Disgust is a bi-partisan concept. Michael Goodwin again:
Ronald Reagan’s famous line that “government is the problem” kept going through my head as the AIG hearing demonstrated the dangers of Washington’s role in the economy. The very people, Republicans and Democrats alike, who can’t balance America’s budget now claim the expertise to run banks, insurance companies and automakers.
If we let them, we’re dumber than they are.
Al Qaeda having difficulty establishing sleeper cells in the US? Not a problem – let the Attorney General help:
European justice ministers met with Mr. Holder earlier this week and pressed for details on how many Guantanamo prisoners the U.S. planned to release domestically, as part of any agreement for allies to accept detainees. Mr. Holder said U.S. officials would work to respond to the questions European officials have over U.S. Guantanamo plans.
For “people who can be released there are a variety of options that we have and among them is the possibility is that we would release them into this country,” Mr. Holder said. “That process is ongoing and we’ve not made any determinations or made any requests of anybody at this point.”
Seriously, anyone – sound like a better option than keeping Gitmo open and these prisoners there until and unless another country can be found to take them?
Even AP seems to be figuring it out. Here’s an analysis by AP’s David Espo discussing the AIG debacle:
Which goes to the crux of the Democrats’ current political problem.
Gone are the days when they could merely bludgeon the Bush administration and promise to seek bipartisan solutions to the nation’s economic problems.
Now, in control of the White House and Congress, they are struggling to come up with an explanation for what no one in either party seems moved to defend.
You can’t help but snicker a bit, can you?
Here’s about as succinct a summary of the Obama administration to date that I’ve seen:
President Obama still enjoys the popularity that comes with not being George Bush, especially in a city top-heavy with Democrats. But his initial response to the global calamity that he found on entering the Oval Office has not inspired popularity’s more sober elder brother, confidence. Large constituencies, notably business, are voicing their scepticism openly. The President’s much-vaunted $787 billion stimulus package is being widely interpreted, even by some of those (such as Warren Buffett, America’s second-richest man) who openly supported Mr Obama for the presidency, as a serious failure.
And I don’t foresee it getting much better. Of course the summary comes to us via the British press (Simon Heffer) who have the luxury of being once removed from the situation and therefore have the ability to be somewhat more objective than much of our own media.
For instance, the much more perceptive analysis of the AIG mess:
Conscious that he has made mistakes, and conscious especially of the increasing perception that he is simply throwing cash at unreformed institutions in the hope that something will happen, Mr Obama is trying to raise his game. He had a soft target two days ago, when he joined in America’s outrage at the paying of bonuses to executives of AIG, the sinking insurance giant now buoyed by public money. This provoked further attacks on him from the Right. Why was he using US taxpayers’ money to bail out a company whose main investors were French, German, Swiss and British banks? And wasn’t he merely jumping on the bandwagon of attacking the bonuses to distract attention from his own policy failings – creating a bogeyman in the same way that Gordon Brown and Harriet Harman did with Sir Fred Goodwin last month?
And of course, we’re witnessing how poorly that’s turning out (you know there’s a political problem when the CEO of AIG comes off as a more sympathetic figure than Barney Frank and Chris Dodd).
Heffer says that instead of concentrating on what ails us financially, Obama has another much broader agenda:
Instead he has been trying, on a broad front, to fulfil the reformist ideal that informed his election campaign. Rather like a would-be government in Britain that talked of “sharing the proceeds of growth”, the candidate who wanted to redistribute wealth now, as President, has no wealth to redistribute. A $3.6 trillion budget showed little sign of addressing the problem of stimulating demand. Both big corporations and small businesses feel overtaxed, their competitiveness hampered, and incapable of creating jobs at a time when they are desperately needed. Mr Obama’s green agenda, which was also a significant part of his election promises, entailed higher taxation that will retard the economy just when it needs to grow. His greatest ambition – of starting a national health service – seems impossible in the present climate. As he seeks to move forward on this broad front Warren Buffett himself has attacked him, saying that his first three priorities should all be the economy. Paralysed by inexperience and a Blairish desire to be liked, and hampered by inadequate senior staff, he is now finding that even some of his own party in Congress feel he has gone too far in the socialist experiment. Mrs Pelosi admitted at the weekend that a second stimulus package – which leftist Democrats are calling for, to the horror of much of the rest of America – was not yet on the cards.
Dead on right. The line “paralyzed by inexperience and a Blairish desire to be liked, and hampered by inadequate senior staff”, strikes home. It is a particularly lethal political combination which we’re seeing displayed in spades. It is no longer a comedy show, it has become a horror show. And with the move by the Fed to buy back long-term bonds, the horror is only deepening.
