Dr. Andrew M. Manis

As one of the blue-eyed folks out there I truly appreciated Dr. Manis’s take on the race discussion or lack there of. This is for the most part a blue-eyed problem.

Read what he has to say and think about it.

For much of the last forty years, ever since America "fixed" its race problem in the Civil Rights and Voting Rights Acts, we white people have been impatient with African Americans who continued to blame race for their difficulties. Often we have heard whites ask, "When are African Americans finally going to get over it?

Now I want to ask: "When are we White Americans going to get over our ridiculous obsession with skin color?

Recent reports that "Election Spurs Hundreds' of Race Threats, Crimes" should frighten and infuriate every one of us. Having grown up in "Bombingham," Alabama in the 1960s, I remember overhearing an avalanche of comments about what many white classmates and their parents wanted to do to John and Bobby Kennedy and Martin Luther King. Eventually, as you may recall, in all three cases, someone decided to do more than "talk the talk."

Since our recent presidential election, to our eternal shame we are once again hearing the same reprehensible talk I remember from my boyhood.

Not much has changed but much has gone underground.

h/t Larry

Rev. Moyers talks to William Greider

Now you know that I love the Reverend Moyers and you should know that I love William Greider. So, the two of them together are such a treat for me. Click on the link and learn something new, or not. But it is a treat. Economics and policy you have to love it.

John H. Franklin

R.I.P.

1915 – 2009

Frank Rich is Off Today!

I hate that.

Thomas Frank

The Wall Street Journal columns, yes the WSJ, are great. Do you read them, and if not why not?

It is all about the Credit Default Swaps Folks

So just in case you haven’t gotten my message on CDS’s here is an Editorial that I should have posted last week.

The Editorial Board at the NYT’’s writes a very good editorial on Credit Default Swaps and AIG. I believe it is a must read. So, here it is:

March 15, 2009

Editorial

Following the A.I.G. Money

The bailouts of American International Group are also rescues of its trading partners — banks and other financial firms — that would have lost out if the insurer had been allowed to fail. But even after four bailouts between last September and this March, no one knows with certainty who those partners are or how much of the bailout money, now totaling $160 billion, has gone to make them whole.

A.I.G. has not said who they are, and neither have government officials in charge of the A.I.G. bailouts — mainly Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke — despite repeated inquiries from Congress. (The Wall Street Journal, citing confidential documents, reported recently that about $50 billion in 2008 bailout money from A.I.G. went to at least two dozen firms, including Goldman Sachs, Merrill Lynch, Bank of America and European banks.) Late last week there was talk that more official information was forthcoming, but no one has seen it yet.

The secrecy is unacceptable. Taxpayers have a right to know how their tax dollars are being spent. Equally important, understanding how the financial crisis happened is crucial to ensuring that it does not happen again. To that end, Congress and the public alike need to know which firms are on the receiving end of the bailouts, how they came to require a government lifeline, and what responsibility they bear for the financial mess.

From what is known, it certainly does not appear that A.I.G’s trading partners were entirely innocent victims of extraordinary circumstances. A.I.G. was a key player in a type of unregulated derivative called a credit default swap. Such swaps are often defined as a form of insurance because the seller guarantees payment to investors in case their investments go bust. They are not safe insurance in any familiar sense, however, because A.I.G. was not required to set aside reserves in the event of a claim. That is why, when the bubble burst and defaults rose, A.I.G. was unable to make good, provoking the bailouts.

Still, the trading partners knew, or should have known, how dangerous the swaps were. And that is not necessarily the whole story. In the manic years of this decade, credit default swaps took off as a way to bet on the likelihood of default by a firm or an investment portfolio, without having to own any financial interest in the firm or portfolio. That is definitely not insurance, it is gambling. The reason it is not illegal gambling is that, in 2000, Congress specifically exempted credit default swaps from state gaming laws.

The result? Eric Dinallo, the insurance superintendent for New York State, has said that some 80 percent of the estimated $62 trillion in credit default swaps outstanding in 2008 were speculative.

It is unknown how much of the credit default swaps between A.I.G. and its partners were for speculation. That is a question that demands an answer. Also unknown is how much had been wagered on the demise of A.I.G. By intervening to prevent the insurer’s failure, the government prevented those bets from having to be paid. Who was let off the hook?

