28 March 2009

Bubblespeak

The Orwellian language of Wall Street finds its way to the Treasury Department.

By Daniel Gross

In his timeless 1946 essay "Politics and the English Language," George Orwell condemned political rhetoric as a tool used "to make lies sound truthful" and "to give an appear­ance of solidity to pure wind." Were he alive today, Orwell might well be moved to pen a com­panion piece on the use of financial lingo. Remember those toxic assets? The poorly performing mortgages and collateralized debt obligations festering on the books of banks that made truly exe­crable lending decisions? In the latest federal bank rescue plan, they've been transformed into "legacy loans" and "lega­cy securities"—safe for professional in­vestors to purchase, provided, of course, they get lots of cheap government credit.

Jim Webb: The National Criminal Justice Commission Act of 2009

The National Criminal Justice Commission Act of 2009 that I introduced in the Senate on March 26, 2009 will create a blue-ribbon commission to look at every aspect of our criminal justice system with an eye toward reshaping the process from top to bottom. I believe that it is time to bring together the best minds in America to confer, report, and make concrete recommendations about how we can reform the process.

Paul Krugman: The Market Mystique

On Monday, Lawrence Summers, the head of the National Economic Council, responded to criticisms of the Obama administration’s plan to subsidize private purchases of toxic assets. “I don’t know of any economist,” he declared, “who doesn’t believe that better functioning capital markets in which assets can be traded are a good idea.”

Leave aside for a moment the question of whether a market in which buyers have to be bribed to participate can really be described as “better functioning.” Even so, Mr. Summers needs to get out more. Quite a few economists have reconsidered their favorable opinion of capital markets and asset trading in the light of the current crisis.

27 March 2009

Reform is needed. Reform is in the air. We can't afford to fail

The task is to build a new financial architecture. If we flunk it, the pain will strike most cruelly in the world's poorest countries

Joseph Stiglitz
The Guardian, Friday 27 March 2009

The financial crisis that began in America's sub-prime mortgage market has now become a global recession – with growth projected to be a negative 1.5%, the worst performance since the Great Depression. Even countries that had done everything right are seeing marked declines in growth rates, and even deep recessions. And much of the most acute pain will be felt by developing countries.

A UN commission of experts on reforms of the international monetary and financial system, which I chair, has just published its preliminary report. It focuses especially on the impact of the crisis on developing countries and the poor everywhere, which is likely to be severe. An estimated 30 million more people will be unemployed in 2009 compared to 2007. The increase could even reach 50 million. Progress in reducing poverty may be halted. The report warns that: "Some 200 million people, mostly in developing economies, could be pushed into poverty if rapid action is not taken to counter the impact of the crisis."

Obama's Afghan Spaghetti Western

By Pepe Escobar

As the Barack Obama administration releases the details of its strategic review of Afghanistan's "good war", an acronym-plagued global public opinion is confronted with a semantic dilemma: what in the world is happening to George W Bush's "global war on terror" (GWOT), then slyly rebranded by the Pentagon as "The Long War" (TLW)?

It all started when a mid-level bureaucrat in the Obama administration's Office of Management and Budget (OMB) sent an e-mail to the Pentagon stressing the White House was finally axing GWOT and giving birth to the delightfully Orwellian Overseas Contingency Operations (OCO).

26 March 2009

Project For The Rehabilitation Of Neoconservatism

What do you do if your previous organization — and the ideology behind it — has become inextricably bound in the public’s imagination to one of the worst foreign policy blunders in American history? Obviously, shut it down, and start a new organization with a new name.

The Foreign Policy Initiative lists Robert Kagan, Bill Kristol, and Dan Senor on its board of directors, so no prizes for guessing what they’re about (more power, less appeasement, stronger wills.)

The Quiet Coup

The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.

Budget Deficits and Blow Up Dolls: It's the Economy Stupid!

