it embeddable), apparently because her career is over.  R-i-i-i-ght. This is just one more example of the right wing projecting those feelings which they doubtless have about themselves onto the current power structure, and while such instances are myriad and this is not necessarily the best example of projection, it does illustrate the point.

Cavuto tells us that Pelosi is about get a knockout punch over her allegations that the CIA misled her over the occurrences of torture of US prisoners in Iraq and Afghanistan.  CIA director Leon Panetta has come out to defend the agency and Republican leaders are guffawing in fake reproach that a Speaker of the House would be so bold and careless as to accuse the CIA of lying.  Obama, for his part, has been silent on Pelosi's bombshell.

But is it a bombshell?  The CIA has always been in the business of misleading the public, the elected officials, our enemies, our allies... heck they probably go about misleading each other in the CIA breakroom just for giggles.  Nobody really knows what the CIA briefed the Congress about, and nobody could certainly know their intent, but the possibility that they would mislead the Speaker about torture is not too far a reach, especially when we consider that Iraq had no yellow cake, no aluminum tubes, no mobile biological weapons labs, no "stockpiles" of chemical weapons, and no association with al Qaeda.  Somebody was misled in 2002... Mr. Cavuto, who exactly is being misled now?

In 2002, Rep. Nancy Pelosi was not the Speaker of the House; she was the minority ranking Democrat on the House Intelligence Committee at the time of the alleged briefings of interrogation techniques.  The Republicans were in control of both houses of Congress and the White House at the time, so when the GOP calls for the account of "who knew what and when did they know it", their comrades will be front and center on the dais.

The irony here is that the left has been calling for investigations and truth commissions for years in order to look into the 100 detainee deaths in US custody, the accusations of waterboarding and other organized torture techniques used on-- not only nationless enemy combatants-- but also captive Iraq nationals and sovereign Iraqi government officials, which is a clear violation of international war crimes treaties to which the US is legal signatory.  

So now with Dick Cheney blabbity blabbing about how proud he is of the US torture regime and his brothers in Congress and Fox News calling Nancy Pelosi out on her supposed knowledge of the crimes, this is a locomotive heading out of control.  The President has tried to sweep this under the carpet to save the nation from the heartache and embarassment of allegations of wrongdoing and the subsequent recrimination, but Cavuto and the Republicans seem to be begging for a fight.

This will not end well for the already staggering GOP.  Any truth commission would put, not Pelosi, but House Intelligence Chairman at the time Rep. Pete Hoekstra (R-MI), GOP Senate leaders at the time, former Secy of Defense Rumsfeld, NSA Condi Rice, VP Cheney and, of course, George W. Bush on the record as well.  Just telling Nancy Pelosi that you are committing crimes does not absolve you of any wrongdoing.

I find it odd that while the Republican party is flailing about trying to decide who would make a better spokesmodel, Sarah Palin, Joe the Plumber or Rush Limbaugh, the only thing the leadership can come up with is to pick a fight over torture:  is it right? (no), is it legal? (no), is it useful? (no), did the Democrats do it? (no!)  Did the Republicans order it?  HEY! wait a minute! You tricked us!... but we told Nancy Pelosi we were doing it!!  

If that were a valid defense, Blago would surely have used it by now.

Here's the deal: torture is a crime and is not okay and now the can of whoopass has been opened... inexplicably by the criminals themselves.  Who ever would have thought that!?  Whether it's arrogance or ignorance, the demise of the GOP is taking on a truly heavyweight tone... and we appear to be nearing the final round.   

Look out, Neil, last November was the standing-8 count...next, the knockout punch is coming your way.

Jesse Ventura: "Give me an hour with Chickenhawk Cheney..."

...and a waterboard, and I'll have him confess to the Sharon Tate murders.

From Larry King:

[JESSE] VENTURA:  I don't watch much TV. This year's reading, I covered Bush's life. I covered Guantanamo and a few other subjects.

And I'm very disturbed about it.

I'm bothered over Guantanamo because it seems we've created our own Hanoi Hilton. We can live with that?  I have a problem.

I will criticize President Obama on this level; it's a good thing I'm not president because I would prosecute every person that was involved in that torture. I would prosecute the people that did it. I would prosecute the people that ordered it. Because torture is against the law.

KING: You were a Navy SEAL.

VENTURA: That's right. I was water boarded, so I know -- at SERE School, Survival Escape Resistance Evasion. It was a required school you had to go to prior to going into the combat zone, which in my era was Vietnam. All of us had to go there. We were all, in essence -- every one of us was waterboarded. It is torture.

KING: What was it like?

VENTURA:  It's drowning. It gives you the complete sensation that you are drowning. It is no good, because you -- I'll put it to you this way, you give me a waterboard, Dick Cheney and one hour, and I'll have him confess to the Sharon Tate murders.

I would prosecute every person that was involved in that torture. I would prosecute the people that did it. I would prosecute the people that ordered it. Because torture is against the law.

If you read one thing today (and every day)  read Glenn Greenwald.

