Brainiac Conspiracy

What a Difference a Vote Makes

I thought this week was supposed to have been really, really bad for Democrats.

---Vitelius

The Two Americas

No, it's not a talking point from a John Edwards stump speech: it's Dittohead Nation and the rest of us.

For anyone who thought the election of our first African-American President heralded a new era of post-racial enlightenment in America, guess again. The states of New England and the Left Coast have seldom looked more appealing.

---Vitelius

Feel the Recovery OSX Sabertooth

The awesomeness of unregulated free markets in action:

Joining other Wall Street firms that bought millions of subprime mortgages, Goldman companies have gone to courts from California to Florida seeking approval to foreclose on the homes of middle- and lower-income Americans who couldn't keep up with their loans' soaring monthly payments.

Some borrowers were speculators or homebuyers who exaggerated their incomes on loan applications, thinking they'd always have an escape hatch because housing prices would keep rising. Others, however, were victims of fast-talking mortgage brokers who didn't explain that the loans' interest rates could rise to as high as 15 percent. Many borrowers who defaulted on their mortgages may never qualify for a home loan again.

In court encounters, Goldman and other Wall Street firms have faced the impact of their own wheeling and dealing. Many of the families being put on the street never would've gotten their big mortgages if investment banks hadn't provided a seemingly insatiable secondary market for millions of loans to marginally qualified buyers.

Subprime borrowers were supposed to provide a safe income stream for investors who bought mostly high-grade, triple-A-rated bonds from Goldman and bigger subprime players, such as now-defunct Lehman Brothers and Merrill Lynch.

Now, millions of these borrowers have defaulted on mortgage payments, contributing to a historic slump in home prices and depressing the bonds' value. Half the homes in some California neighborhoods have been subject to foreclosures or short sales, in which a home is sold for less than the mortgage balance, and either the seller or the lender takes a loss.

And we gave these people $23 billion anyway. And Matt Taibbi doesn't know what the hell he is talking about.

The Obama administration has got to realize its own attempts at mortgage relief to date ain't cutting it, nor are they likely to in the foreseeable future---not with the upcoming tsunami of Alt-A foreclosures about to hit us in 2010. The good news is, Barney Frank is reintroducing his cramdown bill in the current Congressional session. The administration needs to put its full weight behind this bill, not simply abandon it to its own fate as it did last spring. Otherwise, absent any federal intervention to stem the escalating tide of junk loan-induced mortgage defaults nationwide, it's hard to see where real recovery begins, happy talk on Wall Street and Pennsylvania Avenue notwithstanding.

At least some Treasury officials have figured out what needs to be done. Only not here:

Chancellor Alistair Darling will this week unveil his proposed overhaul of the UK banking system which includes breaking up Lloyds and Royal Bank of Scotland and bringing "at least" three new banks to the high street.

Mr Darling is preparing to announce the Government's plan for the future of UK banking –- as first revealed in The Independent last week -– to the House of Commons in the next few days.

• • •

The Chancellor said yesterday there would be a very different look to the High Street banks in the next four years.

He said: "What I want to do now is begin the process of reform and reconstruction so we have got a safer, more competitive banking system with more high street banks than we have at the moment, with new entrants coming in". RBS, which is 70 per cent owned by the Government, and Lloyds, 43 per cent state-owned, will be forced to dispose of a string of assets, which will be sold to new entrants to the market.

The two banks "will be divesting some of the holdings they have at the moment. What you really want to do is have substantial divestment of branches, or particular institutions they own, made available to other people," Mr Darling said. This follows pressure from the European competition commissioner, Neelie Kroes, who has demanded that RBS and Lloyds sell operations under the EU's state aid rules.

He added: "I would hope that you would have perhaps three new entrants over the next few years. You know, some are already in banking, others may decide it's something they want to get into." Virgin Money is understood to be monitoring developments closely, and Tesco is believed to be interested in boosting its financial services operations with assets from the Lloyds and RBS.

Banking giants Barclays, HSBC and possibly Spain's Banco Santander, which owns Abbey, Alliance & Leicester and branches of Bradford & Bingley, are likely to be blocked from bidding as the Government is "determined" to see more competition in the wake of its £1.2 trillion bailout of the sector.

Channeling DeLong, Goldman needs to be burned down, plowed under, and its furrows sewn with salt.

---Vitelius

Let $65 Billion a Thousand Green Shoots Bloom

Can you feel the recovery yet?

After struggling for months to avert bankruptcy, lender CIT Group has filed for Chapter 11 protection in an attempt to restructure its debt while trying to keep badly needed loans flowing to thousands of mid-sized and small businesses.

CIT made the filing in New York bankruptcy court Sunday, after a debt-exchange offer to bondholders failed. CIT said in a statement that its bondholders overwhelmingly opted for a prepackaged reorganization plan which will reduce total debt by $10 billion while allowing the company to continue to do business.

The Chapter 11 filing is one of the biggest in U.S. corporate history, following Lehman Brothers, Washington Mutual, WorldCom and General Motors. CIT's bankruptcy filing shows $71 billion in finance and leasing assets against total debt of $64.9 billion.

• • •

CIT's move will wipe out current holders of its common and preferred stock. That means the U.S. government will likely lose the $2.3 billion it sunk into CIT last year in return for preferred shares to prop up the ailing company. The government could have lost billions more, however, had it not declined to hand over more aid to the company earlier this year.

• • •

CIT has been trying to fend off disaster for several months and narrowly avoided collapse in July. It has struggled to find funding as sources it previously relied on, such as short-term debt, evaporated during the credit crisis.

The company received $4.5 billion in credit from its own lenders and bondholders last week, reportedly made a deal with Goldman Sachs to lower debt payments, and negotiated a $1 billion line of credit from billionaire investor and bondholder Carl Icahn. But the company failed to convince bondholders to support a debt-exchange offer, a step that would have trimmed at least $5.7 billion from its debt burden and given CIT more time to pay off what it owes.

Analysts warned that the bankruptcy could add to the uncertainty around loans for the nation's small businesses, especially retailers, which make up a significant portion of CIT's clients and are already struggling with tight credit markets.

And with the Christmas shopping season for those selfsame retailers just around the corner, this could not be more totally awesome economic news!

One wonders--iin vain, I suspect pessimistically---when anyone on the economic policy team in the Obama Administration will finally throw in the towel and admit that the most urgent problem facing our financial sector is not a liquidity issue but a solvency issue; that the Bush administration's version TARP program was motivated primarily by short-term political considerations, and not to be emulated as a serious long-term policy prescription; and that our current financial system is not simply in need of tinkering via limits on executive compensation but is fundamentally broken and in need of tearing down, breaking up, and rebuilding from the ground up.

It's like a house built on a rotten foundation. Sure, you can spend good money to paint the walls a new color, install hardwood floors, hang some new curtains and purchase granite countertops---and so far, that's all the administration, allegorically speaking, has really done---but the structural underpinnings are still rotten and corroded, and in danger of imminent collapse. There's still time to change course, but the administration up to now has shown no signs that it has any intention of doing so. If Obama should end up a one-term President, it will likely be because of his dogged refusal to acknowledge this inescapable reality.

---Vitelius

The Baron's Halloween To-Do List

Not necessarily in this order, however:

• Sex with demons
• Orgies between animals and humans
• Animal and human sacrifices
• Sacrificing babies to shed innocent blood
• Rape and molestation of adults, children and babies
• Revel nights
• Conjuring of demons and casting of spells
• Release of "time-released" curses against the innocent and the ignorant.

That's a lot to humping for only one night! Good thing I scored a batch of mail-order Cialis this week.

I've mentioned this before, but it always bears repeating: these people fixate on the kind of weird, twisted shit that would never cross the minds of the other 99 percent of us, and I guess I will never fully understand why. Maybe it's simple confirmation of Mencken's Theorem, who knows. (H/t Steve Benen.)

---Vitelius

Can We Call it the "Move America Forward" Act?

While our latest War President was busy signing a $680 billion military spending bill this week, folks hereabouts were trying to rustle up some comparative pocket change that might actually, like, benefit people by giving them jobs and stuff:

The mayor today will unveil an ambitious but politically risky transportation plan that fast-tracks several high-profile rail projects to be completed within the next decade. That's a big speed-up, because officials have generally been talking about completing them within 30 years.