It is not enough to simply know more about A.I.G., its trading partners and their activities. What is needed is transparency going forward. Banks resist the idea of requiring that all trading in credit default swaps be conducted on exchanges, in the open and subject to full regulatory scrutiny. It is an idea, however, that is long overdue.

This is just one idea that is long overdue. The bonuses are interesting but I think a diversion from the billions, not millions (pretty soon you are talking real money,) that are flowing to the counterparties for 100 cents on the dollar. For what, that is the question?

Hey Paul Krugman!

This is going viral but my question is why would he want to give up the job at Princeton? I bet that Ben Bernanke would advise against it.

I love the part about Geithner using Turbo Tax (which I hate!) and the bubbles.

Capitalism Hits the Fan

Professor Wolff does a terrific job of enlightening us about the recent history, going back 30 some odd years, of how capitalism in our country has evolved or devolved as it were. You can check out the preview at the website. There is an annoying shadow over the video, but not so annoying that I didn’t take an hour out of my day to watch the whole thing. He is very clear and connects all the dots.

Go and learn something new everyday. It is a good thing!

h/t Bud

Spitzer is Back, Just When We Need Him!

With Fareed Z. who I love.

The former NYS Governor does have something to add to this dialogue. Now that said, I do have to say that I still can’t believe that someone with Spitzer’s supposed smarts would be dumb enough to keep money in a bank that he is charging with fraud, and has made an enemy of.

But then, who am I?

The "Real Producers"

What did Mel Brooks know and when did he know it?

TORONTO (AP) -- Two former Broadway producers have been convicted of participating in large-scale accounting fraud.

Garth Drabinsky and Myron Gottlieb co-founded one of the major Broadway theater companies in the 1990s. Livent produced hit shows such as ''Ragtime'' and ''Showboat.''

Ontario Superior Court Justice Mary Lou Benotto made the ruling Wednesday, calling the fraud widespread.

The Toronto-based company filed for bankruptcy protection in 1998 after the alleged fraud was revealed when former Walt Disney Co. President Michael Ovitz invested in Livent.

Prosecutors alleged the pair raised hundreds of millions in financing and that they misstated the financial position when they went public.

The pair were charged with two counts of fraud and one count of forgery.

Victor Wooten thy Name is Grace

I just need to repost this again. Here is the background on my falling in love with the great Mr. Wooten and his teaching moment. Now I shouldn’t have to tell you that I love “Amazing Grace” but as a jazz aficionado he does it the best. And it is a lesson on how the bass is not just for rhythm as Mingus made clear.

A Lesson:

Norwegian Wood:

Mingus:

We need a moment or moments to have a little melody and grace in these times of difficulty. Don’t you think?

Geithner?

We all knew that Geithner, Summers and Rubin were bad choices for this Administration if we were wanting “Change” considering the situation we faced that the “Masters of the Universe” dropped on our doorstep and which these three were part of. Non-the-less we got them. Now Timothy Geithner is proving to be such a problem for this Administration that I can’t imagine that he will remain and/or continue to be even slightly influential.

The “Shrill One” has a good blog on Geithner’s Toxic Banking Plan.

Though it is early in the Administration, his departure will mean nothing if Summers and Rubin don’t join him.

I have to agree with the Professor, just from a common sense point of view. We need a new paradigm in the Financial Sector and these guys are not the ones to bring us there.

Perhaps Volker could come up with one?

Best and the Brightest, Not!

AIG’s Libby is an idiot and his testimony in front of Congress was an affront to any thinking person. Watching it I was appalled by what he said and/or didn’t say.

Our Congresscritters Outrage was just as outrageous as Libby’s response was appalling. AIG and its counterparties are engaging in extortion and our representatives responded by passing unconstitutional legislation in a show of solidarity with “their constituents.”

Apparently Mark Twain was so right: Common Sense isn’t all that Common.

I am not impressed.

Burning Down the House

The best description of the whole Credit Default Swaps problem I have heard so far is an analogy to Insurance on your house. Unfortunately I can’t remember who said it. That said, it is a very good explanation of how this whole CDS’s scheme works.