In the movie Lars and the Real Girl, the main character imagines that a female blow-up doll is his fiancé. To humor Lars, his brother and sister-in-law go along with the charade. Over the course of the movie, more people are drawn into the circle, until eventually the whole town is treating Bianca the blow-up doll as one of its leading citizens.

This seems to pretty well describe the debate over the budget deficit, except it's not clear that many people realize it's a charade. The main story is that Lars' budget hawk counterparts are upset that the deficits projected for 2013 or 2019 are too large. They want President Obama to commit to spending cuts and/or tax increases in order to bring these deficits to levels they consider acceptable.

Obama Asks Volcker to Lead Panel on Tax-Code Overhaul

By Roger Runningen and Ryan J. Donmoyer

March 25 (Bloomberg) -- President Barack Obama is putting former Federal Reserve Chairman Paul Volcker in charge of a tax-code review aimed at closing loopholes, streamlining the law and generating revenue, budget Director Peter Orszag said.

Volcker, 81, who heads the president’s Economic Recovery Advisory Board, is being asked to take a look at the laws in an effort to rebalance the tax system.

The Real AIG Scandal: How the Game Is Rigged at Wall Street's Casino

By Lucy Komisar, AlterNet
Posted on March 26, 2009, Printed on March 26, 2009
http://www.alternet.org/story/133228/

There's nothing like a grandstanding member of Congress to deflect attention from the real issues at hand by throwing a few juicy bones to the masses.

Most legislators at a House Finance subcommittee hearing last week deftly avoided the real story of AIG's collapse. Instead, they homed in on the public relations disaster of hundreds of top AIG officials and staff getting $165 million (later revealed as over $218 million) in bonuses.

25 March 2009

Give credit to Timothy Geithner's new toxic asset plan

Give credit to Timothy Geithner's new toxic asset plan

Wednesday, March 25th 2009, 4:00 AM

For the economy to be viable, the financial system must be healthy. For this to occur, the system needs to be cleansed of its poorly performing loans and so-called toxic securities backed by loans. This way, once creditworthy institutions and individuals come to the market looking for capital to borrow, financial firms will be in a position to lend them money.

Secretary Timothy Geithner's new toxic asset plan is a serious step in the right direction in that it creates a public-private partnership to buy the troubled assets of financial firms - in other words, to do the necessary cleansing. Up until now, with all the government bailouts, the financial system has been barely treading water. With this plan, it will still be a hard swim, but, at least, there is a path to shore.

Larry Summers: Brilliant Mind, Toxic Ideas

According to most commentators, the president's press conference went a long way towards taking the spotlight off the roiling anger over AIG, bonuses, and Wall Street abuses -- and putting it back where the president wants it: on the imperative need to pass his budget.

But the best laid plans of our remarkable president may be laid to waste by a bank rescue plan that is the product of exhausted ideas put together by men far too beholden to Wall Street.

The Way of All Debt

By John Gray

Payback: Debt and the Shadow Side of Wealth
by Margaret Atwood

Toronto: House of Anansi, 230 pp., $15.95 (paper)

A perturbation arising from the American market in subprime mortgages has spread through the banking system to disrupt economic activity throughout the world. The pattern of cause and effect will be debated for many years, with historians asking when and how the global economy was set on the path that led to its current condition. Already there are some who trace the crisis to decisions of Alan Greenspan, chairman of the board of governors of the Federal Reserve from 1987 to 2006, when he responded to events such as the collapse in the late 1990s of a hedge fund, Long Term Capital Management, and the subsequent bursting of the dot-com bubble by creating a climate of easy borrowing, which in turn inflated another bubble in the housing market.

Others suggest that a change in the legal system of banking brought about by the repeal in 1999 of the Glass-Steagall Act of 1933, which had aimed to limit speculation by separating commercial and investment banking, created an environment that allowed reckless lending. Yet others explain the turmoil in world markets as a symptom of an endemic instability in the type of finance capitalism that has developed in America, Britain, and some other Western countries.

