media strainer

from the people who brought you the very understandable, entertaining and comprehensive explanation of the housing and financial crises comes this look at the ones who were supposed to be watching the banks and insurers to make sure they weren’t doing what it turned out they were doing, en masse.

in this latest installment, we hear from the regulatory agencies and people who used to be in the business of oversight and how flawed a model it is. we also get to hear from those infamous credit rating agencies, which put their stamp of approval on so many loans that turned out to be toxic.

what’s the takeaway? basically it shows how we have a  system of incentives in which regulators were either paid by the institutions they were supposed to oversee and/or paid by the number of banks they oversaw (so the more pliable they made themselves, the more business they got). 

the guys and gals at this american life and planet money love to show us how things are always more morally complex than we want to believe, but in this episode quite a bit of blame gets left on the doorstep the office of thrift supervision, which was responsible for overseeing AIG, Washington Mutual and IndyMac — major institutions that all failed.

there aren’t as many ‘a-ha’ moments in this episode as there were in others, but it’s still the best  hour of listening you can do.

after failing to post for a few months,  i’m throwing myself on the mercy of the blogosphere.  i guess my truancy began when i discovered google reader, which basically does to Web sites what itunes does for radio:  trolls the places you love for updates and sends them to you.  it’s like the difference between hunting and gathering and pizza delivery.  

so the problem was google had basically invented what i was trying to do here: find good content and share it with others.  it didn’t require me to write or really process the information i was taking in, but in march i began writing a political column for my hometown’s alternative weekly so i had an outlet there.

all that being said, i plan to restart the blogging and make at least a post a week.  i’m winding down at the newshour, so should have more time on my hands to devote to writing.

60 minutes anchor Scott Pelley brings some great stories to television. He did an amazing piece on e-waste in China, another on health care in Appalachia.

In this one below, which aired last night, Pelley explains the role of the federal reserve and its chairman, Ben Bernanke, to a lay audience desperately seeking clarification on the economy. However, Pelley has a flair for gravitas that’s always precariously teetering on being over the top, and sometimes raises questions about his credibility.

See if you agree:

Watch CBS Videos Online

david brooks’ column this week lays out neatly the feelings i and many others have about what’s going on in the country.

brooks sounds like the classic cynic — he wants to believe humans can be more, but he’s seen too much evidence to the contrary. in this way, he serves as the perfect bridge between two supposedly diametrically opposing ideologies, the liberals and the conservatives.

the conservatives, on one hand, say humans are selfish, narcissistic creatures who only do what’s in their own interest, and government only serves a strong arm for those in power. better to recognize this, they say, and allow people to pursue their own self interest through businesses that provide the goods and services that have benefited so much of the world over the past few hundred years. as bad as the world is, under this reasoning, grand plans to transform it will only end up eroding the little good that exists.

liberals start from essentially the same place but come to a much different conclusion: humans are selfish, narcissistic creatures who only do what’s in their own interest, so therefore government is needed to prevent that greed from swallowing up the rest of the world. to them the conservative argument is a faithless one and serves as an excuse to let the rich get richer at the expense of everyone else. inherent in their value is system is a humanistic belief that people have the ability to remake the world as they see fit.

so the question of the obama administration is, can a bunch of sharp, well-intentioned heads in the government make meaningful change that benefits the country? or is this doomed to be a repeat of the ‘best and brightest,’ the JFK experiment that landed the country in Vietnam and saddled with massive inflation? Robert McNamara, the wunderkind who served as secretary of defense under Kennedy and then Johnson, started out every bit as impressive as Tim Geithner, Obama’s star at the treasury. the lessons he learned came at the expense of American blood and treasure and spurred decades of soul searching by the military, government and people.

brooks isn’t sure, but he’s hoping against his own pride and ego that he’s wrong. meanwhile, conservatives like limbaugh and the fox news variety, who are really more reactionaries than conservatives, would rather see the country fail than their dear ideologies. what’s at stake is nothing less than a generation’s perception of the potential of government.

I’ve been sending this link out to anyone who tells me they don’t understand what’s going on in the economy right now, so I thought i’d post here.

also, planet money’s adam davidson had an interview with treasury secretary tim geithner Wednesday. in it, he posed some of the same questions raised in the doll house analogy, and geithner offered carefully worded responses to why taxpayers are essentially going to be buying houses for twice as much as they’re currently worth:

hope this helps!

I had the brief pleasure of meeting Rick Santelli when I toured the Chicago Board of Trade last year as part of an advanced economics reporting class at the Medill School of Journalism.  I was much more of a neophyte to financial wizardry then, and had trouble keeping up with the mile-a-minute mind of Santelli.  But now I think I follow his reasoning, and I’m hardly surprised the traders around him agree. 

The argument over what to do over the financial/economic crisis has basically gelled into two camps: do whatever we have to do, and try to make it fair even though none of it is; and let the markets work because no amount of government help can make up for market corrections.  In the latter view, the recession is not the problem but the solution, the solution to inflated housing prices and cheap money. 