Villaraigosa has made building more rail a priority of his administration, though he's the first to admit it's going to take more than speeches and good intentions to get it done.

"Yes, this is a stretch goal. Yes, this is going to be tough, but I think by now folks shouldn't count me out," Villaraigosa said in an interview. "The fact is that this is the most important thing that we can do to alleviate congestion and gridlock, to improve the quality of our air and to really vindicate the people's will for the need to address transportation."

The mayor scored a victory last year when voters approved a measure to help fund the projects, which include a subway to the Westside, the extension of the Gold Line in the San Gabriel Valley, the extension of the Expo Line to Santa Monica and new rail lines along Crenshaw Boulevard and through downtown L.A.

The mayor's office estimates that the revenue from Measure R and other available funds would provide only an estimated $5.2 billion if they were to expedite the projects. The rest would have to come from private-sector partners, the federal government or other public funding.

For projects that are forecast to cost up to three times that amount. And if any of the work gets farmed out to the private sector instead, you can double that. Gotta leave a little extra for the shareholders, after all.

And Villaraigosa is really only scratching the surface here. There are plenty of public transportation projects already in progress here that could be completed a lot more quickly if we had more resources---and we haven't even broached the subject of high-speed rail.

Atrios puts all things in perspective today:

Even if we accept that exciting new but not yet sufficiently planned for projects didn't belong in the stimulus bill, infrastructure is, you know, necessary, and every municipality in the country has on the shelf projects that could be started pretty quickly. These projects tend not to be sexy -- water and sewer lines, station restoration -- but they're necessary and often overdue. There was money for such things in the stimulus, but it's a shame that there wasn't more. And it's going to be a bigger shame if one way or another they don't come up with more stimulus money, whether or not they call it that.

(Map courtesy LA Streets.)

---Vitelius

Nobody Could Have Possibly Predicted

That Wall Street bandits would behave like . . . well, like bandits:

No Wall Street investment firm has emerged from the global financial crisis more intact than Goldman Sachs. Now a five-month McClatchy investigation shows that the firm's winning strategy may have violated U.S. securities laws. The first installment of this four-part series goes live at www.mcclatchydc.com at midnight Eastern time.

I'll post highlights when the report goes live, but for now, we can all rest our minds at ease knowing that the SEC is bound to spring into action, now that they've got a totally awesome guy running its enforcement division:

The U.S. Securities and Exchange Commission named Adam Storch, a 29-year-old from Goldman Sachs Group Inc.’s business intelligence unit, as the enforcement division’s first chief operating officer.

Storch, who joined the SEC Oct. 13, was named to the newly created post of managing executive in the enforcement unit, charged with making the division more efficient, the SEC said today in a statement. At New York-based Goldman Sachs, he had worked since 2004 in a unit at that reviewed contracts and transactions for signs of fraud.

“Adam’s skill in technology systems, workflow process, and project management will greatly benefit the division,” SEC enforcement chief Robert Khuzami said in the statement. “He will help to make us more efficient and nimble and permit us to put more of our investigators on the front lines.”

Update: Here it is!

In 2006 and 2007, Goldman Sachs Group peddled more than $40 billion in securities backed by at least 200,000 risky home mortgages, but never told the buyers it was secretly betting that a sharp drop in U.S. housing prices would send the value of those securities plummeting.

Goldman's sales and its clandestine wagers, completed at the brink of the housing market meltdown, enabled the nation's premier investment bank to pass most of its potential losses to others before a flood of mortgage defaults staggered the U.S. and global economies.

Only later did investors discover that what Goldman had promoted as triple-A rated investments were closer to junk.

Bwahahahahahahahhaaaaa!!!

I wonder if some of the people who've claimed that Matt Taibbi has been talking out of his ass on Goldman Sachs will reconsider their positions when the McClatchy report sees daylight. My guess is, probably not. You don't get the play in the same schoolyard with the coolest kids in the Beltway if you don't genuflect routinely to the same people who've been fleecing you, and the rest of us, for decades.

---Vitelius

Because It's Always Bad News for Democrats

Well, the Post revealed the ten finalists in its Next Food Network Star Next Great Pundit contest today, and frankly, it wasn't worth the wait. All you have to do is take a quick lap through each column, and the eventual winner becomes painfully obvious. By a country mile:

We are on the verge of acknowledging a powerful demographic and political movement long underway -- the shift of congressional districts, and hence critical electoral votes, from safe Democratic states to safe Republican states. On the presidential level, Democrats will lose the equivalent of a safe blue state the size of Oregon, and it's not going purple -- it's turning ruby red. According to Census Bureau estimates, eight states (Iowa, Louisiana, Massachusetts, Michigan, Nevada, New Jersey, New York, Ohio and Pennsylvania) will lose one congressional seat. Five states (Arizona, Florida, Georgia, Nevada and Utah) stand to gain one seat and Texas will add three.

All of which signifies . . . what? That Democrats will lose 10 or 12 electoral votes in the next presidential election cycle? That's a powerful demographic movement, alright. Good thing Barack Obama didn't have to swim against that kind of tide last year. He'd have only won 355 electoral votes instead of 365.

And how does Nevada gain a seat and lose a seat at the same time? Better copy editors, please. Assuming the Post hasn't laid off all of them.

For an editorial page that's already a safe haven for the likes of Hiatt, Cohen, Gerson, Krauthammer and Samuelson, this kid will fit right in.

---Vitelius

Do We Really Have to Wait Until 2012For The End of Civilization to Occur?

Lord, please blow up California. Please do it now.

To every one of you 4,206,284 of my fellow citizens who thought it would be a way-cool and awesomely bitchin' idea to replace a competent if uninspiring career politico---who was going to be term-limited out of his job in 2006 anyway---with this imbecile, I hope you all do your civic duty three years from now and work very, very hard to elect Palin our next President. You richly deserve her.

---Vitelius

Our Awesomely Self-Correcting Free Market

Wait a minute. I thought the Great Recession officially ended yesterday!

No sooner did trading start on Friday morning than a rush of erroneous orders overwhelmed the computers at the New York Stock Exchange. By the time the day was over, the Dow Jones industrial average had plunged nearly 250 points, or 2.5 percent, in its sharpest sell-off since July.

The Standard and Poor’s 500-stock index fell even more — 2.8 percent — to close out October with its first monthly loss since February. The Nasdaq composite index also tumbled.

The sudden decline, coming only days after the Dow was flying above 10,000, left many traders asking the same question: After a stunning seven-month rally, is the stock market finally running out of steam?

Many economic and financial worries, from the troubles of hard-pressed consumers to the travails of Citigroup, dragged financial shares lower through the day. The losses more than wiped out the market’s gains from the day before, when a government report seemed to suggest that the nation’s longest recession since World War II might be ending.

But even though the worst may be over for the economy, many investors now fear that any recovery will be slow and that the recent optimism in the markets may turn out to have been misplaced.

It never fails to amaze me when I hear some conservative/libertarian policy wonk extolling the self-correcting wisdom of free markets. The government reports GDP growth one day, and everyone on The Street goes shopping. Next day comes a weak consumer confidence report, and the sky is falling so sell sell sell. This isn't self-correcting wisdom, it's the same kind of reactionary, short-sighted mindlessness that blew a $10-trillion hole in the global economy last year by convincing itself that the best way to make the most money for shareholders and the biggest bonuses for executives was to accumulate as much unsecured debt as possible, then run to the government when the business model cratered.

Remember the two words they taught you in Econ 101: Greed and fear. Neither impulse is terribly rational by nature.

---Vitelius

Help Wanted: Democratic Governor

I mean, does anybody in the party want the job in California anymore? First Antonio Villaraigosa decides (wisely, I think) not to even bother making an effort. John Garamendi opts to run for a seat in the House of Representatives instead. And Phil Angelides takes a job with the Obama administration. Now comes news that Gavin Newsom is bowing out too. And the election is still a whole year away.

Which more or less clears the Democratic field for the guy who hasn't even announced his candidacy yet.

