by Chris Bodenner
GREENSPAN: I should say [Congress] should follow the law and let [the Bush tax cuts] lapse.
Q: Meaning what happens?
GREENSPAN: Taxes go up. The problem is, unless we start to come to grips with this long-term outlook, we are going to have major problems. I think we misunderstand the momentum of this deficit going forward.
by Patrick Appel
Greenwald's take:
It's worthwhile now and then to take stock of the vast disparity between how we like to think of ourselves and reality. When a country with Argentina's history and background becomes but the latest country to legally recognize same-sex marriage — largely as the result of a population which demanded it — that disparity becomes quite clear.
by Chris Bodenner
Hmm. Maybe showing a dancing bikini-hottie engulfed in Photoshoppy flames is not such a prudent move to promote nightlife in such an explode-y city. Just. Sayin'.
by Patrick Appel
Felix Salmon's two cents:
Consider an issue with two possible lines of attack: a cheap behavioral-economics solution, B, and a more expensive and politically-fraught substantive solution, S. Does implementing B make implementing S less likely? If B didn’t exist, would S be more likely to come about? Surely there are cases where the answer to both questions is yes — and where therefore behavioral economics is a bad thing, not a good thing. The ability to cover up issues with a behavioral band-aid is often just a way of doing as little as possible while appearing to tackle the issue at hand.
That said, in a lot of cases S would never happen anyway, and in those cases B is better than nothing.
by Patrick Appel
I'm still trying to make sense of the bill, but I've pasted together some thoughts from around the web in the meantime. James Surowiecki:
The bill has been subject to considerable criticism because it doesn’t break up the country’s biggest banks, with people saying that this leaves our Too Big to Fail policy in place. But while the bill doesn’t do much, if anything, about the “Too Big” part, what it does do, at least in theory, is make it possible for even too-big institutions to fail, by creating a mechanism that will allow the government to, in effect, place failing institutions under conservatorship, and wind them down over time, thereby avoiding both the chaos of the Lehman Brothers bankruptcy on the one hand, and the need to give troubled banks government-subsidized handouts on the other.
The bill leaves multiple regulators with wide discretion across a range of critical issues. The argument over precisely what the new rules will be is barely getting started. Some of the most important questions — such as the amount of capital financial firms will have to set aside — are scarcely even addressed. Again and again, the bill calls for studies to be undertaken. No matter how these open issues are resolved, unintended consequences will come thick and fast. The whole thing is unfinished work with a vengeance. Nonetheless, better this than nothing.
Had the measures in Dodds-Frank been in place in 2007 would it have prevented the financial crisis? Since the crisis seems to have been caused by borrowers taking on excessive debt, lenders taking on excessive risk, and the failure of any of a handful of financial institutions posing unacceptable risk to the entire financial system, the answer would appear to be no. Dodds-Frank does little if anything about any of these matters.
We’ve tended to focus much more on what’s not in the bill than on what is in the bill. What is in the bill is a consumer protection setup that would be considered a major progressive win as a standalone item. What is in the bill is a “resolution authority” that will let future regulators avoid the bailout-or-crisis dynamic that plagued us in 2008. What is in the bill are regulatory tools that even Simon Johnson likes.
So financial reform has passed through Congress. It could have been worse as my colleagues recently discussed. But President Obama must be careful about claiming too much. "The American people will never again be asked to foot the bill for Wall Street's mistakes. There will be no more taxpayer-funded bailouts" he said yesterday. The words might come back to haunt him in a few years' time if a Lehman (or AIG) saga repeats itself.
An analysis by a group called Maplight.org uncovered an interesting fact about the vote. The 38 Senators who opposed the bill in the cloture vote this afternoon received an average of $103,266 in campaign contributions from commercial banks. The 60 Senators who were yea votes took an average of $76,759. Obviously this is just part of the puzzle, but it's worth noting.
The bill will make us safer although it will not eliminate future financial crises. Periodic crises are an inherent feature of market capitalism, or indeed any economic system run by humans. What it will do is to make these crises less frequent and considerably less damaging to the economy. This safety comes at a cost, though; economic growth is most years is likely to be a bit slower because banking will be modestly more expensive—loans will be a little costlier and a little harder to get. This is a trade-off worth making, because the real benefit will be from avoiding the severe economic damage that comes in crisis years.
Rep. Barney Frank — the single person who may have had the most to do with the bill’s final form — has blamed many of the greatest financial problems on “non-regulation” rather than “deregulation.” He’s right about that. A working financial system cannot exist in the absence of law and the bill represents a good faith effort to update an outdated financial regulatory framework. As written, the bill contains good ideas and bad ideas in roughly equal number. It could surely stand improvement; but, if implemented wisely, will correct some of the problems that led to the financial crisis in the first place. The risks of overcorrection, however, remain real and, whatever happens, the numerous new agencies and rules created under the legislation will need careful, ongoing scrutiny.
The American people will continue to have to foot the bill for the mistakes of Wall Street’s biggest banks because the legislation does nothing to diminish the economic and political power of these giants. It does not cap their size. It does not resurrect the Glass-Steagall Act that once separated commercial (normal) banking from investment (casino) banking. It does not even link the pay of their traders and top executives to long-term performance. In other words, it does nothing to change their basic structure. And for this reason, it gives them an implicit federal insurance policy against failure unavailable to smaller banks — thereby adding to their economic and political power in the future.