I think both sides have a good point, and that it’s wrong to demonize either one as Chris Matthews tries to do in his interview with Santelli: 

One thing that did surprise me, and continues to surprise me, is how singularly focused on markets many of these traders are. This may be obvious, but it always astounds me when people are so damn certain of their convictions. Traders are motivated by risk, efficiency and the allocation of scarce resources, which they believe lead to overall good. But there are things markets cannot do and have not done, and whether that’s the fault of too much regulation, too little, or what, I don’t know.  But I think Santelli makes some good points, and if I had to guess, I’d say the management of our banks should start posting their redacted resumes to monster.com.

the los angeles times has an article today on Lockheed Martin’s efforts to lobby the Obama administration to purchase more F-22 raptors:

http://www.latimes.com/business/la-fi-jets11-2009feb11,0,165351.story

the argument for doing so, according to Lockheed’s general manager, is that these jobs are “shovel ready,” which is a chichi way people now describe a project that has everything but the funding (or logic?) to move forward.

nevermind that the secretary of defense has questioned the need for these ultra-modern jets in irregular conflicts.  airpower and fighter jets, while undeniably sexy, are the least helpful in these campaigns because there is nothing they add to efforts of building infrastructure, creating stability and securing a population. in fact, in Afghanistan the only time you read about fighter jets is when they have done just the opposite, destroying a target and often civilians around it.

so the idea that we should build more of these jets for a military that doesn’t want or need them because they would create jobs indicates the shift in logic we’re now undergoing. lord keynes, the father of this brand of economic thought, said that during recessions the government should pay men to dig holes and then fill them up. in other words, it didn’t matter what people were doing as long as it put money in the pockets of citizens. of course, holes didn’t cost billions of dollars and kill people, but let’s put that aside.

contrary to statements from both the left and the right, there’s never been a legitimate test of the the Keynesian theory. one could argue that it worked during the Depression, or conversely that it failed and only World War II lifted us out of crisis. but one must concede that a one-time experiment is hardly conclusive of either viewpoint

it seems that Obama, while a Keynesian, is also a practical one. why pay someone to dig holes and fill them up when you can pay him or her to build windmills that create free energy? or repair roads and bridges for better transportation? or build a broadband network for rural America? to put it another way, why not have projects that put money in people’s hands AND invest in future efficiencies?

the military-industrial machine already swallows far too much of our resources, many for its own purposes rather than protecting troops or winning wars. we could put many people to work building far more useful and appropriate things.

perhaps keynes wasn’t so far off in suggesting holes. i hear they’re “shovel ready,” too.

not much to say on this, just wanted to share: 

this week’s new yorker has an interesting look at the prospect of health care reform in the US.

revealing in his look at the historical roots of other industrialized nations (Great Britain, France and Switzerland), author and surgeon Atul Gawande shows that most health care systems result from circumstance rather than some inherent quality of decency these nations possess and which we Americans sorely lack.  for example, Gawande explains that Britain’s health care system came out of the exigencies of WWII — the necessity to move civilians out of the cities that would be bombed out and treat casualties in urban areas. once adapted to this national sytem, after the war ended people simply preferred to stay with what seemed to work.

the author’s point is that, rather than broad, sweeping change that revolutionizes health care in this country (like a single-payer system), we will probably see a patchwork of options amended to our existing system, allowing those unsatisfied with their care (or lack of it) to change their plans and those who are happy with their premiums and plans to retain them. this is what obama referred to on the campaign trail, but i remember hearing many, including his soon-to-be secretary of state hillary clinton, say this would not work. i would love to hear why.

A woman enjoys the inaugural concert near the World War II Memorial on Sunday, January 18th. (photo by Frank Carlson)

 
so at the last minute i was given the day off work, allowing me the option to head into DC for the festivities. i chose not to, a decision which, to say the least, i have mixed feelings about, but that is what it is.

it’s hard not to feel good about America and about ourselves watching the coverage, but i’m interested in the way the media finds a dark lining in every silver cloud. the high expectations, rather than indicative of a massive outpouring of support, somehow add to the burden of the presidency Obama now assumes. this may be true, and i’m the first to acknowledge people’s unrealistic expectations and lack of circumspection, but i think underlying these comments is discomfort with the cult of personality developing around Obama.

the posters, the buttons, the messianic language people use to describe him — they should be cause for concern for anyone who believes in liberal democracy.  not to rain on the inaugural parade, but the danger in the unwaivering support of a leader is evidenced throughout the 20th century in China, Russia, Cambodia, North Korea, etc. We are not those countries, we are not even close.  But there is always a danger is supporting a man and not what he represents, supporting him even when he violates our better judgement.  Fortunately for us Obama’s guiding principle seems to be pragmatism, and I cannot yet think of the frightening danger of being too pragmatic. 

as a sidenote and a plug for where i work, the newshour is providing live coverage of the event, so if you grow tired of one extreme of reporting or another, give jim a chance. also, this clip from the daily show last night highlights jim’s interview with outgoing VP Cheney: