Majikthise

Off to CAF's New Economy Conference

I'm off to the Building the New Economy conference, which kicks off tomorrow in DC.

Scott Paul, the president of the American Alliance for Manufacturing summarizes some of the issues on his mind ahead of the conference:

Ahead of the Oct. 29 'Building the New Economy' conference in Washington, one can state the obvious: something has gone terribly wrong with the U.S. economy. But chalking up the blame to a few bad apples on Wall Street and their risky financial instruments, and responding by simply providing appropriate regulation in the financial services sector, will ultimately be unsatisfying. There are much deeper, structural issues which must be urgently addressed. 

It stands to reason that America needs to produce things of value in order to assure its continued prosperity and security. I'm still weighing the arguments about what role manufacturing should play in that equation. 

Obviously, we shouldn't fall into the trap of propping up heavy manufacturing for heavy manufacturing's sake. But it's impossible to deny that manufacturing has historically been a source of good, skilled jobs.

I'm excited to learn more about green manufacturing jobs. We're going to have to spend a lot of money to become more fuel efficient and less polluting. Someone will have to make the solar panels and wind turbines. Why not Americans?

Tea bagger bus company sued over blaze that killed 23 seniors

One of the featured corporate sponsors of the Tea Party Express had to pay millions of dollars to settle lawsuits for its role in a bus fire that killed 23 elderly nursing home residents fleeing Hurricane Rita in 2005.

The BusBank, a Chicago-based charter company, a "Tour Partner" of the Tea Party Express, a rolling protest sponsored by the Our Country Deserves Better PAC under the supervision of former Republican state legislator Howard Kaloogian, now a PR exec for the GOP-linked firm Russo, Marsh & Rogers.

BusBank is also arranging to ferry Tea Baggers to their 9/12 march on Washington to voice their demands for unfettered capitalism. (Update: Commenter Casual Observer asks if there's a Dick Armey connection here. There is. Dick Armey's FreedomWorks Foundation is the premiere sponsor of the 9/12 march; and Kaloogian's OCDB PAC is a "Gold Co-Sponsor.")

In 2005, a bus carrying seniors fleeing Hurricane Rita burst into flame outside of Dallas, immolating 23 nursing home residents. Investigators later found that the bus was: driven by an undocumented migrant without a valid U.S. driver's license, lacking adequate fire extinguishers, and not registered to operate in Texas. When the bus had mechanical problems before the crash, the driver took it to an unqualified mechanic who failed to notice the critical fault--an unlubricated axle that eventually melted and caught fire.

Manufacturing consent: Execs called off Olbermann/O'Reilly feud

The high-profile feud between MSNBC's Keith Olbermann and Fox News' Bill O'Reilly was great for the shows' respective ratings.

So, the suits were happy to let the feud continue. That is, until O'Reilly started assailing MSNBC's parent company, General Electric, for doing business with Iran.

The O'Reilly crusade against GE had real-world consequences. A GE shareholders meeting was reportedly overrun with Iran critics and an O'Reilly producer.

General Electric was not amused. So, a sitdown was arranged to bring the feud to an end, even though it was making money for both MSNBC and Fox News:

At an off-the-record summit meeting for chief executives sponsored by Microsoft in mid-May, the PBS interviewer Charlie Rose asked Jeffrey Immelt, chairman of G.E., and his counterpart at the News Corporation, Rupert Murdoch, about the feud.

Both moguls expressed regret over the venomous culture between the networks and the increasingly personal nature of the barbs. Days later, even though the feud had increased the audience of both programs, their lieutenants arranged a cease-fire, according to four people who work at the companies and have direct knowledge of the deal. [NYT]

Executives told the New York Times that the feud was called off specifically because it threatened the business interests of GE and the News Corporation.

Olbermann denies that he's a party to any deal, but the verbal barbs have tapered off.

As Glenn Greenwald points out, it's ironic that Charlie Rose, who brokered the deal, has publicly dismissed the idea that parent corporations slant TV coverage for the benefit of the larger enterprise.

FEMA's fake news conference in CA

White House spokesperson Dana Perino is chiding senior FEMA officials for staging a phony news conference:

The agency — much maligned for its sluggish response to Hurricane Katrina over two years ago — arranged to have FEMA employees play the part of independent reporters Tuesday and ask questions of Vice Adm. Harvey E. Johnson, the agency's deputy director.

The questions were predictably soft and gratuitous.

"I'm very happy with FEMA's response," Johnson said in reply to one query from an agency employee.

White House press secretary Dana Perino said it was not appropriate that the questions were posed by agency staffers instead of reporters. FEMA was responsible for the "error in judgment," she said, adding that the White House did not know about it beforehand and did not condone it.

"FEMA has issued an apology, saying that they had an error in judgment when they were attempting to get out a lot of information to reporters, who were asking for answers to a variety of questions in regard to the wildfires in California," Perino said. "It's not something I would have condoned. And they — I'm sure — will not do it again."

She said the agency was just trying to provide information to the public, through the press, because there were so many questions. [AP]

USA Today's blog has a good post on the sham Q&A, including a partial transcript of the phony questions.