(I had no idea Cheney had anything to with the Tate murders.  Who knew.)

Inflation? NO! It's DEflation, dude.

I love The Cunning Realist, but he seems to be falling into this worry troll mode about the inflation that doesn't exist.  My thesis is that this is a function of 40- and 50-somethings who remember the harrowing inflation of the 1970's and are still looking around every corner for it to reappear. 

He says:

"For now and many years into the future, you'll spend part of every day working for people who sit in front of computer screens in Manhattan trading paper.  And what you're allowed to keep will be inflated away for the same cause."

I understand the sentiment, but the time for such angst was 5, 10, 15 years ago... and I would argue that there was no way we (collectively) could accept the dangers then and certainly no way we would have done anything about it.  Heck, we voted an imbecile MBA into the WH (twice), so that tells you how concerned we all were.  Actually, everything done since September 7th has (finally) been in the right direction and more quickly in the proper direction now since Nov and January.  Better late than never, but that's how such an interconnected behemothic economic system with all the inefficiencies and corruption rolls.

The fact is that there is no significant inflation no matter what the venerable TCR says, and when there is it will just be evidence that the economic growth that we have longed for is occurring.  As for making money in Manhattan in front of computer screens, that inefficiency is being addressed with the decrease in available credit and leverage.  Not to say that some new inefficiency will not crop up, because it certainly will, and there will be barracudas out there ready to take advantage.

Can this whole thing still collapse under it's own weight?  Sure, but it's much less likely than just a few moths ago. We are light years away from the precipice into which we were staring in September, so let's all count our blessings for a minute.  It is a bit disheartening that we had gotten so far along towards Armageddon, but the real danger is the NEXT Black Swan event, and we can not know what it is anyway or whether we will avoid it, so why worry?

Whining now about inflation, as TCR does, when we have rampant deflation is silly.    Sure the dollar will lose valuefrom its current lofty position versus most assets, and people who have saved will seem poorer, but prices are also stable or declining so the pain is mitigated.  That's how deflation works.  When inflation starts to tick up again it will just be a sign of the long-hoped-for economic growth, but TCR will be there charting gas and egg prices, god bless him. 

The next test is when to slow the Keynesian spending and quantitative easing: too fast and you shut down the economic growth, too slow and you can get punishing inflation.  But that is the price we all pay to live in this huge interconnected economy, so why wet your pants over it?  If you don't like it, buy 10 acres in Northern AZ and live sustainably... I'm not being funny, it's probably not that hard to go native, grow some food, raise some chickens, use solar power, get off the grid.  Certainly no harder than all the years of useless edjumacation, paying 4 months labor per year in taxes... and now worrying if Bernanke is going to land this thing in one piece.

I love TCR, but he's such an old worry wort sometimes.

"Terrified": Condi Rice admits the terrorists won

In answer to a 4th grader's question, former Secretary of State Condoleezza Rice harangues about the legality of the actions of the Bush administration.  In addition to the difficulty she has explaining this to a child, I was struck by by the use of the word "terrified", as in "we were terrified of another attack..."

Here's the video.

This corroborates completely my thesis on the Bush admininistration's reactions to the 9-11 attacks and the destructive consequences to our well-being.  According to Webster, "terrified" is defined as "filled with terror", and also defined as "panicky" and "thrown into an intense state of fear or desperation." 

Emergency responders teach and train endlessly to avoid panic in the face of danger because such emotion blocks the essential thought processes needed to react successfully.

The inference is that Rice is now admitting that the president allowed his administration to panic and act out of desperation.  She did not say they were "concerned", no, they were "terrified."  Her explanation now that she is out of the bubble of the Bush White House media handlers is the most plausible explanation I have heard to date... and frankly was obvious at the time:  Bush and Cheney panicked.

Her statement in fact gives rationale explanation to the actions taken after 9-11: the flailing about looking for bogeymen, the blaming of uninvolved nations, the abrogation of habeus corpus... panic.  All these actions, in the longer term, weakened our naiton and any moral authority we may have had in the world.  Somewhere Osama was smiling because these are the reactions that a terrorist desires but usually does not expect in such quantity.

Osama bin Laden knew that he could not destroy the United States with a few airplanes, al Qaeda was not a direct existential threat to the US; but he could terrorize us, and his hope was that we would panic and act out of desperation.  We did, and these reactions indeed did more harm to the US than Osama could ever dream of.

And now, Condi Rice has admitted it.

Cheney's no hypocrite

With the expediency that permeates politics I have to say that Dick Cheney's recent campaign to purify the Republican party is a bit refreshing.  We've seen Senator Arlen Specter jump to the Democratic party when it appeared his personal power base was in jeopardy in the next election.  My favorite hypocrisy is Jane Harman becoming incensed that her civil liberties were abridged after she had voted for legislation that formally abridged the Constitutional rights of every US citizen.

Bring on Dick Cheney.  You can call him whichever derogatory name you want, but "hypocrite" is  not one of them.  He gets on national TV and says, sure I ordered torture and I'd do it again, not necesarily because it was the right thing to do or that it worked or even that it was legal, but merely because I wanted to.  Only 21% of voters describe themselves as Republican and Cheney has hung out for nearly 8 years with an approval rating in the teens, so this guy is not in the business of being popular.  

