Flame War

It all started when a writer I like a lot, Matt Taibbi, wrote this piece for the Rolling Stone entitled "Obama's Big Sellout"

Which drew this response about percieved or real inaccuracies in the piece from Tim Fernholz entitled "The Errors Of Matt Taibbi"

Which then, of course, drew this response from Matt Taibbi entiteled "On Obama's Sellout"

Now I encourage you to read all 3 pieces in their entirety and come to your own conclusions and decide for yourself who you think is more right or more wrong. But I will say this, while I like both Taibbi and Fernholz generally, it does seem like Taibbi had an agenda with his article in the Rolling Stone, especially after reading his response to Fernholz. Basically in his response he makes it seem as if they both have the same facts but he interpreted them differently from Fernholz. That is all fine and good but did he express any of that balance in his piece? Balance that he himself in his response admits is basically valid even though he doesn't agree?

I didn't see any.

Basically while Fernholz points out that many of the things Taibbi takes issue with President Obama over happened during President Bush's tenure, Taibbi still feels without any explanation that Obama should be held responsible for it because of the advisors that were chosen for his economic team. Again, its ok for him to have that opinion, but that's just what it is, an opinion. His article for me was ok as an op-ed but definitely not ok as a piece or actual reporting.

And here is my last major point in all of this. Fernholz takes Taibbi to task for flogging yet again the $23 Trillion dollar worst case scenario number for the bailout. Here is the graph where it appears in Rolling Stone:

But whatever jobs the stimulus has created or preserved so far — 640,329, according to an absurdly precise and already debunked calculation by the White House — the aid that Obama has provided to real people has been dwarfed in size and scope by the taxpayer money that has been handed over to America's financial giants. "They spent $75 billion on mortgage relief, but come on — look at how much they gave Wall Street," says a leading Democratic strategist. Neil Barofsky, the inspector general charged with overseeing TARP, estimates that the total cost of the Wall Street bailouts could eventually reach $23.7 trillion. And while the government continues to dole out big money to big banks, Obama and his team of Rubinites have done almost nothing to reform the warped financial system responsible for imploding the global economy in the first place.

Here is how Fernholz addressed it:

"Neil Barofsky, the inspector general charged with overseeing TARP, estimates that the total cost of the Wall Street bailouts could eventually reach $23.7 trillion." It could, if every single loan guaranteed by the Federal government failed at once and all of the assets bought with those loans were destroyed -- and many of those loans are to homeowners, including low-income homeowners, through Fannie Mae and Freddie Mac, or to small businesses. Some of that money went to Chrysler and GM in what was primarily a job saving move. TARP's actual outlays are only $518 billion (still nothing to sneeze at), including foreclosure relief for homeowners. More money has been actually allocated so far on fiscal stimulus, including funds to reinforce the social safety net, than on the bank bailouts.

Here is Taibbi's response to Ferholz:

First of all, Barofsky did use that number, so let’s get that out of the way — there’s no factual issue with the passage I wrote. The Prospect writer wants to take issue with Barofsky’s number and imply that the use of it is misleading. Obviously Barofsky’s number is a worst-case scenario. But let’s cut the bullshit about the bailouts being intended to help ordinary homeowners and save auto workers. We could have paid off every subprime mortgage in America for about $1.4 trillion and instead shelled out at least ten times that to Wall Street, primarily to pay off derivative bets made by bankers on those assets.

The writer notes that the total TARP outlay was only $518 billion, and implies that this is the entire outlay for the bailouts when in fact the TARP is just one small slice of the bailout package — most of the bailout monies went out through little-known Fed programs like the TALF, the TLGP, the TIP, the PPI, and the Maiden Lanes. The number my friend Nomi Prins is using now for the bailouts is about $14 trillion in total outlays, and just as Barofsky pointed out, that number could rise. But to imply that the bailout outlay is not only comparable to the $700 billion stimulus but smaller than it is totally disingenuous.

The bailouts have been a massive boon to Wall Street, not so much to the rest of us (again, see Nomi’s report on that). Most of the bailouts came in the form of very cheap money lent out to the same banks that caused the crisis, who then took that money and lent it out at market rates, pocketing the difference.

