tag:blogger.com,1999:blog-69353199117182064502024-03-05T00:48:21.852-06:00Cognitive Longcutsmost things aren't so black and whiteUnknownnoreply@blogger.comBlogger26125tag:blogger.com,1999:blog-6935319911718206450.post-58042001883518844992010-10-26T07:57:00.001-05:002010-10-26T08:02:10.768-05:00The Juan Williams firingIt's one thing to be honest about your feelings regarding Muslims in public and then admit that something internally needs to be done to address this self-proclaimed bigotry. That is perfectly human and understandable.<br />
<br />
But to be honest about those feelings and then use that in a justifying sort of way (i.e., y'know, I'm a black man who is obviously not a bigot, but I think Muslims are scary and we should be okay with that) is an entirely different thing. That is admitting your bigotry and saying that that is something reasonable and acceptable in our society. That kind of admission in front of millions of Fox viewers is not only unhelpful in the growing tension between Christians and Muslims, but completely destructive.<br />
<br />
<a href="http://andrewsullivan.theatlantic.com/the_daily_dish/2010/10/juan-williams-busted.html">Andrew Sullivan</a> and <a href="http://www.salon.com/news/opinion/glenn_greenwald/2010/10/22/muslims/index.html">Glenn Greenwald</a> also document the glaring hypocrisy of Juan Williams in the light of a speech he made in 1986 regarding racism against black men in NYC by jewelry store owners. He said the following:<br />
<blockquote><div style="color: #333333; font-family: Georgia, 'times new roman', times, serif; font-size: 13px; line-height: 19px;">Neither black nor white store owners are in business to display the virtues of admitting people of all colors, creeds, and fashions to their stores. They are in business to make money. I would want to take precautions to prevent robbery; I would look closely at people entering the store. The race of a potential customer would be one factor among many to be considered as I girded myself against thieves.</div><div style="color: #333333; font-family: Georgia, 'times new roman', times, serif; font-size: 13px; line-height: 19px;">But in Washington and almost all other major cities, blacks do patronize jewelry stores. A jeweler in Beverly Hills who closed his door to heavily bejeweled Mr. T would be foolishly closing his cash register. <em>Unless I am a racist</em>, race and age cannot be the <em>sole deciding factors</em>in calculating whom I will and will not let into my store. And I certainly would not close my door to, say, all young black men - not even to those who are casually dressed and behaving nervously. I would act cautiously in dealing with them, as I would with an antic, strangely dressed white man.</div><div style="color: #333333; font-family: Georgia, 'times new roman', times, serif; font-size: 13px; line-height: 19px;">As a cabdriver I would apply the same considerations. Discrimination can be used judiciously. I would certainly exclude one class of people: those who struck me as dangerous. Nervous-looking people with bulges under their jackets would not be picked up; nor would those who looked obviously drunk or stoned. It all comes down to a subjective judgment of what dangerous people look like. This does not necessarily entail a racial judgment. Cabdrivers who don't pick up young black men as a rule are making a poorly informed decision. Racism is a lazy man's substitute for using good judgment.</div><div style="color: #333333; font-family: Georgia, 'times new roman', times, serif; font-size: 13px; line-height: 19px;">The elevator question is disingenuous. I suspect you are suggesting that I am a white woman getting into an apartment building elevator with a strange black man. Of course, black women have just as much to fear as white women. Nevertheless, black women living in black neighborhoods ride elevators with black men frequently, and do so without being raped. In this situation and all others, common sense is my constant guard. <em>Common sense becomes racism when skin color becomes a formula for figuring out who is a danger to me.</em></div></blockquote>How could he possibly justify that statement with the one he just made on Fox News about Muslims? How?<br />
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P.S. Also, I highly recommend this <a href="http://www.theatlantic.com/national/archive/2010/10/why-npr-matters-long/65068/">very eloquent defense</a> of NPR by Jim Fallows against the recent brutal attack (led by Fox) in the wake of the Williams firing.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-6935319911718206450.post-50215934852433729272010-09-24T13:29:00.001-05:002010-09-24T13:30:09.679-05:00Progressive taxes = Redistribution of wealth?Here's an interesting quote from <a href="http://baselinescenario.com/2010/09/24/bad-arguments-against-tax-increases/">James Kwak today</a>:<br />
<blockquote>Most people think that a progressive tax system is redistributive. I’m not sure. The issue is who you think benefits more from government spending–the rich or the poor. The conventional answer is that the poor do, because they get “handouts.” But imagine a world without government. Who would lose more? Assuredly the rich, who would no longer have the armed forces, the police, and the courts (and the FDIC) to protect their property. I guess you could have a private security market, but how could you maintain, say, a financial system where most of your wealth is bits on a computer somewhere without a government to back it up?</blockquote>Thoughts?Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-6935319911718206450.post-61737529222790751852010-06-16T22:58:00.002-05:002010-06-18T07:53:44.312-05:00The "Trust Us" Presidency...same as it ever wasI am truly at my wit's end with our President. I fully admit that I was "hopeful" in voting for him a year and a half ago. I never considered myself "ga-ga" over the guy, but I was very excited at the prospect of having a presumably intelligent President who would surround himself with the best and brightest minds to tackle the toughest challenges that America has faced in many years.<br />
<br />
In this post, I want to concentrate on a broad area on which he has, by any objective measure, completely failed to live up to his promises: civil liberties.<br />
<br />
First, a quick thought on the term. It's really unfortunate that the term "civil liberties" has been turned upside down to mean something only a far-left nutjob would ever want to strongly and vocally defend (as the ACLU bashers love to do). But part of me is optimistic with the recent rise of libertarianism, which in full really means <i>civil</i> libertarianism. To see how weird this has become, just consider the word "liberty". Nobody would ever <i>not </i>defend that beautiful and profound word. You'll even see it on the signs of a vast majority of the Tea Partiers. Yet, when you put in front of it the word "civil", it all of a sudden turns Soviet Red to some people. It hasn't always been this way.<br />
<br />
The cause of this rift in semantics seems pretty clear to me. There are some who only think Liberty applies to certain upstanding people. Those liberties of those upstanding people should be defended at all costs from all the evildoers of the world whether they be government or private entities. During the African-American civil rights era, these upstanding people were whites. Blacks didn't <i>really </i>deserve liberty, they argued. And it was really easy for people to divide the upstanding people from the non-upstanding people; just look at the color of their skin. We have obviously made leaps-and-bounds on racism issues since then but today we have a new division.<br />
<br />
Today, these upstanding people are anyone who is <u>not</u> a terrorist. That sounds pretty reasonable. Terrorists are bad people, right? They don't deserve to have liberty because they are murderers who use fear to accomplish some sort of political goal. But who exactly is a terrorist? (<a href="http://www.salon.com/news/opinion/glenn_greenwald/2010/02/19/terrorism/index.html">What does terrorism even mean?</a>) How would you recognize one so that you could make the conscious decision of limiting their liberty? I think when the word "terrorist" is mentioned, most of us conjure up images of something similar to the Libyans chasing Marty McFly in their VW bus with a bazooka pointed out the pop-top. But life, unfortunately, is not Hollywood. It turns out that as much as people like to think they know how to "spot a terrorist", it isn't as easy as just looking at someone's skin, is it?<br />
<br />
But it doesn't necessarily matter who <i>we</i> think is a terrorist. More importantly, it matters who the military, intelligence, and law enforcement sectors of our government think is a terrorist. If they say someone is a terrorist, then they are a terrorist, right? Well, apparently more than a few people in this country believe that. And the crazy thing is that these apparently trusting people don't trust government any further than they can throw it on nearly <i>every other issue</i>! How strange. So what should a civilized society do?<br />
<br />
Well, it turns out that we have a fail-safe for exactly these types of situations built into our form of government: the justice system. Fantastic! The fundamental tenet of the justice system is to sift through the evidence to determine whether or not people are who they are accused to be and to safeguard the civil liberties of all people under the control of the U.S. government (Yes, that means it can apply to non-citizens as well). But what happens when the traditional justice system isn't used in terrorist cases?...Welcome to the post-9/11 world and the era of the "War on Terror".<br />
<br />
A favorite argument against using the justice system for suspected terrorists is that we are "at war" with terrorists. It is not appropriate to inject those with whom we are at war into the justice system because there's a non-zero chance that a real terrorist could be let free due to lack of evidence or some procedural error. They say that we are better off just playing it safe and detaining suspected terrorists (i.e., eliminating their liberty and keeping them far away from the justice system) indefinitely for the length of the war.<br />
<br />
This type of argument has been made before in past wars. We surely do not want to put our prisoners-of-war into some courtroom (even though it's pretty obvious that they could be found guilty of some wrongdoing) because of the possibility of letting them go and re-engaging our troops on a battlefied. This has led to a very rigorous framework for how to handle prisoners-of-war that is the basis of the UN Geneva Conventions. But how does this situation apply to the "War on Terror", a war with a battlefield that encompasses every habitable place on Earth and with no conceivable way of formally ending the conflict with some sort of peace treaty or resolution? What we have today and what we have been dealing with for the last 9 years is a whole different animal.<br />
<br />
The Bush administration essentially told us to Trust Them: "We know who the terrorists are and we will protect you from them." So they <a href="http://andrewsullivan.theatlantic.com/the_daily_dish/2010/02/a-bill-to-prevent-future-torture.html">tortured</a> and indefinitely detained suspected terrorists to keep us safe. But as it turns out, they picked up a lot of people who turned out to be <a href="http://www.nydailynews.com/opinions/2009/05/20/2009-05-20_free_the_gitmo_60.html">completely innocent</a>. The biggest reason for this was the enormous bounties being given to Afghan people who could produce "terrorists". Of course, someone would be able to produce a "terrorist" out of thin air if they were promised enough money to feed their starving family for a year. The bottom line is that we were scared after 9/11 and we flexed our muscle way too much. And in the process we extended the dragnet way too wide and picked up perfectly innocent people. But we never acknowledged it and instead tried our damnedest to extract whatever scraps of intelligence these people had (or could fabricate under the stress of torture) all in order to keep ourselves safe. (Quick note: I use "we" here because we should claim responsibility for the actions of those we elect)<br />
<br />
So what, specifically, has President Obama done to continue this same set of horrifying policies? Here's a list that I have slowly been adding to over the last several weeks:<br />
<br />
<ol><li><a href="http://www.salon.com/news/opinion/glenn_greenwald/2010/05/27/democrats/index.html">Not defending and actually investigating lawyers</a> who admirably chose to counsel suspected terrorists in Guantanamo Bay. Doesn't anyone recall <a href="http://www.aclu.org/national-security/john-adams-and-boston-massacre">the time when another admirable person defended</a> a bunch of hugely unpopular defendants accused of barbarism?</li>
<li><a href="http://www.salon.com/news/opinion/glenn_greenwald/2010/05/25/whistleblowers/index.html">Attacking government whistle-blowers</a> in the intelligence community for trying to expose these terrible policies and practices.</li>
<li><a href="http://www.salon.com/news/opinion/glenn_greenwald/2010/05/21/bagram/index.html">Actively fighting against habeas corpus reviews</a> of detainees at Bagram prison even though the Supreme Court ruled against the exact same circumstance for Guantanamo detainees.</li>
<li><a href="http://www.nytimes.com/2010/04/07/world/middleeast/07yemen.html?hp">Ordering the explicit assassination of a U.S. citizen</a> without any due process.</li>
<li><a href="http://washingtonindependent.com/85857/national-security-strategy-embraces-indefinite-detention-without-charge">Developing a "legal" framework</a> to indefinitely detain suspected "dangerous" terrorists. This is incredibly damaging. This would institutionalize and make bipartisan the policy of indefinite detention.</li>
<li>Perhaps the most dangerous aspect of Obama's strategy is using rhetoric to distance himself from the Bush doctrine of American exceptionalism but turning 180 degrees around when actually implementing policy and action. At least with Bush, we knew what we were getting because rhetoric was largely consistent with action.</li>
<li><a href="http://www.salon.com/news/opinion/glenn_greenwald/2010/05/28/guantanamo/index.html">Continuing to detain people</a> in Guantanamo in the face of enormous evidence of their innocence.</li>
<li><a href="http://www.harpers.org/archive/2010/06/hbc-90007242">Actively fighting against allowing</a> Canadian citizen Maher Arar a day in court to address his claims of being tortured in Syria through the extraordinary rendition program.</li>
</ol><br />
My point with this list is to illustrate a wide-reaching and consistent stance by the Obama administration of effectively continuing the policies of the Bush era. While there are some glimmers of hope (like eliminating some torture techniques and <a href="http://washingtonindependent.com/85863/treating-american-muslims-like-citizens-vs-treating-them-like-threats">writing pretty rhetoric in policy statements</a>), this is still the same old stuff.<br />
<br />
So what are the consequences of this type of behavior that completely ignores the justice system exactly at the time when it is most needed? I would consider two types: practical and moral (and <a href="http://www.thedailybeast.com/blogs-and-stories/2009-09-01/tortures-moral-toll/full/">they're inescapably linked</a>) We have become a nation that is hated by so many people across the world because of the hypocritical combination of our beautiful rhetoric FOR liberty and freedom and our ugly actions AGAINST the same. It's the people who have been marginalized and alienated directly by our political decisions who become the new terrorists who then feel impelled to blow up scores of troops and innocent civilians in far away places. We have become less safe as a consequence of decisions that were made (albeit with good intentions sometimes) in the name of making us more safe. There will always be those with unyielding political views that we simply cannot get to come around no matter how principled and moral we behave; but it's those that are "on the fence" that we truly can negatively impact when we enact such horrifying and backward policies as our indefinite detention (and torture) system.<br />
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And on the moral question, I'm going to end with <a href="http://motherjones.com/kevin-drum/2009/04/torture-and-civilization">a quote from Kevin Drum</a> specifically about torture but the same could be said about our indefinite detention policy as well:<br />
<br />
<blockquote>I don't care about the Geneva Conventions or U.S. law. I don't care about the difference between torture and "harsh treatment." I don't care about the difference between uniformed combatants and terrorists. I don't care whether it "works." I oppose torture regardless of the current state of the law; I oppose even moderate abuse of helpless detainees; I oppose abuse of criminal suspects and religious heretics as much as I oppose it during wartime; and I oppose it even if it produces useful information.</blockquote><blockquote>The whole point of civilization is as much moral advancement as it is physical and technological advancement. But that moral progress comes slowly and very, very tenuously. In the United States alone, it took centuries to decide that slavery was evil, that children shouldn't be allowed to work 12-hour days on power looms, and that police shouldn't be allowed to beat confessions out of suspects.</blockquote><blockquote>On other things there's no consensus yet. Like it or not, we still make war, and so does the rest of the world. But at least until recently, there was a consensus that torture is wrong. Full stop. It was the practice of tyrants and barbarians. But like all moral progress, the consensus on torture is tenuous, and the only way to hold on to it — the only way to expand it — is by insisting absolutely and without exception that we not allow ourselves to backslide. Human nature being what it is — savage, vengeful, and tribal — the temptations are just too great. Small exceptions will inevitably grow into big ones, big ones into routine ones, and the progress of centuries is undone in an eyeblink.</blockquote><blockquote>Somebody else could explain this better than me. But the consensus against torture is one of our civilization's few unqualified moral advances, and it's a consensus won only after centuries of horror and brutality. We just can't lose it.</blockquote>Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-6935319911718206450.post-45939190308523358612010-06-07T21:41:00.000-05:002010-06-07T21:41:16.829-05:00The Humbling Experience of Being WrongFrom <a href="http://blogs.reuters.com/felix-salmon/2010/06/07/helen-thomas-christopher-hitchens-and-being-wrong/">Felix Salmon today</a>:<br />