And we’re stuck looking to Timothy Geithner, Barack Obama and Chris Dodd for salvation? Lord help us all.
[HT: Joel C.]
Our congratulations go out to the Obama administration on their latest foreign policy and trade triumph. Last week, apparently without consultation, they did away with a NAFTA pilot program which allowed Mexican trucks to deliver goods to certain areas of the US. Mexico has responded:
Mexico has released the list of U.S. products that will see tariffs of 10 percent to 45 percent. The move is in retaliation for the U.S. scrapping a test program allowing Mexican trucks to deliver goods beyond a U.S. border zone.
Among affected goods are certain fruits and vegetables, wine, juices, sunglasses, toothpaste and coffee, according to a government statement. Most tariffs are 10 percent to 20 percent, with unspecified fresh products subject to a 45 percent charge. The tariffs will apply to $2.4 billion of goods and take effect today.
Just what you need in a down economy – punitive tariffs for political stupidity. And there won’t be a solution anytime soon:
Talks to diffuse the first [self-inflicted -ed.] trade dispute of President Barack Obama’s administration can’t begin until the U.S. has a Commerce Secretary, Economy Minister Gerardo Ruiz Mateos said.
So far I’m really not at all impressed with the status of the “better relations” throughout the world promised by the Obama administration.
Oh, and for an encore, how about this little goodie:
Energy Secretary Steven Chu on Tuesday advocated adjusting trade duties as a “weapon” to protect U.S. manufacturing, just a day after one of China’s top climate envoys warned of a trade war if developed countries impose tariffs on carbon-intensive imports.
Mr. Chu, speaking before a House science panel, said establishing a carbon tariff would help “level the playing field” if other countries haven’t imposed greenhouse-gas-reduction mandates similar to the one President Barack Obama plans to implement over the next couple of years. It is the first time the Obama administration has made public its view on the issue.
“If other countries don’t impose a cost on carbon, then we will be at a disadvantage…[and] we would look at considering perhaps duties that would offset that cost,” Mr. Chu said.
I know this will come as a complete surprise, but some Democrats have been lying to you. But before we get to that, let’s review.
AIG was deemed dangerously insolvent a few months ago, so insolvent that it required the government to step in and save it. It was one of the “too big to fail” companies. It got TARP funds. Then, as a part of the “stimulus” bill, signed into law under the Obama administration, an attempt was made to add a provision to strictly limit such payments as those now causing the faux outrage:
Around the same time, Congress and Obama’s team were passing up an opportunity to put in place strict laws to revoke bonuses from recipients of the $700 billion Wall Street bailout. In February, the Senate voted to add such a proposal to the economic recovery bill that cleared Congress, but in final closed-door talks on the measure, that provision was dropped in favor of limits that affect only future payments.
“There was a lot of lobbying against it and it died,” said Sen. Ron Wyden, D-Ore., who proposed the measure with Republican Sen. Olympia J. Snowe of Maine. He said Obama’s team is sending mixed messages on what will and won’t be tolerated on bonuses, with the president coming out strongly against excessive Wall Street rewards but top officials not following through.
“The president goes out and says this is not acceptable, and then some backroom deal gets cut to let these things get paid out anyway,” Wyden said. “They need to put this to bed once and for all.”
They also need to “put to bed once and for all” this nonsense that they “didn’t know” until a couple of days ago. And, of course, had anyone actually read the bill that they claimed was too important to delay, they’d have actually caught this, one assumes. But it appears, at least initially, that reading legislation before it is signed is just not a priority for this administration or Congress.
And surprise, surprise, we’re finding what they did pass sucks.
While administration officials insisted Tuesday that neither Obama nor Geithner learned of the impending bonus payments until last week, the problem wasn’t new. AIG’s plans to pay hundreds of millions of dollars were publicized last fall, when Congress started asking questions about expensive junkets the company had sponsored.
A November SEC filing by the company details more than $469 million in “retention payments” to keep prized employees.
Back then, Rep. Elijah E. Cummings, D-Md., began pumping Liddy for information on the bonuses and pressing him to scale them back.
“There was outrage brewing already,” Cummings said. “I’m saying (to Liddy), ‘Be a good citizen. … Do something about this.’ ”
Around the same time, outside lawyers hired by the Federal Reserve started reviewing the bonuses as part of a broader look at retention and compensation plans, according to government officials who spoke on condition of anonymity. The outside attorneys examined the possibility of making changes to the company plans — scaling them back, delaying them or rescinding them. They ultimately concluded that even if AIG’s bonuses were withheld, the company would probably be sued successfully by its employees and be forced to pay them, the officials said.