So, say you insure your house against fire. Then say many of your neighbors also buy insurance against your house burning down. How well are you going to sleep at night knowing that hundreds of your neighbors are betting that your house is going to burn down and betting that it will (Goldman Sachs, et. al., that means you?) It is frightening that your neighbors’ financial benefit is based on your house immolating, right? That is what Credit Default Swaps are all about. The counterparties are betting on the bet that your house is going to immolate. Now how legit is that? Now if there is no connection to the underlying asset there should be no bet just like your neighbor’s bet on your house burning to the ground.

Wipe those bets out and stop payments to the counterparty’s bets on those bets. Bets are a risk, just like at the track. The Counterparties need to pay for their risk: it is called Moral Hazard.

Simplistic, maybe, but it is a thought.

JMHO!

Two Questions and a Comment on AIG

One: If these were retention bonuses as Mr. Liddy says why pay 11 people who no longer work at AIG Financial Products?

Two: If these payouts to AIG’s counterparties are for Credit Default Swaps crafted by AIGFP, what were the events that triggered the payouts and were these payouts based on actual defaults on underlying assets or were they merely bets on bets?

The irony of all this is that just like Liddy is using the retention argument, and that the bomb makers are the only ones who know how to defuse the bomb, it is a similar one made by Obama’s administration. The Administration’s Geithner, Rubin and Summers are bomb makers as well and they are in charge of defusing all of the bombs.

Like I keep on saying and repeating ad nauseam, it is all about the Credit Default Swaps and the Counterparties. Until we deal with that and break the Wall Street Banksters hold on Washington, etc., and wipe out the CDS bets on bets and not the underlying asset bets, we are doomed and there can never be a resolution to this extraordinary situation.

So are you surprised that Goldman Sachs is at the top of the list? Not me! And let’s talk to the UAW about that Contract argument shall we!

JMHO!

Latest Update on AIG

Update: AIG is going to give it’s “Masters of the Universe” in it’s London unit that fueled the trashing of an American Insurance Company’s comedown “bonus retention” money. So, it appears that AIG and their “new management” have learned their lessons, right? NOT!

Nadja Salerno-Sonnenberg

I love me some fiddle and the finest and most ferocious violinist of our time in my opinion is NSS. Her Vivaldi’s “Four Seasons” is one of my all time favorites. Concerto # three is a work to behold and maybe you don’t know but autumn is my favorite season. That said, here for your entertainment is NSS with two of the other greatest players in our world, Ivers and Carter with the Boston Pops (which I grew up on.) We get it all Classical, Celtic, Jazz and Blues. What a flawless blend. What more could you ask for?

Enjoy!

I am going to admit that I went gaga over NSS on West End Ave one evening several years ago. I was walking home up WEA and she was walking down WEA. I said something like, “OMG it’s you.” She politely laughed and as I ditched my cigg so I could extend my hand and shake hers, she berated me for wasting a perfectly good cigarette. Though we were both embarrassed by my gushing, she was very funny and gracious. I, of course, was in a state of euphoria as I continued on my way up WEA after having personally shook hands, the hand, of one of the greatest hands ever to play a violin.

I love Musicians, New York and WEA.

I Might As Well Pile On, Too!

Here from Calculated Risk is the link to the Stewart v. Cramer Smack-down in the uncensored version with Outtakes. I watched it at the crack of dawn this morning on Comedy Central.

Remember when he took down Tucker, et al.? Only a comic could be this “serious as a heart attack” (remember Melvin Van Peeples?) Cramer is contrite to say the very least. Though, I am doubtful that CNBC will get the drift.

Racino at Aqueduct in Doubt, Once Again.

The other evening at dinner we were talking about this development. Now I am not in favor of the video terminals per se though I do understand their attraction for politicians, horseracing enthusiasts and many taxpayers. Many think that the future of horseracing is at risk without the casino aspect at the tracks. It strikes me as just another way to soak the less able among us, aka the lottery that was suppose to benefit the education system and we all know how that worked out: general fund anyone?

Scratch those plans for the first casino on a subway line in New York City — at least for now.

Plans to build a casino at the Aqueduct racetrack in Queens have collapsed, the latest victim of the financial turmoil that has tightened the credit markets.

[Snip]

The casino was to include a 184,000-square-foot gambling floor and 4,500 video gambling terminals as well as restaurants, a hotel and a 60,000-square-foot conference center. Construction was to have started early this year. Delaware North operates a similar casino in Saratoga Springs.

