As banks falter, more critics call for receivership

By Michael Kranish Globe Staff / March 7, 2009

WASHINGTON - With major banks flailing and criticism swelling in some quarters over how President Obama is handling the crisis, a growing chorus of economists, former top government officials, and analysts is calling on the Obama administration to put the institutions into federal receivership and closely follow the model of how the government dealt with the savings and loan crisis.

They avoid the word "nationalization," but say that some major institutions that have received billions in taxpayer money might otherwise be insolvent.

French firm touts air-powered car at Geneva show

The Associated Press

Wednesday, March 4, 2009

GENEVA: Consumers have grown used to the idea of cars powered with alternative fuels, from hydrogen to electricity. But running a car on air?

French firm MDI says it can be done, and used the Geneva Auto Show to display a bubble-shaped 3-wheeler it plans to start rolling out later this year.

The AirPod can travel up to 137 miles (220 kilometers) on a single 46-gallon (175-liter) tank of compressed air, producing zero emissions on the road, MDI spokesman Sebastien Braud said Wednesday.

A Bank Bailout That Works

by Joseph E. Stiglitz

The news that even Alan Greenspan and Senator Chris Dodd suggest that bank nationalization may be necessary shows how desperate the situation has become. It has been obvious for some time that a government takeover of our banking system--perhaps along the lines of what Norway and Sweden did in the '90s--is the only solution. It should be done, and done quickly, before even more bailout money is wasted.

The problem with America's banks is not just one of liquidity. Years of reckless behavior, including bad lending and gambling with derivatives, have left them, in effect, bankrupt. If our government were playing by the rules--which require shutting down banks with inadequate capital--many, if not most, banks would go out of business. But because faulty accounting practices don't force banks to mark down all their assets to current market prices, they may nominally meet capital requirements--at least for a while.

War on the Rich?

The bogus GOP claim that Obama is trying to bleed wealthy Americans.

By Daniel Gross
Posted Thursday, March 5, 2009, at 6:09 PM ET

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To hear conservatives tell it, you'd think mobs of shiftless welfare moms were marauding through the streets of Greenwich and Palm Springs, lynching bankers and hedge-fund managers, stringing up shopkeepers, and herding lawyers into internment camps. President Obama and his budgeteers, they say, have declared war on the rich.

On Tuesday, Washington Post columnist (and former Bush speechwriter) Michael Gerson argued in an op-ed that "Obama chose a time of recession to propose a massive increase in progressivity—a 10-year, trillion-dollar haul from the rich, already being punished by the stock market collapse and the housing market decline." The plans are so radical, "there will not be enough wealthy people left to bleed." CNBC's Larry Kudlow wrote that "Obama is declaring war on investors, entrepreneurs, small businesses, large corporations, and private-equity and venture-capital funds." Other segments on the financial news network warn of a tax on the rich, a war on the wealthy. My personal favorite was a piece from ABCNews.com, which had to be rewritten and reposted because the original was so poorly done. (The revised version isn't much better.) It quotes a dentist who is contemplating reducing "her income from her current $320,000 to under $250,000 by having her dental hygienist work fewer days and by treating fewer patients. [That way, she] would avoid paying higher taxes on the $70,000 that would be subject to increased taxation if Obama's proposal is signed into law."

Commentary: A shining city on a hill can't have dungeons in its basements

By Joseph L. Galloway | McClatchy Newspapers

It turns out that even the most paranoid among us were right to be afraid of what George W. Bush’s White House and Justice Department were up to in the days and months after the terrorist attacks of 9/11.

This week the Justice Department declassified and released two memos and seven so-called legal opinions that, taken together, informed President Bush that, as a wartime chief executive, he had unfettered dictatorial powers.

Paul Krugman: The Big Dither

Last month, in his big speech to Congress, President Obama argued for bold steps to fix America’s dysfunctional banks. “While the cost of action will be great,” he declared, “I can assure you that the cost of inaction will be far greater, for it could result in an economy that sputters along for not months or years, but perhaps a decade.”

Many analysts agree. But among people I talk to there’s a growing sense of frustration, even panic, over Mr. Obama’s failure to match his words with deeds. The reality is that when it comes to dealing with the banks, the Obama administration is dithering. Policy is stuck in a holding pattern.