Recently he said:

You know, when you add all those things up, the idea that we ought to moderate basically means we ought to fundamentally change our philosophy.  I for one am not prepared to do that, and I think most of us aren't. Most Republicans have a pretty good idea of values, and aren't eager to have someone come along and say, 'Well, the only way you can win is if you start to act more like a Democrat.'

Maybe it's me, but I find it somewhat refreshing to have a politician not willing to bend to the wind of polls and such quaint popular cultural institutions as the Constitution, Geneva Conventions and basic moral decency.   Nope, basic moral decency is for wimps, and I'd be greatly  disappointed if I found out that Cheney had softened... kinda like if I found out Ted Nugent started volunteering at the no-kill animal shelter or Ozzie Guillen stopped swearing.

To be blunt, my worldview as it has been formulated would be torn asunder.  Cheney is Cheney and will always be Cheney.  He is the one constant in national government that connects some of the greatest life-defeating schemes of the last 50 years: the School of the Americas in the 1970's where we trained thugs in Central America to torture innocent nuns and children, Nixon ordering a break-in and then paying off witnesses, the US selling weapons to Iran in the 1980's, arming Saddam Hussein with biological weapons, giving Stinger missiles to the Taliban, enabling Saudi, Sudanese and various other despots against their own people in exchange for oil, the dismantling of our Bill of Rights, rounding up and torturing un-tried brown people, and the subsequent false case for war in Iraq.  The one remaining person who was present in every White House, at the table of each one of these decisions, if not the verbal proponent certainly the reticent observer of the process, was one man: Dick Cheney.

For Cheney to now come out of the cold and show remorse or compassion, for him to call for his party to change into something resembling a republican institution, would be hypocritical.  He has stood on the side of blind authoritarianism, wielding power not for his own personal gain nor even the benefit of the nation, but simply and merely to wield power.  Cheney is a mutated limbic system, containing just enough social conformity to be able to don a suit and tie for the purpose of getting elected, but in reality a lizard seeking to chaotically devour.  For him to change would be against the nature of the beast.  And we all should know where beasts belong.

The tangible discrepancy in this drama is the fact that supposedly well-informed adults have voted this guy into national office, not once but twice.  With all the information available, the press, the internet, the history books... for anyone to admit ignorance of the destitute crimes of Dick Cheney challenges credulity.  Cheneys exist, sure, that's not too incongruous; but he was ELECTED to run this country by coherent, walking, talking people.  That's like calling Chris Brown up and asking him if he'd like to date your daughter, then giving him the keys to the car as well.  The word "sheeple" comes to mind.

No, Dick Cheney exists and will never change. The GOP needs now to determine where to go from here, and whether they will become a reasonable loyal opposition and do the heavy lifting contingent on national leadership or whether they will follow Cheney off the cliff to oblivion.  

Video Joke from Clement Freud

Is it funnier because it's Sigmeund Freud's grandson?

Olbermann: Cheney, the Official US Worry Troll

Cheney gets a take down from Olbermann with the recent Special Comment.  In talking to conservative friends I have come to detect a unique venom that Olbermann elicits.  For some reason folks who have backed Bush and Cheney *hate* Keith Olbermann, having a know-it-all smart-ass sportscaster ream a former Vice-President a new asshole on national television.  How can that be?  How can some guy who used to voice overs for football bloopers be so uncomproising in his digust for Mr. Cheney, even calling him un-American?

I'll tell you the secret:  it's because Olbermann is right and Cheney is wrong.

Olbermann embodies the paramount objective of a liberal arts education: someone who can understand areas as broad-ranging as politics, economics, science, the Constitution, popular culture and sports, and then use this knowledge in an inspiring way to engender change in our daily lives.  Somewhere Plato is smiling.

But I realize that this is can make some a bit uneasy, and I admit that it does seem weird.  But, I challenge anyone to find one inconsistency, inaccuracy or untruth in Olbermann's recent Special Comment about Dick Cheney.  Just one.  

These are opinions, sure, and Olbermann epitomizes the liberal elite with his mocking tone and use of words such as "anew" and "desist", and I can fully understand how this can drive people crazy, but the problem with Olbermann's critics is that they have no real argument with the substance of his diatribe only the idea that the authority of the previous administration could have such a vocal critic as all.   Or, as President  "Give 'em hell" Harry Truman famously said, "I don't give them hell, I tell the truth and they think it's hell."

On with the video, and the challenge stands.

Visit msnbc.com for Breaking News, World News, and News about the Economy

Bachmann keeps bringing the stupid

She's the Energizer bunny of ignorance.  Bachmann says, "I find it interesting..."

What I find interesting is that 187,000 Minnesotans voted for this idiot.  That state must have a wicked alcohol problem, maybe they should close the bars on election day.

Here's the video.

My Rant on a Naysayer...

I know I shouldn't do this, but it's my (only) vice. I read yet another guy going off on how stupid everyone is, especially Congress, the EPA, the administration, yada, yada, yada. The world is ending, nobody can see it, we're all gonna die! We need fiscal responsibility and "limited government"... . Cliche Angry White Man stuff with all the angst and vitriol aimed at the wrong people, not the Dick Fulds and Angelo Mozillos and Phil Gramms and Financial Product salsmen who took our trust and used it for their short term gain and are now living on some tropical island....

No, these guys (and they seem to be mostly men, and certifiably crazy women like Michelle Malkin) go off with their "concern" about all the "troubling" things that the gummint is doing. It's all the gummints' fault. We need "limited government" (and unlimited Angelo Mozillos, I suppose). So now we have "Something's Gotta Give". The drama. My God, it's palpable. Read it, then read my reply below.


My reply:

In Doug Kass' defense, he does say he is increasing cash now due to the overbought condition of the market.

The only thing I can say about your general negative sentiment and crappy world view is that this is exactly how deflationary recessions are supposed to make us feel: sick... like it is dire with the outcome determined to be the worst case.

Deflationary recessions of this magnitude are rare: the previous such cycle was 1929 to 1933 and all other recessions since have been inflationary. Deflations are managed by doing exactly what is currently being done: re-flating assets with govt spending, massive borrowing and the printing of money so that dollars flood the system. This way inventories of goods are sold off with the devalued borrowed dollars and employers don't fire anybody. It may seem counter- intuitive, but that's the cure.

Is this fair to those of us who have been frugal and responsible and now will see our saved dollars devalued? Maybe not, but who said life was fair? In reality, the dollars don't really belong to "us" anyway, they are solely under the control of the Federal Reserve (take out a dollar and look at what is says across the top) and they can do what ever they like. They can print more if they choose or take them out of circulation, whatever they want to do. Don't like it? Then demand your employer pay you in something else: seashells or pork bellies, or better yet, come up with your own currency and market it for general use (that idea is not too far off base since some communities are doing just that, see Berkshares. Furthermore, this would help to massage your "limited government" muscle, and good luck with that.)

I don't know if the current regime of stimulus and easy money will work to ensure the survival of the market economy, nobody can predict-- it may not and we may be overrun tomorrow by marauding bands of disgruntled unemployed UAW members with machetes (at least they would know who the real bad guys are). Who knows? But I do know that doing nothing, freezing spending, having runs on the banks, increasing unemployment and declining industrial production would very likely fracture the economic structure and would surely lead to damage in greater social structures. At least that is what history tells us about the few deflationary recessions that have been well studied.

One last thing: consumer sentiment can turn very quickly. The empty parking lots can fill very quickly once enough (devalued) dollars start flowing and people are more confident that they won't lose their jobs.

This is a gruesome recession, no question, but geez, the world has survived a lot worse things than this. The politicians are no worse and the the circumstances are no more dire. Sure, the world may explode by next Tuesday and leave us all in a pile of ashes, but it probably won't.

Hold cash, or gold or what ever your currency of choice happens to be if you like. Sell down to you sleeping point. Re-supply your fallout shelter and stock up on ammo and canned fish and Glenn Beck DVD's if that makes you feel secure... at least it will keep your mind occupied while the adults fix the country. But soiling your pants and whining about Congress or the EPA are the least productive (and least fun I would think) ways to while away the hours.

Cub fan creates an everlasting Hell

Maybe only White Sox fans can fully understand the irony of a Cub fan mausoleum in which they can place their cremains upon death. The morbidity and gallows humor that surrounds the Cubs franchise permeates every business venture associated with it. Baseball is supposed to be a hopeful and happy endeavor, the American pastime, but leave it to the Northsiders to find some opportunity in death.

These losers relish their loserdom, so a cemetary is the natural extension to this tragic team.

It fits... I just wish I had thought of this.

Earth Day Rant: what about kids?

With the knowledge that our carbon economy is destroying the ice caps, this year we have more reason than ever to embrace the Earth Day sentiment, so I did the Nature.org carbon footprint calculator... and, no surprise, I'm one of the worst offenders on the planet when it comes to leeching carbon into the atmosphere and having a general lack of regard for conservation.

I spew out nearly 40 tons of CO2 per year which is 7X the world's average and much more than the US average of 27 tons. The questionnaire covers such topics as how much I drive, the size of my house, my recycling habits and whether I eat organic food and meat. The lowest I can get my carbon level is 9.6 by following all their recommendations of becoming a vegetarian, never traveling by plane, and always driving a hybrid car, etc.

Here's my problem with this and all such carbon footprint calculators: they never ask how many offspring you have. The number of progeny an individual produces definitely would increase the amount of carbon used by the family for energy and other things, assuming the kids lived in Western civilization. Kids will eat meat, need clothes and heat, and some day they will likely drive cars and travel in airplanes and have kids of their own. Yet, none of this is taken into account when figuring someone's carbon footprint versus an individual who has never procreated.

