Month: March 2008

Jackson Will Resign

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by hilzoy Via TPM, the WSJ: “Housing and Urban Development Secretary Alphonso Jackson is expected to announce his resignation Monday, according to people familiar with the matter, a decision that will deal a blow to the Bush administration’s efforts to tackle the housing and mortgage mess. The exact reasons for Mr. Jackson’s decision couldn’t be … Read more

Meet McCain’s Economics Advisor

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by hilzoy

I’m late getting to John McCain’s speech on the housing crisis, in which he promised to do next to nothing to help homeowners, to convene a meeting of accountants, to cut taxes, and, in a surprising break with most economists here on planet earth, to respond to the present financial problems by cutting regulation [UPDATE: as von notes, this is McCain’s response to what he calls “an explosion of complex financial instruments that weren’t particularly well understood by even the most sophisticated banks, lenders and hedge funds” As von correctly notes, McCain does propose new regulation on mortgage lenders. END UPDATE.] The idea that overregulation is at the heart of our present predicament might seem counterintuitive. But the fact that McCain believes it is a lot easier to understand when you realize that his chief economic advisor and general campaign co-chair is Phil Gramm, who seems never to have met a financial regulation he didn’t want to destroy.

Gramm, who has been described as “McCain’s econ brain” and “the expert he turns to on the subject,” didn’t just oppose financial regulations in general. He helped to create the conditions for the mortgage crisis, and others, in quite specific ways. Lisa Lerer at Politico has more:

“The general co-chairman of John McCain’s presidential campaign, former Sen. Phil Gramm (R-Texas), led the charge in 1999 to repeal a Depression-era banking regulation law that Democrat Barack Obama claimed on Thursday contributed significantly to today’s economic turmoil. (…)

A year after the Gramm-Leach-Bliley Act repealed the old regulations, Swiss Bank UBS gobbled up brokerage house Paine Weber. Two years later, Gramm settled in as a vice chairman of UBS’s new investment banking arm.

Later, he became a major player in its government affairs operation. According to federal lobbying disclosure records, Gramm lobbied Congress, the Federal Reserve and Treasury Department about banking and mortgage issues in 2005 and 2006.

During those years, the mortgage industry pressed Congress to roll back strong state rules that sought to stem the rise of predatory tactics used by lenders and brokers to place homeowners in high-cost mortgages.

For his work, Gramm and two other lobbyists collected $750,000 in fees from UBS’s American subsidiary. In the past year, UBS has written down more then $18 billion in exposure to subprime loans and other risky securities and is considering cutting as many as 8,000 jobs.”

The 1999 bill that Gramm sponsored overturned the Glass-Steagall Act, which (among other things) separated investment banks from ordinary banks. Gramm’s bill was an enormously important piece of financial legislation, and by allowing banks and brokerages to merge, it set in place some of the conditions that hampered scrutiny of mortgage-backed securities, and made the damage from the present meltdown harder to contain. As Paul Krugman wrote last week:

“I’d argue that aside from Alan Greenspan, nobody did as much as Mr. Gramm to make this crisis possible.”

Isn’t that comforting?

But Gramm isn’t just involved in this economic meltdown…

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Nomination – Stupidest Quote of 2008 (Thus Far)

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by publius God help us if this isn’t a lie (emphasis mine): Randy Scheunemann, the McCain campaign’s senior foreign policy adviser [said] “Would you rather have the Maliki government in control, or the Iranian-backed special groups in control, or Al Qaeda in control?”

Weekend Bleg – To Mac or Not to Mac

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by publius So I’m thinking of becoming a cool kid and getting a Mac notebook. But I’m not sold yet. For one, I love my right clicking. Two, I’m worried about Windows compatibility (though I’ve been told that’s no longer a problem). Plus, I don’t really do audio/video editing, etc. So that’s the question – … Read more

Iraq: Roundup

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by hilzoy

This is not good at all:

“U.S. forces in armored vehicles battled Mahdi Army fighters Thursday in the vast Shiite stronghold of Sadr City, and military officials said Friday that U.S. aircraft bombed militant positions in the southern city of Basra, as the American role in a campaign against party-backed militias appeared to expand. Iraqi army and police units appeared to be largely holding to the outskirts of the Sadr City fighting, as U.S. troops took the lead.

Four U.S. Stryker armored vehicles were seen in Sadr City by a Washington Post correspondent, one of them engaging Mahdi Army militiamen with heavy fire. The din of U.S. weapons, along with the Mahdi Army’s AK-47s and rocket-propelled grenades, was heard through much of the day. U.S. helicopters and drones buzzed overhead.

The clashes suggested that American forces were being drawn more deeply into a broad offensive that Prime Minister Nouri al-Maliki, a Shiite, launched in the southern city of Basra on Tuesday, saying death squads, criminal gangs and rogue militias were the targets. The Mahdi Army of cleric Moqtada al-Sadr, a Shiite rival of Maliki, appeared to have taken the brunt of the attacks; fighting spread to many southern cities and parts of Baghdad.”

And this just makes it worse:

“Maliki decided to launch the offensive without consulting his U.S. allies, according to administration officials. With little U.S. presence in the south, and British forces in Basra confined to an air base outside the city, one administration official said that “we can’t quite decipher” what is going on. It’s a question, he said, of “who’s got the best conspiracy” theory about why Maliki decided to act now.