Now I have been to the casino in Saratoga Springs and it was and is appalling. If this is an example of Delaware North’s product perhaps it is not such a bad thing that it is now in doubt. Certainly from my point of view the actual racetrack didn’t benefit from Delaware North’s investment. Only the casino was upgraded, not the track or the very sad restaurant. I was really surprised at how decrepit the actual racetrack facilities were and how glitzy and disorienting the casino was after the “improvements.” And if they were planning a similar casino to the one at the Spa, well, I am not so distraught that it may have fallen to the “economic situation” we now find ourselves and the state in.

Maybe it is the “Gift Horse,” and we should be thankful to get another do around. Aqueduct is tacky enough it doesn’t need to be tackier.

Time will tell.

When Did Competition in Capitalism Become a Bad Thing?

We now have all this talk about an entity being “too big to fail?” So the taxpayers are pouring all this money into these entities that are “too big to fail” and which pose a systemic risk to the economy should they go down. Obviously if it is “too big to fail” it is simply too big.

And then of course there is possible criminal activity with those who are “too big to fail.” Susie Madrak takes a look at AIG over at Crooks and Liars.

What ever happened to Anti-trust Laws and competition?

This isn’t exactly rocket science folks!

I’m just saying!

There is a reason that “Insurance” is regulated. And Credit Default Swaps, not matter what you call them, are an Insurance Product. Too big to fail indeed.

Update: AIG is going to give it’s “Masters of the Universe” in it’s London unit that fueled the trashing of an American Insurance Company’s comedown “bonus retention” money. So, it appears that AIG and their “new management” have learned their lessons, right? NOT!

From Back in the Day!

Often when I am forced to look at my archives I am shocked at how terrific and interesting some of my post were. So here is one that I particularly loved.

And here is one just for fun. Now the YT has taken down the embedded video but the video lives on. Lord I love these women!

Enjoy!

How Iceland Became Bankrupt.

Michael Lewis of Liar’s Poker fame once again is on to financial and economic reportage in “Wall Street on the Tundra” about Frozen Assets from Vanity Fair. This time it is on the totally outrageous Iceland Meltdown and an entire “Western” Country’s Bankruptcy.

Check it out. This is probably one of the most important International Crisis in our current history and a lesson to all. Now I am pretty confident that the Community Reinvestment Act and poor brown skinned people didn’t have anything to do with this meltdown. Though I am sure that Rush and Company will find some way to make a connection and put the blame on them.

Or it could be all Obama's fault. I'm not saying or anything.

Cod fishing to just phishing, who could have thought it would turn out so badly?

Magna Going Down?

My friend Steve has been on the Magna Death Watch as long as Frank Stronach, of Magna Entertainment Corporation (MEC), has been in the horseracing game. Steve was my Federal Tax professor in Law School. He introduced me to handicapping and horseracing in 1993 when he was on Federal jury duty (he was serving at my courthouse at 40 Foley Square.) I came up with Sea Hero (son of Polish Navy) for the winner of the Kentucky Derby and I was right. I must admit I was enamored with the name which is sometime a winning strategy for beginners. Lucky, you bet!

That said, after the Belmont Stakes last year he started his own blog. He had gotten some really good feedback from his posts in the NYT’s Triple Crown blog the Rail so he broke out and what a good thing it was.

So, after reading Andy Beyer’s article in the WAPO yesterday and being a little behind the curve, I immediately went to Steve’s blog. Needless to say he didn’t disappoint. The whole structure of the Bankruptcy, as Beyer explained it, was fishy to me and, as reality would have it, it was rotting from the head. Hopefully Steve is right and all those corporate bankruptcy specialists on the court get the picture and what is so wrong with it. Also, as you may not know many Federal Judges are also horseracing aficionados so hopefully there is some insight on the court about the game as well.

I know that when I worked in the Federal Courts and the endless “Devil His Due” litigation and then the “Milkshake” controversy was in our court one of our counselors would interrogate me all the time on various aspects of the litigation she was mediating. I found this very funny as I am not an expert in anyway. But I guess she felt she had to go with what she had.

So, as Andy explains “greed,” per se, didn’t have anything to do with this particular corporate meltdown but there certainly was a huge amount of hubris. This hubris and mismanagement has already had a huge effect on Maryland racing according to Beyer. And as this Bankruptcy filing suggests, and as Steve points out, it is continuing. Doesn’t this sound familiar!