A spokesman for Attorney General Jerry Brown acknowledged Thursday that he taped a phone conversation with a reporter for The Chronicle this week without disclosing the fact or asking permission -- and admitted he has taped conversations with other news reporters.

Scott Gerber, spokesman for Brown's office, made the admission after the publication of a story in the newspaper that detailed consumer activist Harvey Rosenfield's criticisms of revisions the attorney general made to the summary of a ballot measure that deals with car insurance rates.

California Penal Code Section 632 prohibits the recording of private telephone conversations without consent, and the state is one of 12 states that require notification of all parties prior to taping.

Jim Humes, chief deputy attorney general, said in a statement to The Chronicle Thursday: "In the future, Mr. Gerber will not tape any conversation unless all parties agree." He added that Gerber has recorded "a few other conversations" with reporters and will contact them.

How thoughtful. But since, uhh, the guy works for the fucking Attorney General's office, how about charging him with a violation of Penal Code Section 632 instead? Or maybe even, like, fire him?

Jesus. Every time I start liking Jerry Brown again, he (or someone on his staff, in this case) pulls some stupid crap like this. Are we really destined to be misruled by Governor Whitman for the next four years? I might as well start making plans to defect to Cuba.

---Vitelius

A Major Milestone

Well, the times they are a-changin', now, aren't they?

For reasons I can't quite fathom, Andy Sullivan is still apoplectic:

It's absurd. Does anyone seriously believe that a hate crimes federal law will actually prevent gay bashing? How exactly?

What it will do is allow for extra federal penalties for anyone found guilty of such an attack if its victim was selected by anti-gay bias and if local authorities refuse to prosecute. Now recall that Matthew Shepard's murderers were given the harshest sentence allowed under the law (a hate crime provision would have added nothing) and that sentence was passed down in the absence of any hate crime law in Wyoming. So this bill has zero actual relevance to the Shepard case: in fact, the Shepard case is really salient in showing why hate crimes laws are unnecessary.

Dude, you have got to be kidding. This is huge. No, it won't prevent gay-bashing any more than the Voting Rights Act of 1965 prevented any lynchings. That's not the point. You can't send in in an army to fight an idea, as Victor Hugo once wrote.

This is the first time in the history of the Republic that the Federal government has recognized gay, lesbian, bisexual and transgendered people as deserving of equal protection under the law from discriminatory actions and activities because they are gay, lesbian, or transgendered. Which is to say, the federal government now has the authority to intervene in local issues involving discriminatory behavior against gays and lesbians. For the moment, that kind of behavior is described as "violent," but it sets a precedent for future legislation against non-violent discrimination. Is Andy so myopically hung up on Marriage Right Now that he can't see the forest for the trees? Only an idiot could not see where the passage of this law inexorably leads.

If that's the case, it's sad and unfortunate. Because, just as the Civil Rights and Voting Rights Acts of 1964 and 1965 made Loving v. Virginia an inevitable fait accompli, so will this bill eventually pave the way for the federal recognition of marriage equality. Crikey, Obama just signed into law a bill that recognizes gender orientation as deserving of equal protection under Federal law for the first time ever in our nation's history! Does this not mean anything at all?

Perhaps Andy Sullivan would prefer the alternative to this, in which an incumbent, and conservative, president uses his inaugural address to urge the Congress to use the power of Constitutional amendment to relegate people like him, and his husband, to permanent second-class status. Like I said, this is huge.

---Vitelius

Suicide Bombers: Not Only in Pakistan Anymore

And the only thing these guys are gonna blow up is their own damn party:

The GOP's new line of attack against health care reform is starting to sound familiar.

On Monday, we reported on the House GOP's plans to target AARP in the health care reform debate. Republican leaders say AARP is supporting changes to the Medicare system included in Democratic health care reform bills because they would result in more sales of AARP-branded insurance. They claim that "backroom deals" between executives of the AARP and Democratic leadership -- deals the GOP say are designed to protect the executives' high salaries -- led to the group's pro-Medicare reform stance.

Yesterday, the message gained traction among the right wing commentariat. AARP flatly denies the claims and says it's beginning to feel a little like the GOP's new ACORN.

"Oh, absolutely," an AARP official told TPMDC. "They're using their standard methods to target us."

Yesterday, right wing blogs and publications picked up the story. Michelle Malkin re-Tweeted the House GOP talking points on the topic and Human Events published a story echoing the GOP claims. Malkin and the conservative magazine focused on the corruption message, highlighting the "back-room" dealing.

This is proof positive that the True Believers who have hijacked the Republican Party are acting out some kind of collective-unconscious death wish. Or perhaps somebody should remind them that the only age demographic that didn't prefer Hussein teh Radical Marxist in last year's election was the 65-and-older crowd. What more awesomely better way to win the hearts and minds of your most loyal voting bloc by pissing off the leading nonprofit lobbying organization that 20 million of them are card-carrying members of?

Somebody needs to get ahold of Palin right away: "He's pallin' around with sexagenarians" will be the red-hot meme on Fox for the next news cycle. Perhaps the Club for Growth can organize some Metamucil Parties, or some Senator like Imhofe can introduce a bill to allow open carry of AR-15s at regional Social Security offices. However they decide to proceed, conservatives really are doing their darnedest to ensure that Obama's a two-term President, aren't they? To all of which I can only say, "You betcha!"

---Vitelius

Dignity. It's Hard Work

This really is rich.

Former President George W. Bush told more than 11,000 people at the Fort Worth Convention Center that he was confident he made the right decisions as president, even if it hurt his popularity.

“Every single day I was honored to be your president by bringing honor and dignity to the office,” Bush said Monday afternoon, during his first foray into motivational speaking, at the day-long "Get Motivated" seminar.

We knew this already, of course.

As he marched the nation to war, Bush presented himself as a Christian man of peace who saw war only as a last resort. But in a remarkable though little noted disclosure, Time magazine reported that in March 2002---a full year before the invasion---Bush outlined his real thinking to three U.S. senators, “Fuck Saddam,” Bush said. “We’re taking him out.”

Time actually didn’t report the quote exactly that way. Apparently not to offend readers who admire Bush’s moral clarity, Time printed the quote as “F--- Saddam. We’re taking him out.”

Bush offered his pithy judgment after sticking his head in the door of a White House meeting between National Security Adviser Condoleezza Rice and three senators who had been discussing strategies for dealing with Iraq through the United Nations. The senators laughed uncomfortably at Bush’s remark, Time reported.

And who can ever forget this honorable and awesomely dignified moment, and the folks in attendance who chuckled and guffawed in approval at it:

Heckuva job, Villagers. You sick bastards have as much blood on your hands from the last six years as Dick Cheney does.

---Vitelius

Nobody Could Have Possibly Predicted

That those poor beleaguered health insurance companies really aren't doing all that well, or that the AP wouldn't remind us of it, as if in cue.

In the health care debate, Democrats and their allies have gone after insurance companies as rapacious profiteers making "immoral" and "obscene" returns while "the bodies pile up."

But in pillorying insurers over profits, the critics are on shaky ground. Ledgers tell a different reality.

Health insurance profit margins typically run about 6 percent, give or take a point or two. That's anemic compared with other forms of insurance and a broad array of industries, even some beleaguered ones.

Profits barely exceeded 2 percent of revenues in the latest annual measure. This partly explains why the credit ratings of some of the largest insurers were downgraded to negative from stable heading into this year, as investors were warned of a stagnant if not shrinking market for private plans.

Jesus, where to begin.

Okay, last year Americans plied private health insurers with some $400 billion in premiums. At a paltry six percent margin, that still works out to $24 fucking billion dollars a year in pure profit. The top thirteen insurers alone pocketed close to $15 billion all by themselves.

Perhaps the AP scribe should think things over next time, and ask some simple questions such as, "Well, what's cutting into those insurance industry profits to the point where's there's more money to be made in railroads?" He might've come up with some easily Googled answers. Ezra touches on one of them:

An apples-to-apples comparison would not leave you with the 2 percent of total Medicare spending often bandied about in debate. That doesn't count, for instance, Medicare's premium collection, which is done through the tax code, and thus through the IRS. Nor does it count most of Medicare's billing, which is outsourced -- and this might surprise people -- to private insurers like Blue Cross Blue Shield and listed under vendor services rather than program administration. A more straightforward estimate, according to experts I've spoken to, would be in the range of 5 to 6 percent.