In January, Reps. Joseph E. Crowley of New York and Paul E. Kanjorski of Pennsylvania wrote to the Federal Reserve and the Treasury Department pressing the administration to scrutinize AIG’s bonus plans and take steps against excessive payments.
“I at that point realized that we were going to have a backlash with regard to these bonuses,” Kanjorski said in an AP interview. In a meeting with Liddy later that month, he said he told the AIG chief that “all hell would break loose if we didn’t find a way to inform the public … and that we should take every step to put that information out there so we wouldn’t have the shock.”
And of course, Kanjorski is right. This is a “distraction”, as Rahm Emanuel is labeling it, that the administration could have avoided had the Treasury Secretary been on top of it and the President had exerted even a bit of leadership. Instead, both are in extreme cover-up mode. And as more and more info comes out, the time-line of events they issued has less and less credibility.
This wasn’t something that just emerged as a problem last Tuesday as Geithner is attempting to claim. This has been known and waved off for months. And that includes the provision that was going to be inserted in the “stimulus” package but died due to apparent Democratic lobbying.
Edward Liddy, CEO of AIG, has a piece in the Washington Post today. It is useful for a couple of reasons, one of which is to try to nail down the timeline in this dustup.
But first, this from another Washington Post article:
Senior White House officials said last night that President Obama did not learn that bonuses worth $165 million were to be paid to executives of American International Group until Thursday, one day before they were issued and two days after his Treasury secretary was informed that the payments were going forward.
A point or two to remember. One – $55 million had already been paid out under the very same plan in December of last year with little or no coverage. This wasn’t something new nor should it have been a surprise. This was a plan that was already in place and one has to assume, unless they weren’t doing their jobs, known to the appropriate people in the administration (not necessarily Obama, but at least Geithner).
That brings us back to the Liddy piece. Liddy joined AIG in September of 2008 to begin the difficult task of saving the insurance giant and structuring it so it was again profitable and able to pay the taxpayer funded bailout money back as quickly as possible. There’s a very telling paragraph in Liddy’s piece which makes the point that the plan which is such a huge surprise to the Treasury Secretary and President shouldn’t have been a surprise to anyone:
To prevent undue risk exposure in the meantime, AIG has made a set of retention payments to employees based on a compensation system that prior management put in place. As has been reported, payments were made to employees in the Financial Products unit. Make no mistake, had I been chief executive at the time, I would never have approved the retention contracts that were put in place more than a year ago. It was distasteful to have to make these payments. But we concluded that the risks to the company, and therefore the financial system and the economy, were unacceptably high.
In the meantime, AIG has restructured its 2009 compensation system (note the use of the word “compensation” by Liddy and not “bonuses”) and made all the cuts and changes I noted yesterday.
The fact that this is just another part of the same plan that paid out $55 million last year without a peep, was in place, per Liddy prior to his assuming the Chairmanship and has been in place for at least a year strongly argues one of two things – A) someone is not telling the truth about when they “knew” this latest payment was going to take place or B) someone was not doing their job and is now trying to cover that up like a cat covering crap.
Obama aides defended Timothy F. Geithner’s handling of the situation yesterday, with White House press secretary Robert Gibbs saying the president has “complete confidence” in the Treasury chief.
Sounds like a “heck of a job, Brownie” moment to me.
Iran isn’t just fomenting unrest in its home region, it has found a new area to spread the revolution and fund it:
Iran is increasing its activity in Latin America and the Caribbean, including actions aimed at supporting the Lebanese militant group Hezbollah, a top U.S. military commander said on Tuesday.
Navy Admiral James Stavridis, who oversees U.S. military interests in the region as head of U.S. Southern Command, also said Hezbollah was linked to drug-trafficking in Colombia.
“We have seen… an increase in a wide level of activity by the Iranian government in this region,” Stavridis told the Senate Armed Services Committee.
“That is a concern principally because of the connections between the government of Iran, which is a state sponsor of terrorism, and Hezbollah,” he said.
The U.S. State Department lists the Lebanese-based political and military movement as a terrorist organization.
Stavridis said Hezbollah activities in South America have been concentrated particularly in the border region between Brazil, Paraguay and Argentina, but also in Colombia.
“We have been seeing in Colombia a direct connection between Hezbollah activity and narco-trafficking activity,” the commander added, without providing specifics.
