Sunday, September 28, 2008

Strange... think of a world without Paul Newman. One of the few movie stars who also happened to be a very good actor.

Go see Harper. It may not be one of his best movies, but it is one of the most fun.

Also, try Nobody's Fool. Small, almost forgotten, but excellent.

Thursday, September 25, 2008

Political Theater

New York Times: Talks Implode During Day of Chaos:

Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the Senate banking committee, denounced the session as “a rescue plan for John McCain,” and proclaimed it a waste of precious hours that could have been spent negotiating.

But a top aide to Mr. Boehner said it was Democrats who had done the political posturing. The aide, Kevin Smith, said Republicans revolted, in part, because they were chafing at what they saw as an attempt by Democrats to jam through an agreement on the bailout early Thursday and deny Mr. McCain an opportunity to participate in the agreement.

Funny, but by trying to refute the Democrats' point, Mr. Smith confirmed it. If an agreement had effectively been reached, then what did it matter if John McCain was there to participate in it? Answer: It didn't, unless the whole thing was simply a set up to make it look like he had participated.

Tuesday, September 23, 2008

Big Shitpile, Indeed

I thought that these few paragraphs in a New York Times story did a very good job of encapsulating the risk in giving the US Treasure $700,000,000,000 in the form of a blank check:

The financial system got to its dangerous perch by betting extravagantly on real estate. When housing prices began plummeting and borrowers stopped making payments, financial institutions found themselves with huge inventories of bad loans. Not simple loans, but complex investments created by pooling millions of mortgages together and then slicing them into pieces. These were the investments that Wall Street bought, sold and borrowed against in cooking up the money it poured into housing.

The trouble is that these investments are so intertwined and complex that no one seems able to figure out what they are worth. So no one has been willing to buy them. This is why banks have been in lockdown mode: with mystery enshrouding both the value of their assets and their future losses, banks have held tight to their remaining dollars, depriving the economy of capital.

Now, the Treasury aims to clear the fog by buying up these investments. But their value is as mysterious as ever.

“There’s a tendency for people to think these are stocks and bonds and you know what the price is,” said Bruce Bartlett, a former White House economist under President Reagan. “The problem is people are operating in a world in which nobody knows what the hell is going on. There’s some na├»ve assumptions about how this would function.”

If Mr. Paulson pays the market rate — whatever that is — that presumably would not be enough to persuade banks to sell. Otherwise, they would have sold already. For the plan to work, Treasury has to pay a premium.

“It’s a straight subsidy to financial institutions,” said Martin Baily, a former chairman of the Council of Economic Advisers in the Clinton administration, and now a senior fellow at the Brookings Institution. “You’re essentially giving them money.”

We're going to have to pay top dollar for a lot of junk that no one wants in order to entice the banks to give up the junk that they don't want.


Friday, September 19, 2008

Invisible Hand? What Invisible Hand?

From the New York Times: Bush Officials Urge Swift Action on Rescue Powers
WASHINGTON — The Bush administration, moving to prevent an economic cataclysm, urged Congress on Friday to grant it far-reaching emergency powers to buy hundreds of billions of dollars in distressed mortgages despite many unknowns about how the plan would work.

Henry M. Paulson Jr., the Treasury secretary, made it clear that the upfront cost of the rescue proposal could easily be $500 billion, and outside experts predicted that it could reach $1 trillion.

We. Are. So. Fucked.

Friday, September 05, 2008

Now It Begins

"With the end of the nominating process, American politics leaves logic behind.

"If the conventions have done their work well, as normally they do, then the American people are offered two men of exceptional ability. Now they must choose. And they must choose in a primitive and barbaric trial. Although the contest is bloodless, the choice that ends the contest is nonetheless as irrational as any of the murderous or conspiratorial choices of leadership made elsewhere in great states. Until Plato's republic of philosophers is established, leaders will always be chosen by other men, not out of reason, but out of instinct and trust. In America, all citizens help choose."

Theodore H. White
"The Making of the President 1960"