In fact, my personal score improves if my wife and I were to have 2 kids living in our house instead of just the two of us. Using this twisted logic, a guy my age with six kids in my smallish house and using my car would actually be considered to be saving the planet with his lifestyle!

I fully understand the compelling urge to reproduce; we are all the result of the natural process of evolution that has selected out the most successful reproducers. Our limbic systems are hard-wired to make more of us. But let's just realize that these kids will all spew carbon into the atmosphere for 80 years and they will likely have kids themselves who will do the same and this should be factored into the carbon footprint calculation. It's eery how scientists, journalists, conservationists and citizens of every stripe never see this huge discrepancy with footprint calculations and happily go along thinking that if they cart around their passel of a dozen kids in a hybrid Escape then all is well. (Pets, too, generally eat meat and require heat and shelter, although to a much lesser extent than children.)

Where's the little pie wedge labeled "kids"

Although I do not have children, nor have I adopted Third world kids to live a frothy Western lifestyle, and I will never have grandkids or great grandkids to melt whatever remains of the Arctic ice cap and exterminate the polar bears or drown the residents of the Maldives, I do see the immense joy that parents exhibit and appreciate that procreation is not really negotiable. Humans will continue to populate this planet until this planet cannot hold any more of us, and we will continue to justify this even as the last of the remaining large mammals becomes extinct and climate change irrevocably alters our habitat.

Although I pump 40 tons of carbon into the atmosphere every year and remain the scourge of Nature.org and every other so-called conservation group, I know my destructive planetary onslaught, unlike most everybody else's, will end in a mere 40 years...

..so, I'll take an extra long, extra hot, shower to celebrate Earth Day.

TEA Party makes no sense

Taxed Enough Already (TEA) Parties were staged all over the country with promises to repeat these protests again and again.  I admit that I hardly pay attention to the wingnuts now that they have been relegated to background noise as the adults try to fix the problems of the last eight years, but this phenomenon has penetrated my medulla oblongata.

What are they protesting?  Increased taxes?  The current budget bill calls for reduced overall federal taxation.   Reduced means less, BTW.   Are they complaining about the increased spending? Then why don't they call it Spending Enough Already (SEA) Party?  Just sayin'.

Is the TEA party based on the original Tea Party movement from the 1770's?   If so, then it is not consistnet with the same argument which was taxation without representation.  These nutjobs have representation, they just lost the election.  That's what a republican democracy is all about.

Obviously some other factors are at work with this well-organized movement, and I smell corporatism disguised as populism.  We have the puppetmasters (Armey and Gingrich) whipping up the ignoramuses again with some new faux outrage.  I guess abortion, prayer in schools and gun rights just can't get them elected anymore. 

Obama is wrong. Period.

Nobody covers this better than Glenn Greenwald.  Olbermann has been issuing scathing criticism of President Obama's reinforcement of the policy of the previous administration regarding civil liberties.  In fact this infringement is being extended by President Obama so that it now includes a prohibition of citizens' rights to pursue damages in court. 

The Olbermann videos in the above link need to be watched, especially the second one with Jonathan Turley, a respected Constitutional attorney.  Any honest person must recognize the travesty implicit in this governmantal abrogation of our rights as citizens.  

Suffice to say that I read Greenwald every single day and I cannot understand how any responsible citizen cannot garner valuable argument from him.  Although I may not always understand his theses or agree with his opinion, Greenwald is one of the most articulate voices from the left, and in this case he is spot on with his defense of civil liberties and his discomfort with the current administration policies.

The Rhyminig of Historical Rhetoric

Cartoon from the Chicago Tribune, 1934.

And you thought Limbaugh and Beck thunk up all that bile on their own!!  

(h/t barry ritholtz)

Why GM should be Euthanized

I guess this is what you get when government tries to bully industry into a "good" idea: a really really bad idea  Hummer is being retro-fitted into making segways.

Upsidetrader said it best: "Here's me in the new GM PUMA on my way to a business trip in Chicago. I will arrive on July 2, 2011, but boy do I feel good about myself. "

Why doesn't govt just tax gas and let the market place figure out the technology.  Who's going to buy this piece of crap?    A corporate attorney on his way to meet with a venture capitalist group?  A neurosurgeon rushing to make that 7:30 am craniotomy?  Bankrupt seniors have $5K for a golf cart to knock around the trailer park?

Get real.  Good-bye, GM.  It's just sad to see you go out with such a lack of dignity.

Two ideologies on the economy

Jim Nussle, former OMB Director under George W. Bush, was on CNBC criticizing the Democratic approach to the current economic recession.  He applauded David Walker's rheotoric against deficit spending an went on to say that we should get out of this recession "the way we always do."

He likened the current leadership to a drunk at the bar and said that Europe "lectured America on the ills of socialism."  Really.  I think what happened is that leaders in Europe pointed out that they already have the social safety nets that the US needs to fund and put in place wiht universal health care the main objective.

Nussle said that we need to promote business and employment, but he failed to admit that health care costs are the fastest rising cost to empployers and the major barrier to increasing employment (or limiting layoffs in the recession) for small business.

