Blog Update

With my formal book tour over and the press of other commitments, I won't have time for now to do much blogging (as many of you have already noticed and pointed out!). However I do expect to be doing regular columns for The Daily Beast, and contributing op-ed columns as well to The Financial Times, The Wall Street Journal, and other such outlets. If you're interested in following this work please do sign up for the email list on the site -- I'll be sending out new pieces as they appear. Many thanks for your interest.


Another Beast column

This one on Ben Bernanke's latest moves.


Wall Street Ethics In Brief

From The Big Picture, one of my favorites blogs:

When a fireman sees a house on fire, he sounds an alarm, dons his turnout gear, bravely rescues the occupants and puts out the fire.

When an investment banker sees a house on fire, he quietly sells the burning house short, uses the proceeds to buy a larger house for himself and, when someone suggests that his taxes be raised to help the homeless, he rails against the dangers of socialism.


Give The Bonuses Back --Or Else

I have a new piece up on The Daily Beast today on the AIG bonuses.


Obama's No Socialist

I have new piece in The Daily Beast today on why top earners should relax because Obama's new tax plan still subsidizes them very generously.


The AIG Black Hole

Barry Ritholtz lays out the awful truth about how the AIG bailout is really just bailing out the brand name Wall Street firms who made bad derivative bets. That's where much of our $170 billion or so has gone. In the name of "preventing systemic risk." Maybe there will be a revolution once people really understand what's happened...

Forbidden Environmental Fruit

Interesting piece in Foreign Affairs about geoengineering, the idea that we might try to directly re-engineer stuff in the atmosphere to address climate change if we can't get our global act together to reduce carbon emissions in the decades ahead. This has generally been considered fringe stuff with real sci-fi overtones (as well as something no one wants to talk about because if pols think this can really work they'll skip the hard work of actually cutting emissions). So FA's publication of a serious piece making the case for examining this option more fully marks a new moment in the evolving debate methinks. Worth a look.

Lerach's Letter From Prison

Have another piece in the Daily Beast based on an idea from Jody that I blogged about here, about siccing Bill Lerach on the banks to get back their ill-gotten bonuses. Lerach himself replied with a long letter from prison on how the feds can do it, which you can read at the Beast. Here's hoping the authorities follow up....


The Failure of Economics

Mark Thoma has great post on new paper about the systemic failure of economics as a field in not helping us avoid today's crisis or having enough relevant things to say about our most pressing problems.


Beastly Again

I have another new piece up today on the Daily Beast as the budget wars begin....



FYI I've got a piece up today on Obama's new budget on The Daily Beast.


Quick Morning After Thoughts On Obama's Speech

1 - These thing are always a Rorschach test, but in our household Obama was king of the world last night. In fact, my wife Jody (as usual) had the best quick take when he was done. "After he does eight years as president," she said, "he'll clearly go on to be president of the world." She meant that since we'll increasingly be looking for new forms of global governance to deal with all the important stuff that can only be dealt with across borders, Obama will create or lead whatever premiere institution has emerged or is being set up in this regard. Yes, I know, we've got a recession to conquer and health care, energy and education to fix first. Still, sounds like a plan!

2 - During the always amusing cutaway shots I couldn't help noticing the wistful looks on many of the presidential wannabes in the audience, all of whose faces had the same sentiment grudgingly etched in italics: "I really wanted this, but this guy's got the goods in ways I never will." On my list that captured John Kerry, Evan Bayh, John McCain and Jay Rockefeller. Maybe I missed some.

3 - Can't wait to see what Obama said was the $2 trillion in budget savings over ten years they've already identified when the budget outline gets unveiled Thursday. Team Obama is laying the groundwork for the kind of budget honesty we haven't seen since -- well, since Clinton, in whose OMB I proudly served. If the $2 trillion over ten is real stuff (and not magic asterisky) it will be fabulous. Fingers crossed.

4 - Wonder if anyone else was as struck as I was by Obama's message to kids about not dropping out of high school. If you drop out, he said, "you're not just quitting on yourself -- you're quitting on your country." Why hasn't a president put it that way before? Another great example of Obama's instinct for using the bully pulpit to make a difference. Look for that quote to be up on placards in high poverty schools across America soon. Hope they develop a more detailed "hang in there" You Tube message from Obama that schools and other caring adults can show to every kid who's at risk of dropping out.


A Case for Hope

Lots of people I know are deeply depressed as they watch the Dow spiral down toward 7000 -- I'm no less gloomy when it comes to the market because we've been been riding it down, too. And I'm no stock market guru (if such a thing exists), so I have no idea when things will turn.

But I'll tell you what gave me supreme hope Monday: watching Obama conduct what amounted to a national teach-in at the end of his Fiscal Responsibility Summit at the White House. Find the clips on You Tube and watch them. (Start here, here, here, and here.) Obama led a conversation about our fiscal and economic challenges with a hundred or so assembled pols and other community and interest group leaders, and in its seriousness, civility, candor, and humor, it was a thing to behold.

He called on John McCain first, led the conversation through assorted Democratic and Republican leaders, including GOP House leader Eric Cantor (who clearly looks in the mirror each morning and imagines he sees the next Newt Gingrich). Obama's masterful framing of the issues, the respect and deftness with which he treated and integrated all views, his shrewdness in knowing how much coveted national TV airtime he was giving even to those who disagreed with him...all of this amounted to a new model of presidential leadership that I think we're going to see much more of.