Nor is it easy to measure administrative costs among private insurers. For one thing, which private insurers? When the Congressional Budget Office examined this issue, it found that administrative costs -- including advertising and profits -- accounted for 12 percent of the average insurer's dollar. But that hid substantial variation among insurers. Among employer-based plans, the largest firms had the lowest costs. Plans covering companies with at least 1,000 employees had a mere 7 percent in administrative costs. Those covering companies with fewer than 25 employees spent 26 percent of premiums on administration. And the individual market was a mess: 30 percent.

This tells us a couple of things. First, size matters. The most important predictor of administrative costs is not whether the plan is public or private, but whether it is large. Second, the bulk of these costs are not helping humanity. Some conservative wags have been suggesting that Medicare's administrative costs are too low. But none of those wags, I'd wager, would prefer the small-group market to the large-group market. Others have argued that the difference in administration is that private insurers do an excellent job ferreting out fraud. Unless you believe that only holds true for small business insurers, there's no evidence for that claim.

So tack on another six percent---roughly $24 billion---to the amount of money Americans are paying each year that doesn't go towards keeping them healthy. And those administrative costs have a way of affecting other sectors of the industry too:

Physicians, on average, spent 142.3 hours per year interacting with health plans, or 3.0 hours per week and 2.7 physician work weeks per year. Primary care physicians spent significantly more time (164.9 hours per year) than medical specialists (123.7 hours) or surgical specialists (100.3 hours).

Nursing staff spent an additional 23 weeks per year per physician interacting with health plans, while clerical staff spent 44 weeks and senior administrators spent 2.6 weeks doing so.

Compared with other interactions, physicians, on average, spent more time dealing with formularies (78.2 hours for primary care doctors, for example), and the least on submitting or reviewing health plan quality data (1.9 hours annually for all physicians).

Converted into dollars, practices spent an average of $68,274 per physician per year interacting with health plans; primary care practices spent $64,859 annually per physician, nearly one-third of the income, plus benefits, of the typical primary care physician.

The authors further note that “the estimated $31 billion in costs physician practices incur in their interactions with health plans comprises 6.9 percent of all U.S. expenditures for physicians and clinical services. That is six times the amount the federal government spends annually on the Children’s Health Insurance Program (CHIP).”

Do you get the idea that now we're talking about real money?

In a way, this AP dispatch is wholly indicative of how a great number of mainstream-media National Affairs scribes view their profession, and their role in it: Namely, to act as "gotcha" arbiters in some manipulative numbers game, or to view the healthcare debate as simply another Beltway pissing match, rather than as dispassionate reporters attempting to analyze the merits of a bloated and wasteful system of health delivery in America that kills off thousands of our fellow citizens each year so shareholders can keep receiving their quarterly dividend checks, and executives can continue to pocket their richly deserved annual bonuses. Why oh why can't we . . . oh, never mind.

Update: The other wire service nails it, and doesn't waste precious bandwidth on pointless comparisons of whether Wellpoint's margins were better than Yahoo's.

---Vitelius

In Senior High-School Book Report,Obama Praised Islam, Denounced Capitalism

Honolulu -- A special Brainiac Conspiracy investigation has uncovered a trove of essays, composed by President Barack Obama in the 1970s, that suggest a youthful affinity for the religion of Islam on the part of the future President, and a growing skepticism of the morality of free-market economic theory.

The papers were obtained under a request filed under the federal Freedom of Information Act.

One essay, composed in 1978 by a 17-year old Obama for his senior Literature class at Punahou Preparatory Academy, was entitled, "Is Objectivism Compatible With The Holy Quran?" The essay, a review of the 1957 novel Atlas Shrugged, examines the book's underlying political philosophy, commonly referred to as Objectivism, and compares it to parallel principles discussed in the Quran, the holy book of Islam. Obama provides no explanation within his essay as to why he chose to use the Quran as his critical benchmark.

Atlas Shrugged, written by the Russian emigre Ayn Rand, depicts a dystopian future world where so-called "moochers" and "looters" have won the right to extort wealth from the virtuous class of "producers" by means of coercion and taxation. The book calls for a new paradigm of politics and economics, where individual liberties trump the institutional demands of either church or state. Many conservative economists have cited the book as a influential work in the formulation of modern free-market economic theory; among Rand's more prominent adherents is Alan Greenspan, former chairman of the Federal Reserve Bank.

At one point in his essay, the youthful Obama writes:

Rand's emphasis on the primacy of the individual over the collective, and the material over the spiritual, is highlighted in Atlas in the following passage: "So you think that money is the root of all evil?" said Francisco d'Anconia. "Have you ever asked what is the root of money? Money is a tool of exchange, which can't exist unless there are goods produced and men able to produce them. Money is the material shape of the principle that men who wish to deal with one another must deal by trade and give value for value. Money is not the tool of the moochers, who claim your product by tears, or of the looters, who take it from you by force. Money is made possible only by the men who produce. Is this what you consider evil?"

This would appear to differ, by measures large and small, from the tenets of Islamic charity enumerated here: "Those needy ones who are wholly wrapped up in the cause of Allah, and who are hindered from moving about the earth in search of their livelihood especially deserve help. He who is unaware of their circumstances supposes them to be wealthy because of their dignified bearing, but you will know them by their countenance, although they do not go about begging of people with importunity. And whatever wealth you will spend on helping them, Allah will know of it." (2:273)

Moreover, the character of Galt proclaims capitalism as a moral good, stating: "I am a trader. I earn what I get in trade for what I produce. I ask for nothing more or nothing less than what I earn. That is justice. I don't force anyone to trade with me; I only trade for mutual benefit. Force is the great evil that has no place in a rational world. One may never force another human to act against his/her judgment. If you deny a man's right to Reason, you must also deny your right to your own judgment."

But let's be clear: the Holy Quran preaches a more humble and nuanced approach: "Allah does not love the arrogant and the boastful, who are miserly and bid others to be miserly and conceal the bounty which Allah has bestowed upon them. We have kept in readiness a humiliating chastisement for such deniers (of Allah's bounty)." (part of 4:36 and all of 4:37)

In Atlas, then, no quarter is given to the collective or community when the requirements of those institutions clash with the desires of the individual. Every "producer" of wealth is a law unto himself, free from obligations to either man or God. The Quran, by contrast, stresses individual responsibilities to others, regardless of circumstance, as an obligation of the highest priority. As such, the philosophical and moral tone of Atlas, and of the unregulated laissez-faire economic model it attempts to uphold, can be rightly categorized as anti-Islamic in nature. Less relevant to this survey, Ayn Rand's writing is also really, really lame.

Elsewhere in the essay, the young Obama also refers to the Quran as "a spiritual blueprint for the future implementation of Marxist dialectics" and "my second favorite book after Rules for Radicals." An excerpt from a 1969 anthology, Prairie Fire: The Politics of Anti-Imperialism by Bernardine Dohrn and William Ayers, was included in Obama's original handwritten manuscript, but was excised from the final typewritten draft.

White House aides declined to comment for this story.

---Vitelius

It's Not Really About Swine FluBecause Muslims Don't Eat Pork

Okay, how long before someone in the whackosphere starts braying about forced immunizations, the encroaching of our liberties, and the general sapping of essence of our precious bodily fluids?

President Barack Obama declared the swine flu outbreak a national emergency and empowered his health secretary to suspend federal requirements and speed treatment for thousands of infected people.

The declaration that Obama signed late Friday authorized Health and Human Services Secretary Kathleen Sebelius to bypass federal rules so health officials can respond more quickly to the outbreak, which has killed more than 1,000 people in the United States. The goal is to remove bureaucratic roadblocks and make it easier for sick people to seek treatment and medical providers to provide it immediately. That could mean fewer hurdles involving Medicare, Medicaid or health privacy regulations.

