Meltdown in Progress: Useful links

I am spending too much time reading about the financial crisis/bailout/meltdown. I hate money.

Good links that may help explain things:

Paul Krugman's blog, always.

Stirling Newberry on "The Crooked Deals that Made This Financial Meltdown Inevitable", Part 1. He promises Part 2 will be RSN.

The underlying problem then, is not the housing bust, since that could be dealt with by a relatively modest FDIC bail out of banks and changes to Freddie and Fannie, nor even the wall of paper that was created, since that could be dealt with by cleaning up a few toxic funds. It is that the very basic bet of the economy was wrong.

The very bet was that war and debt were all that was needed to grow for ever. Because every cent was being poured either into the war, or houses, or into gambling double and triple that these would expand forever, there was no money for anything else.

Nouriel Roubini on "The shadow banking system is unravelling".

Last week saw the demise of the shadow banking system that has been created over the past 20 years. Because of a greater regulation of banks, most financial intermediation in the past two decades has grown within this shadow system whose members are broker-dealers, hedge funds, private equity groups, structured investment vehicles and conduits, money market funds and non-bank mortgage lenders.

Like banks, most members of this system borrow very short-term and in liquid ways, are more highly leveraged than banks (the exception being money market funds) and lend and invest into more illiquid and long-term instruments. Like banks, they carry the risk that an otherwise solvent but liquid institution may be subject to a self-­fulfilling and destructive run on its ­liquid liabilities.

But unlike banks, which are sheltered from the risk of a run – via deposit insurance and central banks’ lender-of-last-resort liquidity – most members of the shadow system did not have access to these firewalls that ­prevent runs.

Roubini emphasizes that the crisis will necessarily involve European financial institutions, as well.

Jerome a Paris is one of the people best placed to say "I told you so." Over the past couple of years, he has been talking about The Anglo Disease:

The Anglo Disease is the label I have been using to describe the current situation, whereby too much debt has made the financial sector dominant, and starved the rest of the economy of oxygen - and not-so-coincidentally transfering massive wealth from the working classes to the very rich: debt, managed by the financial sector, and working under assumptions of ever increasing returns, is both the core tool of very obvious policies and the very instrument to hide these from view; feeding the ideology of selfishness, and hiding (temporarily, but for much longer than even its creators dared hope, I think) the empoverishment of the many, it is both self-sustaining and popular for the masses, is it has become a full scale addiction.

White-collar deterrance

I've left versions of this comment hither & yon. This one is from Bailout at Obsidian Wings:

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You say "petulance" and "high moral dudgeon", I say "deterrance."

Stanley Hauerwas is a great theologian, scholar, ethicist, and proponent of non-violence. In Performing the Faith: Bonhoeffer and the Practice of Nonviolence he argues against the "capital punishment has a deterrant effect" position, by saying (paraphrased), "if we really wanted to see effective deterrance, we'd have public executions on Wall Street for insider trading, and it would probably work."

I'm sure Hauerwas is being ironic and doesn't *really* believe in capital punishment for white-collar crime, but I think there's a lot to be said for direct, shaming punishment of wealthy malefactors. It's the Stan Lee principle for avoiding moral hazard: "With great power comes great responsibility, and also serious personal consequences when you f*ck up."

Vengence and schadenfreude are all very well, but what I want to see is some *deterrance*.

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Meanwhile, at echidne's post about executive compensation, commenter Dr. Wu writes:

I am concerned that among your various proposals for achieving a long-term solution, you have not given sufficient consideration to the idea of identifying the best of the "smart and clever financial managers" and eating them.

It's a proposal, he said modestly.

Where are the McCain canvassers?

I've decided to take this relationship to the next level, as they say, and start canvassing this weekend. I'm in safe-blue NJ, but just across the river from PA, so the local Obama office is sending us to Bristol/Lower Bucks County to go door-to-door on Saturday.

I've never canvassed before, so I've been surfing around looking for "helpful hints" and "what to expect". And I stumbled across something weird.

If you plug canvass for obama into Google, you get 282,000 hits. If you use canvass for mccain, you get only 141,000 hits -- but scanning the first few pages, most of those are about canvassing *against* McCain, not for him.

If you put everything in quotes, "canvass for obama" gets 8180 hits -- and "canvass for mccain" gets only 7 (seven) hits. That's a boggling and almost literally unbelievable thousand-fold difference.

Where are the McCain canvassers? The GOP has got to have a ground game, but where is it? How are they organizing their people? Are they not going door-to-door at all, but just reaching people on the phone?

I can't figure out if the McCain campaign is totally clueless, or if they have some sort of ninja canvassing force that's invisible until it strikes. Does anyone know?

It's not just Palin

Sarah Palin has been getting much-deserved flak because while she was mayor of Wasilla, rape victims were charged the cost of the forensic rape kit. The state had to pass a law making it illegal to charge victims for evidence collection. (the link is to the local Wasilla paper, from 2000.)

However, I don't think we can pin this on her, specifically. Charging rape victims for evidence collection turns out to be standard in North Carolina and Tennessee.

H/t to Women's Health News.

False witness

Fred at slacktivist is really hitting it out of the park with False Witnesses, about lie- and rumor-mongering by supposed Real True Christians. I wrote:

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I can't really figure out how it *works*, that people so tolerant of false witness for "a good cause" (this is also a leitmotiv of one of the books I'm currently reading, The Devil in Dover: An Insider's Story of Dogma v. Darwin in Small-town America, by Lauri Lebo) can have so many serious discussions about whether it's OK to lie to save a life.

I mean, the point of such discussions in Sunday school, etc., is to get people used to the idea of consistent truth-telling as a highest goal, right? So why doesn't it take?

Do the discussions, sermons, etc., always involve dramatic and unlikely scenarios, instead of daily life? Or is it that Lying for Jesus is just too accepted for those in the culture to even notice it's happening?

What flags are for

From hilzoy's post about Sen. Inhofe's questioning Obama's patriotism. The comments went on to include discussion of who took the flags from Invesco Field. I wrote:

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My question for OCSteve (or whomever) is, why is this Democrats-threw-out-flags! story important to you? *Even if it were true* (which IMHO it is not), what would it signify?

What the Republican reaction looks like to me is idol-worship, fetishization. Flags are not particularly *good* symbols for a country: in the case of the US flag, for instance, they're objectively ugly and poorly-designed. They have no nuance, no complexity, no thought, no expression. A flag is not just simple, it's simplistic.

And what flags are for is war. Flags were developed to give soldiers something easily identifiable to follow or rally around -- they *have* to be simple and visually blunt to do that job. The Constitution would be a very poor battlefield token. And soldiers, in turn, need to be trained to react strongly to the flag, to follow it without taking vital time for thinking.

But what Republicans seem to be demanding is for civilians to have that kind of reaction, that kind of unthinking, reflexive response to a simple visual stimulus. This is not just idolatry, this is militarism -- which IMHO is a perversion of human society, whether it leads to Sparta or the Nuremburg Rallies.