The fact is that under Republican control we spent like drunks too, the only difference is that the expense went to unncessary and mismanaged war.  Just think what the trillion dollars would have done for American schools and health care over the last decade.

Now we have a global depression lurking at the door due to a deflationary cycle.  We have twoideologies from to choose. Spend money or save money.  Obama, Bernanke and Congress have opted for the former as a way to stimulate the economy by creating jobs.

Imagine the alternative.  Let's not spend any money and let's balance the federal budget over the next 24 months.  Unemployment, now at 10% on it's way to 12%, would rise precipitously to 15 or 20%.  This would likely shatter the already structurally damaged economy.  Reduced consumption would further reduce industrial production which would lead to more layoffs, and the vicious cycle would continue.  This is exactly what happened during the last deflationary recession which was called the Great Depression.

During the 1930's the conomy was not as global and stimulation could be immediately accomplished by putting dollars in peoples' pockets which would go to domestically manufactured products and increased domestic industrial production.  Today many of those dollars would go overseas for consumer products, so the approach has to be nuanced.   Obama's plan is such a plan.

The proposed plan is three-fold: 1) Direct stimulation and immediate spending.  This is accomplished by increasing unemployemnt insurance, direct payments to individuals and lower home mortgage rates.  The advantage is that money is pumped into the economy immediately, the disadvantage is that much of the money goes overseas for imported consumer products.

2) The second part is Keynesian government-funded programs such as infrastructure rehab, transportation projects, education improvemnt, job training and health care funding.  The advantages are that this spending leads  to predominantly domestic stimulation and is value-added with increased long term economic growth coming from a better educated and healthier human resources as well as improved roads and factories for increased efficiency.  The huge disadvantage to this part of the plan is that it takes 18 to 24 months to implement and by then the economy could past the point of rescue.

This potentially has the greatest long term effect and I would argue that if --- IF-- the previous administration and Congress had been alert and proactive and had avoided the huge Keynesian spending in Iraq, we could have diverted those funds to our own domestic spending, which would have given us universal health care, free college education for all and improved and light rail inevery city.  Very regrettable indeed.

3) The third part of the plan is tax cuts, especially for small businesses and middle income people.  Reduces federal tax revenues in the short term, but potentially increases economic growth in the intermediate and long term.

For my money, I would rather spend less and emphasize the needed infrastructure and health care spending, but unfortunately we need immediate stimulus too.  Obama's plan is as close to perfect as it gets. One-third is devoted to each of the three parts of the plan.  We are indeed in bad straits and nobody knows if such enormous spending will work.  The deficit projections are daunting and rely on a large and quick turn-around in GDP.  If it fails, and it may, then we are destined for possible disaster.

But doing nothing is assured disaster.

David Walker and Medicare Advantage

"We want Medicare Advantage to save us money."  David Walker, Comptroller General of the US, on CNBC this morning.

Whoever said that Medicare Advantage was supposed to save us money?  Walker is the guy who goes on 60 Minutes every 6 months or so to tell us all that Medicare and Social Security are going to bankrupt the nation and lead to Armageddon.  We're putting the bill on our kids' credtit card, yada, yada, yada.  

He was doing his shtick with his emotion very well articulated, as usual, this morning.  Today he mentioned how the Medicare Advantage programs are costing the system instead of saving money as they were supposed to do.

Wait a minute.  Who said the Medicare Advantage (MA) program was supposed to save the Medicare system money?  We've known for quite a while that MA plans cost the beneficiary a monthly fee that really adds no value on a population basis, and the costs to the Medicare pool are also increased.  It's a twofer for the insurance industry.

I'm not busting Walker's chops on this, but let's call it like it is.  MA is a boondoggle that was designed by the insurance industry in order to get their grubby hands on public funds, something they have been wanting to do ever since publicly funded health took hold.  In fact, insurance executives brag to shareholders that their MA plans add dollars to the company's balance sheet, and these are dollars that are unavailable to patient care.

Medicare is designed to be comprehensive.  The amount paid in premiums to an insurance company for MA plan is split with much of the total going to further administrative expense.  

Insurance companies tout their ability to screen doctors and monitor quality, which is really cose for limiting choice to the lowest cost providers.  The quality standards within the Medicare system are the highest in the industry and private insurers do not add any value to the product offered.  

Medicare is in financial trouble.  Costs are spiraling upward with increasing enrollment and health care costs.  Having private insurers ladle off some fat was okay when we were solvent, but this is one boondoggle that needs to be removed.  If folks can pay hundreds per month for a private plan, then perhaps they should be paying more for the basic Medicare.

The fact is, the vast majority of MA customers would be better off just banking the premiums and paying out of pocket for additional care and copays.

Economics and the Avoidance of Armageddon

My open letter to the Anti-pundit, who sent references without any adjoining opinion or discussion.  I'll assume he wanted to solicit my opinion, so here it is.  I welcome a response and discussion.