My question is: will there be a Triple Crown with the Preakness next year?

Soros, Roubini and Sachs at Columbia

This is from last year and is so worth watching (it is approximately 100 minutes and so well worth it as long as you care about what is going on and how we got here.) These three are an inspiration. I hadn’t realized that Sachs was Roubini’s mentor. Jeffrey Sachs looks too young to have mentored Nouriel Roubini. Nonetheless, it is a fact and the passion on display in this piece is heartfelt and Sachs is a true inspiration not to mention intellectually engaging and so rational. That of course is just my personal opinion. Though I do have to say if you don’t get choked up when Sachs is expounding on his theories and Soros and Roubini are explaining their positions there might be something wrong with your analytical skills and abilities.

I am not saying, but you know what I am saying.

So here it is from October 20, 2008:

Can we Save the World Economy?

Can We Save the World Economy? from Earth Institute on Vimeo.

In case the video doesn’t work here is the link.

These guys have been right all a long and they are still right and we need to pay attention to everything they say.

Rove and Miers to Testify

Could a “Gonzales” like transcript be too far in the future?

Above the Fold Indeed!

This is from the Memorial Service for John Leonard.

Read all of it and get a look at the personal John Leonard not just the public face.

I so admired him. Every time we spoke he would tell me how many days it had been since he last had a cigarette. I am so glad that he lived to see Obama elected President. I still cry when I think about it. But then he always hung in there.

Someone out there has my autographed copy of Smoke and Mirrors: Violence, Television and other American Cultures. I need it now more than ever.

Perfect for a Blog!

Don’t you think?

I have loved her since she first started appearing at our Coffee House, “The Y-Not,” back in the 60’s.

Here is another favorite of mine which is perfect to dance to:

And for all you girl friends and boy friends out there because it is never too late:

And you know that I couldn’t leave politics out so, here from her Farm Aid concert with John Haitt:

Okay, so this is all back in the day, for the most part, but it is really current compared to the 60’s tunes she was singing when it was really “back in the day.”

The “One” Should Have Had Etta Sing!

I guess I am a little late to the debate, nonetheless:

This is HER SONG! Just one Old Gal standing up for another!

It is About Time!

On a fall afternoon in 2002, the New York City police broke up a protest in front of Gov. George E. Pataki’s office in Midtown Manhattan and hauled a dozen demonstrators away.

The protesters were demanding that Mr. Pataki repeal the state’s 30-year-old drug sentencing laws, widely regarded as the nation’s most unforgiving. One of those placed in plastic handcuffs and carted off to a police station was a state senator named David A. Paterson.

Now, with Mr. Paterson in the governor’s mansion and Democrats in control of both houses of the State Legislature, an aggressive effort is under way to finally dismantle what remains of the stringent 1970s-era drug laws, which imposed stiff mandatory sentences as a way to combat the heroin epidemic then gripping New York City.

The Assembly is expected to pass legislation on Tuesday that would once again give judges the discretion to send those found guilty of having smaller amounts of illegal drugs to substance-abuse treatment instead of prison and allow thousands of inmates convicted of nonviolent drug offenses to apply to have their sentences reduced or commuted.

Elections do have consequences.

We hope.

Who could have Thunk It?

When the genius Real Estate Investors decided to buy many largely successful housing developments at the top of the RE market with overvalued leveraged loans by promising to bring all those dastardly rent-stabilized apartments up to market rents you had to know it was a truly stupid and flawed business model.

These might seem like the worst of times for large-scale housing complexes like Riverton Houses, Stuyvesant Town and Savoy Park. Their owners, all of whom bought the buildings at the top of the market, are in rough shape, stumbling under the weight of oversize debts and teetering at the edge of foreclosure.

But in the midst of an unforgiving market in which rents are falling and lenders are showing no mercy, real estate executives and even some housing advocates say that the tenants at these large complexes may come out of this dire situation in good shape.

Well reality does often does have an upside, we can only hope. As they say “Reality does have a Liberal Bias.”

UPDATE:

Tenants at Stuyvesant Town and Peter Cooper Village, the sprawling middle-class apartment complexes on the East Side of Manhattan, won a major victory over their landlord on Thursday when an appeals court ruled that the company had wrongfully raised rents and deregulated thousands of apartments after receiving special tax breaks.

