Bill Moyers & Company covers one of my hair-on-fire topics this week. I’ve written a lot about ALEC before and how it tends to pen some of the worst laws in the land. So, what’s ALEC been up to recently now that it’s role in voter suppression and defunding planned parenthood has been held up to the light? Moyers & Company will broadcast the report today on PBS so be sure to look for it.
A national consortium of state politicians and powerful corporations, ALEC presents itself as a “nonpartisan public-private partnership”. But behind that mantra lies a vast network of corporate lobbying and political action aimed to increase corporate profits at public expense without public knowledge. Using interviews, documents, and field reporting, the episode explores ALEC’s self-serving machine at work, acting in a way one Wisconsin politician describes as “a corporate dating service for lonely legislators and corporate special interests.” In state houses around the country, hundreds of pieces of boilerplate ALEC legislation are proposed or enacted that would, among other things, dilute collective bargaining rights, make it harder for some Americans to vote, and limit corporate liability for harm caused to consumers — each accomplished without the public ever knowing who’s behind it.
This raw story article on a 1,000 year old Buddha statue from Tibet that was taken from its home by the NAZIs and has been discovered to be made of the remains of a meteorite reads like something from an Indiana Jones script. It caught my eye earlier this week so I thought I’d share it with you.
Backed by SS chief Heinrich Himmler and heading a team whose members are all believed to have been SS, Schaefer roamed Tibet in 1938-9 to search for the origins of Aryanism, the notion of racial superiority that underpinned Nazism.
Weighing 10.6 kilos (23.3 pounds), the statue features the Buddhist god Vaisravana seated, with the palm of his right hand outstretched and pointing downwards.
Chemical analysis shows that the rock from which it was carved came from a meteorite.
The rock survived a long trip through the Solar System and the destructive friction with the atmosphere when it collided with Earth.
It is a particularly rare kind of meteorite called an ataxite, which has iron and high contents of nickel, according to the study, published in the journal Meteoritics and Planetary Science.
“The statue was chiseled from an iron meteorite, from a fragment of the Chinga meteorite which crashed into the border areas between Mongolia and Siberia about 15,000 years ago,” said investigator Elmar Buchner of Stuttgart University.
“While the first debris was officially discovered in 1913 by gold prospectors, we believe that this individual meteorite fragment was collected many centuries before.”
The exact dating of the carving cannot be established accurately, but its style links it to the pre-Buddhist Bon culture of the 11th century.
Vaisravana was the Buddhist god-king of the North, also known as Jambhala in Tibet.
I’d just like to mention that the “god” description really isn’t apt here but, oh well. Jambhala was a god in the Hindu tradition, however, so I suppose it kind’ve carries on over but it’s not like you’ think. However, the findings are interesting.
Feminists in the Ukraine are banding together to stop Human Trafficking. Here’s some information on that movement.
At first sight, few people would mark the group of topless young women protesting in the streets of Kiev, the capital of Ukraine, as outspoken advocates or feminists. Garlands of flowers adorn their waist-length hair, strategically thrown forward to cover their bare breasts. But the black graffiti-style slogans that cover their arms and bellies make it crystal clear: “Ukraine is not a brothel” and “Women Power”.
Founded in Kiev in 2008 by a group of university students, FEMEN quickly became famous for their topless protests against prostitution, sex tourism and sexism, which is still rife in Ukraine today. The group has been in the news a lot lately with protests in Milan, Istanbul and Moscow and most recently to bring attention to the sloppy investigation and suspected nepotism surrounding the horrifying rape of eighteen-year-old Oksana Makar by three Ukrainian young men. The attack left Makar with burn wounds across more than half of her body. Surgeons had to amputate her arm and both feet in an attempt to save her life, but Makar was unable to pull through, dying from heart failure a little more than two weeks following her attack.
Oksana Mahar’s case is indicative of a much larger problem: women are often treated as a mere commodity in Ukraine’s patriarchal society – a fact that is exacerbated by the difficult economic climate, and human trafficking, especially for sex work, remains a serious problem. Evidence exists from a variety of sources of the widespread and increasing nature of the problem: it is estimated that 420,000 women have been trafficked out of the country in the last few years alone.
For decades, scientists have been trying to solve a tough question: if the Internet runs out of cat pictures, can we generate more using advanced mathematics?* A paper posted on the arxiv earlier this month by mathematicians Kathryn Lindsey and the late William Thurstoncalms fears about “peak cat.” In the paper, they describe a method of approximating the outline of a cat or other object using the Julia sets of polynomials.