<blockquote><div style="font-family: arial, helvetica, sans; font-size: 14px; line-height: 1.6; margin-bottom: 10px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">The <a href="http://thehill.com/homenews/administration/101731-helen-thomas-announces-retirement" style="color: #006e97; cursor: pointer; text-decoration: none;">forced retirement of Helen Thomas</a> is further proof, if any were needed, that it’s still unacceptable, in public discourse, to be wrong in one’s opinions. I find that sad.</div><div style="font-family: arial, helvetica, sans; font-size: 14px; line-height: 1.6; margin-bottom: 10px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">Thomas <a href="http://www.youtube.com/watch?v=RQcQdWBqt14" style="color: #006e97; cursor: pointer; text-decoration: none;">gave voice</a> to an opinion which she then, almost immediately, <a href="http://helenthomas.org/" style="color: #006e97; cursor: pointer; text-decoration: none;">retracted</a>; no one, in the<a href="http://www.theatlanticwire.com/opinions/view/opinion/Helen-Thomas-Tells-Israeli-Jews-to-Go-Home-Blogosphere-Erupts-3883" style="color: #006e97; cursor: pointer; text-decoration: none;">subsequent debate</a>, defended the substance of her remarks. She was wrong; everybody, including Thomas, agrees on that point, and no real harm was done to anyone but Thomas when the video of her remarks surfaced.</div><div style="font-family: arial, helvetica, sans; font-size: 14px; line-height: 1.6; margin-bottom: 10px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">But if you turn out to be wrong, even temporarily, even only once, on a hot-button issue, that’s enough for effective excommunication from polite society. That, to me, is chilling: I’d much rather live in a world where people should be able to change their minds and should be allowed to be wrong on occasion. For surely we <i>are</i> all wrong, much more often than we like to think.</div></blockquote>----------<br />
<blockquote>This morning, I had an interesting conversation with Christopher Hitchens, who’s in town plugging his <a href="http://www.google.com/products/catalog?q=hitch-22&oe=utf-8&rls=org.mozilla:en-US:official&client=firefox-a&um=1&ie=UTF-8&cid=16874110839506037175&ei=HSINTPGROsOB8gbRuoiMBw&sa=X&oi=product_catalog_result&ct=result&resnum=3&ved=0CCsQ8wIwAg#" style="cursor: pointer;"><span class="Apple-style-span" style="color: black;">memoir</span></a>. He professed to be a man of few beliefs, political or otherwise: “my only commitment is to a group of skeptics who are not sure of anything,” he said. But when I asked him what he wasn’t sure about, he started talking about galaxy formation, of all things. He said that “my greatest delight is being proved right in my own lifetime”, and said that he couldn’t think of the last time that he was wrong about anything. In other words, he’s highly skeptical of others, but utterly incapable of interrogating his own opinions with the same kind of approach.</blockquote><blockquote>Hitchens, in other words, would make an atrociously bad trader. He has the cocky-and-arrogant bit down, to be sure — in order to beat the market you have to think that you’re smarter than the market. But you also have to be incredibly insecure, willing to change your mind and your opinions very quickly.</blockquote><blockquote>At the beginning of the conversation, Hitchens expressed a certain amount of intellectual pleasure in noting that the statement “Christopher Hitchens is dead” is false now, but will be true in the future. But that’s trivial. When it comes to the opinions he expresses in his columns and books, he’s much less willing to admit that any of them are anything but certainly and timelessly true.</blockquote><blockquote>I try hard to believe the opposite: that many if not most of my opinions are wrong (although of course I have no idea which they are), and that many of the most interesting and useful things I write come out of my being wrong rather than being right. This is not, as Wilkinson noted to Cowen, an easy intellectual stance to hold: he calls it “a weird violation of the actual computational constraints of the human mind”.</blockquote><blockquote>But I think it’s undoubtedly worth working on, and, as I say, I think it’s one which is more common in women than in men. And I think it’s a serious weakness of Hitchens’ that he places so much importance on his being right. </blockquote>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-6935319911718206450.post-47774906792902434192010-05-25T22:29:00.007-05:002010-05-27T09:45:43.485-05:00The Goldman Sachs hearings missed the point - PART 5Okay...sorry for another extended delay. It's been difficult knowing when to jump into the mix here when the financial reform package was still being hashed out. It has <a href="http://nymag.com/news/politics/66188/">now passed the Senate</a> and will be molded together with the House bill in the next few weeks. But before I talk about that at all...let's discuss this issue of 'Too Big To Fail'.<br />
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As I mentioned in the last post, I see two major categories for reform: 1) Increasing the transparency of financial transactions from the credit-card consumer-level to the hedge fund-level, and 2) breaking up the "Too-Big-To-Fail" banks. In my mind, both are absolutely critical and one is nearly useless without the other.<br />
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I know the phrase 'Too Big To Fail' has been thrown around A LOT lately (almost to the point of becoming cliché) but what exactly does it mean? Again, let's go to my current favorite book (<a href="http://13bankers.com/">13 Bankers</a>):<br />
<blockquote>Certain financial institutions are so big, or so interconnected, or otherwise so important to the financial system that they cannot be allowed to go into an uncontrolled bankruptcy; defaulting on their obligations will create significant market losses for other financial institutions, at a minimum sowing chaos in the markets and potentially triggering a domino effect that causes the entire system to come crashing down.</blockquote>No one in their right mind would ever argue for the existence of financial institutions that are Too Big To Fail. Fixing this problem was the rallying cry from nearly everyone in the financial world (both financiers and regulators) at the time of the near-collapse in late 2008. The reason that everyone appeared on the same side was because the problem caused by Too Big To Fail institutions was such a blatant affront to the very foundation of the free market that no one in their right mind would argue for their existence. And the consequences of bailing out Too Big To Fail banks was clear as day to everyone in late 2008: the mega-banks get the benefits of all of the risks that they took over the preceding years and the taxpayer bears the enormous cost of these risks once they exploded. It is privatized gains and socialized losses. Essentially...if you think Obama's health reform plan was socialistic, then this is even at another level beyond that (at least in a socialistic system, the taxpayer gets the gains as well as the losses).<br />
<br />
And once an institution realizes that they are Too Big To Fail, they now have the perverse incentive to take more risks because they are implicitly backed by the federal government. This gives them an enormous competitive advantage over smaller banks who do not have this implicit government backstop. It is completely unfair and antithetical to everything that capitalism stands for.<br />
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One of the big rallying cries of the right during the financial reform debate has been to get rid of Fannie Mae and Freddie Mac (the government-supported entities that create liquidity in the housing market). And I completely agree with that argument for the reasons I discussed above. Fannie and Freddie are Too Big To Fail. But in order to stay intellectually consistent, those same people who argue for the dissolution of Fannie and Freddie should also be for breaking up the mega-banks for the exact same reason. Essentially, Fannie and Freddie are explicitly backed by the federal government and the mega-banks are implicitly backed by the federal government. There is zero difference when it comes to their power to corrupt our economic system.<br />
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This is why this is so frustrating. This should not be a left vs right issue. This is clearly not an example of the free market working as planned. But those against reform are buying the completely bogus piece of propaganda from those interested in keeping the status quo: "This is a government takeover of the financial sector!" Good sweet Lord...it's just amazing to see and hear the financial sector make this argument. The mega-banks have been holding the American government and taxpayers hostage for years and <i>they</i> are the ones crying about being taken over? Give me a friggin' break.<br />
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Another way to address the Too Big To Fail issue is through a re-implementation of the <a href="http://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_Act">Glass-Steagal Act</a> which was enacted during the Great Depression in 1933 to formally separate the plain-vanilla commercial banks (like the one where you have your checking or savings account) from the speculative and inherently riskier investment banks. The idea is to have the safer commercial banks backed up by the federal government [through the Federal Deposit Insurance Corporation (FDIC)] to protect against a <a href="http://en.wikipedia.org/wiki/Bank_run">bank run</a> and conversely have the riskier investment banks not backed up by the government. However, this perfectly reasonable separation provision was quietly repealed back in 1999 as the market for complex financial products was just starting to go into full swing.<br />
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Along the same lines, another proposal is to eliminate proprietary trading, which is when banks use their own money for trading financial products to gain profit as opposed to using their customers money. This is better known as the Volcker Rule. More details can be found <a href="http://rortybomb.wordpress.com/2010/05/18/why-merkley-levin-is-necessary/">here</a>.<br />
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So why do we need hard and clear rules on the size and type of banks instead of just relying on regulations?<br />
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Banks will inevitably find loopholes and ways to have their activities exempted because of their enormous and unrelenting power over the political world. If you don't believe me, just look up the source of campaign contributions for nearly every politician with any significant say in financial legislation. That's one of the benefits to running a Too Big To Fail firm; you have lots and lots of money just lying around to pay lobbyists to push legislators to do just about anything in order to fund increasingly expensive re-election campaigns. This political power is also quite potent with the regulators (known as regulatory capture). All in all, it has really turned our political-economic system into something more resembling an <a href="http://www.theatlantic.com/magazine/archive/2009/05/the-quiet-coup/7364/">oligarchy</a>.<br />
<br />
So the only way to play ball with the mega-banks is to implement clear and decisive rules that would essentially break them up into smaller less politically powerful institutions.<br />
<br />
But what about the argument that we <i>need</i> big banks to compete in an international market full of other enormous banks? Well, it turns out that, yes, we are not the only country with enormous financial institutions. Some countries have banks that are better dubbed Too Big To Bailout (this is part of the reason that Europe is in their current economic crisis). But even with that admission, there is still no credible evidence to suggest that we (as a country and as players in the market) <i>need</i> Too Big To Fail financial institutions. The megabanks are currently at such a bloated size that the usual economies of scale no longer apply. They really only got uber-huge (relative to GDP) in the last 15 years and back then they could still compete quite well. Also take <a href="http://baselinescenario.com/2010/05/01/why-do-senators-corker-and-dodd-really-think-we-need-big-banks/">this argument from Simon Johnson</a>:<br />
<blockquote>Even the biggest nonfinancial companies do not, under any circumstances, want to buy all their financial services from one megabank. They like to spread the business around, to use different banks that are good at different things in different places – in part to prevent any one bank from having a hold over them. Playing your suppliers off against each other to some degree is always a good idea.</blockquote>There is just no evidence for having these megabanks around. They are enormous liabilities!<br />
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Okay, so what about the financial reform package? Well, I think I'll save more of a discussion on it after it passes both houses but things do not look all that great. It is still largely a technocratic fix...i.e., they really are only addressing the regulation side of things and nothing really structural (e.g., the size of banks...Too Big To Fail). I'm afraid that we really missed a huge political opportunity in early 2009. Some of the new rules will surely help but we are still poised for another situation where a future President decides between two awful choices: A) another massive bail-out of Too Big To Fail banks or B) collapse of the financial system leading to another Great Depression.<br />
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<b>UPDATE:</b> Just so everyone is clear on what exactly a megabank is, Johnson and Kwak would like to start with a limit of 4% of GDP for all banks and 2% of GDP for investment banks. That would make the following banks "mega-banks" and definitely Too Big To Fail:<br />
<br />
<ul><li>Bank of America (16% of GDP)</li>
<li>JPMorgan Chase (14%)</li>
<li>Citigroup (13%)</li>
<li>Wells Fargo (9%)</li>
<li>Goldman Sachs (6%)</li>
<li>Morgan Stanley (5%)</li>
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</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-6935319911718206450.post-81442756856031935932010-05-13T23:02:00.000-05:002010-05-13T23:02:44.509-05:00The Goldman Sachs hearings missed the point - PART 4Sorry for the delay. I have waited to finish these last few posts on the financial crisis (for a while at least) until I finished the book <a href="http://13bankers.com/">13 Bankers</a>. And by the way, I just cannot possibly recommend it more to those interested and willing to take the plunge head-first down the rabbit-hole that is our broken financial system. It is a fascinating and well-written book by some really brilliant guys.<br />
<br />
Okay...so here's a short, convenient summation of what I went through in the last 3 parts (quoted from <a href="http://13bankers.com/">13 Bankers</a>):<br />
<blockquote>The end result was a gigantic housing bubble propped up by a mountain of debt - debt that could not be repaid if housing prices started to fall, since many borrowers could not make their payments out of their ordinary income. Before the crisis hit, however, the mortgage lenders and Wall Street banks fed off a giant moneymaking machine in which mortgages were originated by mortgage brokers and passed along an assembly line through lenders, investment banks, and CDOs to investors, with each intermediate entity taking out fees along the way and no one thinking he bore any of the risk. </blockquote>So, as we all know, the bubble did end up bursting and today we are continuously faced with the consequences in the form of high unemployment, cuts in government services, etc. But you might ask yourself...didn't we learn our lesson? Well, I wish that I could say 'yes' but I'm afraid we, as a country, are not even close to learning the larger lessons of this crisis.<br />
<br />
The way the current financial system is structured, a future president (regardless of ideology or party) will inevitably look over the edge into a dark abyss of economic chaos and face the same decision that the Bush administration faced in the fall of 2008 after an asset bubble burst (this last time it was housing, the time before it was dot-com's, the next time...who knows?):<br />
<ul><li>let the mega-banks fail and cause a banking crisis that would lead to another Great Depression (many, many times worse than the current economic recession) OR </li>
<li>pledge an enormous amount of taxpayer money to bail out the mega-banks.</li>
</ul>Both of these ideas are horribly unsustainable. Another Great Depression would dramatically change the world's economic status. It would be absolutely devastating. Another Huge Bailout for banks would funnel more money away from taxpayers to the financial elite plus it would dramatically increase the government's debt burden (with the worst consequences experienced by future generations). So that's why we cannot let this moment just pass and say 'Boy...that was close...we sure did learn our lesson...that shouldn't ever happen again.'<br />
<br />
We have not truly come to grips with this crisis as a country. Those that are unemployed or otherwise severely affected by this recession are undoubtedly hurting and very interested in solutions but, as a whole, we are poised to repeat this mistake again. (See <a href="http://www.npr.org/blogs/money/2010/05/partying_like_its_2005.html">this new data</a> on the decrease in the savings rate for a taste of this idea). More people need to be told about how close we came to plunging into a Great Depression...how the commercial paper market (the short-term loans that companies depend on to cover payroll) momentarily froze in September 2008 (the <a href="http://www.thisamericanlife.org/radio-archives/episode/365/Another-Frightening-Show-About-the-Economy">This American Life episode</a> on this is great...the very first story beautifully explains the commercial paper market). This is all poised to happen again.<br />
<br />
Alright...splendid. What to do? Now...on to the actual financial reform ideas.<br />
--------------------------------------------------------------------------<br />
<br />
I think it's easiest to just break it up into two basic strategies: 1) Increasing the transparency of financial transactions from the credit-card consumer-level to the hedge fund-level, and 2) breaking up the "Too-Big-To-Fail" banks.<br />
<br />
<b>#1: Increasing transparency of financial transactions</b><br />
<b><br />
</b><br />
A fundamental assumption of a fully-functional capitalist market system is that everyone has the correct information available to them and then they use that information appropriately and efficiently to make a "correct" economic decision. But the critical lesson of the crisis is that this assumption is totally bunk. People are irrational and information is conveniently and strategically hidden from those who are being duped.<br />
<br />
This has been happening at all levels of the financial system but most people are much more familiar with the credit-card side of things. I think most of us would agree that credit card companies have become exceptionally good at deceiving people into high interest loans and charging for hidden fees. This has got to stop. But it's not at the heart of the crisis.<br />
<br />