Obama, Change And China, Part 1

The song stays the same
By Henry C K Liu

Foreign policy is fundamentally based on national interests that change only slowly and infrequently, except under crisis situations. Still, even in normal times, electoral changes of administration inevitably bring changes in style and nuance in the formulation and implementation of foreign policy within a context of continuity.

Yet the Barack Obama administration has come into power at a time of unprecedented and severe global financial and economic crises that have profound implications in US national interests and US position in a changing geo-economic-political world order. Crisis conditions that are crying out for change are enhancing the new president's ability to live up to his campaign slogan of "Obama for Change" not just domestically but also in foreign policy. The question is whether Obama's campaign for change can survive his politics of change.

Good Riddance, Yucca Mountain

Obama pulls the plug on the nuclear industry's last best hope.

By Timothy Noah
Posted Tuesday, March 3, 2009, at 7:49 PM ET

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We've seen a lot of hyperbole lately about the significance of a presidency that's all of six weeks old. I hesitate to add to it. But the following statement happens to be the literal truth.

The ramifications of the 2008 presidential election will be felt for 1 million years.

One million years is a long time. A million years ago, Homo erectus (who looked like this, not this) was getting ready to invent the hand axe and discover fire. Yet 1 million years is the length of time that the Bush administration was preparing to guarantee (apparently to our successor hominid species) the safe storage of spent nuclear fuel rods inside Nevada's Yucca Mountain, in a waste facility whose approval had been making its way through three branches of government for a comparatively brief 32 years. The goal was to start dumping this high-level nuclear waste inside Yucca Mountain in 2020.

A Talk With Dean Baker: "We Really Need Much More Stimulus"

By Leo Gerard

Created 03/04/2009 - 9:46am

Summary:

I ask the economist who has just released a new book on the collapse of the "bubble economy" how he saw the crash coming when few others did, and what more the Obama administration and Congress should do to shop the economic free fall.

Leo W. Gerard: Economist James K. Galbraith, the Lloyd M. Bentsen Jr. Chair in Government/Business Relations at the University of Texas, recently told Deborah Solomon of the New York Times that you are “the person with the most serious claim” for predicting the onslaught of the current credit disaster.
The promo for your most recent book, "Plunder and Blunder: The Rise and Fall of the Bubble Economy" (PoliPoint Press, 2009), says the fall of the bubble economy was “completely predictable.” But you were standing nearly alone out there for some time yelling, “The collapse is coming, the collapse is coming.”

When did you get the first inkling that the collapse was impending and what did that feel like?

Thomas Frank: Conservatives and Their Pity Parties

Out of power and out of touch, they feast on stale slogans and whine.

By THOMAS FRANK

Just as the financial crisis has created toxic assets and "zombie" financial institutions, so has it transformed conservatism into a movement of the living dead. Its partisans cling to a now-toxic portfolio of discredited notions, rhetoric, gestures and strategies. They lumber comically on, their only goal being to obstruct efforts to save the economy from catastrophe.

These days the zombie right is rallying around CNBC commentator Rick Santelli, who won fame last month when he railed against a rescue of the economy's "losers."

Zombie Banks Are Devouring Our Public Money with No End in Sight

By Bill Moyers, Bill Moyers Journal
Posted on March 4, 2009, Printed on March 6, 2009
http://www.alternet.org/story/129732/

The following is a transcript from the Feb. 27 edition of Bill Moyers Journal.

Remember when economists poked fun at Ronald Reagan's voodoo economics? Well, now they are dead serious about so-called "zombie banks" - financial giants like Citigroup and Bank of America whose debts are greater than their assets, with stock worth less than zero, and they're only able to stay alive by devouring federal bailout bucks. Those banks, in turn, are terrified by talk that the government might come in and nationalize them. Well, some critics ask, why not? Given all this, I wanted to talk to a man with a clear-eyed perspective on the worldwide economic impact of this banking crisis.

Robert Johnson was once the Chief Economist of the Senate Banking Committee under the chairmanship of that fiercest of budget pit-bulls, the late Wisconsin Senator William Proxmire.

