How the Greedheads and the Internet Destroyed Thought

On this last day of 2008, I mourn the loss of the thinking writer. What is this shit with Twitter (164 characters worth of discussion at one time? Rachel said last night that Israel "tweaked[?]" its current bombing and possibly ground troop campaign against Hamas in the Gaza through Twitter. "Isrl bomb only mil instal; civ dths sad but nec."

Meanwhile, just read in the
New York Times that Nat Hentoff and Lynn Yaeger were laid off. According to Tom Robbins, who is still a staff writer there, half the staff of the VV has been laid off since the New Times Media (a Phoenix-based publisher of alternative weeklies that later changed its name to Village Voice Media) bought it in 2005.

Nat Hentoff has been there for 50 years, since 1958. I disagreed with him on many issues, particularly abortion, but he was always a worthy adversary. He could think in print. He discussed detailed constitutional issues, like the urgency of protecting first amendment rights. How can you discuss this shit in 164 characters without being extremely reductive, if not totally stupid? Is this what everyone is evolving towards (whether they want to or not), public discourse based on Valley Girl text messaging?

I am guilty of the same short-term responses myself. If my homepage hesitates for a milisecond, I get impatient. The thought of pulling down the Encyclopedia Britannica to research something seems anachronistic and a waste of time. Why look it up in a deliberate fashion: selecting the proper book, leafing through the pages, and reading all those goddamned words when all you have to do is type "key" words into a search box to get answers? But what the fuck kind of answers are they?

Banks, Automakers and (T)he (A)ct to (R)eward (P)lutocrats

This is a horrible economy (that is the understatement of the year). Some estimate that the official unemployment rate will rise to 10% from around 6.7% now. 1 in 7 homes will be in foreclosure. And the TARP bailout is causing more problems, not less.

“Banks Need More Than Just A Tuneup” 12/1/08 from “Heard on the Street” column

The banks’ business model has failed. That’s the truth. They lent poorly, gave out credit to anyone with a pulse and were sorely undercapitalized. They used off-balance-sheet vehicles (like SIVs) to sock away their bad debt. And the incentives were set up to make a killing and walk away. You got paid on the basis of your deals, not how the deals unraveled.

Congress is closely monitoring the auto bailout (if there even will be one) with the sticky fingers promise of maybe $25 billion, a mere drop in the bucket for the failed banks. In order to get the money, Detroit will have to genuflect, including cutting down the union. By contrast, banks get money with few strings attached. There is no demand to lend, no requirement to reveal collateral, no requirement to cut salaries or dividends, fucking nothing.

The banks blame everything but themselves. It’s the volatile, unpredictable market. It’s predatory hedge funds; short sellers; a “perfect storm” of events coming together at the same time (I mean, who could predict that housing prices would actually go down?). If the fault, dear Brutus, lies not in ourselves, then why change?

This is the exact opposite of the argument being made against the Big Three. They’re dinosaurs; their business model failed; the market should let them die. But the business model for banks has also failed, as stated in above article:

The reality is the crisis is due to bad lending, and investment decisions. And those, after all, form the core of the banking business. In auto terms, it’s as if banks designed cares that suffer from catastopic mechanical failures, or can’t be driven during snow storms.

Banks need to adjust incentive structures so bad lending decisions aren’t as likely, slim costs to reflect reduced future profitability and rethink capital.

If the Fed and the Treasury keep rewarding bad players, if they reward reckless decisions with more money while requiring nothing in return, this catastrophe (if it ever ends) will continue.

I know that Bloomberg News service filed a Freedom of Information Act (FOIA) to force the Fed to reveal what it is accepting in return for all the taxpayer money it is printing and doling out. The Fed refuses. It is laughable to believe that we will make anything back from all the shitty debt they’re shoveling onto us. What collateral is the Fed accepting?

From 11/25/08 www.rgemonitor.com :

The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers, or half the U.S. GDP, to rescue the financial system since the credit markets seized up 15 months ago. Bernarke’s Fed is responsible for $4.4 trillion of pledges, or 60% of the total commitment of $7.4 trillion. The unprecedented pledge of funds includes $2.8 trillion already tapped by financial institutions. The commitment dwarfs the only plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program (aka The Act Rewarding Plutocrats). Regulators refuse to disclose who is receiving how much while Congress starts pushing for transparency and give authority over taxpayer money back to elected officials.

In today’s NYT, Andrew Ross Sorkin writes about how Paulson, Bernarke, et al lent money to a Lehman subsidiary AFTER they let Lehman go bankrupt, ostensibly because (as Paulson claimed) they didn’t have the legal authority to lend to Lehman based on Lehman’s collateral. So why did they lend to its subsidiary after Lehman crashed? Didn’t Lehman still have the same collateral?

Municipalities Going Down The Drain

Buyers Shun Port Authority Bond Issue