The other side of the system is where the huge problem is...in that maze of crazy acronyms that is the complex financial products for the "sophisticated" investors; a market that became a house of cards, which then imploded to trigger the meltdown. While greed was definitely a primary driver on both sides of each transaction, lack of information was surely another. As was <a href="http://www.onpointradio.org/2010/04/banking-reforms-goldman-moment">argued recently</a>, it is clear that some people knew much more about the complexities (and associated risks) of these financial instruments than others. Firms like Goldman Sachs manufactured these products, had contact with the individual lenders that fed into the products, and were able to "negotiate" (i.e., pay for) good ratings from the agencies responsible for assessing these products. Therefore, they are at a distinct advantage when compared with the average (even sophisticated) investor.<br />
<br />
Some people will just say "buyer beware" and trying to fix a problem like this with government regulation would be equivalent to a nanny state but I think this is a case where overly deceptive (and sometimes illegal as we are <a href="http://www.reuters.com/article/idUSTRE64C1YD20100514">seeing with Goldman and JPMorgan</a>) practices are hurting the overall machinery of the economy more than helping.<br />
<br />
That gets me to my main point here, as wonderfully summarized (again) by <a href="http://13bankers.com/">13 Bankers</a>:<br />
<blockquote>The core function of finance is financial intermediation - moving money from a place where it is not currently needed to a place where it is needed. The key questions for any financial innovation are whether it increases financial intermediation and whether that is a good thing. </blockquote>I think it can be argued that these deceptive practices and overly complex products do not do anything to move money from a place where it is not currently needed to a place where it is needed (think greasing the gears of the economy). We are no better off as an economy because of these practices/products. It is squarely the opposite...our economy is much, much more susceptible to disaster as a consequence of them.<br />
<br />
So I would recommend increasing regulations on the complex financial products (derivatives) market to increase transparency. The assumption of abundant information is so incredibly important in this market because of the enormous risks that get compounded and correlated together with each new bet on the same set of assets.<br />
<br />
Currently, the proposal that claims to deal with exactly these types of regulations would be in the form of the <a href="http://baselinescenario.com/2009/07/21/three-myths-about-the-consumer-financial-product-agency/">recently proposed</a> <a href="http://baselinescenario.com/2010/02/17/banker-for-the-cfpa/">Consumer Financial Protection Agency</a>. While I realize that another huge bureaucratic regulatory agency is rarely a good solution to anything, what else would you propose we do in the light of what I just discussed?<br />
<br />
<i>Okay, I have rambled on for too long again...I will save the Too-Big-To-Fail issue for next time.</i>Unknownnoreply@blogger.com3tag:blogger.com,1999:blog-6935319911718206450.post-63248239696442834622010-05-03T22:52:00.001-05:002010-05-03T23:06:02.095-05:00The Goldman Sachs hearings missed the point - PART 3Okay...now that we have that little bit of background behind us, what about those hearings last week?<br />
<br />
So Goldman Sachs was charged with committing fraud in the course of selling a <a href="http://baselinescenario.com/2010/04/28/abacus-a-synthetic-synthetic-cdo/">synthetic, synthetic CDO</a> to a group of investors that consisted of the German bank, IKB and which also led to a lot of money lost by the Royal Bank of Scotland (through, yet another big insurance deal/bet). The complex product was called ABACUS and it was put together by the "Fabulous Fab" at Goldman Sachs along with the close advice of a big-time hedge fund manager, John Paulson, who also, it turns out, was "shorting" (betting against) the synthetic, synthetic CDO. The SEC alleges that the company that originally packaged up the synthetic, synthetic CDO (their name is ACA) thought that John Paulson was on the long side of the bet...not the short side. Hence, Goldman Sachs was at fault for knowingly avoiding to clear up this misunderstanding with ACA and committing fraud in the process. Clear as mud, eh? (Try <a href="http://bit.ly/duN1aA">this timeline</a> for a full rundown of this case)<br />
<br />
But as I said in the opening post...the Senate committee really missed the point here. They didn't argue about the specifics of the fraud charge. Instead, they focused on the fact that Goldman Sachs was also on the short side of many of these mortgage-backed securities and other financial products that were implicitly backed by the mortgages of ordinary Americans. The senators emphasized that Goldman Sachs was essentially "betting against the American dream" and that's why they are such cruel people. In addition, they lambasted them for betting against the very products that they were selling to their investor clients. But as <a href="http://www.economist.com/blogs/democracyinamerica/2010/04/goldman_hearings">this great post from the Economist's Democracy in America blog points out</a>, that's a pretty ridiculous thing to scold them over:<br />
<span class="Apple-style-span" style="color: #333333; font-family: Verdana, Arial, sans-serif; font-size: 10px;"></span><br />
<blockquote>It's important to distinguish between the SEC allegations and the allegations being aired in Congress, which I believe some senators are intentionally trying to confuse. The SEC is alleging that Goldman broke the law in a very specific way. Binyamin Appelbaum of the <span style="background-attachment: initial; background-clip: initial; background-color: transparent; background-image: initial; background-origin: initial; border-bottom-width: 0px; border-color: initial; border-left-width: 0px; border-right-width: 0px; border-style: initial; border-top-width: 0px; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px; vertical-align: baseline;">New York Times</span> <a href="http://www.nytimes.com/2010/04/20/business/20sec.html?pagewanted=all" style="background-attachment: initial; background-clip: initial; background-color: transparent; background-image: initial; background-origin: initial; border-bottom-width: 0px; border-color: initial; border-left-width: 0px; border-right-width: 0px; border-style: initial; border-top-width: 0px; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px; vertical-align: baseline;"><span class="Apple-style-span" style="color: #333333;">explains</span></a>, "Rather than asserting that Goldman misrepresented a product it was selling, the most commonly used grounds for securities fraud, the Securities and Exchange Commission said in a civil suit filed Friday that the investment bank misled customers about how that product was created. It is the rough equivalent of asserting that an antiques dealer lied about the provenance, but not the quality, of an old table." That type of misrepresentation or misleading is illegal, no doubt about it. On the other hand, the accusations emanating from Congress—that Goldman took the opposite side of its clients' bets on the housing market—are certainly not. As we say in our <a href="http://www.economist.com/displayStory.cfm?story_id=15951777" style="background-attachment: initial; background-clip: initial; background-color: transparent; background-image: initial; background-origin: initial; border-bottom-width: 0px; border-color: initial; border-left-width: 0px; border-right-width: 0px; border-style: initial; border-top-width: 0px; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px; vertical-align: baseline;"><span class="Apple-style-span" style="color: #333333;">leader</span></a> on the subject, "the idea of willing counterparties, with full and accurate disclosure, each seeking to profit from the other's inferior grasp, is central to financial markets."</blockquote><blockquote>This may not seem like an important clarification—in the eyes of many, the story of Goldman during the crisis is already written and the firm acted unethically whether it broke the law or not. That was certainly the mood on Capitol Hill yesterday. But at least consider the following. In his <a href="http://levin.senate.gov/newsroom/release.cfm?id=324210" style="background-attachment: initial; background-clip: initial; background-color: transparent; background-image: initial; background-origin: initial; border-bottom-width: 0px; border-color: initial; border-left-width: 0px; border-right-width: 0px; border-style: initial; border-top-width: 0px; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px; vertical-align: baseline;"><span class="Apple-style-span" style="color: #333333;">opening statement</span></a> Mr Levin asked whether Goldman's actions in 2007 were "appropriate", not whether they were lawful. If we agree with him that Goldman's actions were indeed inappropriate, but also lawful, what does that say about the politicians who were tasked with making the laws?</blockquote><br />
So yes, the Senate committee did reveal the Goldman Sachs executives as exceedingly greedy people but what they did was largely within the confines of a very loose regulatory structure within the financial system...a structure that was created and supported by the very same body of government that was apparently scolding them for making incredible amounts of money only because of how that system was structured.<br />
<br />
It's true that some of what Goldman Sachs allegedly did in the ABACUS deal (the center of the fraud charge) was truly illegal (willfully misleading their client into thinking that another big-time investor was actually betting on the same side as them when in fact that big-time investor, John Paulson, was on the opposite side of the bet and hand-picking the risky pools of mortgage-backed securities). For that they should definitely be brought in front of a court.<br />
<br />
The whole point that I am trying to get at is that it is much easier for a government official to remedy a situation where a party committed an illegal act...you put them on trial and hope to find them guilty. But it's far more difficult for a government official to remedy a situation where a party committed an "inappropriate" act. The only way to remedy that situation in the financial industry is to change the regulations so that you make an "inappropriate" act against the rules (i.e., you get a big fine if you break them).<br />
<br />
So that's where we are now...back to the question of government regulation...the dicey area where we are headed in Part 4. We will actually look at some of the elements of financial reform that include more regulations. What do you think should be the role of government in this situation?Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-6935319911718206450.post-90774434137419859692010-04-29T22:00:00.003-05:002010-04-29T22:29:12.153-05:00The Goldman Sachs hearings missed the point - PART 2So before I get on to subprime lending, I forgot to mention one additional structured financial product which is yet another complex combination of what I already talked about: the synthetic CDO. Recall that a CDO is a pool of pools of mortgage-backed securities. So an investor could buy slices (aka tranches) of a large pool of thousands of mortgages depending on what type of risk they wanted to take (keeping in mind that the higher the risk, the higher the return for the investor). A "synthetic" CDO is really just a combination of a CDO and a credit default swap. It's a bet that the slice of the CDO will (short) or will not (long) default.<br />
<br />
And then yesterday, I found out that there is such a thing as a <a href="http://baselinescenario.com/2010/04/28/abacus-a-synthetic-synthetic-cdo/">synthetic, synthetic CDO</a>. (Yeah...you read that correctly). Again, these new products weren't built out of anything tangible...they were just bets. But it allowed more people to make more money off of a single mortgage transaction than ever before (no one had to go to the trouble of lending new money) and it gave investment banks the opportunity to collect more and more outrageously large fees.<br />
<br />
<b>Subprime lending:</b> So now that this structured financial product wormhole-of-a-market had been created and CDOs, synthetic CDOs, and CDSs were flying off the shelves into the arms of salivating investors...they needed the gravy train to keep coming. But there are only so many houses in this country and so many responsible people that can afford to buy houses. Well, that pesky little fact didn't matter after the invention of the subprime loan. Traditionally, mortgages were long-term, fixed-rate loans that were labelled "prime" because the borrower met specific criteria like possessing good credit, a satisfactory income, and collateral (i.e., the property was in good enough shape so that the lender wouldn't get stuck with a lemon if the borrower defaulted). So that means "subprime" mortgages didn't have to meet these strict (and totally reasonable) standards. But since these new subprime loans were much riskier, the interest rates were set higher, which led to higher-yielding CDOs (exactly what the investors way down at the other end of the pipe were craving like crack cocaine).<br />
<br />
I think everyone has heard stories about these loans..."no doc" and "stated income" loans were better known as "liar loans". The lenders didn't require anything to indicate that someone would be a reasonable and prudent borrower. And the "predatory" lenders would lure the unsuspecting borrower into the loan with arrangements of lower monthly payments in the first year (which then jumped up to prohibitively high levels thereafter) or the "pay option" where borrowers would pay less than the monthly interest (but the principal would go up). It was a total and complete sham! But it didn't matter to the lenders because they were making a killing off of the fees and then just sending it down the pipe to the gluttonous and completely uninformed investors. Those that did think about the quality of the loans would just convince themselves that the subprime loans were still good business because home prices would just continue to rise indefinitely. Here's another passage from <a href="http://13bankers.com/">13 Bankers</a>:<br />
<blockquote>But that [risk of default] no longer mattered - at least not to the lenders or the investment banks - because the lending business model detached itself from the requirement that borrowers pay back their loans. Lenders made fees for originating loans; the higher the interest rate, the higher the fees. Then, when interest rates reset and borrowers became unable to make their monthly payments, lenders could earn more fees by refinancing them into new, even-higher-rate mortgages. As long as housing prices continued to rise, a single borrower could be good for multiple loans, each time increasing his debt.</blockquote>This situation had disaster written all over it. It was a teetering house of cards. Again, <a href="http://13bankers.com/">13 Bankers</a> puts it better than I could:<br />
<blockquote>The end result was a gigantic housing bubble propped up by a mountain of debt - debt that could not be repaid if housing prices started to fall, since many borrowers could not make their payments out of their ordinary income. Before the crisis hit, however, the mortgage lenders and Wall Street banks fed off a giant moneymaking machine in which mortgages were originated by mortgage brokers and passed along an assembly line through lenders, investment banks, and CDOs to investors, with each intermediate entity taking out fees along the way and no one thinking he bore any of the risk.</blockquote>Finally, the bubble burst. Housing prices started falling. Huge mega-firms like Bear Stearns and Lehman Brothers (plus the government-backed Fannie Mae and Freddie Mac) collapsed into bankruptcy. Panic spread like wildfire into every nook and cranny of the banking system...even into places where no one would have ever suspected anything bad to happen. The government stepped in with a colossal bailout package for the firms still standing in order to keep the world's largest economy away from the edge of a deepening abyss. And now today...we are still trying to stay afloat after all of this with an unemployment rate still hovering above 10% and very few signs of a sustainable recovery anytime soon.<br />
------------------------------------------------------------------<br />
Okay...so that's the ugly background. In Part 3, I'll get back to the recent Goldman Sachs hearings, which came about because of some fraud charges filed by the Securities and Exchange Commission (SEC) related to some synthetic CDOs that Goldman Sachs arranged.<br />
<br />
[By the way, if you want another refresher on the crazy financial terms, <a href="http://www.npr.org/templates/player/mediaPlayer.html?action=1&t=1&islist=false&id=126312523&m=126312505">try this glossary</a>.]Unknownnoreply@blogger.com2tag:blogger.com,1999:blog-6935319911718206450.post-23608387280780974672010-04-29T07:56:00.000-05:002010-04-29T07:56:52.337-05:00My Sources on Making Sense of The Financial CrisisBefore I continue the financial crisis/reform discussion, I wanted to divulge the majority of my sources. While, I like to think that my opinions are unique and defensible in their own right, I cannot help but admit that I have been influenced by the following:<br />
<ul><li><a href="http://baselinescenario.com/">Baseline Scenario</a>: This is a blog headed by MIT economist, Simon Johnson, who is the former chief economist of the International Monetary Fund. It is their goal to make the financial crisis understandable to all who make the effort to understand it. The guys are brilliant and their arguments are very well-crafted and well-reasoned.</li>
<li><a href="http://13bankers.com/">13 Bankers</a>: I have been reading this book for the last few weeks. It is by the same two people who run Baseline Scenario.</li>
<li><a href="http://www.npr.org/blogs/money/">Planet Money</a>: This is the NPR podcast that was created following the financial crisis in order to better explain the complexities to the public (a challenging and honorable endeavor). They do an excellent job of explaining the crisis (and many other economic issues) in an interesting and, often, very entertaining way.</li>
<li>This American Life: This great NPR show teamed up with the Planet Money team to do 5 shows specifically on the banking crisis that are outstanding: <a href="http://www.thisamericanlife.org/radio-archives/episode/355/the-giant-pool-of-money">The Giant Pool of Money</a>, <a href="http://www.thisamericanlife.org/radio-archives/episode/365/Another-Frightening-Show-About-the-Economy">Another Frightening Show About The Economy</a>, <a href="http://www.thisamericanlife.org/radio-archives/episode/375/bad-bank">Bad Bank</a>, <a href="http://www.thisamericanlife.org/radio-archives/episode/382/The-Watchmen">The Watchmen</a>, <a href="http://www.thisamericanlife.org/radio-archives/episode/390/Return-To-The-Giant-Pool-of-Money">Return To The Giant Pool of Money</a>, and <a href="http://www.thisamericanlife.org/radio-archives/episode/405/inside-job">Inside Job</a>. If you have the time, I highly recommend downloading and listening to all of these for your next long car ride.</li>