Hidden Pension Fiasco May Foment Another $1 Trillion Bailout

by David Evans

March 3 (Bloomberg) -- The Chicago Transit Authority retirement plan had a $1.5 billion hole in its stash of assets in 2007. At the height of a four-year bull market, it didn’t have enough cash on hand to pay its retirees through 2013, meaning it was underfunded to the tune of 62 percent.

The CTA, which manages the second-largest public transit system in the U.S., had to hope for a huge contribution from the Illinois state legislature. That wasn’t going to happen.

Then the authority found an answer.

Extraordinary Measures

A new memo shows just how far the Bush administration considered going in fighting the war on terror.

Michael Isikoff
Newsweek Web Exclusive

In the aftermath of the 9/11 attacks, the Justice Department secretly gave the green light for the U.S. military to attack apartment buildings and office complexes inside the United States, deploy high-tech surveillance against U.S. citizens and potentially suspend First Amendment freedom-of-the-press rights in order to combat the terror threat, according to a memo released Monday.

Many of the actions discussed in the Oct. 23, 2001, memo to then White House counsel Alberto Gonzales and Secretary of Defense Donald Rumsfeld's chief lawyer, William Haynes, were never actually taken.

Fowl soil additive breaks down crude oil

It is an unlikely application, but researchers in China have discovered that chicken manure can be used to biodegrade crude oil in contaminated soil. Writing in the International Journal of Environment and Pollution the team explains how bacteria in chicken manure break down 50% more crude oil than soil lacking the guano.

Bello Yakubu, Huiwen Ma, and ChuYu Zhang of Wuhan University, China, point out that contamination of soil by crude oil occurs around the world because of equipment failure, natural disasters, deliberate acts, and human error. However, conventional approaches to clean-up come with additional environmental costs. Detergents, for instance, become pollutants themselves and can persist in the environment long after any remediation exercise is complete.

4 Tons of Fertilizer Stolen From Store

By Martin Weil
Washington Post Staff Writer
Monday, March 2, 2009; B03

At least four tons of fertilizer was stolen over the weekend in Frederick, city police said. No motive had been determined.

A ton of urea and three tons of other fertilizer were taken from the Southern States store on South Street between Saturday night and Sunday morning, police said.

According to police, the fertilizer was contained for the most part in white 50-pound bags with a company logo.

Atrios: Bad Democrats

Contact Ellen Tauscher's office and communicate your support for bankruptcy cramdown legislation.

Tomorrow, the House will vote on Representative Conyer's bankruptcy cram down. The whip count is unclear right now, but some Blue Dogs and New Democrats, including Melissa Bean (D-IL), Dennis Moore (D-KS), and New Democratic chair Ellen Tauscher (D-CA), are working on behalf of the financial services industry to water down the legislation.

Bloggers charge 'Tea Party' anti-stimulus protests are corporate front

Muriel Kane
Published: Sunday March 1, 2009

When a few hundred protesters showed up in each of some 30 or 40 cities nationwide on Friday to object to President Obama's stimulus plan, they claimed that the well-coordinated protests had arisen spontaneously in response to a tirade against mortgage bailouts, delivered just over a week earlier, on February 19, by CNBC's Rick Santelli.

Paul Krugman: Revenge of the Glut

Remember the good old days, when we used to talk about the “subprime crisis” — and some even thought that this crisis could be “contained”? Oh, the nostalgia!

Today we know that subprime lending was only a small fraction of the problem. Even bad home loans in general were only part of what went wrong. We’re living in a world of troubled borrowers, ranging from shopping mall developers to European “miracle” economies. And new kinds of debt trouble just keep emerging.

How did this global debt crisis happen? Why is it so widespread? The answer, I’d suggest, can be found in a speech Ben Bernanke, the Federal Reserve chairman, gave four years ago. At the time, Mr. Bernanke was trying to be reassuring. But what he said then nonetheless foreshadowed the bust to come.

Stimulus funds to benefit homeowners with energy-efficiency

By Jim Downing | The Sacramento Bee

In Santos Espinosa's small beige house near Arden Fair mall last week, a crew installed fluorescent lightbulbs, swapped out an old water heater and filled drafty gaps beneath doors.