As "Jeff Gannon" Guckert of "Talon News" once asked George W. Bush, "How are you going to work with people who seem to have divorced themselves from reality?"

Interview with "Blackwater USA" author Jeremy Scahill

Independent journalist Jeremy Scahill gives a very impressive interview to TruthDig about his new book, Blackwater: The Rise of the World's Most Powerful Mercenary Army.

Hivemind, what's the matter with the credit derivatives market?

There's a very interesting story in today's New York Times about the credit derivatives market. That may sound like a contradiction in terms to some people, but stay with me... Apparently, there's a $26 trillion credit card derivative market that nobody really understands, not even the world's top financiers:

High on [the head of the Federal Reserve Bank of New York]'s to-do list is understanding and monitoring the $26 trillion credit derivatives market — twice the size of the United States economy — the fastest-growing financial market there is. Its explosive growth has greased the wheels of the global economy, increasing liquidity, spreading risk and minting money for Wall Street along the way. But it has surged at a time when volatility has been low, debt has been historically cheap and defaults have been virtually absent. When this market gets tested, no one knows for certain how it may react.

Even the heads of some of the world’s biggest banks seem overwhelmed by the size and complexity of credit derivatives. “It makes my head swim,” said Kenneth D. Lewis, the chief executive of Bank of America. [NYT]

Maybe some economically savvy readers can help me out here. It sounds like "a market nobody understands" is actually a euphemism that for a looming disaster that nobody knows how to fix.

In 2004, Mr. Geithner’s staff conducted an extensive review of counterparty risk. But rather than dump its conclusions on the industry, he chose to stay behind the scenes while encouraging Mr. Corrigan to reconvene the group. In January 2005, Mr. Corrigan brought together a group that included some of the most senior executives on Wall Street. Six months later, the group produced a report that made 47 recommendations on issues from the very technical to the philosophical.

Central to the report’s findings were shocking weaknesses in the way credit derivatives were being assigned and traded around without any sense of who owned what. The so-called “assignment issue” was simple: credit derivatives were negotiated by two parties, say JPMorgan and Goldman Sachs. But banks were “assigning” the contracts out to others — like hedge funds — without telling each other. It was a little bit like lending money to a friend who is really rich who in turn lends it to her deadbeat brother and fails to mention it. [NYT]

You've got to read the whole article to get a sense of the anxious bafflement of the financial establishment.

Is this portrayal accurate? If so, what's the underlying problem?

[Edit: I initially surmised that the credit card derivative industry had to do, at least in part, with speculation on unsecured consumer debt (credit cards). I misunderstood. However, I'm still baffled why nobody understands the credit derivatives industry and why there's such widespread anxiety about the state of the market.]

Corporate Love Council

RedStateson reports:

This'll warm your heart -- South Korean capital, distressed by the growing anti-corporate mood of that country's youth, have formed the Corporate Love Council. Because commodification and low-wage zones are simply a different way of saying, We Care.

A.I.G. brought to heel

Something else to be thankful for this holiday season:

A.I.G. Will Accept Monitor and Pay $80 Million to Close Inquiries [NYT permalink]

The American Insurance Group copped a plea. The company will pay an $80 million fine and submit to an external monitor.

A.I.G. is accused of using insurance contracts to "smooth out" earnings. The NYT article explains why forrays into so-called "finite insurance" have gotten so many leading insurance companies in to serious regulatory trouble:

Finite risk or loss mitigation insurance was developed in the 1990's. The policies have become the subject of investigations because they sometimes do not operate like insurance - which protects against unexpected events - but may simply amount to loan agreements, possibly violating accounting standards. Payments of insurance claims should be recorded, for example, as income. But a loan must be recorded as a liability. A crucial test in insurance is whether there is a transfer of some risk from an insurance company's customer to the insurance company. If there is no transfer of risk, there is no insurance.

Update: Reuters reports that A.I.G. has agreed to pay $126 million to settle earnings inflation charges (as opposed to the $80 million figure cited above).

Sunday usury-blogging

Albrecht Durer: Christ Driving the Money Changers from the Temple

The pundits say that Democrats must learn to speak the language of faith. I don't have any faith, but here's what I think a person of faith would say, if they believed the literal truth of the Bible:Usury is an abomination that threatens the very foundations of our society.

Soaring Interest Compounds Credit Card Pain for Millions [NYT permalink]

Ezekiel 18:13 Hath given forth upon usury, and hath taken increase: shall he then live? he shall not live: he hath done all these abominations; he shall surely die; his blood shall be upon him.

Ken Lay's wife probed

Wife of Enron's Lay Investigated

HOUSTON (Reuters) - Federal prosecutors are investigating whether the wife of former Enron Corp. (ENRNQ.PK: Quote, Profile, Research) Chairman Kenneth Lay illegally sold shares in the company just before it went bankrupt, a lawyer for Lay said on Wednesday.

The Justice Department's Enron Task Force is investigating whether Linda Lay engaged in insider trading in the sale of 500,000 shares of Enron stock on Nov. 28, 2001, through the Lays' charitable foundation, lawyer Michael Ramsey said. [...]