"As a nation, we have prepared at all levels of government, and as individuals and communities, taking unprecedented steps to counter the emerging pandemic," Obama wrote in the declaration, which the White House announced Saturday.

He said the pandemic keeps evolving, the rates of illness are rising rapidly in many areas and there's a potential "to overburden health care resources."

My bet's on Atlas Shrugs to be the first on the block with this, but we'll find out soon enough.

Update: And sure enough, right on cue, we have a winnah!

Of course he's more concerned about H1N1. The swindle flu allows him to declare a state of emergency, which grants the government more power. And I'm sure he's not at all worried about Islamofascists; does anyone think he WOULDN'T, if push came to shove, willingly embrace Sharia? That is, if he doesn't already?

It never fails. Blow the dog whistle, and the faithful start salivating. Maybe the administration should order up a few million rabies shots from the CDC while they're waiting on H1N1 vaccinations.

---Vitelius

I'm With Cole. Bring on President Palin Already

If you needed any more examples to prove that our state's awesome Initiative & Referendum process has run completely amok, here you go.

California Secretary of State Debra Bowen today authorized the backer of an initiative that would ban divorce to begin collecting signatures to put the proposed constitutional amendment before voters.

John Marcotte now has until March 22, 2010, to collect 694,354 signatures of registered voters in order to get the measure on the ballot next year. The proposal would change the California Constitution to "eliminate the ability of married couples to get divorced in California."

Couples could still get their marriages annulled under the proposal.

Here is the official text of the initiative:

ELIMINATES THE LAW ALLOWING MARRIED COUPLES TO DIVORCE. INITIATIVE CONSTITUTIONAL AMENDMENT. Changes the California Constitution to eliminate the ability of married couples to get divorced in California. Preserves the ability of married couples to seek an annulment. Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local government: Savings to the state of up to hundreds of millions of dollars annually for support of the court system due to the elimination of divorce proceedings.

EPIC JOURNALISM FAIL. Here's the bill's author (that's him in the picture) on what kinds of marriages could be "annulled".

Rob Cockerham: John Marcotte. You've filed a petition with the Secretary of State, in an effort to get a voter's initative on the California 2010 ballot.

John Marcotte: Yes. Filed the paperwork on September 1. It's the "2010 California Marriage Protection Act." I am trying to ban divorce in the state of California.

RC: Ok. So your act, if it became law, would make marriage undissolvable.

John: Exactly. The only exception would be if the marriage was "voidable" -- if you married an 8-year-old, you don't get to keep her. She goes back on the shelf. You can't marry the mentally incapacitated, etc.

RC: Ah, ok, so most normal marriages would be irreversable [sic].

John: 99.99% of all marriages would be set in stone. It's a return to traditional values.

RC: Wow, that is amazing. Could it really happen? What steps remain to make this initiative into a valid, enforced law?

John: I am trying to extend the good work done with Proposition 8 last year. It could really happen. The United States has not always had divorce as an institution the way we do now. As a ballot initiative it bypasses the legislature and the governor. It's the will of the people made law.

Bwahahahahahahahaaaaa!!!!

"If you married an 8-year old, you don't get to keep her" . . . These people fixate on the kinkiest shit. Why is that?

Other than that, if I wanted to deter as many people as possible from ever getting married in the first place, I could think of no more effective way to accomplish this than passing this initiative into law. Who the fuck in his or her right mind would wanna roll the dice, knowing that once they'd signed the contract, it could never be rescinded? So your wife turns out to be a two-timing gold-digger? Too bad, pal, you're stuck with her. You say your husband is a serial abuser? Shut up, toots---you need to be obedient to your man the way John Marcotte is obedient to Our Lord. Unless you've got a thing for children or the retarded, that is, in which case you've got an out.

The truly amazing thing is, if it qualifies for the general-election ballot---and given the number of insane ballot initiatives that seem to qualify every two years, I have little doubt that it won't---this exercise in delusion will still end up garnering some 25 percent of the vote. Any measure that turns up on the ballot in California is good for at least that amount of votes. It really does seem sometimes that we as a people are in a race to prove Darwin wrong, doesn't it?

Oh, and can the serious journalists at LA Times get a little more acquainted with teh Google, please?

---Vitelius

The Atrios Decade

Or, the Year America Got Eated:

The cascade of U.S. bank failures this year surpassed 100 on Friday, the most in nearly two decades. And the trouble in the banking system from bad loans and the recession goes even deeper than the number suggests.

Dozens, perhaps hundreds, of other banks remain open even though they are as weak as many that have been shuttered. Regulators are seizing banks slowly and selectively -- partly to avoid inciting panic and partly because buyers for bad banks are hard to find.

Going slow buys time. An economic recovery could save some banks that would otherwise go under. But if the recovery is slow and smaller banks' finances get even worse, it could wind up costing even more.

The bank failures, 103 in all, are the most in any year since 120 collapsed in 1992, at the end of the savings-and-loan crisis. Regulators took over Partners Bank and Hillcrest Bank Florida, both of Naples, American United Bank of Lawrenceville, Georgia, and Flagship National Bank in Bradenton, Florida, on Friday afternoon.

When a bank fails, the Federal Deposit Insurance Corp. swoops in, usually on a Friday afternoon. It tries to sell off the bank's assets to buyers and cover its liabilities, primarily customer deposits. It taps the insurance fund to cover the rest.

Bank failures have cost the FDIC's fund that insures deposits an estimated $25 billion this year and are expected to cost $100 billion through 2013. To replenish the fund, the agency wants banks to pay in advance $45 billion in premiums that would have been due over the next three years.

The FDIC won't say how deep a hole its deposit insurance fund is in. It can tap a credit line from the Treasury of up to a half-trillion dollars to cover the gap.

And we still have ten awesome weeks to go.

---Vitelius

Feel The Insanity!

Altered states: They're not only for pot-smokers anymore.

The folks at Media Matters must be some of the most patient and longsuffering people on the planet to sit through this stuff, hour after hour every day. I can't stand more than ten minutes of this crap, maybe once a month. But point well taken---the White House's pushback is no more a real war against Fox than O'Reilly's imaginary war against Christmas is. Let's hope he administration continues to push back, and hard. These bullies deserve every minute of ridicule they can possibly get.

---Vitelius

BHO: Nine-Month Report Card

Taibbi has issued it, and it's ugly. It also, sadly, rings true for me:

Barack Obama ran an incredible campaign last year, managing to turn himself into the stuff of political iconography — he captured and owned amorphous and happy concepts like “hope” and “change” through a brilliant 18-month run of painstakingly careful imageering, and through the force of his own remarkably genial and patient personality. He took a country which historically has always been divided powerfully by race and he managed to win a hotly-contested race with grace and class and in that sense advanced the cause of racial tolerance to an incalculable degree. He made the racist electoral strategies of Karl Rove and Mark Penn outdated. And he gets credit for restoring respect for the American presidency abroad.

But he also inherited a terrible financial crisis and he completely whiffed on it, siding with the financial status quo, who happen to be the bad guys. And in general, policywise, he has turned out to be eerily in sync with the previous administration, even down to some of the more obvious and egregious stuff, like the Guantanamo business and his amazing, perhaps illegal, and completely inexplicable refusal to investigate the ICRC (Red Cross) claims of systematic torture there.

And because of that, he can now be attacked on the iconic level just as he as once elevated there, made now into a symbol of anti-change — which in fact is beginning to be what he represents. We need some courageous politician to step up and offer us a symbol not of reassuring pablum but of that spirit which is needed at the moment, revolt and a return of political power to the voter. And when people coalesce around that image, it will throw the real meaning of the Obama phenomenon into relief. This will be too bad, given the historic import of Obama’s amazing run, but it’s just necessary, unfortunately.

We need someone who will run on one very basic principle —- the refusal to accept corporate money.

Exactly. And it's the reason why an imbecile like Palin can continue to gain traction with a sizable bloc of the populace---not because she won't whore herself out to corporate interests at the drop of a dime but because of her ability to re-brand herself as a simple apolitical soccer mom, free of any Lower 48/Wall Street corruption, to a considerable percentage of the voting public. Obama needs to come to grips with the degree of blind, furious anger that's swirling out there among the electorate right now, be it Teabagger madness or Progressive restlessness, and figure out how to harness that energy to his administration's---and by extension, the nation's--- best advantage. Perhaps this week's Wall Street pay cuts were the opening salvo, we'll find out. But as Matt writes, this administration had a pretty clear mandate to rewrite the rules of American crony capitalism in a way that no American President has had since Franklin Roosevelt, and so far, he's been a big disappointment. There's still time to rectify this situation, but the window is growing ever smaller each day---it's already petty minuscule now. And any well-meaning but essentially craptastic policy initiative that only penalizes people like Fritz Henderson who were willing to play by the rules and leaves the Goldman Sachses and the Morgan Stanleys alone and unmolested ain't gonna cut it. Not now, not tomorrow, not ever. We need a 70-percent top marginal income tax rate, a ban on derivatives trading on unsecured debt, restoration of minimum capital requirements for mergers, acquisitions and issuance of debt, and a permanent division of investment and commercial banks. This isn't even "change" per se---it's only a restoration of the status quo that existed in this country before the Friedmanites and the Randians and the supply-siders came riding into Washington on the coattails of Emperor Ronaldus Maximus. How fucking difficult can this possibly be?

---Vitelius

Achieve Your Dreams: Dare to Be Insolvent!

I am going to ask my day-job boss if I an go to this totally awesome seminar, but if he turns me down, would you consider making a generous donation to my Tip Jar?

I mean, check it out: Zig Ziglar, Terry Bradshaw, Bob Schuller, Rudy G, and our 43rd President, all under one Big Top, to boost my productivity and improve my business skills! I am so all over this like a cheap suit.

Ya gotta love the ethnic diversity in that line-up, doncha?

For those who've forgotten, let's review this stellar resume:

• Arbusto, an oil exploration company, lost money, but it got considerable investments (nearly $5 million) because even losing oil investments were useful as tax shelters.

• Spectrum 7 Energy Corp. bought out Arbusto in 1984 and hired Mr. Bush to run the company's oil interests in Midland, Texas. The oil business collapsed as oil prices plummeted by 1986, and Spectrum 7 Energy was near failure.

• Harken Energy acquired Mr. Bush's Spectrum 7 Energy shares, and he got Harken shares, a directorship, and a consulting arrangement in return. Harken, under Bush, brought in Saudi real estate tycoon Sheikh Abdullah Bakhsh as a board member and a major investor. Over the next few years, Harken would turn out to have links to: Saudi money, CIA-connected Filipinos, the Harvard Endowment, the emir of Bahrain, and the shadowy Bank of Credit and Commerce International.

A 1991 internal SEC document suggested George W. Bush violated federal securities law at least 4 times in the late 1980s and early 1990s in selling Harken stock while serving as a director of Harken. This is essentially the same kind of activity that Martha Stewart is going to prison over. Except at the time of the investigation, Mr. Bush's father was president and the case was quietly dropped.

And let's not forget this example of savvy corporate awesomeness:

The privately held company, called Caterair International Inc., was created in 1989 when Marriott Corp. spun off its airline catering business to investors organized by the Washington investment bank the Carlyle Group. If you haven't heard of it, Carlyle is a sleek financial operation that does its deals with help from a roster of former government big shots such as former defense secretary Frank Carlucci, former secretary of state James A. Baker III and even former president George Herbert Walker Bush. As of 2001, a newspaper article pegged Carlyle's value at about $12 billion.

The Caterair deal was a piece of financial engineering known at the time as a "leveraged buyout." It was financed mostly by high-yielding "junk bonds," of the sort pioneered in the 1980s by Michael Milken, who later served jail time for his financial shenanigans.

Carlyle and its investors paid about $570 million for Marriott's In-Flite Services division, which the hotel wanted to sell so it could concentrate on its core business. The investor group was headed by Frederick V. Malek, a Carlyle senior adviser who had served as director of the 1988 Republican convention -- the one that nominated Vice President George H. W. Bush.

Malek resigned in September 1988 as a high-level adviser in the elder Bush's campaign after disclosure that in 1971, at the insistence of his boss, President Nixon, he had compiled a list of Jews at the Bureau of Labor Statistics, who, Nixon suspected, were part of "Jewish cabal" that was distorting his economic achievements. Several on the list were later transferred to different jobs, but Malek said he had no role in personnel decisions and denied he had willingly engaged in anti-Semitic conduct, arguing that he had been coerced by Nixon's repeated requests. The Malek flap didn't hurt his friend the vice president, who was elected as the nation's 41st president in November 1988.

It was Malek who suggested that George W. Bush join the Caterair board in 1990, according to a 1991 article in the New York Times. "I thought George W. Bush could make a contribution to Caterair," the Times quoted Malek as saying. "He would be on the board even if his father weren't President."

A March 2001 profile of Carlyle in the Times noted that the investment bank "gave the Bush family a hand in 1990 by putting George W. Bush, who was then struggling to find a career, on the board of a Carlyle subsidiary, Caterair, an airline-catering company."

Bush remained on the Caterair board until May 1994, according to a Sept. 17, 1994, article in the Dallas Morning News. He said he resigned so he could concentrate on his campaign for governor of Texas. The paper reported that Bush had previously disclosed that he owned between 1,000 and 4,000 shares of "stock appreciation rights." What intrigued the Dallas newspaper was that Bush had dropped the Caterair connection from his official campaign resume in August 1994.

At that time, Caterair was staggering under its huge debt load, and because of unforeseen changes in the airline catering business. The Dallas paper noted at the time that in SEC filings, Caterair had disclosed $263 million in operating losses and writeoffs since its 1989 founding.

Now, believe it or not, I am not going to flame 43 too excessively for leveraging the power of his name to earn a few shekels on the motivational speakers circuit. Bill Clinton worked a few of these kinds of gigs earlier in the decade, though I believe he was hanging with the Tony Robbins-Marianne Williamson crowd rather than the Ziglar-Schuller cabal. But honestly, after the last eight years, who in their right mind would be so fucking stupid to plunk down any money, or invest any time, to listen to President Mission Accomplished prescribe his proven formulas for success and prosperity?

Whatever you do, when you make a donation to my Tip Jar, do it on a credit card that's already maxed out. Then simply don't pay it back when the bank statement comes. Our 43rd President wouldn't have it any other way.

---Vitelius

Too Bad He Forgot to Mention ThoseLiberal Nazi Euthanasia Programs

Just when you think that the wacknuts can't sink any lower . . . well, they do.

Conservative talk show host Rush Limbaugh suggested this week that perhaps climate change reporter Andrew C. Revkin of The New York Times should take his own life to reduce carbon emissions, if he felt it was so important to the planet's future to reduce them.

"If he really thinks that human beings, in their natural existence, are going to cause the extinction of life on Earth," Limbaugh asked, "Mr. Revkin, why don't you just go kill yourself, and help the planet by dying?"

Limbaugh accused Revkin of being part of a radical environmentalist fringe . . .

Limbaugh invoked the much maligned Chinese government's "one child" policy -- and made pointed comparisons to jihadists and Palestinian suicide bombers.

Called for comment Wednesday afternoon, Limbaugh's producer, Kit Carson, said the host was not available.

Revkin has received angry hate mail and telephone messages. He wants Limbaugh to apologize to the rest of his family — especially his older son, a regular Limbaugh listener who is, Revkin says, currently serving in the Israeli military.

I've often wondered if there is anything---anything---that this oaf can utter over the airwaves that won't eventually offend most of his listeners. That millions of people can listen to, and applaud, this guy without devoting a single iota of their combined mental energies to any kind of independent thought has always amazed me, in some weird and scary way, and I guess I will never quite understand the Dittohead Mentality, no matter how hard I try to decipher it.

---Vitelius

Why Does Robert Gibbs Hate America?

Good to see a little show of spine at today’s press gaggle:

The White House slammed Dick Cheney Thursday, accusing him of years of neglect of Afghanistan, after the ex-vice president said President Barack Obama was "dithering" on troop decisions.

The latest fierce feud over national security between the past and current administrations flared up as Obama nears a fateful choice on whether to order thousands more troops to the Afghan war after an exhaustive strategy review.