The, decision issued by the Appellate Division of State Supreme Court in Manhattan, could ultimately cost the landlord, Tishman Speyer Properties, $200 million if it is required to repay residents of more than 3,000 apartments for improper rent increases over the past four years, said a lawyer for the tenants.

Liar’s Poker

Michael Lewis’ book gives a really good look at Wall Street and makes it pretty clear that there is no pretty picture to be seen. He also has a follow-up article from a couple of months ago in Portfolio. Read it and “Learn Something New Everyday.” He also has some very fine things to say about Meredith Whitney formerly of Oppenheimers. Ms. Whitney is one of my heros.

You Need to Check in with “The Shrill One.”

At the very least once a day and do read the comments. Sure he does write some wonky stuff, but often he writes really thoughtful and funny stuff.

The Nobel Prize Winner for Economics is the gift that keeps on giving

Don’t Ask Don’t Tell!

Made up out of whole cloth! The whole “Unit Cohesion” rational was just made up. So what other “shit” has the government made up? Oh, yeah Saddam was a threat and he had WMD.

Hopefully we will eventually catch up to the rest of the world when it comes to gays in the military and Universal Health Care, etc. The studies are done folks and the information is out there. So, let’s stop studying stuff to death and just get it done.

Thank you Rachel! Lord, I love her.

Friends in High Places!

Indeed! More on the AIG and Goldman Sachs connection in a NYT’s Editorial:

The serial A.I.G. bailouts are especially problematic for their connection to the Wall Street bank Goldman Sachs. At the time of the first A.I.G. rescue last fall, it was reported by Gretchen Morgenson in The Times that Goldman was A.I.G.’s largest trading partner, with some $20 billion of business tied into the insurer. Goldman has said that its exposure to risk from A.I.G. was offset, or hedged, by other investments.

What is certain is that Goldman has lots of friends in high places — yet one more reason why this bailout has to be as transparent as possible. Lloyd Blankfein, Goldman’s chief executive, was the only Wall Street executive at a September meeting at the New York Federal Reserve to discuss the initial A.I.G. bailout. Also involved in the discussion was the then head of the New York Fed, Timothy Geithner, who is now President Obama’s Treasury secretary.

It is really all about those Credit Default Swaps. Just what is Goldman’s exposure? It appears that Goldman is the major counterparty with AIG. Connect the dots folks. Because as we all know in life and politics connections are just about everything.

You know what I was going to say, but I won’t say it.

The Rev. for Mayor?

So, the Green Party has nominated Reverend Billy of the Church of Stop Shopping for Mayor.

From the NYT’s:

Reverend Billy of the Church of Stop Shopping is — to say the least — not your typical candidate for mayor. With his blond pompadour, cobalt blue suit, black shirt and white collar, he made his announcement in Union Square on Sunday accompanied by a choir in green robes.

But he has the nomination of an actual political party and might have a spot on the ballot in November, something Mayor Michael R. Bloomberg has yet to secure.

Hmm, this could be a very interesting campaign season.

Many of Us Have Been in Willful Denial

For the most part I find “Infotainment” and its grip on the News appalling. So, I have been ruminating on Frank Rich’s column for a week as it seems obvious to me. This ruminating has been very personal for me. I have acquaintances who have made disparaging remarks about my need to know facts and my devotion to the “U.S. Constitution.” And this is from supposed “Law and Order” types. They were incensed every time I brought up my outrage at repealing the Glass-Steagall Act (I actually remember the S&L Crisis.) When I would talk about the economy and what could be expected, they got upset. When I complained about the Administration’s assault on the Constitution and the ability of the President to imprison anyone anywhere without a right to Habeas Corpus I was informed that their spouse would fight really hard if they were interned. My retort was that it is too late once you are interned. But then they really believe that they are innocent and can’t be affected by the policies of the Unitary Executive. They were incredulous that I didn’t understand that of course we have to give up some liberty for security. I guess we are not longer “The Land of the Free and the Brave.”

So, basically I was causing trouble what with talking about credit default swaps, cheap credit, an Executive run amok, and how those in charge are f**king up the country. So it was clear that I was a “Communist” and down with the terrorists. Really!