Of course, one of Iran’s NBFs in the area is Venezuelan strongman Hugo Chavez. And he’s not the only one as reported by Todd Bensman:
But with the exception of my own coverage, there’s been hardly a peep about the fact that Iranian President Mahmoud Ahmadinejad planted the Iranian flag so far north in Nicaragua as soon as the time-tested American nemesis Daniel Ortega took office in January 2007. In fact, Ahmadinejad considered Ortega’s ascension so important that he was in Nicaragua to attend the inauguration. Within months, Iran was promising hundreds of millions in economic projects — and quickly set up a diplomatic mission in a tony Managua neighborhood where it could all supposedly be coordinated. Now Iran is extending its reach even further north, right into Mexico City with equally under-covered proposals to vastly expand tenuous ties to America’s immediate southern neighbor.
Hey, we mess around in Iraq and Afghanistan, they mess around in Mexico. Of course all we have to do talk to them and we can straighten this all out, right?
Another anecdote that makes you want government run health care so badly you can just taste it:
The full extent of the horrific conditions at an NHS hospital where hundreds may have died because of ‘appalling’ care was laid bare yesterday.
Dehydrated patients were forced to drink out of flower vases, while others were left in soiled linen on filthy wards.
Relatives of patients who died at Staffordshire General Hospital told how they were so worried by the standard of care they slept in chairs on the wards.
The ‘shocking’ catalogue of failures was released yesterday after an independent investigation by the Healthcare Commission.
It found Government waiting time targets and a bid to win foundation status were pursued at the expense of patient safety over a three-year period at Mid-Staffordshire NHS Trust.
The commission’s report – revealed in yesterday’s Daily Mail – said at least 400 deaths could not be explained, although it is feared up to 1,200 patients may have died needlessly.
Nice. And I’m sure, somewhere, some politician or bureaucrat will claim that the problem, naturally, is “lack of regulation”.
And by the way, if you’re wondering how much the American version will cost, here’s the first estimate. Remember, when looking at it, how often these sorts of estimates are so low they’re not worth the paper they are written on – figure anywhere from 2 to 4 times the figure once the government gets done being “efficient”:
Guaranteeing health insurance for all Americans may cost about $1.5 trillion over the next decade, health experts say. That’s more than double the $634 billion ’down payment’ President Barack Obama set aside for health reform in his budget, raising the prospect of sticker shock at a time of record federal spending.
Thus the nice “downpayment” with money we don’t have.
Russia is our friend. Don’t believe it? Well let’s look at a couple of things.
Just as the US starts talking about cutting defense spending and axing weapons systems and programs, what are our friends in Russia doing?
President Dmitry Medvedev on Tuesday announced a “large-scale” rearmament and renewal of Russia’s nuclear arsenal, accusing NATO of pushing ahead with expansion near Russian borders.
Meeting defence chiefs in Moscow, Medvedev said he was determined to implement reforms to streamline Russia’s bloated military and stressed Moscow continued to face several security threats needing robust defense capacity.
“From 2011, a large-scale rearmament of the army and navy will begin,” Medvedev said.
He called for a renewal of Russia’s nuclear weapons arsenal and added that NATO was pursuing a drive to expand the alliance’s physical presence near Russia’s borders.
“Analysis of the military-political situation in the world shows that a serious conflict potential remains in some regions,” Medvedev said.
So, new nukes and large-scale rearmament in the face of US defense cuts. As the article asks “reset” or new Cold War?
And then, just to really upset the apple cart, how about a new currency?
The Kremlin published its priorities Monday for an upcoming meeting of the G20, calling for the creation of a supranational reserve currency to be issued by international institutions as part of a reform of the global financial system.
The International Monetary Fund should investigate the possible creation of a new reserve currency, widening the list of reserve currencies or using its already existing Special Drawing Rights, or SDRs, as a “superreserve currency accepted by the whole of the international community,” the Kremlin said in a statement issued on its web site.
The SDR is an international reserve asset, created by the IMF in 1969 to supplement the existing official reserves of member countries.
The Kremlin has persistently criticized the dollar’s status as the dominant global reserve currency and has lowered its own dollar holdings in the last few years. Both President Dmitry Medvedev and Prime Minister Vladimir Putin have repeatedly called for the ruble to be used as a regional reserve currency, although the idea has received little support outside of Russia.
Now there’s not much “there” there as it pertains to this initiative, but it another indicator, among many, that the “Joe Biden Challenge” is alive and well and Russia is in the running to bring it to fruition.