Obama is trying to create a climate in which our real long-term challenges can actually be talked about and addressed. These necessarily involve finding ways both parties can work constructively together, in spite of their simultaneous ambition to clobber the other at the polls. This bipartisan gambit - a determination to create a new space in our political culture where real problem-solving can take place across party lines -- is at the core of Obama's real audacity (a point I argue in a Wall Street Journal op-ed on Tuesday, and which I think many liberals who've bashed Obama's GOP outreach have failed to appreciate).

It gives me real hope even amidst the bad economic news because Obama's eye is plainly on long-term problem solving -- which is what our economy needs -- no matter the day to day fears and rumors that hold so many Wall Street traders in their myopic grip.



FYI I have a new column up at The Daily Beast entitled, "You Don't Deserve To be Rich." It's about what we might do now that it looks like capitalism isn't a meritocracy after all.


Always Nice To See

WSJ reports that a number of top mutual fund managers did very well for themselves in 2008 even as those who invested with them lost their shirts. Some CEOs and chief investment officers pulled down $4 to 5 million while their funds were off 16% and 38%. Always nice to see merit rewarded in the free market....

Health Scandal

A new report from my colleagues at the Center for American Progress shows that 100,000 people are losing health insurance each week in this recession. Only in America does a president need to seek "emergency" funding as part of an economic stimulus to try to stem this calamity that comes with rising unemployment - all because America remains uniquely in the grip of the dead idea that health care should be tied to one's job. For those who say we can't afford to do health reform, the fact that an economic downturn leaves people at risk of medical bankruptcy (and worse) is proof that we can't afford NOT to do health reform. Hopefully Obama will make that clear in his State of the Union and budget presentations next week.


Harold's Point

Make-you-think column by Harold Meyerson in the Post on how unions might have mitigated today's woes in context of the US-China imbalances. Highlights:

At the center of the global meltdown, then, is the misshapen economic codependency of the United States and China. Each has followed a fundamentally unstable economic model, with one nation suppressing wages so that it could export more and the other living on borrowed funds so that it could purchase more. Despite the sharply different roles that each nation carved for itself, though, a shared characteristic allowed them to chart their ultimately disastrous course...What do the United States and China have in common? They are the only two major economic powers that are resolutely hostile to unions....

But suppose that China and the United States did have powerful unions. In China, such unions might have pushed for higher wages, social insurance and more domestic consumption. Here, such unions would have preserved more of a manufacturing sector and boosted wages in the service and retail sectors, so that American consumers could have relied more on income than on credit to make their purchases. The two nations would have had more sustainable economic strategies.
I'm not sure he's right, but I'm also not sure he doesn't have an important point. Worth mulling, especially for those who reflexively oppose unions.

Shocking bank factoid of the day

Fascinating op-ed in NYT today that points out something I had not been aware of - the TARP money went to bank holding companies, not the bank subsidiaries themselves, which seems like an enormous benefit to shareholders and incumbent management but not at all a way to assure capital adequacy in the actual banks. Highlights:
While TARP has been generous with bank holding companies, these companies have not been so generous with their banks. Four large holding companies — JP Morgan, Citigroup, Bank of America and Wells Fargo — initially received a total of $90 billion in TARP money in the fall, but by the end of 2008 they had contributed less than $15 billion in equity capital to their subsidiary banks....[This] means that when it comes time to recapitalize banks there is a bigger hole to fill, and when banks fail there is less capital available to meet the government’s obligations to insured depositors and other creditors. Keeping money at the holding company may benefit its shareholders, but it is costly for taxpayers.
If there's a credible rebuttal I'd like to hear it. Otherwise this looks like (yet) another source of justifiable outrage in the way the bank bailout has been structured to date.

Detroit Blackmail?

Can anyone explain why GM and Chrysler say they'll need $100 billion and $25 billion in financing respectively if they have to file bankrupcy, but far far less if they stay out under the latest hat in hand plans they've brought to DC? The enormous difference in magnitudes feels like it's part of Detroit's rhetorical blackmail to get the fix it wants (i.e. not bankrupcy), but maybe I'm missing something.

The Voodoo We Need

NYT has fun piece on the new Bernie Madoff doll turning heads at the Toy Fair -- with the epic Ponzi man dressed as a devil, and a bonus hammer included to take your own revenge. Also apparently hot is the John Thain doll that sits on its own golden toilet.

Housing confusion

Heard NPR report this morning that gloomily lamented the fact that housing starts were down some record amount last month, but I don't understand the arm-waving about this. Don't we need fewer new homes until the housing market in general settles down? When prices have been plummeting and are seeking a bottom, MORE new houses is the last thing we need -- boosting supply would just push prices down even more.


Trouble at Treasury?

Krugman's blog usefully points to Washington Post piece today that shows that Geithner's bank plan was so vague largely because he decided close to the deadline set for announcement that the approach they'd been focused on wouldn't work -- and there wasn't time to fully develop the alternative he decided would be better. Coupled with other details about how shorthanded the working group seems to be, the episode says troubling things about the team's insularity, the needless commitment to false deadlines, and more. To keep an eye on...