Thomas Frank: The 'Populists' Are Right About Wall Street

What's wrong with well-directed anger?

Social skills, extracurricular activities in high school pay off later in life

Phil Ciciora, News Editor
217-333-2177;pciciora@illinois.edu

CHAMPAIGN, Ill. — It turns out that being voted “Most likely to succeed” in high school might actually be a good predictor of one’s financial and educational success later in life.

According to a University of Illinois professor who studies the sociology of education, high school sophomores who were rated by their teachers as having good social skills and work habits, and who participated in extracurricular activities in high school, made more money and completed higher levels of education 10 years later than their classmates who had similar standardized test scores but were less socially adroit and participated in fewer extracurricular activities.

Pundits Gone Wild (in Dumping on Obama)

By David Corn | March 23, 2009 10:22 AM

Sitck a fork in it. Obama's presidency is done. He's lost the people. He's adrift. He's screwed the pooch.

Some pundits are already pronouncing the O Era a bust--or suggesting it's near the cliff's edge. In the White House press room, reporters routinely ask press secretary Robert Gibbs if the Obama White House has already lost its mojo. Over at The Weekly Standard, Fred Barnes has declared Obama's stint a "flailing presidency." Given that Barnes considers the Bush presidency one of the best in this country's long history, his success-o-meter may be in need of recalibration.

Congress Passes Wide-Ranging Bill Easing Bank Laws

An old article from 1999, on the repeal of Glass-Steagall...read it and weep--Dictynna

Congress approved landmark legislation today that opens the door for a new era on Wall Street in which commercial banks, securities houses and insurers will find it easier and cheaper to enter one another's businesses.

The measure, considered by many the most important banking legislation in 66 years, was approved in the Senate by a vote of 90 to 8 and in the House tonight by 362 to 57. The bill will now be sent to the president, who is expected to sign it, aides said. It would become one of the most significant achievements this year by the White House and the Republicans leading the 106th Congress.

We Need to Regulate the Financial Instruments That Took AIG Down

By George Soros, The Financial Times
Posted on March 25, 2009, Printed on March 25, 2009
http://www.alternet.org/story/133272/

In all the uproar over AIG, the most important lesson has been ignored. AIG failed because it sold large amounts of credit default swaps (CDS) without properly offsetting or covering their positions. What we must take away from this is that CDS are toxic instruments whose use ought to be strictly regulated: Only those who own the underlying bonds ought to be allowed to buy them. Instituting this rule would tame a destructive force and cut the price of the swaps. It would also save the U.S. Treasury a lot of money by reducing the loss on AIG's outstanding positions without abrogating any contracts.

CDS came into existence as a way of providing insurance on bonds against default. Since they are tradable instruments, they became bear-market warrants for speculating on deteriorating conditions in a company or country. What makes them toxic is that such speculation can be self-validating.

Do the Secret Bush Memos Amount to Treason? Top Constitutional Scholar Says Yes

By Naomi Wolf, AlterNet
Posted on March 25, 2009, Printed on March 25, 2009
http://www.alternet.org/story/133273/

In early March, more shocking details emerged about George W. Bush legal counsel John Yoo's memos outlining the destruction of the republic.

The memos lay the legal groundwork for the president to send the military to wage war against U.S. citizens; take them from their homes to Navy brigs without trial and keep them forever; close down the First Amendment; and invade whatever country he chooses without regard to any treaty or objection by Congress.

Liquid war: Welcome to Pipelineistan

By Pepe Escobar

What happens on the immense battlefield for the control of Eurasia will provide the ultimate plot line in the tumultuous rush towards a new, polycentric world order, also known as the New Great Game.

Our good ol' friend the nonsensical "global war on terror", which the Pentagon has slyly rebranded "the Long War", sports a far more important, if half-hidden, twin - a global energy war. I like to think of it as the Liquid War, because its bloodstream is the pipelines that crisscross the potential imperial battlefields of the planet. Put another way, if its crucial embattled frontier these days is the Caspian Basin, the whole of Eurasia is its chessboard. Think of it, geographically, as Pipelineistan.