Outspoken Sheila Bair is telling tales on Timothy Geithner and the 2007 bank bailouts. She says the bailouts were ‘skewed’ to help Citigroup.
Former financial regulator Sheila Bair says that Treasury Secretary Timothy Geithner was primarily concerned with shoring up Citigroup and other banks in his response to the financial crisis, rather than holding those banks accountable.
Bair went on a media tour on Tuesday topromote her new book, “Bull by the Horns,” about the government’s response to the financial crisis, which she experienced firsthand as a top financial regulator. Bair criticized Geithner in the book, and she aired some of that criticism in an interview with the Wall Street Journal on Tuesday.
“He was in constant communication with [Citigroup CEO] Vikram Pandit throughout that whole process, and I felt like he and Vikram were figuring out what they were going to do and then trying to jam it on me,” said Bair, who served as chair of the Federal Deposit Insurance Corporation (FDIC) between 2006 and 2011. “I do think that a lot of the policy decisions that were made were made through the prism of what Citigroup needed.”
Bair said that most big banks did not need the Troubled Asset Relief Program (TARP), the government’s bank bailout in 2008, but the government forced TARP on all of them partly because Citigroup needed it. “It worked horrible reputational damage on everyone,” Bair said of TARP.
Some TARP defenders say granting TARP funds across the board was necessary to avoid a loss of trust in specific banks. Citigroup was one of the more vulnerable banks during the financial crisis, since it held a large number of toxic mortgage-backed securities. The government gave Citigroup multiple bailouts.
“He viewed these institutions as entities that needed to be taken care of,” Bair said of Geithner, adding he thought the banks “needed to be taken care of and that this was just a big systemic event, and we needed to protect them — whereas I wanted them to have accountability. They had caused this.”
“If you view the banks themselves as victims just of the larger crisis, then you’re going to just try to help them however you can, and I think that was his guiding philosophy,” she added.
Thankfully, Giethner is not going to be there for a second Obama term. It can’t come soon enough for me. Any guesses as to which bank he’ll eventually land?
When do these guys jeopardize their infernal tax breaks? What exactly does it take? A Raw Story article reports that one Catholic bishop says that ‘Voting for Obama jeopardizes the ‘eternal salvation of your own soul’.
A Catholic bishop from Springfield, Illinois is warning that the stakes for the 2012 election are even higher than most people think because voting for President Barack Obama could damn “you own soul” to hell.
In a column and video posted by the official newspaper of the Diocese of Springfield in Illinois and obtained by Right Wing Watch on Wednesday, Bishop Thomas John Paprocki called out the Democratic Party for temporarily removing God from their platform, supporting abortion and recognizing that “gay rights are human rights.”
“There are many positive and beneficial planks in the Democratic Party Platform, but I am pointing out those that explicitly endorse intrinsic evils,” the bishop explained. “My job is not to tell you for whom you should vote. But I do have a duty to speak out on moral issues. I would be abdicating this duty if I remained silent out of fear of sounding ‘political’ and didn’t say anything about the morality of these issues. People of faith object to these platform positions that promote serious sins.”
“So what about the Republicans? I have read the Republican Party Platform and there is nothing in it that supports or promotes an intrinsic evil or a serious sin,” Paprocki added. “One might argue for different methods in the platform to address the needs of the poor, to feed the hungry and to solve the challenges of immigration, but these are prudential judgments about the most effective means of achieving morally desirable ends, not intrinsic evils.”
Evidently, torture isn’t an intrinsic evil compared to using birth control or being in a loving same sex relationship. It’s reported that Romney favors going back to the old Cheney/Rumsfield extraordinary “interview” techniques.
In one of his first acts, President Obama issued an executive order restricting interrogators to a list of nonabusive tactics approved in theArmy Field Manual. Even as he embraced a hawkish approach to other counterterrorism issues — like drone strikes, military commissions, indefinite detention and the Patriot Act — Mr. Obama has stuck to that strict no-torture policy.
By contrast, Mr. Romney’s advisers have privately urged him to “rescind and replace President Obama’s executive order” and permit secret “enhanced interrogation techniques against high-value detainees that are safe, legal and effective in generating intelligence to save American lives,” according to an internal Romney campaign memorandum.
While the memo is a policy proposal drafted by Mr. Romney’s advisers in September 2011, and not a final decision by him, its detailed analysis dovetails with his rare and limited public comments about interrogation.