For thousands of Sacramento-area households, this sort of work stands to be the biggest direct benefit of the federal economic stimulus package. The bill pumps at least $20 billion into energy efficiency, by far the largest such investment in U.S. history.

New GOP Lie: Regulations are the Problem

Trish | Mar. 1, 2009

Jon already noted the falsity of Gov. Bobby Jindal’s (R-La.) assertion that regulations were responsible for the Bush administration’s failed response to Hurricane Katrina. So why did Jindal, who later admitted things didn’t exactly happen the way he said they did in his rebuttal to Pres. Obama’s “state of the union” speech, go there?

Rick Santelli’s Planted Rant ?

I was interviewed by several journalists last week about Rick Santelli’s Rant — my exact quote was it had a “Faux” feel to it. (I haven’t seen it in print yet)

What was so odd about this was that Santelli is usually on the ball; we usually agree more often than we disagree. He’s been repsosible for some of the best moments on Squawk Box.

But his rant somehow felt wrong. After we’ve pissed through over $7 trillion dollars in Federal bailouts to banks, brokers, automakers, insurers, etc., this was a pittance, the least offensive of all the vast sums of wasted money spent on “losers” to use Santelli’s phrase. It seemed like a whole lot of noise over “just” $75 billion, or 1% of the rest of the total ne’er-do-well bailout monies.

It turns out that there may be more to the story then originally met the eye, according to (yes, really) Playboy magazine.

Marine One blueprints and avionics leaked to Iran through peer-to-peer network

Thanks to a defense contractor's errant use of a peer-to-peer file-sharing network, President Obama's helicopter may not be as safe as it looks.

A Pittsburgh-area company that monitors peer-to-peer networks accessed with file-sharing software like LimeWire and Napster says it has identified a potentially serious security breach involving Marine One and an IP address in Tehran, Iran.

In Geithner We Trust Eludes Treasury as Market Fails to Recover

By Yalman Onaran and Michael McKee

Feb. 25 (Bloomberg) -- It was 2004 and Tim Geithner, president of the Federal Reserve Bank of New York, had a message for the Federal Open Market Committee in Washington. He told his 18 colleagues gathered around the long mahogany table that a clearinghouse was needed to monitor risks in the burgeoning $5 trillion market for credit-default swaps -- the over-the-counter derivatives that would later spin out of control and help take down Wall Street.

In a move that may have foreshadowed his role as President Barack Obama’s Treasury secretary, Geithner over the next two years nudged financial firms to voluntarily clear a backlog of swap trades. They stopped short of creating a clearinghouse to bring more transparency to the market.

Frank Rich: The Ecstasy and the Agony

BARACK OBAMA must savor the moment while he can. It may never get better than this.

As he stood before Congress on Tuesday night, the new president was armed with new job approval percentages in the 60s. After his speech, the numbers hit the stratosphere: CBS News found that support for his economic plans spiked from 63 percent to 80. Had more viewers hung on for the Republican response from Bobby Jindal, the unintentionally farcical governor of Louisiana, Obama might have aced a near-perfect score.

Propping Up a House of Cards

By JOE NOCERA

Next week, perhaps as early as Monday, the American International Group is going to report the largest quarterly loss in history. Rumors suggest it will be around $60 billion, which will affirm, yet again, A.I.G.’s sorry status as the most crippled of all the nation’s wounded financial institutions. The recent quarterly losses suffered by Merrill Lynch and Citigroup — “only” $15.4 billion and $8.3 billion, respectively — pale by comparison.

At the same time A.I.G. reveals its loss, the federal government is also likely to announce — yet again! — a new plan to save A.I.G., the third since September. So far the government has thrown $150 billion at the company, in loans, investments and equity injections, to keep it afloat. It has softened the terms it set for the original $85 billion loan it made back in September. To ease the pressure even more, the Federal Reserve actually runs a facility that buys toxic assets that A.I.G. had insured. A.I.G. effectively has been nationalized, with the government owning a hair under 80 percent of the stock. Not that it’s worth very much; A.I.G. shares closed Friday at 42 cents.