24 March 2009

Glenn Greenwald: A Major Difference Between Conservatives and Progressives

One of the linchpins of the Bush presidency, especially during the first term (and well into the second, until he became a major political liability), was the lock-step uncritical reverence - often bordering on cult-like glorification - which the "conservative" movement devoted to the "Commander-in-Chief." An entire creepy cottage industry arose - led not by fringe elements but by right-wing opinion-making leaders - with cringe-inducing products paying homage to Bush as "The First Great Leader of the 21st Century" (John Podhoretz); our "Rebel-in-Chief" (Fred Barnes); "The Right Man" (David Frum); the New Reagan (Jonah Goldberg); "a man of extraordinary vision and brilliance approaching to genius" who is our "Big Brother" (John Hinderaker); and "the triumph of the seemingly average American man," the supremely "responsible" leader who, when there's a fire, will "help direct the rig to the right house and count the kids coming out and say, 'Where's Sally'?" (Peggy Noonan).

Fiscal Plan Fails both Markets and Taxpayers

by Joseph E. Stiglitz<

Let's be clear: President Barack Obama inherited an economy in freefall and could not possibly have turned things around in the short time since his election. Unfortunately, what he is doing is not enough.

The real failings in the Obama recovery program lie not in the stimulus package -- though it is too heavily weighted toward tax cuts, and much of it merely offsets cutbacks by states -- but in its efforts to revive financial markets.

Brain quirk could help explain financial crisis

With hindsight, the causes of the current global financial meltdown seem obvious, even predictable. Now, brain imaging offers one explanation for why so few investors challenged foolhardy fiscal advice.

Our brains raise few objections when presented with seemingly expert guidance, new research suggests.

Memo to the media: Where's W?

So how did we get to this point? Job losses in the hundreds of thousands every month, almost weekly bank failures, and 401(k)s at half their value from a year and a half ago. The media treat the question as a mystery that can be solved through scrutiny of the Obama administration's actions starting on January 20, 2009 -- an approach that is absurd on its face. The media's erasure of the Bush administration and its policies in their coverage of the economy has been so pervasive that they have given round-the-clock attention to the AIG bonus scandal for days on end with virtually no mention of the fact that it was the Bush administration that last fall approved billions of dollars in aid to AIG without requiring the company to nullify its bonus contracts.

“The Zombie Ideas Have Won”–Paul Krugman on $1 Trillion Geithner Plan to Buy Toxic Bank Assets

Treasury Secretary Timothy Geithner is preparing to unveil a plan today to purchase as much as $1 trillion in troubled mortgages and other assets from banks. The government is reaching out to hedge funds, private equity firms and sovereign wealth funds to help buy the toxic assets. The Obama administration has described the plan as a public-private partnership, but most of the actual money will be put up by the government. We speak with Nobel Prize-winning economist and New York Times columnist, Paul Krugman. [includes rush transcript]

Down the dark path

[...]

That's a little bit like the situation with the newly revealed, final US Treasury Secretary Timothy Geithner toxic asset recovery bank program. It may work. It may not. Whatever happens with its effectiveness, one thing is certain. US taxpayers are definitely going to be getting the chop, maybe you could even say they're getting it in the chops, as a result of its implementation and administration.

It has now been over a year since I advocated that the subprime and other mortgage-related debt securities that were depreciating away, as a result of falling real estate prices, in major banks' portfolios be somehow removed. (See And the band played on, Asia Times Online, March 6, 2008.)

23 March 2009

The Geithner Plan: Billions More for Failed Banks

The last-ditch effort to save Wall Street will hurt taxpayers and still require another big bailout down the line

by Dean Baker

Treasury secretary Timothy Geithner's latest bank bailout plan is another Rube Goldberg contraption intended to funnel taxpayer dollars to bankrupt banks, without being overly transparent about the process. The main mechanism is a government guarantee that would allow investors to buy junk with a 12-to-1 leverage ratio, where they only risk the downside on their own investment, not the borrowed money.