“We’ll use enhanced interrogation techniques which go beyond those that are in the military handbook right now,” he said at a news conference in Charleston, S.C., in December.
The campaign policy paper does not specify which techniques Mr. Romney should approve, saying more study was needed because Mr. Obama had “permanently damaged” the value of some by releasing memorandums detailing Bush-era techniques in April 2009.
Revisions to new jobs numbers makes our economy look healthier than previously thought. This, coupled with the increased home prices, can give us a little lift on the future of the US economy. It also makes Romney’s economic arguments look weak. The economy has produced enough jobs to give Obama a net job growth for his term. This even counts the worst of the Dubya Bush recession years.
So the Bureau of Labor Statistics announced this morning that it is revising its jobs count, to include an additional 386,000 nonfarm jobs that were created from March of 2011 to March of 2012.
Jobs numbers are only one metric for measuring economic improvement, so we shouldn’t overstate their significance. This new finding, however, does matter politically in a few key ways. First, as Justin Wolfers points out, the added jobs means that there has no longer been a “net” loss of jobs on Obama’s watch. As you know, Romney has been saying for a very long time now that the “net” jobs lost on Obama’s watch proves his policies failed. That’s a bogus metric, because it factors in the hundreds and hundreds of thousands of jobs lost in each of the first few months of Obama’s term, before those policies went into effect.
But putting that aside, net jobs were now actually gained on Obama’s watch. So, in theory at least, Romney has been deprived of one of the talking points that has been central to his candidacy for a year now. That talking point was crucial for Romney, because it enabled him to make the (nonsensical) case that Obama destroyed jobs overall.
Okay, that’s a little this and that for today. What’s on your reading and blogging list?
I thought I’d try to focus on some interesting news today and ignore politics. We’ll see how well I do.
BBC News reports that “an iceberg twice the size of Manhattan has broken away from the Petermann Glacier in northern Greenland”. You can see the NASA satellite picture at the link. Is this yet another symptom of global warming?
Scientists have raised concerns in recent years about the Greenland ice shelf, saying that it is thinning extensively amid warm temperatures.
No single event of this type can be ascribed to changes in the climate.
But some experts say they are surprised by the extent of the changes to the Petermann Glacier in recent years.
“It is not a collapse but it is certainly a significant event,” Eric Rignot from Nasa said in a statement.
Some other observers have gone further. “It’s dramatic. It’s disturbing,” University of Delaware’s Andreas Muenchow told the Associated Press.
“We have data for 150 years and we see changes that we have not seen before,” Mr Muenchow added.
Okay, here’s another one of my grave stories. No “seriously”, it’s another story about a grave. This time they think they may have located Mona Lisa’s remains in Florence.
Scientists claim that they might have found the skeleton of the woman who posed for Leonardo Da Vinci’s most famous painting.
Most art historians agree that Lisa del Giocondo was the woman who inspired Da Vinci to create his iconic work.
Now the archaeologists working in Florence are pretty convinced they have found the remains of the lady, merchant Francesco del Giocondo’s wife Lisa Gherardini.
The skeleton was unearthed beneath the medieval Convent of Saint Ursula in Florence. Knowing she became a nun after her husband died and lived in the convent until her death in 1542, a team of archaeologists began excavation works at the abandoned convent last year.
Sheila Bair is still on the stump for financial regulation. She answered some questions on Wednesday on the state of Dodd-Frank.
Horwich: So going after systemic risk suggests safety, it suggests caution. Then we have this other important aspect of our economy where we say financial institutions are supposed to be taking risks on deserving people and businesses. How do you reconcile what seems like a real contradiction there?
Bair: Well, I think we do want banks to take risks but we want them to take risks on economic activities that have some real economic benefit. I mean, trading CDS indexes with a bunch of hedge funds — I don’t know what kind of positive economic benefit we would get from that. It’s the kind of risk you take and whether you’re taking a well-measured, well-understood, well-evaluated risk, that’s really the question.
Horwich: There are many people out there who would have liked to have seen and might still like to see banks fail — especially big banks fail — that they think have been misbehaving. What do you say to them?
Bair: Well, I say that we should have a let a couple fail. It makes me angry that we didn’t and I think there were tools there that could have been used that were not. You know, there were a couple of institutions that were clear outliers in the terms of their mismanagement — the risks that they took — and they should have been put into a bankruptcy-like process and they weren’t. I think if we had done that; that would have been more powerful than all the rules that we’re writing now to try to correct these misbehaviors. Be that as it may it’s a legacy of the bailouts and it’s something we have to deal with now.