"What vice president Cheney calls dithering, the president calls his solemn responsibility to the men and women in uniform and the American public," White House spokesman Robert Gibbs said.

Gibbs said Cheney was in no position to fault Obama, saying he had ignored a previous request for more troops, lodged with the Bush administration and only met by Obama in March, soon after he came to office.

"The vice president was for seven years not focused on Afghanistan. Even more curious given the fact that an increase in troops sat on desks in this White House, including the vice president's for more than eight months," Gibbs said.

"I think we've all seen what happens when somebody doesn't take that responsibility seriously."

(Cue the rim shot.)

It’s good to see this level of feistiness coming from the White House now, not only in regards to Cheney but to Fox News (and, by implication, the rest of the wacknut noise machine) as well. If there’s anything the administration seems to have finally learned at this point, it’s that there is no point in dignifying people like Dick Cheney with the slightest modicum of respect, and there is likewise no substantive political price to be paid, outside of the Old Confederacy, to standing up to these bullies and giving them the public tongue-lashing they've richly deserved for years. It’s a lesson we’ve been waiting for Congressional Democrats to learn for the past few years. Hopefully, some of the White House’s gumption will be contagious on the Hill.

---Vitelius

If You Don't Want the Interview, Shut it Off

I'll be the first to admit that the prospect of another Brown Governorship does not set my heart a-flutter. He was ineffectual at best the first time around, and during the time I spent in Oakland when he was the mayor there, he seemed more interested in erecting glistening monuments to his own brilliance than in actually doing the hard work of governing, like, patching potholed roads in blighted neighborhoods and stuff like that. But given our executive leadership of the past seven years, even with Brown's deficiencies he certainly represents a quantum leap in virtually every category relevant to wise and competent governance. Let's hope he keeps to the theme, and plays to the persona, that he signifies here: Namely, calling out the kind of self-serving and pro-corporate bullshit one sees on display each night on a network such as CNBC. In a state such as California, mired in the depths of a Great Recession, I see no possible downside to this tactical approach in a statewide electoral campaign. And neither, I gather, does he.

(H/t Calitics.)

---Vitelius

Gotta-Read of the Day: Blame the Unions Edition

I'm sure there's a certain amount of self-serving logic in this essay, but there's also quite a lot in it that rings painfully true, and either way, it's a fascinating look behind the scenes at the Obama administration's GM and Chrysler restructuring efforts, by the guy who was charged with pulling them off. One example of spot-on analysis (and there many) comes here:

Everyone knew Detroit's reputation for insular, slow-moving cultures. Even by that low standard, I was shocked by the stunningly poor management that we found, particularly at GM, where we encountered, among other things, perhaps the weakest finance operation any of us had ever seen in a major company.

For example, under the previous administration's loan agreements, Treasury was to approve every GM transaction of more than $100 million that was outside of the normal course. From my first day at Treasury, PowerPoint decks would arrive from GM (we quickly concluded that no decision seemed to be made at GM without one) requesting approvals. We were appalled by the absence of sound analysis provided to justify these expenditures.

The cultural deficiencies were equally stunning. At GM's Renaissance Center headquarters, the top brass were sequestered on the uppermost floor, behind locked and guarded glass doors. Executives housed on that floor had elevator cards that allowed them to descend to their private garage without stopping at any of the intervening floors (no mixing with the drones).

In my relatively few interactions with chairman and CEO Rick Wagoner, I found him to be likable, dedicated, and generally knowledgeable. But Rick set a tone of "friendly arrogance" that seemed to permeate the organization.

Certainly Rick and his team seemed to believe that virtually all of their problems could be laid at the feet of some combination of the financial crisis, oil prices, the yen-dollar exchange rate, and the UAW.

And here's a little "friendly arrogance" in action, after the decision has been made to fire Rick Wagoner.

Rick Wagoner and his team were scheduled to be in Washington the following day, March 27, to discuss the progress of GM's restructuring. I was also aware that the GM board was meeting by phone every Friday during this crisis and asked Rick's assistant for a few private minutes with him, early enough to be sure it preceded that board call.

I don't know whether Rick had any inkling of why I had wanted to see him alone. His face was impassive as I said, "In our last meeting, you very graciously offered to step aside if it would be helpful, and unfortunately, our conclusion is that it would be best if you did that."

I told him of our intention to make Fritz acting CEO and he supported that idea, cautioning me against bringing in an outsider to run the company. "Alan Mulally called me with questions every day for two weeks after he got to Ford," he said.

As we continued our rather awkward conversation, Rick suddenly asked, "Are you going to fire Ron Gettelfinger too?" Startled by the reference to the UAW head, I replied, "I'm not in charge of firing Ron Gettelfinger," and Rick soon left to brief his board on our decision.

Bwahahahahahhahhaaaa!!!

As if Ron Gettelfinger had any decision-making power over GM's product planning, brand management, platform engineering, powertrain engineering, body-on-frame, labor relations, government relations, quality assurance, dealer relations, design, marketing, media relations and advertising divisions for the last six years.

And if only Ron Gettelfinger's company had received $50 billion dollars in federal bailout money, too. Jesus, this guy was not only arrogant; he was, on a certain level, dumb as an MBA.

I was critical at first of the Obama team's handling of Wagoner (I can't find the link at present, it's somewhere deep in the bowels of this site) and at the time, I chalked it up more to political grandstanding than to a meaningful attempt to change the culture at GM. After reading Rattner's essay, though, I've changed my mind. Dan Neil was right after all.

---Vitelius

Sternly Worded Warnings We Can Believe In

All I can say to this is: Good. But nowhere nearly good enough.

The Obama administration plans to order companies that received huge government bailouts last year to sharply cut the compensation of their highest paid executives, according to a person familiar with the decision.

The seven companies that received the most assistance will have to cut the annual salaries of their 25 highest-paid executive by an average of about 90 percent from last year, said the person, who spoke on condition of anonymity because it has not been announced.

This person said Wednesday that the Treasury Department will announce the deep pay cuts within the next few days.

Kenneth Feinberg, the special master at Treasury appointed by Obama to handle compensation issues at the seven firms getting exceptional assistance from the government's $700 billion financial bailout package, is making the pay decisions.

The seven companies are: Bank of America Corp., American International Group Inc., Citigroup Inc., General Motors, GMAC, Chrysler and Chrysler Financial.

Total compensation for the top executives at the seven firms will decline, on average, by about 50 percent, according to the person familiar with the administration's decision.

Conspicuously absent (sigh): Goldman Sachs. And yes, they have, in theory, “paid back” the $10 billion in TARP funds they were loaned directly last year. But what has never been paid back, and never will be, was the TARP money that Goldman received via failed money laundering operation insurance giant AIG. Matt Taibbi:

Well, when--—if AIG had been allowed to proceed to an ordinary bankruptcy without government intervention, Goldman Sachs might actually have gone out of business, because AIG owed Goldman about $20 billion at the time. But what happened instead, you know, Goldman was able to appeal to its former chief, Hank Paulson in the Treasury, who engineered an $80 billion taxpayer-funded bailout of AIG, and immediately about 13 billion or 14 billion of those dollars went directly to Goldman Sachs. So this was really Goldman Sachs bailing out Goldman Sachs in the middle of the bailout.

What’s important to remember is that that same week that the AIG bailout happened, Hank Paulson elected not to rescue Lehman Brothers. So Goldman Sachs went from facing almost certain disaster to seeing their primary competitor leave the market and getting $13 billion in money from the taxpayer.

Seems to me that if the Obama administration really wanted to really punish these firms for reckless behavior or to make it more difficult for their boards of directors to dole out lavish salaries and bonuses, well, how about if we simply make it a little harder for companies like Goldman to amass so much excess capital to pay those salaries in the firsts place? Matt again:

They paid $14 million in taxes last year, which is an effective tax rate of about one percent, which means that they paid in taxes about a third of what CEO Lloyd Blankfein actually made in compensation last year. And that sounds like an amazing number. And if you—their excuse for why that is, is because they had changes in their so-called geographic earnings mix, which basically means that they moved all their revenues to foreign countries, where the tax rates were lower. And so, Goldman, which was, again, the beneficiary of massive subsidies during the bailouts, you know, paid really just a pittance in taxes last year. (Emphasis added.)