Ostensibly, this is supposed to reveal the "true" price for junk assets, as investors compete at auctions to buy assets under the new rules. But this story doesn't pass the laugh test. All we will really learn is what price investors are willing to pay for these junk assets when they are given a large subsidy from the government to buy them. In reality, this plan is a way to use taxpayer dollars to get investors to pay far more than these assets are worth in order to give more money to bankrupt banks.

America Is in Need of a Moral Bailout

By Chris Hedges

In decaying societies, politics become theater. The elite, who have hollowed out the democratic system to serve the corporate state, rule through image and presentation. They express indignation at AIG bonuses and empathy with a working class they have spent the last few decades disenfranchising, and make promises to desperate families that they know will never be fulfilled. Once the spotlights go on they read their lines with appropriate emotion. Once the lights go off, they make sure Goldman Sachs and a host of other large corporations have the hundreds of billions of dollars in losses they incurred playing casino capitalism repaid with taxpayer money.

We live in an age of moral nihilism. We have trashed our universities, turning them into vocational factories that produce corporate drones and chase after defense-related grants and funding. The humanities, the discipline that forces us to stand back and ask the broad moral questions of meaning and purpose, that challenges the validity of structures, that trains us to be self-reflective and critical of all cultural assumptions, have withered. Our press, which should promote such intellectual and moral questioning, confuses bread and circus with news and refuses to give a voice to critics who challenge not this bonus payment or that bailout but the pernicious superstructure of the corporate state itself. We kneel before a cult of the self, elaborately constructed by the architects of our consumer society, which dismisses compassion, sacrifice for the less fortunate, and honesty. The methods used to attain what we want, we are told by reality television programs, business schools and self-help gurus, are irrelevant. Success, always defined in terms of money and power, is its own justification. The capacity for manipulation is what is most highly prized. And our moral collapse is as terrifying, and as dangerous, as our economic collapse.

The Real AIG Scandal, Continued!

The transfer of $12.9 billion from AIG to Goldman looks fishier and fishier.

By Eliot Spitzer

The AIG scandal is getting ever-more disturbing. Goldman Sachs' public conference call explaining its trading relationship and exposure with AIG established, once again, that Goldman knows how to protect itself. According to Goldman, even if AIG had failed, Goldman's losses would have been minimal.

How did Goldman protect itself? Sensing AIG's weakening capital position through 2006 and 2007, Goldman demanded more collateral from AIG and covered outstanding risk with instruments from other firms.

Paul Krugman: Financial Policy Despair

Over the weekend The Times and other newspapers reported leaked details about the Obama administration’s bank rescue plan, which is to be officially released this week. If the reports are correct, Tim Geithner, the Treasury secretary, has persuaded President Obama to recycle Bush administration policy — specifically, the “cash for trash” plan proposed, then abandoned, six months ago by then-Treasury Secretary Henry Paulson.

This is more than disappointing. In fact, it fills me with a sense of despair.

US unveils $1tn toxic asset plan

The US has announced details of a plan to buy up to $1 trillion (£686bn) worth of toxic assets to help repair banks' balance sheets.

The "Public-Private Investment Programme" will purchase the troubled mortgages and securities that have been at the root of the credit crunch.

The Treasury has committed $75bn to $100bn to the programme and said the private sector would also contribute.

On Wall Street key share indexes soared by up to 7% on the news.

The President Needs to Hear Millions of Second Opinions on His Economic Plans

By William Greider, The Washington Post
Posted on March 23, 2009, Printed on March 23, 2009
http://www.alternet.org/story/132858/

This is part of a special AlterNet series on Obama's latest plans for a rescue of the bankers and Wall Street's toxic assets.
Read our editorial on the big picture.