Here’s one of my favorite Brit Economists Robert Skidelsky on “The Bad Society”. He raises some interesting points on income inequality.
There is a strange, though little-noticed, consequence of the failure to distinguish value from price: the only way offered to most people to boost their incomes is through economic growth. In poor countries, this is reasonable; there is not enough wealth to spread round. But, in developed countries, concentration on economic growth is an extraordinarily inefficient way to increase general prosperity, because it means that an economy must grow by, say, 3% to raise the earnings of the majority by, say, 1%.
Nor is it by any means certain that the human capital of the majority can be increased faster than that of the minority, who capture all of the educational advantages flowing from superior wealth, family conditions, and connections. Redistribution in these circumstances is a more secure way to achieve a broad base of consumption, which is itself a guarantee of economic stability.
The attitude of indifference to income distribution is in fact a recipe for economic growth without end, with the rich, very rich, and super-rich drawing ever further ahead of the rest. This must be wrong for moral and even practical reasons. In moral terms, it puts the prospect of the good life perpetually beyond reach for most people. And, in practical terms, it is bound to destroy the social cohesion on which democracy – or, indeed, any type of peaceful, contented society – ultimately rests.
Is Syria collapsing and what will this to do its ally Iran? Better yet, what will this do to further instability in the region?
The fall of the Assad government would remove Shiite Iran’s last and most valued foothold in the Arab world, and its opening to the Mediterranean. It would give Saudi Arabia and other Sunni Arab states their long-sought goal of countering Iranian influence in the region, finally splitting the alliance between Tehran and Damascus that has lasted for decades. And it would further erode Iran’s role as a patron of the Middle East’s revolutionaries, a goal that moderate Arabs and the United States have long sought.
Already the militant Palestinian group Hamas, long dependent on Syria and Iran, has thrown its support behind the Syrians in the streets seeking Mr. Assad’s overthrow.
Worse might follow, from Tehran’s point of view. Iran and Syria’s last revolutionary ally, the Hezbollah party that dominates Lebanon, would lose its source of weapons and financial support. And Lebanon’s fragile sectarian balance might be torn apart, raising the threat of another civil war there.
On Wednesday, Hezbollah was quick to respond to the government’s worst day so far to make its strongest declaration yet that it would not abandon Mr. Assad.
Meanwhile, intense global pressure is being brought to bear on Putin and Russia. Russia and China once again vetoed a Syria resolution.
Russia and China again vetoed a Western-backed U.N. resolution Thursday aimed at pressuring President Bashar Assad’s government to end the escalating 16-month conflict in Syria.
The 11-2 vote, with two abstentions from South Africa and Pakistan, was the third double veto of a resolution addressing the Syria crisis by Damascus’ most important allies.
The defeat leaves in limbo the future of the 300-strong U.N. observer mission in Syria, which was forced to suspend operations because of the intensified fighting. Its mandate, to monitor a cease-fire and implementation of international envoy Kofi Annan’s peace plan, expires Friday.
Britain’s U.N. Ambassador Mark Lyall Grant, who sponsored the Western-backed draft, said he was “appalled” at the third double veto of a resolution aimed at bringing an end to the bloodshed in Syria and creating conditions for political talks. The resolution had threatened sanctions if the Syrian regime didn’t quickly stop using heavy weapons.
“The consequence of their decision is obvious,” he said. “Further bloodshed, and the likelihood of descent into all-out civil war.” Activists say more than 17,000 people have been killed since the uprising began in March 2011, most of them civilians.
“The consequence of today’s action is the situation will continue to deteriorate,” U.S. Ambassador Susan Rice told reporters.
The Smithsonian Magazine tell us that Ocean Acidity is just as much of a challenge for us as Climate Change. WTF are we doing to Mother Earth and Mother Nature?
Rising ocean acidity is now considered to be just as much of a formidable threat to the health of Earth’s environment as the atmospheric climate changes brought on by pumping out greenhouse gases. Scientists are now trying to understand what that means for the future survival of marine and terrestrial organisms.
In June, ScienceNOW reported that out of the 35 billion metric tons of carbon dioxide released annually through fossil fuel use, one-third of those emissions diffuse into the surface layer of the ocean. The effects those emissions will have on the biosphere is sobering, as rising ocean acidity will completely upset the balance of marine life in the world’s oceans and will subsequently affect humans and animals who benefit from the oceans’ food resources.