That’s where all these billions in bonuses for the major banks are coming from this year; it’s almost impossible to not make mountains of money when you’re borrowing your money from the government basically for free. Moreover we issued government guarantees for all the least responsible banks in the country — so while you and I have to keep our same old shitty credit scores, all the people who leveraged themselves to the hilt and bet the farm on subprime mortgages that we ended up bailing out now get squeaky clean, brand-new AAA credit ratings to borrow from. The cost of credit for them plummeted thanks to these guarantees, while we’re paying the same old rates to borrow our money.

This, again, is perfectly in line with the basic premise of the article. Geithner and Ben Bernanke continued a bailout policy that rewarded the very people who were most responsible for the crisis. The rest of the population did not see those same benefits. We can argue about the motives behind Obama’s bailout decision, but the numbers are not really a factual issue.

Now I pasted the whole response to be as fair as possible to Taibbi but its really his response at the beginning that is the tell.

First of all, Barofsky did use that number, so let’s get that out of the way — there’s no factual issue with the passage I wrote. The Prospect writer wants to take issue with Barofsky’s number and imply that the use of it is misleading. Obviously Barofsky’s number is a worst-case scenario. But let’s cut the bullshit about the bailouts being intended to help ordinary homeowners and save auto workers.

Let's cut the bullshit indeed. First of all, I don't know how anybody reads Taibbi's article and gets that its "obviously...a worst case scenario". In point of fact anybody reading the article probably thinks its highly likely or at least reasonable to assume that the number WILL reach $23 Trillion. Time and time again Taibbi has flogged this number as a kind of gotcha moment in his articles and when he has had TV interviews. At no point have I personally seen or heard or heard of him caveating it as a worst case scenario. And when confronted on it by Fernholz his reaction is not to admit he should have caveated it this time, but to say it was "obvious".

Really?

Because I can guarantee you that there are folks on both side of the political spectrum who quote that $23 Trillion dollar figure as if it were gospel. It definitely doesn't seem so "obvious" to them. And again I have to point out that the article isn't "Bush and Obama's Big Sellout", its "Obama's Big Sellout" as if he were President when TARP was signed into law anyway.

And just look at the rest of Taibbi's response which is constructed of all manner of strawmen. Fernholz isn't holding the bailouts out as to being meant to help "ordinary homeowners" or "save autoworkers". In point of fact TARP WASN'T about helping anybody but Wall Street from its inception and when you REALLY sit down to think about it, the fact that President Obama and his team broadened the scope of TARP to help homeowners and help the auto industry doesn't that kinda, you know, kick Taibbi's point on the matter squarely in the junk?

Just sayin...

Now I know there are some folks that believe President Obama should never be criticized, and there are others who think he should always be criticized and anybody who criticizes the people who level that criticism of him from the left are "apologists". I think if you go through my posts in this blog its clear that I fall into neither category. When Obama is fucking up I say so. When people on the left are full of shit in their criticism of him, I say that too. It is what it is.

But I have to say that for me, in this particular situation, Fernholz carries more weight. Matt Taibbi set out to write an article bashing President Obama essentially as guilty by association because of the economic advisors he chose and where he chose to put them. Again that's fine and dandy by me. But the problem for me comes in when he tried to mask it as actual reporting on President Obama's record since being, you know, President. When those facts are lined up against his opinion then his article becomes what it should have been, an op-ed.

But do the people reading the article realize that?

Somehow I highly doubt it because just like that $23 Trillion number, I just don't think its that "obvious".

A Lesson Not Learned

There was a remarkable political lesson last year that wasn't really learned because of subsequent events. However someone should point this lesson out to Harry Reid as we head into a cloture vote tonight just to start debate on health care reform, and then head into a final cloture vote later.

Last year with the financial markets on the edge of collapse the House held a vote for TARP. At the time the people of this country were made aware of how dire of a circumstance we were in and how easily we could have slipped into a depression. A couple of big name financial firms had already essential been vaporized and more were right over the horizon.

In the midst of this some of the Republicans in the House decided to vote against TARP. At the time I don't know if their leadership had miscounted or were stabbed in the back by some of their caucus but the result was the bill came up short of the votes needed to pass and chaos on the floor of the House ensued. What happened next was utterly predictable.