The president is getting what he asked for, but perhaps not what he had in mind. During the campaign, Barack Obama beckoned Americans to put aside their cynicism about politics and re-engage as active citizens. They are now doing so with red-hot anger. They are outraged by events and forcing their way into congressional affairs and behind closed doors where policy wonks discuss issues with cerebral civility. The president is now trapped between these two realms -- the governing elites who decide things and the people who are governed. Which side is he on? If he does not choose wisely, the anger could devour his presidency.

Tax to the rescue

By Hazel Henderson

Reforming the unregulated global casino must be addressed at the summit of the Group of 20 (G-20) countries in London next month. The communique from the November 2008 summit of G-20 leaders in Washington, DC, clearly cited increased cooperation between nations as essential, particularly oversight of global banks and other financial players. Cooperation is necessary to avoid "beggar-thy-neighbor" policies.

Yet, no mention was made at the November summit of the most urgent priority: tackling the up to US$3 trillion of daily currency trading, over 90% of which is speculation. Bouncing currencies have caused much of the turbulence and excessive volatility in world markets as contagion spreads in minutes in this around-the-clock trading. A small tax (less than 1%) on all trades has been advocated since the 1970s, when it was proposed by economist James Tobin. The idea was also floated in 1989 by now US National Economic Council head Lawrence Summers, who also attended the Washington summit.

Petraeus hands over a 'political hot potato'

By Gareth Porter

WASHINGTON - United States special operations forces in Afghanistan, whose commando raids and airstrikes against suspected Taliban targets have caused large numbers of civilian casualties that have angered Afghans, have quietly been put under the "tactical control" of the commander of US and North Atlantic Treaty Organization (NATO) forces in Afghanistan, General David McKiernan, for the first time.

An order issued last Tuesday at the direction of Central Command (CENTCOM) chief General David Petraeus gives McKiernan authority over all operations by special operations units stationed in the country, as Colonel Gregory Julian, McKiernan's spokesperson, confirmed in an e-mail to Inter Press Service (IPS). The order, which has not been made public, modifies previous command arrangements which had excluded US special operations forces from McKiernan's command authority.

22 March 2009

The Two Documents Everyone Should Read to Better Understand the Crisis

As a white-collar criminologist and former financial regulator much of my research studies what causes financial markets to become profoundly dysfunctional. The FBI has been warning of an "epidemic" of mortgage fraud since September 2004. It also reports that lenders initiated 80% of these frauds.1 When the person that controls a seemingly legitimate business or government agency uses it as a "weapon" to defraud we categorize it as a "control fraud" ("The Organization as 'Weapon' in White Collar Crime." Wheeler & Rothman 1982; The Best Way to Rob a Bank is to Own One. Black 2005). Financial control frauds' "weapon of choice" is accounting. Control frauds cause greater financial losses than all other forms of property crime -- combined. Control fraud epidemics can arise when financial deregulation and desupervision and perverse compensation systems create a "criminogenic environment" (Big Money Crime. Calavita, Pontell & Tillman 1997.)

The FBI correctly identified the epidemic of mortgage control fraud at such an early point that the financial crisis could have been averted had the Bush administration acted with even minimal competence. To understand the crisis we have to focus on how the mortgage fraud epidemic produced widespread accounting fraud.

Climate Change Myths and Facts

By Chris Mooney
Saturday, March 21, 2009; A13

A recent controversy over claims about climate science by Post op-ed columnist George F. Will raises a critical question: Can we ever know, on any contentious or politicized topic, how to recognize the real conclusions of science and how to distinguish them from scientific-sounding spin or misinformation?

Congress will soon consider global-warming legislation, and the debate comes as contradictory claims about climate science abound. Partisans of this issue often wield vastly different facts and sometimes seem to even live in different realities.

Guess What Got Lost in the Loan Pool?

WE are all learning, to our deep distress, how the perpetual pursuit of profits drove so many of the bad decisions that financial institutions made during the mortgage mania.