The damage to marine life is due in large part to the fact that higher acidity dissolves naturally-occurring calcium carbonate that many marine species–including plankton, sea urchins, shellfish and coral–use to construct their shells and external skeletons. Studies conducted off Arctic regions have shown that the combination of melting sea ice, atmospheric carbon dioxide and subsequently hotter, CO2-saturated surface waters has led to the undersaturation of calcium carbonate in ocean waters. The reduction in the amount of calcium carbonate in the ocean spells out disaster for the organisms that rely on those nutrients to build their protective shells and body structures.
The link between ocean acidity and calcium carbonate is a directly inverse relationship, which allows scientists to use the oceans’ calcium carbonate saturation levels to measure just how acidic the waters are. In a study by the University of Hawaii at Manoa published earlier this year, researchers calculated that the level of calcium carbonate saturation in the world’s oceans has fallen faster in the last 200 years than has been seen in the last 21,000 years–signaling an extraordinary rise in ocean acidity to levels higher than would ever occur naturally.
So, today we have a moment without US Presidential Politics. Take a deep breath, then tell me what’s on your reading and blogging list today?
Ezra Klein (AKA Beltway Bob) is really coming up in the world. He somehow managed to get a gig writing a review of Ron Suskind’s book Confidence Men for the New York Review of Books. I’m impressed, I must admit.
As you probably guessed already, Klein is quite critical of the book. In fact he thinks Suskind should have written a completely different kind book instead–maybe even a couple of different kinds of books.
As I see it, Suskind set out to write an interesting and entertaining political book about Obama’s economic advisers, how they interacted with each other and the President, and how administration economic policy took shape over the first couple of years. The book is gossipy and very much focused on the people involved and their relationships with each other. As a psychologist, I found it fascinating to read Suskind’s insights.
Klein admits that
The work that went into Confidence Men cannot be denied. Suskind conducted hundreds of interviews. He spoke to almost every member of the Obama administration, including the President…He takes you inside…the Oval Office. He heads to Wall Street and back. He quotes memos no one else has published. He gives you scenes that no one else has managed to capture.
But that isn’t good enough. Klein disapproves of the gossipy, personality-centered tone of Confidence Men. He wants Suskind to provide evidence for his personal assessments of people. For example, Klein objects to Suskind’s description of Treasury Secretary Tim Geithner’s appearance at Obama’s announcement that Elizabeth Warren would be working with Geithner to set up a consumer agency that she had first conceived of and then fought for. Although Warren didn’t know it yet, she would never head the agency, because Geithner had already made a deal with the bankers: they would accept a consumer agency as long as Warren wasn’t put in charge.
Here’s the passage that Klein found offensive:
This has caused discomfort not only for the president, but also for his top lieutenants, including the boyish man in the too-long jacket at Obama’s right hip, bunched cuffs around his shoes, looking more than anything like a teenager who just grabbed a suit out of dad’s closet. That’s Treasury Secretary Tim Geithner, looking sheepish.
Klein so objected to this paragraph that he felt he had to go watch the announcement again himself, to see if Suskind’s description was accurate.
I prefer to verify. So I went back to the tape. I rewatched the September 2010 press conference where Obama introduced Warren to the country. I paid special attention to Geithner. Suskind’s right: his suit is too big. But he doesn’t look sheepish or ashamed. He looks, by turns, bored and interested. He clasps his hands behind his back. He nods attentively. He tries not to fidget. He looks like every experienced bureaucrat looks when they’re asked to stand like a prop near the president. Blank, and trying not to make any news. He failed.
But Klein doesn’t offer any evidence for his observations either. How can he know what Geithner was thinking–that he tried “not to fidget” and tried “not to make any news?” He can’t. Klein has shared his own observations and interpretations, just as Suskind did. But Klein finds it annoying. He didn’t want to read a book about people, based on the close observations and opinions of its author. No, Klein wanted a book about policy, and he felt that
…any account of what he [Obama] has done wrong, or what he could do right, needs to provide, first and foremost, a persuasive case of how the White House could have done more to promote an economic recovery over the last three years, or could do more to accelerate one now.
Klein wanted a wonky book, heavy on policy and light on human interest, and he can’t understand why Suskind wrote something different. Quite honestly, I think Klein should go right ahead and write a book like that if he wants to. It wouldn’t be as much fun to read as Suskind’s book, but it might make people like Matt Yglesias and Brad DeLong happy.