The markets fell sharply and GOP members of the House were raked over the coals for being insufficiently serious about the problem our nation was facing. In the end this episode probably as much as anything else helped to sweep Democrats into both halls of Congress in major majorities last year. When push came to shove it appeared to most anyone that these Republicans were more interested in playing politics than fixing a problem, and they paid for it.

Now the problem of course is that TARP has been such a PR disaster on a lot of fronts and Democrats have been so fucking inept at defending it even at all that nobody really wants to look back at the days that led up to its actual passage. If they did then they would remember that Republicans were so surprised but the country's reaction to their fuckery on the first vote that they panicked. All of a sudden McCain was suspending his campaign and on the second vote some off those Republicans who just couldn't find their way to voting for it the first time got on board to take the heat off. What that means is that when there is a crisis in this country and people play games like not voting to at least attempt to fix the problem, the American people are not going to be happy. The important thing is that in the end the fix actualy works and can be sold on an ongoing basis.

Which brings us to health care reform and a few corporatist Democratic Senators who are holding out for sweeteners.

Here is what Harry Reid should say to each and every one of them: "Fuck you, pay me!"

What I mean is he should literally tell them to step the fuck off and bring the bill up for a cloture vote tonight and dare them to vote against cloture. Dare them to put their careers in the Senate on the line by refusing to even allow the Senate to debate health care reform, a reform that an overwhelming majority of Americans agree we need even if they don't agree what it should entail. Dare the sorry muthafuckas to totally abandon the base of their party and join with the Republicans.

Matter of fact, double dare them.

See the thing of it is, this can be what they like to call these days a "teachable moment". There is no rule that says Harry Reid can't bring the bill back again in the next few days and put it up for debate again. Basically the bill has to truly be defeated for that to happen and he still has to the power to keep bringing it back. But what some of these assholes need to see is what will happen to their poll numbers if they should happen to vote against cloture.

I am thinking specifically of Blanche Lincoln who is fighting to get reelected next year, but her poll numbers would also be an example to her corporatist bretheren like Mary Landrieu and Ben Nelson. Its about time we stopped caving these assholes and instead putting their ass on the spot and making THEM cave. Fuck it, if they have the balls to say no when the bill is up for cloture then so be it, let them live with the consequences for a few days.

But my money is on them folding like a bad hand and from that point on they will be dealing fom a point of weakness.

If Harry Reid never stands up to them you can expect that every single item on the Democratic agenda will go through the same bunch of bullshit. And we already have seen what the result is when that happens, just take a look at the stimulus bill. Had we punched their asses in the throat earlier this year and rammed through a better bill then its highly likely that all the economic numbers, including unemployment, would look substantially better. Instead we gave them practically everything they wanted, fucked up the bill, and now the Democratic brand is damaged because of it.

So Harry Reid just go back and google the headlines after that House vote last year. The get on the floor tonight with confidence and put the bright lights on the ConservaDems and make them follow through on their hollow threats while the world is watching.

Trust me on this, they wont be able to take the heat.

The Sky WAS Falling

Last year when the Congress and the President responded to the financial crisis by rushing to sign into law the 700 billion dollar TARP bill many Americans, myself included, were skeptical about it. In the ensuing months, many of our concerns were borne out as Secretary Paulson totally flipped the script when it came to implementing the first tranch of TARP money and instead of buying up toxic assets as he pledged that he would, he pushed the money off onto big banks with little to no oversight or accountability. Now personally I still felt like the TARP program must have done something right because the financial markets didn't totally crash. Still you would be hard pressed to find an average citizen who would have a lot of good things to say about TARP. One of the main criticisms is that it was rushed through Congress which all but ensured it would be done wrong.

Of course the one thing missing from the conversation was WHY it was rushed through so fast. For whatever reason most of the people involved on the hill have been reluctant to say what was the impetus for such bold and swift I action. I guess they didn't think that many Americans would react well to knowing how close we came to the going off a cliff. Well at balloon-juice, John Cole had this video up that I feel like needs to get more play along with a partial transcript. Check it out.

I was there when the secretary and the chairman of the Federal Reserve came those days and talked to members of Congress about what was going on… Here’s the facts. We don’t even talk about these things.