<li><a href="http://blogs.reuters.com/felix-salmon/">Felix Salmon</a> at Reuters: a great financial journalist who can grind through a lot of the technical details.</li>
<li>A couple of PBS specials also helped: <a href="http://www.pbs.org/moyers/journal/04242009/watch.html">Simon Johnson and Michael Perino on the historical lesson of the Pecora hearings</a>, <a href="http://www.pbs.org/moyers/journal/04162010/watch.html">Simon Johnson and James Kwak on the current crisis and reform</a>, <a href="http://www.pbs.org/wgbh/pages/frontline/warning/view/">PBS Frontline episode on "The Warning" and the blunders of financial deregulation</a></li>
</ul>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-6935319911718206450.post-48555709095449665142010-04-28T23:06:00.001-05:002010-04-28T23:10:04.240-05:00An Externality<div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"><br />
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<span class="Apple-style-span" style="-webkit-border-horizontal-spacing: 2px; -webkit-border-vertical-spacing: 2px; color: #333333; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 13px; line-height: 16px;"><b style="color: #333333; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 13px; line-height: 1.25em; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">ex·ter·nal·i·ty</b> <embed align="texttop" flashvars="soundUrl=http%3A%2F%2Fsp.dictionary.com%2Fdictstatic%2Fdictionary%2Faudio%2Fahd4%2FE%2FE0297400.mp3&clkLogProxyUrl=http%3A%2F%2Fdictionary.reference.com%2Fwhatzup.html&t=a&d=d&s=di&c=a&ti=1&ai=51359&l=dir&o=0&sv=00000000&ip=18b76479&u=audio" height="15" id="speaker" loop="false" menu="false" quality="high" salign="t" src="http://sp.dictionary.com/dictstatic/d/g/speaker.swf" style="color: #333333; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 13px; line-height: 1.25em; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;" type="application/x-shockwave-flash" width="17" wmode="transparent"></embed> (ěk'stər-nāl'ĭ-tē)<br style="color: #333333; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 13px; line-height: 1.25em; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;" />n. <i style="color: #333333; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 13px; line-height: 1.25em; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">pl.</i> <b style="color: #333333; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 13px; line-height: 1.25em; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">ex·ter·nal·i·ties</b></span><br />
<span class="Apple-style-span" style="-webkit-border-horizontal-spacing: 2px; -webkit-border-vertical-spacing: 2px; color: #333333; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 13px; line-height: 16px;"><b style="color: #333333; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 13px; line-height: 1.25em; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;"><br />
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<span class="Apple-style-span" style="-webkit-border-horizontal-spacing: 2px; -webkit-border-vertical-spacing: 2px; color: #333333; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 13px; line-height: 16px;"><b style="color: #333333; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 13px; line-height: 1.25em; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">1 : </b><span style="color: #333333; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 13px; line-height: 1.25em; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">the quality or state of being external or externalized</span></span><br />
<span class="Apple-style-span" style="-webkit-border-horizontal-spacing: 2px; -webkit-border-vertical-spacing: 2px; color: #333333; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 13px; line-height: 16px;"><span style="color: #333333; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 13px; line-height: 1.25em; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;"><b>2 :</b> something that is external</span></span><br />
<span class="Apple-style-span" style="-webkit-border-horizontal-spacing: 2px; -webkit-border-vertical-spacing: 2px; color: #333333; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 13px; line-height: 16px;"><span style="color: #333333; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 13px; line-height: 1.25em; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;"><b>3 :</b> a secondary or unintended consequence</span></span><br />
<span class="Apple-style-span" style="-webkit-border-horizontal-spacing: 2px; -webkit-border-vertical-spacing: 2px; color: #333333; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 13px; line-height: 16px;"><span style="color: #333333; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 13px; line-height: 1.25em; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;"><br />
</span></span><br />
<span class="Apple-style-span" style="-webkit-border-horizontal-spacing: 2px; -webkit-border-vertical-spacing: 2px; color: #333333; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 13px; line-height: 16px;"><span style="color: #333333; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 13px; line-height: 1.25em; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">---------------------------------------------</span></span><br />
<span class="Apple-style-span" style="-webkit-border-horizontal-spacing: 2px; -webkit-border-vertical-spacing: 2px; color: #333333; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 13px; line-height: 16px;"><span style="color: #333333; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 13px; line-height: 1.25em; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">I'm really not trying to be melodramatic here or lay out a big guilt trip but I think these types of accidents are critical for making ourselves realize the consequences of being an oil-addicted civilization. We won't see an extra 5 cents tacked on to our next total at the pump to pay for this disaster clean-up, but we are all truly paying for this accident in complex and long-lasting ways. We cannot afford to shy away and plug our ears.</span></span>Unknownnoreply@blogger.com2tag:blogger.com,1999:blog-6935319911718206450.post-51285102372952116552010-04-28T22:47:00.003-05:002010-04-30T21:24:22.040-05:00The Goldman Sachs hearings missed the point - PART 1Although <a href="http://www.economist.com/business-finance/displaystory.cfm?story_id=16002681&source=features_box2">the hearing yesterday</a> was pretty entertaining (the word shitty was said more than a dozen times), I'm afraid that the committee completely missed the opportunity of the moment; the opportunity that would propel us into a new mindset for how the financial world should work in a sustainable economy.<br />
<br />
I guess it should be to nobody's surprise that these hearings were a lot of theatrics and not that much substance. The committee members were definitely successful at painting the Goldman executives as greedy, disingenuous, arrogant, and unethical. The truth is, they really didn't even need to try that hard...especially after several e-mails were released from Goldman Sachs employees including from bond trader Fabrice Tourre (aka Fabulous Fab), who is the only Goldman Sachs employee named in the present fraud charge by the SEC. Here he is <a href="http://www.bloomberg.com/apps/news?pid=20601087&sid=aDgzfxGflUMg">explaining</a> to one of his girlfriends how he perceives one of the complex financial products that he created:<br />
<blockquote><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">...a product of pure intellectual masturbation, the type of thing which you invent telling yourself: ‘Well, what if we created a “thing,” which has no purpose, which is absolutely conceptual and highly theoretical and which nobody knows how to price?’</div></blockquote>He goes on to explain that he has sold some of these products "to widows and orphans that I ran into at the airport". That's lovely. What a swell guy.<br />
<br />
So I am happy that these people have been clearly exposed as the greedy bastards that they are but the whole reason that this hearing was called in the first place was because Goldman Sachs was just charged with fraud. Not because they are greedy bastards. We are a country that is chock full of greedy bastards. That doesn't mean that we should drag them all into the chambers of Congress for a good grilling. Far from it.<br />
<br />
No...what needed to happen was some tough questioning about how Goldman Sachs crossed the line from greedy bastards to lawbreakers. This really didn't happen because the Senators kept muddying the water by misunderstanding the issue.<br />
<br />
So before I go further...a few explanations are needed:<br />
<br />
I think most people perfectly understand that the underlying cause of the recession has to do with people taking out mortgages on homes that they really could not afford. That doesn't mean that they were the only ones at fault (far from it). The culture of the 80s, 90s, and 00s really solidified the idea of homeownership as quintessentially American. The government encouraged it at every opportunity that it could by creating incentives and keeping interest rates at very low levels. And in a lot of cases, homeownership is a great thing. But it's the combination of <b>1)</b> <u>the cultural appeal of homeownership</u>, <b>2)</b> <u>the view that the value of homes would perpetually increase as an investment</u>, and <b>3)</b> <u>the creation of new highly complex financial "innovations" in the 90s that dramatically increased the amount of money that could be made on mortgages</u> that got us into HUGE trouble (This is why the discussion of these complex financial products has become so important...it has now become not just of interest to the Wall Street big-whig but to anyone who depends on a healthy economy)<br />
<br />
So let's talk a bit about these new financial "innovations". In the book that I'm currently reading (<a href="http://13bankers.com/">13 Bankers</a> by Simon Johnson and James Kwak...excellent so far) they break these up into three categories: structured finance, credit default swaps, and subprime lending. But before we get too deep into this, it's important to know that this whole twisted system is made up of two different sides: on one side you have ordinary people taking out mortgages and on the other side you have this long and enormously complex chain of different parties, companies, and investors. A few months after a mortgage contract was signed, it could have theoretically changed hands dozens of times and the affected parties could have been from all around the world (for more on this idea, listen to the This American Life podcast, <a href="http://www.thisamericanlife.org/radio-archives/episode/355/The-Giant-Pool-of-Money">The Giant Pool of Money</a>...it's terrific)<br />
<br />
<b>Structured Finance and Credit Default Swaps:</b> So when we think of investing, we usually think of buying something tangible, whether it is a stock, bond, gold, etc. But there are also other types of investments that are known as structured products that don't necessarily include these tangible assets in the product itself. For instance, you give $100 to a bank and sign a contract that says that the change in that $100 over a certain time period will be directly tied to the change in value of some foreign currency. Essentially...it's a bet. Investors call them pure derivatives. You can opt to be on the short (you get money if the currency value goes down) or long (you get money if the currency value goes up) side of the bet. An investor could do the same thing with interest rates in place of foreign currencies.<br />
<br />
Another structured product is created by pooling actual financial assets (mortgages, student loans, credit card loans, etc.) together and then slicing them up in various ways. These are known as asset-backed securities [the major players in the housing crisis were mortgage-backed securities (MBS)]. They are different than the above example in that they aren't just a pure bet because the investor actually owns part of the asset. But commonly, these asset-backed securities are combined with derivatives or a derivative could be created based on the value of an asset-backed security. Another popular product was the collateralized debt obligation (CDO) which were pools of mortgage-backed securities (MBS). So yeah...pools of pools.<br />
<br />
Is your head spinning, yet? Wait...there's more: the mighty credit default swap (CDS). I'm just going to quote directly from <a href="http://13bankers.com/">13 Bankers</a> (don't sue me, Pantheon Books):<br />
<blockquote>A credit default swap is a form of insurance on debt; the "buyer" of the swap pays a fixed premium to the "seller", who agrees to pay off the debt if the debtor fails to do so. Typically the debt is a bond or a similar fixed income security, and the debtor is the issuer of the bond. Historically, monoline insurance companies [i.e., insurance companies that just sold insurance] provided insurance for municipal bonds, and Fannie Mae and Freddie Mac insured the principal payments on their mortgage-backed securities. With credit default swaps, however, now anyone could sell insurance on any fixed income security.</blockquote>The line between "bet" and "insurance" is now largely obscured. The invention of the credit default swap has enabled the "sophisticated" investor to bet for or against any type of debt.<br />
<br />
So why the hell would someone want to buy one of these complex transactions? Why were they even created in the first place? Well, the first purpose is to increase the amount of things that the market can invest in. The theory goes that now there are more products with a wide variety of risk associated with them and each has a unique set of characteristics to attract a specific investor. Second, these products should make it easier for businesses to raise money in that they can now hedge their bets (cover their asses) more efficiently. The consensus of the finance world was that these products made it much easier to manage financial risk (as long as you had the correct mathematical model to tell you what to buy). Everyone was drinking the Kool-Aid including all of the major government regulators over the last several decades (e.g. Alan Greenspan). Finally, another huge reason that these products were created in such abundance was that each new transaction led to fees for the banks that set them up for their "sophisticated" investor clients. Enormous fees! (A former trader said that Morgan Stanley earned $75 million on a single trade)<br />
<br />
Okay...enough for now. The second part will deal with subprime loans and my main beef with yesterday's hearings.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-6935319911718206450.post-3139276032347699072010-04-27T21:55:00.000-05:002010-04-27T21:55:33.216-05:00Why I am closer to the left than the right...There has been some <a href="http://andrewsullivan.theatlantic.com/the_daily_dish/2010/04/epistemic.html">interesting</a> <a href="http://capitalgainsandgames.com/blog/bruce-bartlett/1660/data-point-epistemic-closure">commentary</a> recently about the problems those on the right have had with "epistemic closure" (i.e., closed-mindedness or groupthink). The argument goes that each political group suffers from this idea to a certain extent but the GOP and the right have been exceedingly stifled in this way. Patricia Cohen at the NY Times <a href="http://www.nytimes.com/2010/04/28/books/28conserv.html">added</a> to the discussion today. But I (as usual) really enjoyed reading Daniel Larison's <a href="http://www.amconmag.com/larison/2010/04/26/untethered/">take</a>:<br />
<br />
<blockquote>Where movement conservatives enable their political leaders to do more or less as they please, progressives seem far more willing to challenge and question “their side.” The siege and persecution mentalities that movement conservatives have long cultivated as coping mechanisms for their long history of domestic policy defeats and losses in the culture wars tend to make them far less willing to break with “their side,” which is why there is such importance placed on conformity and “team” loyalty. That means that movement conservatives typically have had to stifle, mute or otherwise water down any objections they do have to Republican policies under Bush. Then, once Bush is gone, for the sake of “the team” they feel they have to exaggerate their objections to Democratic policies and politicians to the point of absurdity to create sharper contrasts with the dismal record of Republican governance they just spent the last decade making possible.</blockquote>And on <span class="Apple-style-span" style="font-family: inherit;">conservative media outlets:</span><br />
<span class="Apple-style-span" style="font-size: 12px; line-height: 14px;"></span><br />
<span class="Apple-style-span" style="font-size: 12px; line-height: 14px;"><blockquote><span class="Apple-style-span" style="font-size: medium;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">These media are popular because they tell the audience what they want to hear, they reaffirm the audience’s prejudices and assumptions, and they serve as a crutch for a movement that seems mostly incapable of producing superior arguments. Their relative popularity on cable television and radio could just as easily indicate conservative weakness inasmuch as these outlets have become hideaways where a conservative audience can avoid unsettling realities that contradict their ideological commitments. Part of the problem is that these media allow movement conservatives to become “untethered” from reality by actively protecting their audience from unpalatable and unwelcome truths, so it is much harder to learn from past errors when those errors cannot even be acknowledged as having been made. In recent months, movement conservatives have been working hard to try to </span></span><a href="http://www.amconmag.com/larison/2010/03/07/who-would-want-credit-for-iraq/"><span class="Apple-style-span" style="color: black;"><span class="Apple-style-span" style="font-size: medium;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">rehabilitate the Iraq war</span></span></span></a><span class="Apple-style-span" style="font-size: medium;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"> before it is even over. Even when faced with one of their most grave, terrible errors, most conservatives have responded by becoming what Millman </span></span><a href="http://theamericanscene.com/2010/04/08/who-closed-the-conservative-mind"><span class="Apple-style-span" style="color: black;"><span class="Apple-style-span" style="font-size: medium;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">called</span></span></span></a><span class="Apple-style-span" style="font-size: medium;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"> “minimizers, avoiders, and abandoners.”</span></span></blockquote></span><br />