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Wow, it looks like Turbo Tax Timmy has gone rogue! We better send the press up to Alaska to chase down another Palin rumor. First, there’s that nastiness over the weekend with the Stephanapolous show on ABC where he explicitly said that the administration wasn’t ruling out new taxes on the middle class. (Something Larry-the-la-la Summers also inkled, but hey, he’s not a cabinet officer, he’s something akin to a Czar that has to be overthrown by something other than scandal and public displays of stupidity.) I believe that gave Robert Gibbs Excedrin headaches number 349-357 during yesterday’s presser.
Now, there’s rumors of a temper tantrum in the presence of all the nation’s topic economists and financial regulators outlined here in the WSJ. It seems he’s not getting the Obama way on this one. The ladies in the room have taken exception to his granting Ben Bernanke (possibly later, this year, La-la Summers) all the fun and power. I guess being an independent regulator with an agency all to yourself just isn’t what it used to be; especially when you have scary lady parts and a huge brain.
Mr. Geithner told the regulators Friday that “enough is enough,” said one person familiar with the meeting. Mr. Geithner said regulators had been given a chance to air their concerns, but that it was time to stop, this person said.
Among those gathered in the Treasury conference room were Federal Reserve Chairman Ben Bernanke, Securities and Exchange Commission Chairman Mary Schapiro and Federal Deposit Insurance Corp. Chairman Sheila Bair.
Friday’s roughly hourlong meeting was described as unusual, not only because of Mr. Geithner’s repeated use of obscenities, but because of the aggressive posture he took with officials from federal agencies generally considered independent of the White House. Mr. Geithner reminded attendees that the administration and Congress set policy, not the regulatory agencies.
Mr. Geithner, without singling out officials, raised concerns about regulators who questioned the wisdom of giving the Federal Reserve more power to oversee the financial system. Ms. Schapiro and Ms. Bair, among others, have argued that more authority should be shared among a council of regulators.
This current turf battle is only the latest move by a group within government possibly thwarting the Treasury’s plans to continue uploading tax dollars to the bonus class in the guise of saving the financial sector. If there’s still disagreement about this point, can you imagine what other things are going on in complete disarray behind the scenes? Who is really in charge of solving this overt act of sibling rivalry? Well, if you have figured out where the buck stops in this administration, you’re doing better than me. (Hint: these folks are ALL presidential appointments).
I’ve been watching the three big regulators in the Financial Crisis (the Fed, the FDIC, and the SEC) start doing things unheard of only a year ago. What has been baffling is no one has changed any laws or charters while these things keep happening. I’m not a lawyer and I don’t have the time to go poking around a lot of the charters and laws surrounding these institutions, but you have to start wondering if some of their more unconventional moves are technically legal.
I’ve been watching the Fed Open borrowing at the Discount Window and accepting some really strange collateral. The Discount Window used to be exclusive to member banks. I’ve been looking over what they now accept as collateral and am surprised. Take a look at the list and see if you’d like to be left holding the bag on some of these things. I’m not sure I want these off budget quasi agencies turning their balance sheets into dumping grounds for some of the most heinous looking gambles available on the market.
The NY Times Reporter Andrew Ross Sorkin has been poking around the charter and law concerning the FDIC. The FDIC was chartered to provide deposit insurance to bank deposits. You would think that is a fairly straight-forward task. However, when the charter was written, the size of the task at hand today was unfathomable and it seems the FDIC is tiptoeing around some of its charter provisions. The FDIC is barred from incurring any obligation greater than $30 billion and its about to take part in guarantees that would commit $1 trillion in the PPIP bank bailout program. Sorkin reports on what he calls “mission creep” here.
Now, because of what could politely be called mission creep, it’s elbowing its way into the middle of the financial mess as an enabler of enormous leverage.
In the fine print of Treasury Secretary Timothy F. Geithner’s plan to lend as much as $1 trillion to private investors to help them buy toxic assets from our nation’s banks, you’ll find some details of how the F.D.I.C is trying to stabilize the system by adding more risk, not less, to the system.
It’s going to be insuring 85 percent of the debt, provided by the Treasury, that private investors will use to subsidize their acquisitions of toxic assets. The program, extraordinary in its size and scope, is the equivalent of TARP 2.0. Only this time, Congress didn’t get a chance to vote.
These loans, while controversial, were given a warm welcome by the market when they were first announced. And why not? The terms are hard to beat. They are, for example, “nonrecourse,” which means that if an investor loses money, he owes taxpayers nothing. It’s the closest thing to risk-free investing — with leverage! — around.