But while investors tally the losses that were generated by loose lending so far, the impact of another lax practice is only beginning to be seen. That is the big banks’ minimalist approach to meeting legal requirements — bookkeeping matters, really — when pooling thousands of loans into securitization trusts.

Stated simply, the notes that underlie mortgages placed in securitization trusts must be assigned to those trusts soon after the firms create them. And any transfers of these notes must also be recorded.

James K. Galbraith Reponds to Geithner’s Toxic Asset Plan

I've just been reading the NYT report.

The central Treasury assumption, at least for public consumption, seems to be that the underlying mortgage loans will largely pay off, so that if the PPIP buys and holds, at an above-present-market price governed by auction, the government's loan to finance the purchase will not go bad.

Recovery rates on sub-prime residential mortgage-backed securities (RMBS) so far appear to belie this assumption. IndyMac lost $10.8 bn on a $15bn portfolio (and if you count the wipeout of equity, the total loss is about $12bn). That's an 80 percent loss. It's possible that recovery rates at other banks will be better, but how can we know? No one is examining the loan tapes.

WaMu sues FDIC for more than $13 billion over forced sale

Stephen C. Webster
Published: Saturday March 21, 2009

Washington Mutual, the bankrupt, seized and "under investigation" financial institution which saw some operations forcibly sold off to JPMorgan Chase in 2008, is suing the agency that guarantees Americans' deposits, and that agency is running low on funds.

Washington Mutual (WaMu), formerly one of the nation's most prestigious banks and alleged holder of over $307 billion in assets, is suing the Federal Deposit Insurance Corporation for more than $13 billion over the roll-up of its banking division into JPMorgan Chase & Co.

Frank Rich: Has a ‘Katrina Moment’ Arrived?

A CHARMING visit with Jay Leno won’t fix it. A 90 percent tax on bankers’ bonuses won’t fix it. Firing Timothy Geithner won’t fix it. Unless and until Barack Obama addresses the full depth of Americans’ anger with his full arsenal of policy smarts and political gifts, his presidency and, worse, our economy will be paralyzed. It would be foolish to dismiss as hyperbole the stark warning delivered by Paulette Altmaier of Cupertino, Calif., in a letter to the editor published by The Times last week: “President Obama may not realize it yet, but his Katrina moment has arrived.”

The Virtues of Public Anger and the Need for More

by Glenn Greenwald

With lightning speed and lockstep unanimity, opinion-making elites jointly embraced and are now delivering the same message about the public rage triggered this week by the AIG bonus scandal: This scandal is insignificant. It's just a distraction. And, most important of all, public anger is unhelpful and must be contained or, failing that, ignored.

This anti-anger consensus among our political elites is exactly wrong. The public rage we're finally seeing is long, long overdue, and appears to be the only force with both the ability and will to impose meaningful checks on continued kleptocratic pillaging and deep-seated corruption in virtually every branch of our establishment institutions. The worst possible thing that could happen now is for this collective rage to subside and for the public to return to its long-standing state of blissful ignorance over what the establishment is actually doing.

Sorry Krugman, Geithner's Plan is the Least Risky Option


Krugman, who shined so much light in the dark days of the Bush administration, and who is still doing more than anyone outside of This American Life to help non-economists understand the banking crisis, is fundamentally wrong in his assessment of Obama's plan to rescue the financial system.

Mrs. Obama Speaks Out About Her Household

WASHINGTON — Reporters are not the only ones with a particularly keen interest in what Michelle Obama wears. Her husband, Mrs. Obama says, notices everything. In fact, she has learned not to wear a certain gray metallic belt when the president is around.

“Barack calls it my ‘Star Trek’ belt,” the first lady said in an interview this week. “He doesn’t understand fashion.”

The interview, which started out on the subject of the new White House vegetable garden, ended up ranging over a variety of household topics, which Mrs. Obama addressed with substantial fun-poking at her husband, her mother and herself.