Despite the bill's length, most of the regulations have yet to be written. Inevitably, those rules be written to the specifications of the largest banks, because the large-bank mindset will be the only one present in the room. My first prediction is that the biggest long-term consequence of this legislation will be a significant increase in concentration in the U.S. financial industry. My second prediction is that the financial consumer protection agency will turn out to be the financial incumbent protection agency. It will be captured by legacy financial firms, who will use it to outlaw new competing products as unsafe.
No doubt quite a few inquiring minds will be wondering how a financial reform bill that failed at 100% of its objectives while accomplishing virtually nothing can possibly be considered a "stunning success".
This is where it pays to consider the crucial point: reasonable expectations.
by Dave Weigel
The backlash to the NAACP's resolution calling for the tea party movement to renounce racism ended pretty much as I expected — with the tea partiers grabbing back the megaphone as the NAACP decided not to press the issue. (Indeed, the organization isn't making the full text of the resolution public.) Mark Williams, a former spokesman for the Tea Party Express whose string of extreme statements about the president (he calls him a Muslim) only stopped being a problem when he quit to run for office, calls the NAACP a "racist organization." Mark Meckler and Jenny Beth Martin of Tea Party Patriots — the latter was named one of the "Time 100" this year — go a bit further.
The NAACP has long history of liberalism and racism. If you are a conservative — including a conservative African-American — there is no room for you at the NAACP. If you have opinions that differ from the NAACP and the liberal establishment, and if you are African-American, you are an “Uncle Tom,” a “negro,” “not black enough” and “against our people.”
When I said the NAACP's move would backfire, I meant things like this would happen. I didn't mean they were wrong to go down that road. It's just that they should know that calling out a group for "racism" is pointless — whoever's been targeted will simply claim to have been attacked unfairly and had his free speech threatened. Remember what happened when Eric Holder said that America had been a "nation of cowards" in discussing race. Boom: Backlash. Anger. Debate over why he said it, but not what he meant. A year and change later we have a ridiculous national debate over whether Holder's department hates white people because it won't draw and quarter the New Black Panther Party. This stuff is what he meant, of course. But saying it isn't actually starting the debate. It's pretty obvious that the NAACP failed here.
by Chris Bodenner
An authoritative list.
by Patrick Appel
Joe Klein reports that it is actively being considered:
One other factor has brought the military option to a low boil: Iran's Sunni neighbors really want the U.S. to do it…It is also possible that this low-key saber-rattling is simply a message the U.S. is trying to send the Iranians: it's time to deal. There have been rumblings from Tehran about resuming negotiations, although the regime has very little credibility right now. The assumption — shared even by some of Iran's former friends, like the Russians — is that any Iranian offer to talk is really an offer to stall. A specific, plausible Iranian concession may be needed to get the process back on track. But it is also possible that the saber-rattling is not a bluff, that the U.S. really won't tolerate a nuclear Iran and is prepared to do something awful to stop it.
I'm reading a review copy of Hooman Majd's forthcoming book on the Iranian elections and on Iranian-American relations. Regardless what you happen to to think of Majd's political analysis (I happen to mostly agree with it), he has the most detailed and gripping reporting of the Iranian elections to date. I'll likely have more to say on the book when its release date nears, but for now I'll note that Majd convincingly argues that saber-rattling will not bring Iranians around. There was a brief moment at the beginning of the Iraq war when Iran thought the US might actually invade, and threats of military action might have won concessions at that point, but now that we are bogged down in Iraq and Afghanistan those threats are mostly toothless and the Iranians know it.
Iran is a proud country with an ancient history; trying to bend it to America's will through force alone is unlikely to succeed. It sees itself as an equal, as a superpower – or at least a regional superpower – in the making. However far-fetched that may seem to Americans, treating the nation like a donkey, to be controlled with carrots and sticks, is insulting to many Iranians and politically strengthens anti-American forces inside the Iranian government.
Negotiations have suffered from tone-deafness on both sides. I encourage the White House to get a copy of Majd's book. And for Dish readers to pre-order it.
by Patrick Appel
A reader tips me off to a better explanation of the phrase from March from August 2008:
by Patrick Appel
Evan Osnos sits next to a Chinese scientist on his way to an agricultural project in Congo:
China has stepped up the growth of large-scale agricultural projects in Africa over the past five years. As Howard French described, in The Atlantic, in a terrific piece in May, large Chinese-run farms designed to export rice and other staples to China are one of the new and least-understood elements of China’s push into Africa. Two years ago, the Chinese government earmarked five billion dollars for farm projects in Africa, intended to ease China’s concerns about food security. But ceding land to foreigners, to manage it and claim the products, are acutely sensitive issues in Africa. In 2007, French notes, Chinese and Mozambican officials reportedly agreed to have three thousand Chinese settlers begin farming the fertile soil in Zambezi River Valley, but the news prompted an uproar, and Mozambique’s government now denies all reports of the idea.
The Dish 