Items in question:

Greenwald:  http://www.salon.com/opinion/greenwald/2009/04/04/summers/index.html

Moyers and Black: http://www.dailykos.com/storyonly/2009/4/4/716394/-Moyers-drops-bailout-bomb-on-Obama

Ritholtz on AIG: http://www.ritholtz.com/blog/2009/04/aig-before-cds-there-was-reinsurance/#more-22986

I read the references that you sent.  Black is correct in maligning the marriage between Washington and Wall Street, but he acts like this is something new.  In fact, going all the way back to Alexander Hamilton, we've had corruption at the highest levels of finance and govt.  And I would say it's even worse in other types of govt models like Communism (Russia is the obvious example, but also we see it in Cuba) and monarchies (QE1 had a stranglehold on the financial system of the world; feudal lords were also an obvious example).

I'm not saying it's okay, just saying that money and power will always get married.  Greenwald implies that a new President can change the status quo in 90 days and that is unrealistic.  While I agree with the sentiment, I can appreciate the practicality of keeping the system intact for now.  There is also a marriage between the educational system and the financial world with the brightest students pursuing careers on Wall Street because that is where the money is.  Sure, there are exceptions like Krugman and Romer and Geithner, who are lifetime academics, but they are rare exceptions.  Romer is chair of Obama's CEA after all.  Geithner is a career govt official.

For the president to ignore Sunmers' and Rubins' input would be lunacy.  We also assume that Obama is blindly following the advice of one side of the debate which is not necessarily true. 

Black made the analogy of a plane wreck and bemoaned having the pilots who crashed the plane lead the investigation.  To use his analogy, I would say we are still cleaning up the debris on the runway and seeing if there are any survivors. Any investigation I have seen so far, such as with the Congressional hearings, has devolved into inane political posturing by the representatives.  I cannot figure out who is the dumber, Maxine Waters or Michelle Bachmann.  Even Barney Frank, who is hailed as the smartest guy on Finance in Washington, seems to have a very superficial understanding of the crisis for someone who has been involved with the issue for 2 decades.  

To wax philosophical for a moment, money is the property of the federal reserve-- they print it and control how much is in circulation.  We can accept it as a payment for the labor and goods we provide, but no law says you are required to do this.  The resolution of this crisis may require the devaluation of dollars at some point, but that point has not come yet, at least not in relationship to other currencies and commodities-- which is after all the only practical way of valuing a currency.   The federal reserve is a quasi private organization of banks and we can only loosely control its management.  Each of us has to make a determination of our value to society and we can choose to accept or reject the offer made.  (Ask John Galt.)   

Black and Greenwald and Moyers have a lot of bile for the status quo and the way it is being handled, and I can appreciate their skepticism and frustration.  But, they offer no alternative solutions.  In September, we approached the edge of the abyss and we successfully backed away.  Not everyone appreciates how close we were to financial Armageddon.  This is not to say that we should not or could not have seen it coming.  Economists like Taleb and Roubini and Ritholtz and many others have been railing about it for years (and reading Ritholtz since 2006 has likely saved me tens of thousands of dollars), although each one of them have intimated in various venues that they had no idea it would unwind so quickly.  Even a semi-coherent non-professional could figure out that lifestyles were out of hand:  entire subdivisions of $500,000 homes were built on speculation, total household debt is 100% of GDP, our trade imbalance is increasing exponentially, federal budget deficits are rising due to wasteful unnecessary war.  And so on.  It has taken us 25 years to reach this point.

I would also comment that as bad as this situation still is, look at the bright side.  It is being managed without bloodshed, revolution or massive dislocations in peoples' lifestyles (so far).  Just look to 40 years ago when a similar (I would even say less severe) crisis occurred in China.  What was the solution?  The Cultural Revolution orchestrated by the Party slaughtered 35 million people.  Or look to the Wiemar Republic in 1933.  After several years of crushing Depression, they elected Hitler as Chancellor whose solution was to exterminate a third of the population and start a world war where 50 million people died.  I hope we have learned from the past enough to avoid such extreme outcomes, but there is no guarantee.

Today we have safety nets: Medicare, Social Security, unemployment insurance, etc.  The crisis will not inundate everyone all at once. That is why we pay our taxes for 20 years and whine that it's not worth it, then all of a sudden, it is worth it.  That's the wisdom of FDR and Ike and like minded progressives.

Ritholtz points out that before AIG developed CDS', we had reinsurance.  I would add that we also had portfolio insurance, S&L shenanigans, internet bubbles, tulip bubbles, etc.  The financial industry has a long history of creating "products" that are designed to bilk us out of our hard-earned labor and the history likely goes back to the first Cro-magnon man selling ink to write on cave walls in France.  As dour as Ritholtz has been for the last several years, I think it's only fair to point out that he has recently called for people to get back into the market and invest in stocks.  I tend to agree with Ritholtz that someone at AIG intended to commit fraud; he's the lawyer and I'll defer to his professinal opinion.