<blockquote><span class="Apple-style-span" style="font-family: inherit;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">More dangerously, being “untethered” mea</span>ns that producing actual evidence for an increasingly bizarre view of the world matters less and less. Assertion becomes more important than proof. We see this in the frequent, virtually unanimous insistence that Obama went on an “apology tour,” or the near-universal conservative assessment that he “betrayed” Poland and the Czech Republic over missile defense, or the common view on the right that Obama undermines allies and treats rivals gently. None of these things is true, but they have become true for a great many movement conservatives through constant repetition. The hysterical over-reaction to the Nuclear Posture Review that basically changed nothing is one of the most recent episodes when the desperate need to reclaim the national security mantle has forced movement conservatives to make the most laughable, unserious arguments. At best, relevant policy experts on the right will pay little attention to these arguments from activists and pundits, but they will hardly ever directly criticize or attack the latter. This permits the activists and pundits to continue on as if their arguments remained valid and had not already been dismissed as nonsense. </span></blockquote>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-6935319911718206450.post-2051614427513673812010-04-17T10:20:00.003-05:002010-04-17T17:36:30.039-05:00Goldman Sachs charged with fraudIf <a href="http://www.nytimes.com/2010/04/17/opinion/17sat2.html">this</a> doesn't wake people up to the need for <a href="http://13bankers.com/">financial reform</a>, I have no idea what else possibly could.<br />
<br />
Goldman Sachs is the most powerful investment bank in the United States and it is very likely that they will be convicted of fraud (something that people have been saying for a while now). Think about that. Our main investment bank is a fraud.<br />
<br />
And this news comes after a week of many other well-reported stories on financial fraud. Last weekend, NPR's Planet Money and This American Life (along with ProPublica) <a href="http://www.thisamericanlife.org/radio-archives/episode/405/inside-job">exposed</a> the dark inner-workings of a Chicago hedge fund. Then the NY Times on Tuesday <a href="http://www.nytimes.com/2010/04/13/business/13lehman.html">reported</a> that Lehman Brothers (whose bankruptcy - which was the largest ever - ignited the banking crisis and the current economic mess we are in) used a secret company to channel their enormous risks associated with their mortgage-backed securities.<br />
<br />
Our financial system in this country is broken. Reform is desperately needed in order to keep our economy going in the long-term and to avoid another Great Depression or Big Bank Bailout. I have no idea why the "Tea-Partiers" do not grasp this idea.<br />
<br />
I hope to write more on this issue in the coming week as it will be (finally) front-and-center in the media world.<br />
<br />
In the meantime, I highly recommend watching <a href="http://www.pbs.org/moyers/journal/04162010/watch.html">this</a> and reading <a href="http://www.nytimes.com/2010/04/17/opinion/17sat2.html">this</a>.Unknownnoreply@blogger.com3tag:blogger.com,1999:blog-6935319911718206450.post-16098784559946692212010-04-15T12:40:00.002-05:002010-04-15T12:40:37.686-05:00Andrew Sullivan on Sarah PalinWell, this pretty much <a href="http://andrewsullivan.theatlantic.com/the_daily_dish/2010/04/a-halfterm-former-governor-with-a-tv-show.html">sums it up</a>:<br />
<blockquote><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', Times, serif; font-size: 13px; line-height: 19px;">She creates her own reality, and that is an incredibly important talent for a party base that desperately wants to live in another reality (a kind of souped-up version of 1950s culture and late nineteenth century economy). Her book - a fictional account of an imagined life - sold well with the GOP base because they too want a fictional account of America's current standing in the world and an imagined set of viable policy positions. She so lives and breathes this magical-realist culture she doesn't need to channel it. She knows we can keep social security and Medicare and global power for ever and balance the budget without any taxes - because that is what she wants to know. And she has never let reality get in her way. Reality is one of those doors she keeps crashing through.</span></blockquote>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-6935319911718206450.post-52013965023432799612010-04-10T21:31:00.001-05:002010-05-27T22:22:24.604-05:00An incredibly dangerous precedent set by ObamaFor those that have not heard, it <a href="http://www.nytimes.com/2010/04/07/world/middleeast/07yemen.html">has been confirmed</a> that President Obama has ordered the targeted killing of a U.S. citizen <i>suspected</i> of being a terrorist or supporting terrorists in Yemen. Here is what I wrote to Sen. Feingold after I heard about this:<br />
<br />
<blockquote><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">Dear Sen. Feingold,</div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><br />
</div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">I am writing to you today to express my absolute disgust over hearing yesterday the confirmation that President Obama has ordered the assassination of a U.S. citizen, Anwar al-Awlaki. He is suspected of being an al-Qaeda member. The key word there is SUSPECTED. He is a U.S. citizen suspected of being a terrorist (he hasn't even been charged with a crime like treason). Instead of handling this case according to the traditions of law and justice like every U.S. citizen should and must expect, President Obama has usurped these bedrock principles and has essentially become the Judge, Jury, and Executioner.</div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><br />
</div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">I can understand that national security issues are always challenging to deal with but this action sets an extremely dangerous precedent. What is to stop the President (or future Presidents) from ordering the assassination of other U.S. citizens who are away from a battlefield? This is absolute insanity.</div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><br />
</div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">Please continue to harshly criticize the administration in its horrific effort to destroy the foundational principles of our country and society.</div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><br />
</div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">Sincerely,</div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">Eric Booth</div></blockquote><br />
But wait...you might be thinking, "Hey, I thought Obama was <i>soft</i> on terrorists..." That has got to be one of the most ridiculous myths currently plastered across the media (specifically at places like Fox News). Although his rhetoric might sound nicer and more reasonable than Bush/Cheney, his actual policies for the "War on Terror" have followed in lock-step with what they did.<br />
<br />
Just ask yourself, how is this any different than the Good vs Evil mentality initiated by Bush/Cheney? Somehow they just think that the American public will just blindly believe them when they declare someone as a Terrorist who they feel is <i>dangerous</i>. Where is the skepticism of our government? Just because the President or the military says that someone is a terrorist, doesn't magically make that person a terrorist. That should go without saying. We have the justice system set up for this exact reason. The government can't just declare that someone broke the law and hand out their punishment without the use of the judicial branch.<br />
<br />
And even if they were a terrorist, we still can't just assassinate them...especially if they are an American citizen. That is insane and contrary to the very foundation of our country. Some could reasonably argue that our wars in Iraq and Afghanistan (no matter what you think about them) give the U.S. military the right to kill<br />
terrorists in a battle situation. But targeted killing far away from a battlefield is an entirely different thing. Obama, Bush, and Cheney may think that the "battlefield" is the entire surface of the Earth, but if that is true, then there is no limit to their authoritarian power (and no end to this perpetual War). All they would have to do is declare someone as a terrorist (i.e., our enemy in the War on Terror) and then assassinate them no matter where they are. Judge, Jury, and Executioner are all conveniently wrapped up into one Executive decision.<br />
<br />
The Executive branch was never intended to have this much power. With this much limitless power, abuse is just inevitable. It is insanity, plain and simple...and the President who was supposed to be the Constitutional scholar is continuing the destruction of our American principles of justice and the rule of law.<br />
<br />
With all that said...the most frustrating thing about this whole mess is that I would vote for Obama a second time if it kept a Republican like Romney or Palin out of the White House. As vile and despicable as Obama's positions are on the War on Terror, the GOP front-runners are even more extreme (I mean, they laugh about how soft Obama is on Terror...sometimes I feel like I'm taking crazy pills).Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-6935319911718206450.post-70902208039237541602010-04-06T21:59:00.001-05:002010-04-07T08:46:12.808-05:00Lessons from the horrific WikiLeaks video - UPDATED<div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">So if you missed it, a group called WikiLeaks <a href="http://www.salon.com/news/opinion/glenn_greenwald/2010/04/05/iraq/index.html">released a video</a> showing an attack by U.S. troops on 12 people in Iraq in July of 2007. The soldiers in the Apache helicopter thought that the 12 men were insurgents. It turns out that they were not and two employees of Reuters news were killed in the attack. Their cameras were mistaken for AK-47s and rocket-propelled grenades (RPGs). After the initial attack, a van pulls up and several unarmed men get out to carry the wounded away. They are then attacked by the same Apache helicopter. Two children in the van were seriously wounded.</div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><br />
</div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">I should warn you that the video is very disturbing. Here are a few lessons that I am taking away from watching it and <a href="http://www.economist.com/blogs/democracyinamerica/2010/04/iraq_collateral_damage">the</a> <a href="http://andrewsullivan.theatlantic.com/the_daily_dish/2010/04/the-lies-of-the-pentagon-ctd-2.html">ensuing</a> <a href="http://www.foreignpolicy.com/articles/2010/04/06/is_this_the_future_of_journalism">reaction</a> that I've seen thus far.</div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><br />
</div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><b>Lesson 1:</b> Although some of the actions taken by the troops in the helicopter were terribly wrong and appeared to violate the Rules of Engagement (firing at unarmed civilians trying to remove the wounded), these troops should not be blamed or vilified for what happened. Those of us who have not served in the military will never know what it's like to be in those situations where it is kill or be killed. This occurred right at the peak of the Awakening and this part of Baghdad was one of the most dangerous in the country. American troops were being killed, RPGs were shooting down helicopters. While it is absolutely sickening what is on that video, we have to be careful not to disparage those who fight in the military under excruciating circumstances that we cannot even begin to comprehend.</div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><br />
</div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><b>Lesson 2: </b>This is what happens when the U.S. invades countries and battles insurgencies. This is what happens when people support a war of this kind. Horrible, horrible things happen to innocent people. It's not that we are bloodthirsty savages...it's just the unassailable fact that we will inevitably kill innocent civilians when we are fighting an insurgency in a country where a large percentage of the population perceives us as an occupying force that should get the F%&K out of their country. We should not blame the troops for this event. We should blame the government who went to war and ourselves for allowing it to happen.</div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><br />
</div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><b>Lesson 3:</b> This is not an isolated or even a terribly rare incident as <a href="http://andrewsullivan.theatlantic.com/the_daily_dish/2010/04/the-lies-of-the-pentagon-ctd-3.html">an active duty soldier in Iraq puts it</a>. Glenn Greenwald <a href="http://www.salon.com/news/opinion/glenn_greenwald/2010/04/06/iraq/index.html">adds</a>:</div><blockquote><span class="Apple-style-span" style="font-family: georgia, serif; font-size: 13px; line-height: 19px;">This incident is commonplace, not unusual, because it's what war is and it's what has been happening in our wars throughout the decade. We just don't usually see it, and this time we did. That -- and the fact that Reuters journalists were killed and it thus generated more pressure than normal -- are the only things that make it unusual.</span></blockquote><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">Another example came in <a href="http://www.nytimes.com/2010/04/06/world/asia/06afghan.html">a NY Times article</a> yesterday that described a cover up of another horrific incident in Afghanistan back in February of this year involving the all-too-common mistake of confusing militant insurgents with innocent and unarmed civilians.</div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><br />
</div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><b>Lesson 4:</b> The people who hate the U.S. and are inspired to take up arms against us do not hate us because they hate freedom or <a href="http://www.foreignpolicy.com/articles/2010/03/31/lady_gaga_vs_the_occupation">Lady GaGa</a>. They hate us because of events like what happened in July 2007 in New Baghdad. The most important lesson that all of us should know by now is that the people we are fighting in the "War on Terror" are not all crazed and irrational people (even though it's a lot easier to justify a war against people like that). They respond the same way that we would if our innocent family members and friends were killed by a foreign military...with outrageous anger. The simple act of realizing that our military actions in Iraq and Afghanistan are sometimes counterintuitive (not to mention horribly oppressive) to our own goals of national security is so easily missed today. We ignore it at our peril.<br />
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<b>UPDATE:</b> I should have also mentioned this under-reported story under Lesson 3: The <a href="http://www.nytimes.com/2010/03/27/world/asia/27afghan.html">NY Times reported a few weeks ago</a> that Gen. Stanley M<span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">cChrystal (</span><span class="Apple-style-span" style="font-family: georgia, 'times new roman', times, serif; font-size: 15px; line-height: 22px;"><span class="Apple-style-span" style="font-size: medium;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">senior American and NATO commander in Afghanistan) </span></span><span class="Apple-style-span" style="line-height: normal;"><span class="Apple-style-span" style="font-size: medium;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">said the following while</span></span></span><span class="Apple-style-span" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> taking questions from troops:</span></span><br />
<blockquote><div style="color: #333333; font-family: 'Times New Roman', times, georgia, serif; font-size: 14px; line-height: 18px; margin-left: 20px; margin-right: 20px; margin-top: 14px;">We really ask a lot of our young service people out on the checkpoints because there's danger, they're asked to make very rapid decisions in often very unclear situations. However, to my knowledge, in the nine-plus months I've been here, not a single case where we have engaged in an escalation of force incident and hurt someone has it turned out that the vehicle had a suicide bomb or weapons in it and, in many cases, had families in it...That doesn't mean I'm criticizing the people who are executing. I'm just giving you perspective. We've shot an amazing number of people and killed a number and, to my knowledge, none has proven to have been a real threat to the force.</div></blockquote>Quite a frank admission coming from a lead commander in Afghanistan. </div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-6935319911718206450.post-10663318853684190662010-04-01T22:20:00.001-05:002010-04-01T22:25:45.826-05:00Is Health Care Reform a "Big F*#king Deal"? PART 5I'm a little burned-out on the health care issue at this point (as I'm sure you are as well), so this will be the last in what has become a 5-part series.<br />
<br />
I wanted to end with a little politics. No one can deny the incredible passion that this issue stirs in most Americans. Politicians on both sides of the aisle are professionals when it comes to playing on these passions.<br />
<br />
So let's finally get to the question posed in the title of the series...Is <i>this </i>Health Care Reform a "Big F*#king Deal? Well, sure it is. There are some new and sweeping regulations on the health insurance industry. That's pretty damn big! Creating tax disincentives to essentially require companies to offer health insurance to their employees and require all Americans to be covered is a big change.<br />
<br />
But is it really the embodiment of Stalin and Hitler...communism and fascism. Of course not. It is all about the degree to which our health care system is socialistic. Arguments could be made that any government subsidization of health insurance (e.g., Medicare) is socialistic. But we've had Medicare since the 60s and you didn't see the Tea Partiers up-in-arms during the Bush or Reagan administrations to repeal Medicare? No, you didn't...especially since a lot of Tea Partiers are currently getting Medicare and are quite satisfied with it (they are not exactly the bastions of intellectual consistency...remember <a href="http://tpmdc.talkingpointsmemo.com/2009/08/tea-party-sign-keep-the-guvmint-out-of-my-medicare.php">this</a>?)<br />
<br />
Another great example of why the hysteria is so unwarranted is because a lot of what is in the bill is very consistent with ideas that Republicans have put forward many times before in the past. Take, for instance, what Mitt Romney (former GOP Presidential candidate) actively fought for and implemented in Massachusetts. <a href="http://www.frumforum.com/defending-romneycare">David Frum did a great job</a> of pointing out the similarities between "Romneycare" and "Obamacare". As Frum puts it:<br />
<blockquote><span class="Apple-style-span" style="color: #3b3b3b; font-family: verdana, helvetica, arial, san-serif; font-size: 12px; line-height: 18px;"></span><br />