From Mr. Rich:

Steroids, torture, lies from the White House, civil war in Iraq, even recession: that’s just a partial glossary of the bad-news vocabulary that some of the country, sometimes in tandem with a passive news media, resisted for months on end before bowing to the obvious or the inevitable. “The needle,” as Danner put it, gets “stuck in the groove.”

For all the gloomy headlines we’ve absorbed since the fall, we still can’t quite accept the full depth of our economic abyss either. Nicole Gelinas, a financial analyst at the conservative Manhattan Institute, sees denial at play over a wide swath of America, reaching from the loftiest economic strata of Wall Street to the foreclosure-decimated boom developments in the Sun Belt.

When we spoke last week, she talked of would-be bankers who, upon graduating, plan “to travel in Asia and teach English for a year” and then pick up where they left off. Such graduates are dreaming, Gelinas says, because the over-the-top Wall Street money culture of the credit bubble isn’t coming back for a very long time, if ever. As she observes, it took decades after the Great Depression — until the 1980s — for Wall Street to fully reclaim its old swagger. Not until then was there “a new group of people without massive psychological scarring” from the 1929 crash.

In states like Nevada, Florida and Arizona, Gelinas sees “huge neighborhoods that will become ghettos” as half their populations lose or abandon their homes, with an attendant collapse of public services and social order. “It will be like after Katrina,” she says, “but it’s no longer just the Lower Ninth Ward’s problem.” Writing in the current issue of The Atlantic, the urban theorist Richard Florida suggests we could be seeing “the end of a whole way of life.” The link between the American dream and home ownership, fostered by years of bipartisan public policy, may be irreparably broken.

Well, it seems that the chickens have come home to roost and it isn’t a pretty picture. It is hard to be a retiree in this current situation what with the stock market tanking and all those dividends going the way of the toilet. I feel sorry for those caught unawares, but in many cases it was a choice. The choice was to deny reality and facts and stick with an ideology that doesn’t benefit you but your overlords. I am not talking about folks who maybe don’t have the resources to have information and the resources to know better. For those folks I have great sympathy. We are not all created equal. I am talking here of people who have the resources to know better, but choose not to. That said, many of us saw what was coming down the road. That was because we were paying attention. We are still f**ked but we had some time to prepare as best we could. I was able to retire my credit card debt after a crushing illness that put me in the poor house (thank you Michelle Singletary for the strategy.)

I still listen to the pundits at CNBC, and snort, but I pay particular attention to those who have been right all along. You know who they are. They are the talking-heads, and actual experts, who have been disparaged for so long. There is the “Shrill One” Paul Krugman, there is “Dr. Doom,” Nouriel Roubini, and from “Black Swan” fame Taleb who actually said that “Dr. Doom” is an optimist. And then of course is Stiglitz. These folks are not cranks and the MSM is finally catching on to this.

So, just like it was obvious that there were no WMD in Iraq and that as early as May 2002 when Halliburton was given the no bid contract to rebuild Iraq (always read the business section first) none of what has happened was unforeseeable no matter what the pundits or politicians say.

Willful denial is the cause of our current situation. Not to mention Cognitive Dissonance because if you collect Social Security and think Medicare is the greatest thing since sliced bread you probably shouldn’t be outraged by all things called “Socialist” by the ideologue purists.

I am not saying, I am just saying!

Thank you Mr. Rich because what we don't want to know will hurt us.

Young and Unemployed

When Bob Herbert speaks everyone should listen. So, here is his take on our youthful unemployment situation. And he is right. When I was growing up I always had a job. From the age of Twelve on I did work with the YMCA which was socially meaningful. Some were paying some weren’t but there always was work. It had a great effect on my personal self-esteem not to mention my intellectual development.

So, here he is:

February 28, 2009

Op-Ed Columnist

Even Worse for Young Workers

By BOB HERBERT

The employment situation in the U.S. is, if anything, worse than most people realize. And huge numbers of young people, ages 16 to 30, are being beaten down in ways that could leave scars for a lifetime.

Much of the attention in this economic downturn has focused on the growing legions of men and women who are officially counted as unemployed. There are now more than 11 million of them.

But a better picture of the economic distress related to employment emerges when the number of jobless Americans is combined with two other categories of workers: the underemployed (those who are working part time, for example, because they can’t find full-time work) and the so-called labor force reserve, workers who have abandoned their job searches but who would work if employment became available.