So, bad economic conditions can have dire consequences and calling for a complete takedown of the status quo would have a plethora of unintended consequences, mostly bad.  The solution must be practical.  My opinion is that Obama is handling the greatest economic crisis in 80 years with unbelievable aplomb.  I have no idea if it will have a better or worse outcome than we had in the 1930's or 1917 or the 1870's, and neither does anyone else.  I do know that ignoring the problem, castigating individual banks, calling for massive large bankruptcies, allowing unemployment to reach 25%, being vindictive and wasting time putting the pilots on trial while the passengers are burning to death... all should be options that off the table.

Black and Moyers seem to think that we should dismantle the reserve banking system by 9:00 am next Tuesday.  Is that really in the best interest of the working man?  There will be plenty of time for Waters and Bachmann to make political hay, but let's clean up the runway first.

Ex-Bush diplomat: North Korea is (another) Bush failure...

Of course North Korea (DPRK) launched a ballistic missile.  This is one of the most telegraphed provocations to date.  They have launched before, they have said they would do it again, they had placed the weapon on the platform on display for all the world to see via Google Earth (at left).  It's been an ongoing situation for at least five years.

The threat to the United States is not immediate and, in fact, is only theoretical.  Even under perfect circumstances, the Taepodong missile could barely reach Hawaii from North Korea.  The real threats are that DPRK would destabilize Asian allies, or more worrisome, that the economically challenged regime would sell the technology to Iran or terrorist groups that are hell-bent on attacking us or our allies.

This situation will require astute diplomacy since China has been the enabling big brother to Kim Jong Il and would not be thrilled with US military action on the peninsula.  Yesterday, before the launch had taken place, John Bolton* (at right), who served as the US Ambassodor to the UN under George W. Bush, was interviewed by Greta Van Susteren of Fox News on this very topic. 

Bolton opined yeaterday: 

The fact is, I don't think the Obama administration knows much what to do. I think their reaction will be in the U.N. Security Council. I think that's going to be entirely inadequate. North Korea, by launching this rocket, is already violating several Security Council resolutions, so I don't think they pay much attention to what happens in New York.

[Note: Obama has said that the act is a violation of UN resolutions and that he will engage our allies in the region.]

   

And when pressed for an answer on what should be done, Bolton added:

 I don't think the U.N.'s going to do much of anything. I think it's very unlikely they'll get a stiff sanctions resolution. The sanctions that were imposed in 2006, when North Korea tested missiles and a nuclear device, obviously haven't not stopped them.

I think the real pressure has to be applied on China, which gives North Korea 80 to 90 percent of its energy and a substantial amount of its food and other humanitarian needs. China's got the capability to stop this nuclear program. We've just never applied adequate pressure to them.

And then... change of subject.

So there you have it.  Bush's own ambassodor admits, 1) this incident is a threat to US interests, 2) China needs to be engaged on the issue, 3) the Bush administration "never applied adequate presure."  We do not know exactly what President Obama will do in this situation, but if history is a guide we do know what President Bush would do.  After the North Korean missile launch in 2006, Bush did... nothing.  He ignored it, did not engage China or the UN or garner adequate allied pressure on the regime... which I suppose is better than the alternative plan which would have been to attack and invade Australia.

Thank you, Mr. Bolton, you may now drift back into the obscurity which you so richly deserve.  (And the next time you get the urge to take an ad hominem swipe at the current administration which is charged with cleaning up the shitstorm left by your previous boss, please just STFU).

*It is also importatnt to note that Bolton has been a lifetime critic of the UN, not of any specific policy of the UN mind you, but rather of the entire notion of an institution of United Nations.  So, in effect, Bush's appointment of Bolton was really just giving the finger to the UN.

My prediction:  Right wing pundits will immediately wet their pants and then they will busily voice all their inane fears and empty concerns and feel the need to tell us how they are "scared" and "worried"... yada, yada, yada.  Count how many times you see or hear those words on websites and Fox news in the coming week.

Martin Feldstein and one problem with CNBC

Martin Feldstein, the conservative Harvard economist who was chair of Reagan's CEA and currently serves on Obama's Recovery Advisory Board, was on CNBC criticizing the administration proposal to limit charitable tax deductions.  

He categorically stated that such a proposal would reduce the amount of charitable giving.  The problem is that he's an academic economist, so I would ask, where's the reference?  Sure, the president argued the opposite point over the weekend saying that the state of the general economy is a better indicator for charitable giving than tax deduction status.  Both men failed to cite an objective study as evidence.

Perhaps this is a problem with economics as a supposed science, and perhaps that is the part of the primary cause of the horrific boom and bust cycles we see.  A high profile academic can go on national business TV with fairly sophisticated viewers and spout his opinion without any compulsion to make his case with a substantive argument or reference.

In medicine, even the least academic practitioner in the most rural locale, speaking to the least sophisticated patient, would likely be able to cite two or three studies published in national referee journals to support placing the patient on the most basic antibiotic or blood pressure medicine.  

So why can't we get a little more rigorous in dealing with the financial crisis that ate the world?

(Also, Feldstein sat on the AIG board that reviewed their financial products; do you think Joe Kernan could broach that important part of his resume during the interview?)