<span class="Apple-style-span" style="color: #3b3b3b; font-family: verdana, helvetica, arial, san-serif; font-size: 12px; line-height: 18px;"><div style="color: #3b3b3b; font-family: verdana, helvetica, arial, san-serif; margin-bottom: 8px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">Romney sharply distinguishes his healthcare preferences from Barack Obama’s. For him, the red line is the public option. He adamantly opposes it. Yet in many other respects, there is common ground. Like Obama, Romney worries about the malign incentives of fee-for-service medicine. Like Obama, Romney regards the status quo as unsustainable. Like Obama, Romney is a big fan of the healthcare journalism of Atul Gawande.</div><div style="color: #3b3b3b; font-family: verdana, helvetica, arial, san-serif; margin-bottom: 8px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">And of course, the public option has now vanished from the Obama plan. Which means that the federal plan bears a closer family resemblance than ever to Romney’s idea: regulated health insurance exchanges, mandates to buy insurance for those who can afford it, subsidies for those who cannot. Romney’s preference would be to omit the mandate for those who “can demonstrate their ability to pay their own health-care bills.” (176) That would be precious few of us. And he wants to allow states ample leeway to innovate without hindrance by the federal government.</div><div style="color: #3b3b3b; font-family: verdana, helvetica, arial, san-serif; margin-bottom: 8px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">Romney frames the distinction between his preferences and President Obama’s as “free enterprise and consumer-driven markets or government management and regulation.” (193)</div><div style="color: #3b3b3b; font-family: verdana, helvetica, arial, san-serif; margin-bottom: 8px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">It’s hard to avoid the suspicion that these two technocrats have more in common with each other on this issue than either does with his party’s more fervent supporters. With this one difference: shout outs to CEOs in Ch 7 – 3, including one to the CEO of drugmaker Novartis.</div></span></blockquote>It's true that this legislation has a lot of flaws in it (as I've tried to point out). But those flaws are not because it is too "liberal" or too "socialistic" (there is no public option for God's sake!). In the grand scheme of American politics, it is actually very centrist and parts are even somewhat conservative.<br />
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So why is the right acting so unhinged and rabid about this whole plan? Well, I've tried to be kind and sympathetic in my mind as I've tried to figure out where all of this hatred comes from...but in the end, I am actually pretty cynical about this (maybe not quite as cynical as <a href="http://www.grist.org/article/2010-03-30-post-truth-politics">this</a>, though). It really just seems that, in the eyes of the Republicans, the debate versus the Democrats has turned into a completely irrational game between two competing professional sports teams (or, better yet, two WWF wrestlers). If the other side likes something...well, then our side doesn't like that (even if we might have liked it before). It really is obstructionism at its finest.<br />
<br />
The GOP could have acted like grown-ups during this whole health care reform debate and realized that the Democrats, after a major political victory in 2008, were seriously going to pass something. They could have put forth rational arguments about why the Obama way of tackling the health care crisis was the wrong way to do things. But they didn't...all they did was provide raw meat to the massive angry populace (and rightly so, this economic depression is devastating for a lot of people) with their cries of Fascism and "Baby killers". This is the main critique that David Frum <a href="http://www.frumforum.com/waterloo">wrote a week ago</a> (before subsequently getting fired by the right-wing think tank who couldn't handle the criticism):<br />
<blockquote><span class="Apple-style-span" style="color: #3b3b3b; font-family: verdana, helvetica, arial, san-serif; font-size: 12px; line-height: 18px;"></span><br />
<span class="Apple-style-span" style="color: #3b3b3b; font-family: verdana, helvetica, arial, san-serif; font-size: 12px; line-height: 18px;"><div style="color: #3b3b3b; font-family: verdana, helvetica, arial, san-serif; margin-bottom: 8px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">A huge part of the blame for today’s disaster attaches to conservatives and Republicans ourselves.</div><div style="color: #3b3b3b; font-family: verdana, helvetica, arial, san-serif; margin-bottom: 8px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">At the beginning of this process we made a strategic decision: unlike, say, Democrats in 2001 when President Bush proposed his first tax cut, we would make no deal with the administration. No negotiations, no compromise, nothing. We were going for all the marbles. This would be Obama’s Waterloo – just as healthcare was Clinton’s in 1994.</div><div style="color: #3b3b3b; font-family: verdana, helvetica, arial, san-serif; margin-bottom: 8px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">Only, the hardliners overlooked a few key facts: Obama was elected with 53% of the vote, not Clinton’s 42%. The liberal block within the Democratic congressional caucus is bigger and stronger than it was in 1993-94. And of course the Democrats also remember their history, and also remember the consequences of their 1994 failure.</div><div style="color: #3b3b3b; font-family: verdana, helvetica, arial, san-serif; margin-bottom: 8px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">This time, when we went for all the marbles, we ended with none.</div><div style="color: #3b3b3b; font-family: verdana, helvetica, arial, san-serif; margin-bottom: 8px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">Could a deal have been reached? Who knows? But we do know that the gap between this plan and traditional Republican ideas is not very big. The Obama plan has a broad family resemblance to Mitt Romney’s Massachusetts plan. It builds on ideas developed at the Heritage Foundation in the early 1990s that formed the basis for Republican counter-proposals to Clintoncare in 1993-1994.</div><div style="color: #3b3b3b; font-family: verdana, helvetica, arial, san-serif; margin-bottom: 8px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">Barack Obama badly wanted Republican votes for his plan. Could we have leveraged his desire to align the plan more closely with conservative views? To finance it without redistributive taxes on productive enterprise – without weighing so heavily on small business – without expanding Medicaid? Too late now. They are all the law.</div></span></blockquote>I completely agree and think that some conservative ideas could have really helped this bill. But we didn't get that.<br />
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All in all, it's bad enough in this country that we only have two parties running the show. But when one completely excuses itself as it throws spitballs from the corner of the room, then we're all worse off.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-6935319911718206450.post-57835040816913781202010-03-30T22:26:00.000-05:002010-03-30T22:26:31.646-05:00Is Health Care Reform a "Big F*#king Deal"? PART 4Okay...I think it's time to bring in the health care reform bill that Obama signed into law last week (plus the revisions signed into law today). I won't possibly be able to cover all of the details but I'm going to provide my two cents. For more information, <a href="http://www.scottharringtonphd.com/?p=847">here's a quick synopsis</a> from a University of Pennsylvania professor (who happens to be very critical of the bill), <a href="http://www.economist.com/opinion/displaystory.cfm?story_id=15769767">a great article</a> by The Economist, and <a href="http://www.npr.org/blogs/money/2010/03/podcast_the_health_bill_did_bi.html">a great podcast</a> from the folks at NPR's Planet Money that does a great job of analyzing the bill.<br />
<br />
So let's first analyze the bill in the context of the problems and potential solutions that I already covered. A big part of the bill is to try and cover more Americans that were previously uninsured (problem #2). The bill attempts to cover more people by various health insurance regulations and tax [dis]incentives. One easy way it does this is by changing the health insurance rule to allow young adults up until the age of 26 to stay on their parents health insurance. This provision will be effective relatively soon and will have a large impact on a segment of the population that has been hit hard by the recession (young adults). A second way is to decrease the number of uninsured by forbidding insurance companies from not covering someone because of "pre-existing conditions" (fully effective by 2014). Now this provision really gets at the heart of the issue. I personally agree with the idea that everyone should be allowed to have some kind of health insurance available at a reasonable cost. But if that were to happen, then health insurance really becomes something fundamentally different than any other product...even fundamentally different than any other insurance product. The whole insurance industry rests upon the foundation of calculating risk. An insurance company wants to avoid insuring anything risky in order to increase profits. But if a regulation comes along that forbids them from refusing to insure something that they deem as too risky, then the whole industry gets turned upside down.<br />
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But I would argue that this new regulation is, overall, a good thing for a developed country like the U.S. There have been way too many horror stories of people not being able to get insurance through no fault of their own. It just doesn't seem fair.<br />
<br />
And just think about it...this is a very similar situation to the one that was mostly responsible for the creation of Medicare. Old people are a risky bunch in the eyes of the health insurance industry. If we didn't have Medicare, old people would have to pay very high premiums because they are such a high risk. It's nearly the same situation for people with pre-existing conditions. The only difference is that everyone, of course, gets older and becomes riskier but not everyone develops "pre-existing conditions". But the "pre-existing conditions" umbrella has gotten so large in the past few decades that anyone has a reasonable chance of being put under it at some point through no fault of their own (random chance).<br />
<br />
And although this new regulation seems like a raw deal for the health insurance industry, keep in mind that while they will be covering more risky people, they will also be covering more non-risky people through the third way that the bill decreases the number of uninsured: a requirement that everyone take out some minimum level of health insurance or pay a $695 tax (effective in 2014). This is by far the most controversial provision in the bill. (There's been a lot of talk about the constitutionality of this and it looks like it will be challenged in court. But I'm inclined to think that it will not be struck down because of <a href="http://balkin.blogspot.com/2010/03/if-you-cant-stop-bill-just-have-another.html">this argument by Jack Balkin of Yale</a>.) In order to help lower income people pay for this mandated health insurance, subsidies on a sliding scale will be available to the working poor and uninsured who make less than $88,000. In addition, Medicaid will be substantially expanded to cover more of the very poor (anyone under 133% of the federal poverty level which is just under $30,000 per year for a family of four).<br />
<br />
So those are the major elements that decrease the number of uninsured Americans. So how the hell are we going to pay for all of these subsidies and the expansion of Medicaid (keeping in mind the third problem - Medicare and Medicaid becoming fiscal nightmares)? Well, there are four ways: <b>1)</b> a new Medicare payroll tax on investment income of the wealthy (families making more than $250,000 per year and individuals making more than $200,000 per year), <b>2)</b> a tax on "Cadillac" insurance plans (those that are worth more than $27,500 for families and $10,200 for individuals), <b>3)</b> a 10% tax on tanning salons (seriously), and <b>4)</b> a $500,000,000 cut in Medicare spending over the next decade (although the details on how this cut will happen are pretty unclear). So leaving aside the issue of whether these taxes are too progressive, will they be able to cover the huge increases in government spending to help cover more Americans? Well, the Congressional Budget Office <a href="http://cboblog.cbo.gov/?p=546">thinks that it will</a>. It looks, though, that it will all rest on what health care costs will do in the future.<br />
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And that (as the first problem that I discussed) is something that is horribly lacking in the bill. It has several very watered-down measures that try to get at the whole cost issue. One of these is to set up an agency that will research ways to "bend the cost curve" and specifically try to find ways to pay health care professionals based on health care outcomes instead of fees for services (i.e., stop paying specialists based on how many tests they do and start paying them based on whether or not the patient got healthier). Another is to set up an advisory board to help reduce Medicare costs. But all of these measures absolutely pale in comparison with what really needs to be done in order to significantly reduce health care costs in this country.<br />
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So the pessimist in me thinks that no politician is willing to make the tough decisions to re-vamp the system of health care (e.g., moving away from an employer-provided system) and our federal budget deficit will continue to balloon as we increase the amount of money the federal government spends on health insurance.<br />
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But the optimist in me thinks that this might be a start (albeit a small one) to something better. That part of me thinks that if everyone is under the tent of the American health care/insurance system, then we'll be forced to make those difficult decisions together...as a community, which is <a href="http://www.slate.com/id/2161736/">exactly how health insurance began</a> in this country over 80 years ago with a non-profit organization called Blue Cross. In addition, the health insurance industry will now be thinking of innovative ways to reduce the riskiness of those that they insure (instead of just dropping them) and this could very well lead to better preventive health care (and do I dare say a leap into the world of food policy???). Here's to hoping.<br />
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I'm going to have one final post on the health care reform bill that is going to deal with the ugly politics and fear-based rhetoric we've been hearing lately...then I will be done.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-6935319911718206450.post-45877677078097189002010-03-27T13:13:00.000-05:002010-03-27T13:13:38.041-05:00Is Health Care Reform a "Big F*#king Deal"? PART 3<div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">Alright, so I have laid out the main problems with health care and health insurance. So what are the potential solutions and what is in the recent health care reform bill?<br />
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Well, first let's take the third problem that was just discussed in Part 2. One potential remedy to any problem related to the federal budget is to raise revenue (i.e., through tax increases). This is the stereotypical "liberal" response to most federal budget issues. Just raise taxes on the rich and we'll be able to pay for our government-subsidized health insurance programs. Some may even go as far as to advocate for expanding our government health insurance program to everyone by having a "public option" that people could enroll in. The logic here is that we'll just be able to tax the rich more so that all of us (even the poor that may not be able to pay into a government insurance program) can have subsidized government health insurance.<br />
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<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhJRbfxUBpELf2k-pEmWqMvcUO7WQXRLGzSoAQ-sIxqRcysatazowpl88vwKg6Z3zzuZBUgoCc6Pe7O6LSoNHHLb8lBZ4idJ7zN5bcafXYd0noTorcwiihVxzJIRq8XjwyBAZkWk5eRovPP/s1600/4-17-09inc-f1.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="301" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhJRbfxUBpELf2k-pEmWqMvcUO7WQXRLGzSoAQ-sIxqRcysatazowpl88vwKg6Z3zzuZBUgoCc6Pe7O6LSoNHHLb8lBZ4idJ7zN5bcafXYd0noTorcwiihVxzJIRq8XjwyBAZkWk5eRovPP/s400/4-17-09inc-f1.jpg" width="400" /></a></div><br />
Now, I am pretty sympathetic to the idea of increasing the tax rate for the super rich mainly because the gap between rich and poor has widened so dramatically in the last few decades (see the figure above from <a href="http://www.cbpp.org/cms/index.cfm?fa=view&id=2789">this great report from the Center on Budget and Policy Priorities</a>). Just look at that figure. It's staggering. I consider myself very much on the capitalist side of things (incentives are critical to our society) but there is something really, really wrong when the rich-poor gap expands that dramatically. It's impossible to "prove", but I just cannot imagine that those at the top 1% of household income really "deserved" that much of an increase in their incomes. For example, look at CEOs of the big banks and their huge bonuses right in the middle of a crisis largely caused by their mistakes (more on that later, for sure). I know that may sound a little fishy to the die-hard capitalists but...wow. It's just staggering.<br />
<br />
But with all of that in mind, increasing taxes on the rich only gets us partially to the point where we could possibly have a sustainable universal health care system (heavily dependent on government subsidies) implemented on top of the current health care structure of the country. So I would argue that just raising taxes on the rich and implementing a public option (plus expanding subsidized health insurance programs such as Medicaid) is a very dangerous position to take for two reasons: 1) just mindlessly raising taxes to solve a fiscal problem can definitely qualify as an attack on individual liberty (one of the non-negotiable principles of this country as I addressed <a href="http://cognitivelongcuts.blogspot.com/2010/03/caveat-some-things-are-black-and-white.html">here</a>) and 2) it does nothing to address the other side of the potential solutions...reducing the costs of health care.<br />
<br />
The reason that universal health care with government subsidies in other developed countries work so well on a national scale (higher life expectancies, lower child mortality rates relative to the U.S.) and are largely sustainable (Germany has had universal health care since 1883) is that the costs of health care (regardless of who is paying for it; the government or an individual) are much lower compared to the U.S. (and again, that is mostly due to the idea that brand new and expensive medical technologies and drugs are not pushed so much and health care professionals are not paid as much in those other countries). So if people truly want to advocate for expanding the role of the U.S. government in supporting health insurance to all, they would also need to advocate for dramatically changing our health care system. And there are enormous obstacles that face that proposition...like the power of the pharmaceutical and hospital industries, for instance.<br />