This total pool of underutilized labor has now risen above 24 million, according to researchers at the Center for Labor Market Studies at Northeastern University in Boston. That total will only grow in the coming months.

The Obama administration has more than enough on its plate at the moment, but before long it will likely have to consider a range of additional strategies, beyond the recently passed stimulus package, for putting jobless Americans to work.

A comparison of the number of people being thrown out of work in this recession with that of the severe recession of 1981-82 will indicate why. The peak unemployment rate was higher in that earlier recession than today’s 7.6 percent, largely because the last big wave of the baby-boom generation was entering the job market in the early ’80s. Those boomers who couldn’t find work were officially counted as unemployed.

What is different and more frightening about the current downturn is the number of people actually losing their jobs — being laid off or fired. That number is dramatically, dangerously higher.

The government uses two different surveys to gauge employment data. The household survey, based on telephone interviews, showed that job losses in the 13 months that followed the beginning of the 1981-82 recession reached 1.53 million. In the first 13 months of this recession, the number of jobs lost, according to the household survey, has been a staggering 4 million.

The payroll survey, which is based on employment records, showed job losses of 1.7 million in the first 13 months of the earlier downturn compared with 3.5 million in the current recession.

Pick your poison. This is not the kind of downturn Americans are used to.

The ones who are being hit the hardest and will have the most difficult time recovering are America’s young workers. Nearly 2.2 million young people, ages 16 through 29, have already lost their jobs in this recession. This follows an already steep decline in employment opportunities for young workers over the past several years.

Good jobs were hard to find for most categories of workers during that period. One of the results has been that older men and women have been taking and holding onto jobs that in prior eras would have gone to young people.

“What we’ve seen over the past eight years, for young people under 30, is the largest age reversal with regard to jobs that we’ve ever had in our history,” said Andrew Sum, the director of the Center for Labor Market Studies. “The younger you are, the more you got pushed out of this labor market.”

There were not enough jobs to go around before the recession took hold. So the young, the poor and the poorly educated were already suffering. Now that pool of suffering is rapidly expanding.

This has ominous long-term implications for the country. The economy cannot perform well with such a large cohort of young people condemned to marginal economic status.

Young men and women who remain unemployed for substantial periods of time find it very difficult to make up that ground. They lose the experience and training they would have gained by working. Even if they eventually find employment, they tend to lag behind their peers when it comes to wages, promotions and job security.

Moreover, as the economy worsens, even the college educated are feeling the crunch.

According to a report by researchers working with Mr. Sum: “While young college graduates have fared the best in maintaining some type of employment, a growing fraction of them are becoming mal-employed, holding jobs in occupations that do not require much schooling beyond high school, often displacing their less-educated peers.”

Employment problems have festered in the United States for decades. The economy will never be brought to a state of health until those problems are more thoughtfully and more directly engaged. This will become more and more clear with each passing month of this hideous recession.

It is a shame that this country so often wastes its resources and our youth are our future. We as a country are so enamored with the short term instead of the long term. How can we flush the country’s future down the proverbial toilet? Perhaps the “Stimulus Package” can stimulate some re-thinking of our take on the future.

It is About Those Credit Default Swaps.

Several years ago I heard about CDS’s and heard the word Counterparties. I’m not sure if it was Roubini, Krugman, Soros or Buffett who talked about them. But I remember thinking at the time, “uh, oh!” Now we are all familiar with Buffett saying that derivatives are the “Financial Weapons of Mass Destruction.” Well, Joe Nocera does a pretty good job of describing their role in the AIG debacle or “scam” as he puts it.

Pour yourself a drink and then read the whole thing! It isn’t all that long or complicated, just really, really, scary. The “Best and the Brightest indeed!”

Update: It also explains why we have all those Goldman Sachs folks in the Treasury. Their exposure to CDS’s from AIG were apparently huge.

Studs With Michael Moore

What more could you ask for?

We miss you Mr. Turkel.

The Latest Rage is Clean Coal

The question is what is it? Here is the latest answer from the Coen Brothers.

This is one of my favorite ads.

And then there is Rachel with her guest about the Reality of Clean Coal.

So, I am thinking that we are not quite there yet with “Clean Coal.”