On Thursday, at about 11 o’clock in the morning, the Federal Reserve noticed a tremendous drawdown of money market accounts in the United States to a tune of $550 billion being drawn out in a matter of an hour or two.

The Treasury opened up its window to help. They pumped $105 billion into the system and quickly realized that they could not stem the tide. We were having an electronic run on the banks.

They decided to close the operation, close down the money accounts, and announce a guarantee of $250,000 per account so there wouldn’t be further panic and there. And that’s what actually happened.

If they had not done that their estimation was that by two o’clock that afternoon, $5.5 trillion would have been drawn out of the money market system of the United States, would have collapsed the entire economy of the United States, and within 24 hours the world economy would have collapsed.

As I hear that and read the transcript I have to say that scared the shit out of me. We have gone all these months pointing fingers and casting aspersions on the people in Congress for voting for the TARP bill never knowing how close we came, literally a matter of hours away, to a total economic collapse not only in this country but worldwide. Now thats not to absolve the execution of the TARP bill which on a lot of counts has been an abject failure. But if you were in that room when you heard this kind of a dire warning could you have really said no to doing SOMETHING to avert the crisis? Mind you, many Republicans and a few Dumb Ass Blue Dog Democrats DID decided to play russian roulette with the world economy. That just sheds more light on how wreckless these people are. I don't take back all of what I had bad to say about the TARP bill but I admit now that at least I understand the motivation behind it.

But What About Haircuts?

Just watching Morning Joe again today and listening to Scarborough harp about how President Obama is "naive" to try to limit the compensation of executives at financial institutions who take TARP money to $500,000 a year. According to old Scar, with an assist from Mikaborg, its necessary to pay Wall Street execs enormous bonuses even after they come to the government for a bailout. Now setting aside for a moment that this is a 180 from just yesterday when he was cheering the idea of cutting executive pay on when it was Claire McCaskill's idea, but doesn't anyone else remember all the talk about haircuts when it came to bailing out the Big 3 auto workers? I remember Mika and Scar vividly. "Ohhhh the union workers have to take a haircut to get this money". So a person making say $30 or $40 an hour actually making something in this country, THEY need to take a paycut. But some fatcat big wig who has lot people's money and has in many cases lied to their clients, THEY should continue getting paid out the ass in Mika and Scar's world. Do these people know ANY regular Americans at all? Their ears aren't tin at this point, they are aluminum.

Don't Act Surprised

Like Alonzo said in "Training Day", this is chess not checkers.

WASHINGTON – Congress laid the foundation for President-elect Barack Obama's economic recovery plan on Thursday with remarkable speed, clearing the way for a new infusion of bailout cash for the financial industry while majority Democrats proposed spending increases and tax cuts totaling a whopping $825 billion.

Two days after Obama personally lobbied for release of $350 billion in bailout funds, the Senate narrowly turned aside a bid to block the money.

Across the Capitol, Speaker Nancy Pelosi, D-Calif. said, "Immediate job creation and then continuing job creation" were the twin goals of the separate stimulus legislation. It recommends tax cuts for businesses and individuals while pouring billions into areas such as health care, education, energy and highway construction.

She and Senate Majority Leader Harry Reid, D-Nev., have pledged to have the economic stimulus bill ready for Obama's signature by mid-February.

Both houses debated Obama's call to release another $350 billion from the financial bailout package, but the Senate vote was the triumph he had sought. Despite bipartisan anger over the Bush administration's handling of the program to date, Democratic allies of the incoming president prevailed on a 52-42 roll call.

The vote followed a commitment by Obama to use as much as $100 billion of the funds to help homeowners facing foreclosure proceedings.

The money will be available in less than two weeks, at a time when there is fresh evidence of shakiness among banks.

First off I hate to say I told you so but nobody should be surprised that Obama gets what Obama wants especially with the make up of Congress now. Always remember that when you hear about a Democrat criticizing or opposing some legislation that Obama favors to look and see who it is. When I saw Senator McCaskill and Senator Kerry criticizing the Tarp legislation and the stimulus bill I just knew the fix was in. They can't look like they are rubber stamping President Elect Obama's agenda but after the bluff and bluster over if you see a Democrat voting against Obama get ready for a cold day because Hell will be freezing over.