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In addition, we would definitely need to expand the scope of what we consider as "health care" in this country to include things like food policy, which I and <a href="http://www.michaelpollan.com/">many others</a> would argue is a vital part to the health and wellness of a country's population. (This is a whole other subject that I will probably address in a later post).<br />
<br />
So I am sympathetic to the idea of increasing access to health insurance through government means but we also must absolutely address, and address with great determination, the growing costs of health care and also the food policies that make us less healthy.<br />
<br />
Okay, so that's a big part of the potential solutions. What about other ideas?<br />
<br />
In Part 4, I will talk about increasing regulations on health care and health insurance to reduce costs and maybe finally get to the new bill.</div>Unknownnoreply@blogger.com3tag:blogger.com,1999:blog-6935319911718206450.post-54135082947919798772010-03-27T11:09:00.000-05:002010-03-27T11:09:23.189-05:00Is Health Care Reform a "Big F*#king Deal"? PART 2<div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">A couple of things to add on the first two problems...<br />
<br />
I view health care as a product that is fundamentally different than, say, a TV or a car or food, even. It's obvious why it's different than a TV or a car because we don't need them to survive. So let's take that last one, food, because we do need it to survive. If someone all of a sudden loses their job for whatever reason, most people can still buy food because they probably have some money saved up (and food doesn't cost all that much relatively speaking...if you really need help, I think most people could find some food from friends and family). When the first time that you get hungry comes around after you lose your job, all you need to do is go down to the grocery store and drop a few bucks. But if you get hit by a car on your way to the store (after you lost your job) or you all of a sudden start feeling a pain in your appendix...well, then you're screwed (<a href="http://www.dol.gov/dol/topic/health-plans/cobra.htm">COBRA</a> plans do obviously help here but they also suffer from problems of being too costly and limited to 18 months after you lose your job). Food may arguably be more critical than health care in our ability to sustain ourselves over the long run but we pay relatively small amounts of money each day for it instead of in huge lump sums like we would have to do if we needed serious medical care.<br />
<br />
Okay, so what about the third problem: Federal budget issues related to Medicare and Medicaid? Boring, right? Wrong! Let's just spend a little bit of time here.<br />
<br />
First, what exactly is Medicare. You may be roughly familiar with it because you see it taken out of our paycheck (1.45% from you, 1.45% from your employer) but let's get down to the details. Essentially, it is the U.S. government's health insurance program for people over age 65, under 65 with certain disabilities, and any age with permanent kidney failure. You might be saying to yourself, "Wow...that sounds an awful lot like socialized health insurance"...and you'd be right. And we've had this since 1965.<br />
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There are several parts (A-D) to Medicare. Part A is hospital insurance (inpatient care at a hospital, hospice, etc.) and if you or your spouse have paid payroll taxes towards Medicare for at least 10 years, then this insurance is provided without charge. You essentially paid for it your whole working life and when you retire, it's supposed to be there for you (at least that's the idea). Part B is medical insurance (covers anything that Part A does not, like doctors' services and some preventive services like flu shots), which you have to pay an extra premium of ~$100 per month in order to receive. If you are enrolled in Parts A & B then you can opt for Part C (Medicare Advantage), which provides the same services as A & B but through a private insurance company that is approved by Medicare. Typically, those that choose to enroll in Part C also pay for additional coverage for prescription drugs, dental, vision, etc. The final part is Part D, which provides subsidized prescription drug coverage. This is what was passed in 2006 under President Bush. You can enroll in this program through the original Medicare (A & B) or Medicare Advantage (C).<br />
<br />
Okay, how about Medicaid? Medicaid is government-provided health insurance for the poor and it is essentially provided for free (some small fees may apply in certain situations). Medicaid is funded by state and federal governments, but management is handled by states. Thus, eligibility and program specifics vary from state-to-state. Medicaid is even subcontracted out to private insurers in some states. So Medicaid is even <i>more</i> socialized than Medicare because we really are giving it away for free to those who are just too poor. It's our society's <a href="http://books.nap.edu/openbook.php?record_id=9612&page=1">safety net</a>.<br />
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Boring, right? Well, okay...But the problem is that these large government-provided health insurance programs are in big financial trouble. One of the big reasons, again, is that overall health care costs are rising (as mentioned in Part 1) but the other is that the baby boom generation is getting old and requiring more services from Medicare. This is a huge part of the problem when you hear about the federal deficit. I don't think everyone truly grasps the enormous amount of money that the government spends on health insurance. Over the last decade it has been around 65% of the total expenditures of the federal government! 65%!! (You can do your own Excel research by downloading all of the data <a href="http://www.gpoaccess.gov/usbudget/fy10/hist.html">here</a>.) I have railed against the huge increase in defense spending related to the "War on Terror" (and will continue to) but even that (at ~20%) is dwarfed by the amount of money spent for health insurance. Now, it's true that a lot of the receipts that the government takes in as revenue is devoted specifically to health insurance (and it is clearly stated as such on your paycheck for instance) and there is no similar transparency for defense spending (i.e., you don't see that separated out nicely on your payroll or income taxes). But still...health insurance completely dominates federal expenditures.<br />
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Bottom line: The government is just not getting enough revenue to cover the increasing cost of providing this subsidized health insurance to those who qualify. It's a friggin' mess!</div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><br />
</div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">So what to do? Well, there are several different ways to try and address each of these problems. Part 3 will look at the bill that was just passed in a little bit more detail as it relates to the problems that I just outlined.</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-6935319911718206450.post-10077437002718320612010-03-24T22:00:00.003-05:002010-03-25T07:43:33.883-05:00Is Health Care Reform a "Big F*#king Deal"? PART 1Alright, Tom. Here you go. I've been holding off on writing about health care/insurance reform because I haven't had adequate time to go through the bill and understand what it all means. I haven't still but I'm going to go ahead and make some comments based on what I know so far. Of course, it's subject to criticism (comments?).<br />
<br />
So was Joe Biden correct when he <a href="http://thecaucus.blogs.nytimes.com/2010/03/23/at-white-house-bidens-expletive-caught-on-open-mic/">pulled a "Biden"</a> and whispered "This is a big f*#king deal" to Obama in front of a microphone to the world just before the signing ceremony? Well, yes and no.<br />
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First, let's spend a little time trying to understand why we even had this enormous debate in the first place. What was the problem? Well, you can really break it up into three problems: <b>1)</b> high and rapidly growing costs for health care and insurance (the percentage of GDP devoted to health care grew from under 6% to over 16% from 1962-2007), <b>2)</b> a lot of uninsured people (~46 million U.S. residents did not have health insurance in 2008), and <b>3)</b> very large projected Medicare deficits and increasing Medicaid costs that are leading the federal budget down a very unsustainable path.<br />
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So why have health care costs risen so much in the U.S. anyways? Well, unfortunately there is no smoking gun here. There are many different factors at play. One of the most convincing causes to me is just the idea that we adopt and diffuse expensive medical technology at much higher rates than other countries. In addition, health care providers (physicians, nurses, etc.) just make more money here. So what's wrong with all of that? Well, it turns out that this increase in the cost of care doesn't really translate into better quality of care. On one hand, we do not have to wait long for noncritical surgeries compared with other countries and we are able to quickly have access to the latest and greatest products from our big medical companies. But on the other hand, our life expectancy is pretty below average compared with the rest of the developed world (check out <a href="http://blogs.ngm.com/.a/6a00e0098226918833012876674340970c-800wi">this excellent graphic by the National Geographic</a>) and infant mortality rates are high compared with other developed countries. That just doesn't seem right.<br />
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What about health insurance costs? Well, it obviously is tied to this increase in health care costs and that's the primary reason it has also increased (it's essentially how the insured pay for care...through premiums and deductibles). But you also need to add in the administrative costs. I'm not sure how those costs have trended through time.<br />
<br />
So as a country we are paying way more but getting less. But should we really care about the situation at a national scale? Well, I would argue that we definitely should when the imbalance between cost and quality is this enormous. What gets so many people fired up about this subject is that the people with insurance generally love their health care. I love mine that is provided to me as a state employee. I don't use it too often but whenever I have, it's been fantastic. And I am confident that if anything bad were to happen to me, I would have great care immediately available to me. So any change from the current system is understandably going to raise the eyebrows of the people with great insurance.<br />
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But what about the people without insurance? Well, they are one of the primary reasons we are lagging behind the developing world in those quality indicators. They really don't have any care unless something catastrophic occurs when the government (i.e. taxpayers) or a charity foots the bill. So why would anyone not have health insurance? Well, they just can't afford it because their employer doesn't help pay for it or they're unemployed. Apologies for stating the obvious but it's important to emphasize and understand that not all uninsured people are blood-suckers who are just hoping for a government hand-out. This is even more apparent during a recession like our current one when everyone knows someone close to them that cannot afford health insurance for one reason or another. Sure there are abusers of the system but I don't think anyone would claim that the status quo is A-Okay (unless you truly are a selfish troll that thinks that they are impervious to the threat of unemployment during difficult economic times).<br />
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Okay...are you still with me? In PART 2, I will address the third problem and then get into the actual bill that was signed into law yesterday. Stay tuned.Unknownnoreply@blogger.com5tag:blogger.com,1999:blog-6935319911718206450.post-27977914086869801792010-03-18T07:38:00.000-05:002010-03-18T07:38:34.414-05:00The incontrovertible link between the War on Terror and Israel-Palestine CONTINUEDDaniel Larison, again, is <a href="http://theweek.com/article/index/200862/Israel_thumbs_its_nose_at_Obama">highly recommended reading</a> on Israel-Palestine. Money quote:<br />
<blockquote><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', Times, serif; font-size: 14px; line-height: 21px;">Despite the perceived insult to Biden and the U.S., in a speech at Tel Aviv University the vice president reaffirmed the “total, absolute, and unvarnished” commitment of the U.S. to Israel. It is this unqualified support that allows Netanyahu to ignore the administration’s demands. Washington has opposed settlement expansion for decades, but no administration has seriously penalized Israel for blithely ignoring U.S. wishes—because even proposing such a penalty is unacceptable in U.S. politics. </span></blockquote>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-6935319911718206450.post-63009609222937524162010-03-17T22:07:00.008-05:002010-03-18T07:52:57.187-05:00The incontrovertible link between the War on Terror and Israel-Palestine<div class="separator" style="clear: both; text-align: left;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">Here we go. The title of this post is more than daunting. To say that this is a delicate issue is quite an understatement and to say that I know all the in's and out's is also completely foolish. I will not do it justice in just a few paragraphs (even though it's taken 2 nights to write) but recent events have encouraged me to write about it.</span></div><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><br />
</span> <br />
<span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">This gets to the heart of the most dangerous cognitive shortcut we currently have in our political discussions. The Good vs Evil dichotomy. It's been ingrained in our heads since we were kids. It just makes thinking that much easier when we can root for the Good guys and despise the Bad guys. We crave that kind of simplicity.</span><br />
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<span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">In this example, the United States and Israel are the epitome of the Good guys. After 9/11, the United States could do no wrong. We were viciously attacked by a bunch of hopelessly misdirected Muslim men and the country came together to exact revenge. We were told by our President that the forces of Good would prevail. The 9/11 terrorists came from the Middle East where we (along with our British friends) have been meddling in affairs for quite some time. We have long decreed that Israel - a state solely created due to a religious movement - was a shining beacon of Goodness in a sea of chaos and our unwavering ally and friend. Although our recent presidents have all tried to sow peace between Israel and Palestine, we have always been better friends to Israel. This friendship comes in the form of massive diplomatic and military support as well as over $2 billion per year in direct financial aid. But even though the Israeli government is definitely a healthy democracy that values the liberty of their people (just look at some of the </span><a href="http://www.haaretz.com/hasen/spages/1156260.html"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><span class="Apple-style-span" style="color: #3d85c6;">recent criticisms in Israeli newspapers</span></span></a><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"> of their government's harsh policies toward Palestine) they have definitely crossed the line into a dangerously aggressive military power.</span><br />
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<span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">And, of course, the Palestinian government on the other side can share the same reckless and manic fury as the Israelis (it's just been more aggressive from the Israeli side recently). But unlike Israel (barring a few shake-ups after elections), the internal affairs of governing Palestine have been extremely chaotic in recent years (especially after the death of their leader in 2004, Yasser Arafat) and this has been legitimately referred to as the Palestinian Civil War. Currently, the internal struggle has been between Fatah (the party of Arafat) and the more hard-line Hamas. After the death of Arafat, the US pushed for elections and were stunned along with the rest of the world when the Palestinians gave an enormous legislative victory to Hamas (the President was and still is Mahmoud Abbas, Arafat's successor within Fatah)</span><span class="Apple-style-span" style="line-height: 19px;"><span class="Apple-style-span" style="line-height: normal;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">. Much was discussed at the time about how militant and unhinged Hamas was and that they wanted to rid the planet of the state of Israel. This seemed somewhat justified at the time, but from what I have gathered it seems that they have become more of a mainstream movement that is at least somewhat interested in brokering a lasting peace with the Israelis (i.e. self-preservation). But immediately following the elections, the US government tried to isolate Hamas and continued giving financial aid to Fatah (as they had been doing for many years to s</span></span><span class="Apple-style-span" style="line-height: normal;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">upport the peace-making process...just an order of magnitude less than the aid to Israel). Today, the dispute over control of the Palestinian state is still largely unresolved.</span></span></span><br />
<span class="Apple-style-span" style="line-height: 19px;"><span class="Apple-style-span" style="line-height: normal;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><br />
</span> </span></span><br />
<span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">But that didn't stop the hostilities with Israel. The crisis was at a rolling boil in 2008-2009 with the 3-week war in Gaza. If you don't recall the images on the news at the time, it was absolutely horrific and mostly one-sided (Israel). Both sides have been accused of war crimes by the UN. </span><br />
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<span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">The recent aggressive maneuver by Israel (and the subject of this post...finally) is the expansion of Israeli settlements into disputed territories. One of the most fundamental disputes has been centered on the city of Jerusalem, especially East Jerusalem. This holy town is seen as both the spiritual and political capital of both the Israeli state and the Palestinian state. Suffice it to say, it's been battled over for many decades.</span><br />