Especially when one considers where the rest of the TARP money seems to have gone---or hasn't, as the case may be.

The man who watches over the $700 billion in government money given to banks and other institutions to avert a financial collapse said Wednesday he thinks it's too early to say how much will be repaid to the taxpayers.

Just as the Obama administration prepares to announce a new TARP-like program for small community banks, Inspector General Neil Barofsky said he believes that "it's unrealistic to think we're going to get all of that money back."

The Treasury Department has spent more than $454 billion through TARP programs. Forty-seven recipients have paid back nearly $73 billion. That means more than $317 billion remains outstanding with the program set to expire Dec. 31.

Let’s see now: 73 ÷ 454 = 16 percent. Awesome return on investment!

This really does fall into the "sternly worded warning" category since I can't see how it accomplishes anything substantive in the way of change from the financial sector, other than maybe managing to scrounge up a few billion more dollars for TARP reimbursements that would otherwise have gone for some fund manager's bonus check. But hey, it looks good at first glance--and when you're still running cover for Hank Paulson's buddies, that's all that really matters. Because when you dig beneath the surface, you can't help but notice how rotten the foundation our national house of finance really is, and how deeply both political parties are compromised by their duplicity in its collapse.

---Vitelius

The Awesomeness of False Equivalencies

Village logic, on display today at the Post:

There’s only one thing dumber than picking a fight with people who buy ink by the barrel -- picking a fight with people who don’t even have to buy ink. The Obama administration’s war on Fox News is dumb on multiple levels. It makes the White House look weak, unable to take Harry Truman’s advice and just deal with the heat. It makes the White House look small, dragged down to the level of Glenn Beck. It makes the White House look childish and petty at best, and it has a distinct Nixonian -- Agnewesque? -- aroma at worst. It is a self-defeating trifecta: it distracts attention from the Obama administration’s substantive message; it serves to help Fox, not punish it, by driving up ratings; and it deprives the White House, to the extent it refuses to provide administration officials to appear on the cable network, of access to an audience that is, in fact, broader than hard-core Obama haters.

Got that? The Nixon administration threatened news organizations like the New York Times and the Washington Post with legal (and illegal) retaliation for publishing accurate accounts of crimes at My Lai and at the Watergate Hotel that the administration wanted to keep hidden from view. As one of them put it at the time:

Katie Graham's gonna get her tit caught in a big fat wringer if that's published.

The Obama administration, on the other hand, simply calls out Fox News for peddling proven falsehoods, fabrications, and psychotic rants, and in the antiseptic, context-free Village schoolyard, it's all the same difference. How much does the Post pay these people, anyway?

---Vitelius

Yes, I Know, the Mere Mention of ThisIs a Declaration of Class War, But . . .

It's time to break out those Lee Greenwood LPs!

The level of poverty in America is even worse than first believed.

A revised formula for calculating medical costs and geographic variations show that approximately 47.4 million Americans last year lived in poverty, 7 million more than the government's official figure.

The disparity occurs because of differing formulas the Census Bureau and the National Academy of Science use for calculating the poverty rate. The NAS formula shows the poverty rate to be at 15.8 percent, or nearly 1 in 6 Americans, according to calculations released this week. That's higher than the 13.2 percent, or 39.8 million, figure made available recently under the original government formula.

That measure, created in 1955, does not factor in rising medical care, transportation, child care or geographical variations in living costs. Nor does it consider non-cash government aid when calculating income. As a result, official figures released last month by Census may have overlooked millions of poor people, many of them 65 and older.

By the end of today, I predict that Rush, or Beck, or Mikey Steele will have proclaimed this revelation as a symptom of the "Obama Recovery". The phrase will be repeated nonstop for the remainder of the week by the myriad mynah birds on Fox, regurgitated by the ruminants at The Corner and Newsmax, and discussed in all seriousness by Blitzer, Matthews and Kurtz. Come the weekend, Presidents Lindsay Graham and John McCain will be called upon to analyze it for the Sunday talk shows, and prescribe the proper remedies: School vouchers, tax cuts, prosecuting ACORN for violating federal RICO laws, and allowing open carry of RPG launchers in America's national parks. Because we live in the most awesomely free country.

--Vitelius

My Cold Dead Keyboard

Regular readers of this blog may recall the post from a few days ago detailing a recent Democracy Corps survey of the growing epidemic of mass hysteria that's afflicting so many self-styled conservatives in America.

The self-identifying conservative Republicans who make up the base of the Republican Party stand a world apart from the rest of America, according to focus groups conducted by Democracy Corps.

Well, today comes further confirmation of the "alternative reality" theory: An awesome new computer game! (Don't go there unless you don't mind giving them the traffic.)

It is the year 2011. The United States has become saturated with suspicion and unrest. Since early 2010, President Barack Obama, President Felipe Calderon of Mexico, and Prime Minister Stephan Harper of Canada have been conducting private meetings with each other and various political heads of the U.N. None of the meetings are open to the media, let alone the public.

The secrecy of the President became an issue tacked onto the political platforms of candidates running for the Senate and Congress in the November 2010 elections. Americans, thoroughly disgusted with the socialistic programs that have been thrust upon them over the last few years, vote out seventeen of the nineteen Democrats in the Senate and 178 in Congress that were up for reelection. When asked for his opinion on this monumental power shift in favor of liberty-minded Republicans during the November elections, President Obama is quoted as saying the elections were "ultimately inconsequential;" he allowed the cryptic statement to stand alone and said nothing more on the subject until January's swearing-in ceremony.

In January 2011, two days prior to the swearing-in of the new Senators and Congressmen, President Obama holds an emergency conference that interrupts the regular broadcasting of every station in the United States, and is replayed on major news networks throughout the day. The news is horrifying, and the ramifications of what the president has said have a numbing effect on the public.

Private ownership of firearms has been outlawed, and Obama promises a new era of equality and peace. Unfortunately for Obama, Americans will not act like the sheep he has taken them for. Revolution begins. Over 20 million armed American citizens begin seizing local and federal government buildings and officials.

Stephen Colbert should sue these dudes for royalties.

Okay, what's the object of the game, and how do you play?

Location: Virginia, U.S.A.
You are a militia commander and in control of 1 county.

Mission: To defeat all enemies of the United States, both foreign and domestic. Includes:
C.O.R.N.Y. (Congress of Rejected and Neglected Youth) Shock Troops
Obama's police force (Ameritroops)
The Cong (Former congressional leaders)
Nation of Malsi (Islamic fundamentalist troops)
Black Tigers (black nationalist troops loyal to Obama)
NHKS (National Honor Killing Society) Yet another Islamic army
I.S.U.E. ( International Service Union Empire) Troops

And finally . . . drum roll, please:

U.N. (United Nations) Peacekeepers

To Win: If you control 10 counties by end of turn 40, you get 1 'win' in challenge section.

Game Time: 1 turn per minute with each turn representing days of battle. It takes 2 turns to take over a district, county, or city with the Blitzkrieg attack. All troops in a Blitzkrieg cannot be used until Blitzkrieg is settled.

Misc. Details: Be sure to train your troops at start-up by clicking 'resources' then paying for the type of militia troops you want. You will need to do this every turn ( every minute). You start with 3000 points and get 300 more militia recruits eager for battle per turn per county controlled. You will also get more militia troops joining after each battle you are in, as the people are eager to defeat all tyrants. You will also get 300 points per turn per county controlled.

Note: Your mission is to control as many counties in Virginia as possible. Enemy forces are in most counties so do not hesitate to attack any player not under your control as anarchy reigns in Virginia until Obama and his loyalists are defeated and game ends after 40 minutes (40 turns).

So basically, it's just like Halo 3, only you're supposed to shoot at anything that moves, including people who might actually your allies, and the game's totally bitchin' graphics would appear to make the green hills of Virginia look like the suburbs of Greater Kandahar:

If you managed to get through the video without wetting your pants from laughter, you are made of sterner stuff than I. (H/t Neiwart.)

---Vitelius