<span class="Apple-style-span" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><img border="0" height="267" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiab3UGovIiTfHhTHyN3LpV_eGvEc7uk-P9hyphenhyphenqhhRcUpiFu3Rj5j4PX9yiI5yldKzTvITm89___NGlvjiTg_pje8Jl7DGY13fYZNf6CfjeLOFawnFb3boyjzhyphenhyphenqESRlKCcgL42K1BpEGyb0/s400/israel-palestine-map.jpg" width="400" /></span></span><br />
<span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><br />
</span> <br />
<span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">Now last week, our white-haired VP visited Israel to partake in the age-old American activity of attempting to jumpstart peace talks. And what happens? Well, he gets one big ol' Israeli middle finger when Israel's interior ministry announces that they will <span class="Apple-style-span" style="color: #3d85c6;">c</span></span><a href="http://www.nytimes.com/2010/03/10/world/middleeast/10biden.html"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><span class="Apple-style-span" style="color: #3d85c6;">onstruct 1,600 new housing units for Jews in East Jerusalem</span></span></a><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">. Now, Prime Minister Benjamin Netanyahu was clearly embarrassed by this announcement right in the middle of the Biden visit. You see, Netanyahu used to be seen as a fairly reasonable politician back when he was Prime Minister the first time from 1996 to 1999. But the Israeli government has shifted to the right in the last several years and in response he has had to shift many of his stances to satisfy the right-wing contingency who are hell-bent on gobbling up more and more former Palestinian land.</span><br />
<span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><br />
</span> <br />
<span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">So the Obama administration is predictably pissed-off about this huge "Fuck you" that just happened in Biden's face. They said reasonable things like "we condemn the decision" and Biden showed up 90 minutes late to a dinner with Netanyahu as payback. Wow...that's pretty ballsy.</span><br />
<span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><br />
</span> <br />
<span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">And then what do we hear from the uber-Pro-Israeli politicians in our Congress </span><a href="http://www.cbsnews.com/8301-503544_162-20000558-503544.html"><span class="Apple-style-span" style="color: black;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">(<span class="Apple-style-span" style="color: #3d85c6;">and our favorite former politician from Alaska</span>)</span></span></a><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">? Essentially, they criticized Biden for being too harsh in his rhetoric and that this faux-controversy manufactured by an "opportunistic" Obama administration would dramatically strain the relationship between Israel and the US. This is all too familiar of a reaction from a bunch of politicians who have pledged an unwavering allegiance to Israel no matter what kind of aggressive actions that they launch. Any sign of even criticizing Israel for being over the line is seen as anti-semitic and dangerous to American security. George Washington in his farewell address in 1796 had some pertinent advice for this exact situation (h/t to </span><a href="http://www.blogger.com/"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><span id="goog_1268875165229"></span><span class="Apple-style-span" style="background-color: white;"><span class="Apple-style-span" style="color: #3d85c6;">Glenn</span></span><span id="goog_1268875165230"></span></span></a><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">):</span><br />
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<div style="border-bottom-width: 0px; border-color: initial; border-left-width: 0px; border-right-width: 0px; border-style: initial; border-top-width: 0px; clear: none; font-style: inherit; font-weight: inherit; font: normal normal normal 1.3em/1.5em georgia, serif; margin-bottom: 1em; margin-left: 16px; margin-right: 0px; margin-top: 1em; outline-color: initial; outline-style: initial; outline-width: 0px; padding-bottom: 0px; padding-left: 16px; padding-right: 0px; padding-top: 0px; vertical-align: baseline;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><span class="Apple-style-span" style="font-size: medium;">Observe good faith and justice towards all nations; cultivate peace and harmony with all. Religion and morality enjoin this conduct; and can it be, that good policy does not equally enjoin it? . . . . .</span></span></div><div style="border-bottom-width: 0px; border-color: initial; border-left-width: 0px; border-right-width: 0px; border-style: initial; border-top-width: 0px; clear: none; font-style: inherit; font-weight: inherit; font: normal normal normal 1.3em/1.5em georgia, serif; margin-bottom: 1em; margin-left: 16px; margin-right: 0px; margin-top: 1em; outline-color: initial; outline-style: initial; outline-width: 0px; padding-bottom: 0px; padding-left: 16px; padding-right: 0px; padding-top: 0px; vertical-align: baseline;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><span class="Apple-style-span" style="font-size: medium;">In the execution of such a plan, </span></span><strong><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><span class="Apple-style-span" style="font-size: medium;">nothing is more essential</span></span></strong><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><span class="Apple-style-span" style="font-size: medium;"> than that permanent, inveterate antipathies against particular nations, and </span></span><strong><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><span class="Apple-style-span" style="font-size: medium;">passionate attachments for others, should be excluded</span></span></strong><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><span class="Apple-style-span" style="font-size: medium;">; and that, in place of them, just and amicable feelings towards all should be cultivated. </span></span><strong><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><span class="Apple-style-span" style="font-size: medium;">The nation which indulges towards another a habitual hatred or a habitual fondness is in some degree a slave.</span></span></strong></div><div style="border-bottom-width: 0px; border-color: initial; border-left-width: 0px; border-right-width: 0px; border-style: initial; border-top-width: 0px; clear: none; font-style: inherit; font-weight: inherit; font: normal normal normal 1.3em/1.5em georgia, serif; margin-bottom: 1em; margin-left: 16px; margin-right: 0px; margin-top: 1em; outline-color: initial; outline-style: initial; outline-width: 0px; padding-bottom: 0px; padding-left: 16px; padding-right: 0px; padding-top: 0px; vertical-align: baseline;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><span class="Apple-style-span" style="font-size: medium;">It is a slave to its animosity or to its affection, either of which is sufficient to lead it astray from its duty and its interest. . . .</span></span></div><div style="border-bottom-width: 0px; border-color: initial; border-left-width: 0px; border-right-width: 0px; border-style: initial; border-top-width: 0px; clear: none; font-style: inherit; font-weight: inherit; font: normal normal normal 1.3em/1.5em georgia, serif; margin-bottom: 1em; margin-left: 16px; margin-right: 0px; margin-top: 1em; outline-color: initial; outline-style: initial; outline-width: 0px; padding-bottom: 0px; padding-left: 16px; padding-right: 0px; padding-top: 0px; vertical-align: baseline;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><span class="Apple-style-span" style="font-size: medium;">So likewise, </span></span><strong><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><span class="Apple-style-span" style="font-size: medium;">a passionate attachment of one nation for another produces a variety of evils.</span></span></strong><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><span class="Apple-style-span" style="font-size: medium;"> Sympathy for the favorite nation, facilitating the illusion of an imaginary common interest in cases where no real common interest exists, and infusing into one the enmities of the other, </span></span><strong><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><span class="Apple-style-span" style="font-size: medium;">betrays the former into a participation in the quarrels and wars of the latter without adequate inducement or justification.</span></span></strong></div><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">Bottom line is that no matter how good of a democracy Israel is or how enlightened their population is, it is an absolutely tragic mistake to have this much unconditional allegiance to a country that engages in terrible and unreasonable hostilities in a powder-keg of a region.</span><br />
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<span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">And now for the good news. It seems like </span><a href="http://www.salon.com/news/israel/index.html?story=/news/feature/2010/03/17/bacevich_on_petraeus_israel"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><span class="Apple-style-span" style="color: #3d85c6;">some in the military are finally starting to get this message</span></span></a><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"> as revealed by a </span><a href="http://mideast.foreignpolicy.com/posts/2010/03/14/the_petraeus_briefing_biden_s_embarrassment_is_not_the_whole_story"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><span class="Apple-style-span" style="color: #3d85c6;">recent article in Foreign Policy magazine</span></span></a><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"> (another highly recommended read). Our ever-popular Commander of Central Command, General David Petraeus, was briefed back in mid-January by some senior military officers who made the case that Arab leaders throughout the Middle East (on whom we are desperately relying to keep the peace and help with our "War on Terror") are becoming more and more disenfranchised with the U.S. over our inability to stand up to Israel. They also argued that Israel's unwillingness to stop settlements and other unreasonable acts was jeopardizing the U.S.'s standing with Arab leaders. It appears that Petraeus may have been listening. And despite the power of the Israel lobby in Congress, the military lobby absolutely trumps it. If the Obama administration can make a strong argument that Israeli policies are actually making our troops less safe, then we may see things change. I guess we'll have to wait and find out.</span><br />
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<span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">And y'know...as far as the whole Israel-Palestine conflict goes, it really all comes down to the same fundamental question that has been thrown around for millennia in the region...Who is God? Both sides of this epic conflict have exacted terrible and despicable pain and suffering on their foes all in the name of their God. How can we possibly look at that fundamental question as a country and take sides?</span><br />
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<span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">Final thought...All I'm asking is that our political discussions about the Israel-Palestine conflict better reflect the Op-Ed columns in Israeli newspapers instead of this hyper-sensitivity to calling people anti-semites for any kind of critical thought against Israeli policies. Is that so hard?</span><br />
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<span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">For more on the attached map, see </span><a href="http://www.salon.com/news/opinion/feature/2010/03/16/palestine_history/index.html"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><span class="Apple-style-span" style="color: #3d85c6;">here</span></span></a><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">.</span>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-6935319911718206450.post-72979867084821383572010-03-17T22:05:00.002-05:002010-03-18T07:40:52.916-05:00Caveat: Some things are black and white CONTINUEDDaniel Larison had another <a href="http://www.amconmag.com/larison/2010/03/16/complexity-and-simplification/">great column</a> in response to Ross Douthat's response to Larison (related to what I wrote about the other day). Essentially, his main beef with Ross is that you can't criticize Hollywood for using a cognitive shortcut by defending a horrible and much more consequential decision by the U.S. government that relied on it's own cognitive shortcut. Excellent.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-6935319911718206450.post-25422157877633867132010-03-15T22:13:00.000-05:002010-03-15T22:13:44.409-05:00Caveat: Some things are black and whiteSo the day after I start a blog that is intended to criticize the growing use of cognitive shortcuts, I see an <a href="http://www.nytimes.com/2010/03/15/opinion/15douthat.html">Op-Ed in the NY Times by Ross Douthat</a> that does this very thing:<br />
<blockquote>Our nation might be less divided, and our debates less poisonous, if more artists were capable of showing us the ironies, ambiguities and tragedies inherent in our politics — rather than comforting us with portraits of a world divided cleanly into good and evil.</blockquote>At first glance, you might think that Ross could easily be my wingman in the effort to denounce the use of the cognitive shortcut; to try and stop people from thinking so much in pure black and white terms. You'd be wrong, however.<br />
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What Ross was arguing about (and I encourage you to read the whole thing) is that Hollywood, and especially the new Matt Damon action flick <i>The Green Zone</i>, is just being too unfair and unforgiving to the Bush administration and their hawkish friends for the whole Iraq situation. He argues that the anti-Iraq war Bush critics are being too overly simplistic and that a civilized discussion about the decision to invade Iraq should be much more nuanced.<br />
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So how could a guy who started a blog called Cognitive Longcuts argue against that, you ask? Well, I think the <a href="http://www.amconmag.com/larison/2010/03/14/we-wouldnt-want-to-be-simplistic-and-naive-now-would-we/">reaction to Ross' piece from Daniel Larison of <i>The American Conservative</i></a> pretty much sums it up (the whole body-slam of a take-down is highly recommended reading):<br />
<blockquote>Yes, the problem might be that we do not have artists capable of rendering contemporary architects of a war of aggression that was based on shoddy intelligence, ideological fervor and deceit in a sufficiently subtle, even-handed manner. If only Hollywood were better at portraying the depth and complexity of people who unleashed hell on a nation of 24 million people out of an absurd fear of a non-existent threat! Life is so unfair to warmongers, is it not? Then again, the reason our debates are so poisonous and our nation so divided might have something to do with the existence of utterly unaccountable members of the political class that can launch such a war, suffer no real consequences, and then reliably expect to be defended as “decent” and “well-intentioned” people who made understandable mistakes. The unfortunate truth of our existence is that villains do not have to come out of central casting for comic book movies. They are ordinary, “decent” people who commit grave errors and terrible crimes for any number of reasons. Many great evils have found their origins in a group’s belief that they were doing the right thing and were therefore entitled and permitted to use extraordinary means.</blockquote>Ouch! He goes on to explain that yes, in general, it is important to appreciate nuance and complexity in political arguments but when you are defending an action (i.e., the invasion and occupation of Iraq) that essentially occurred because of one hugely consequential set of cognitive shortcuts ("good vs evil", "with us or against us") based on a completely unfounded fear of non-existent weapons of mass destruction, the whole nuance and complexity point goes out the window.<br />
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So okay...what does this mean for what I'm trying to accomplish here. Well, it turns out that some things are pretty black and white. In the USA (and other democratic countries, of course) we have a profound respect for the rule of law and our system of justice that protect and uphold the universal rights of all humans. In any political discussion, the notion that you are for this system is a given. It is the very foundation of our country; inscribed in our most important founding documents - the Declaration of Independence ("We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.") and the Constitution ("We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.") These basics are fundamental to our society and are not negotiable.<br />
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Now I am going to avoid a lengthy discussion of the legality of the Iraq war (even though I largely agree with those that have concluded that it was illegal according to international law) but instead I would just argue that the invasion and occupation of Iraq along with the whole War on Terror are completely counter to the fundamental principles of liberty and justice. I'll be exploring that topic much more in the future but, for now, I'll let James Madison explain:<br />
<blockquote>Of all the enemies to public liberty war is, perhaps, the most to be dreaded, because it comprises and develops the germ of every other. War is the parent of armies; from these proceed debts and taxes; and armies, and debts, and taxes are the known instruments for bringing the many under the domination of the few. In war, too, the discretionary power of the Executive is extended; its influence in dealing out offices, honors, and emoluments is multiplied : and all the means of seducing the minds, are added to those of subduing the force, of the people. The same malignant aspect in republicanism may be traced in the inequality of fortunes, and the opportunities of fraud, growing out of a state of war, and in the degeneracy of manners and of morals, engendered by both. No nation could preserve its freedom in the midst of continual warfare.</blockquote>Those words were written over 200 years ago and, yet, today they could not be any more poignant as we are still very much in the middle of a war based squarely on unapologetic deceit and irrational fear.<br />
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So to conclude, too many Ross Douthat's out there may seem like they are all for decreasing the use of the cognitive shortcut so that we can have a more civilized political discourse. Talking heads in the media love to spout about the Fairness Doctrine, which means giving equal time to both Democratic and Republican views (as if those are the only two possible views to have). They worship the idea that the best policy lies somewhere half-way in between these two "reasonable" views. But sometimes the views that some are arguing in favor of are so blatantly counter to our bedrock values and principles as Americans that they should be clearly reminded of that. Some things are black and white.Unknownnoreply@blogger.com0