In Basra, three rival Shiite groups have been trying to position themselves, sometimes through force of arms, to dominate recently approved provincial elections.

The U.S. officials, who were not authorized to speak on the record, said that they believe Iran has provided assistance in the past to all three groups: the Mahdi Army; the Badr Organization of the Islamic Supreme Council of Iraq, Iraq’s largest Shiite party; and forces loyal to the Fadhila Party, which holds the Basra governor’s seat. But the officials see the current conflict as a purely internal Iraqi dispute.

Some officials have concluded that Maliki himself is firing “the first salvo in upcoming elections,” the administration official said.

“His dog in that fight is that he is basically allied with the Badr Corps” against forces loyal to Sadr, the official said. “It’s not a pretty picture.””

It’s made even less pretty by the reports that Iraqi forces are holding back and letting us take the lead, or not fighting at all, or switching sides:

“Abu Iman barely flinched when the Iraqi Government ordered his unit of special police to move against al-Mahdi Army fighters in Basra.

His response, while swift, was not what British and US military trainers who have spent the past five years schooling the Iraqi security forces would have hoped for. He and 15 of his comrades took off their uniforms, kept their government-issued rifles and went over to the other side without a second thought.”

So: Maliki launched an assault on the Mahdi Army without telling us. [UPDATE: Eric Martin says: don’t take the claim that we weren’t told at face value. He’s right. END UPDATE] We’re not sure why he did this, but it appears to be about internal Iraqi politics. And yet, for some reason, our forces are heavily involved, and possibly taking the lead.

More below the fold.

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Read It And Weep

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by hilzoy Via Bitch Ph.D., the WSJ: “A collision with a semi-trailer truck seven years ago left 52-year-old Deborah Shank permanently brain-damaged and in a wheelchair. Her husband, Jim, and three sons found a small source of solace: a $700,000 accident settlement from the trucking company involved. After legal fees and other expenses, the remaining … Read more

Chain Of Fools

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by hilzoy

This is pretty extraordinary:

“Since 2006, when the insurgency in Afghanistan sharply intensified, the Afghan government has been dependent on American logistics and military support in the war against Al Qaeda and the Taliban.

But to arm the Afghan forces that it hopes will lead this fight, the American military has relied since early last year on a fledgling company led by a 22-year-old man whose vice president was a licensed masseur.

With the award last January of a federal contract worth as much as nearly $300 million, the company, AEY Inc., which operates out of an unmarked office in Miami Beach, became the main supplier of munitions to Afghanistan’s army and police forces.

Since then, the company has provided ammunition that is more than 40 years old and in decomposing packaging, according to an examination of the munitions by The New York Times and interviews with American and Afghan officials. Much of the ammunition comes from the aging stockpiles of the old Communist bloc, including stockpiles that the State Department and NATO have determined to be unreliable and obsolete, and have spent millions of dollars to have destroyed.

In purchasing munitions, the contractor has also worked with middlemen and a shell company on a federal list of entities suspected of illegal arms trafficking.

Moreover, tens of millions of the rifle and machine-gun cartridges were manufactured in China, making their procurement a possible violation of American law. The company’s president, Efraim E. Diveroli, was also secretly recorded in a conversation that suggested corruption in his company’s purchase of more than 100 million aging rounds in Albania, according to audio files of the conversation.”

That’s a pretty impressive list of problems, if I ask me. Could it possibly get worse? Well, yes. I left out the entire domestic violence angle, and the bit about the head of the company having a forged driver’s license that would have made him ineligible for contracts if he hadn’t gone into a diversion program for first offenders. That’s a tangent. This is the main point:

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How I Learned to Stop Worrying and Love Judicial Review

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by publius

One of the themes of the John Adams mini-series is the tension between the passions of the mob and the rule of law. We tend to forget – spoiled by 150 years without domestic war – just how precarious the line between civilization and anarchy can be. As 1770s Boston illustrated, mobs can rise quickly and do terrible things. In watching this tension play out on HBO, it reminded me of my own evolution regarding the “rule of law” (the concept). Ironically enough, the George W. Bush era has made me far more conservative on legal matters than I once was. Specifically, Bush has made me more of an Adams man than a Jefferson one.

As a law student, legal realism made a deep impression on me. To be perfectly blunt, I thought law didn’t matter. Constitutional law in particular seemed like one giant fraud – it was nothing more than political preferences cloaked in an impenetrable linguistic façade of legalisms. It was no accident that conservative judges tended to line up on different sides than liberal judges. Nor was it an accident when sweeping constitutional changes occurred with new administrations. [What’s particularly annoying about conservative jurisprudence is not so much that it’s political, but the obnoxious self-righteous denials that it is even slightly political. Their positions (which practically all align with their political views) are not policy preferences but simply “interpretations” of a “static” constitution, or the will of the framers, or whatever.]

In short, law was politics – nothing more. The rule of law was a convenient fiction. And recent events seemed to support that skepticism. Bush v. Gore remains to this day a naked exercise of illegitimate judicial power-grabbing. The audacity of 5 individuals to stop the election for the President of the United States burns me to this day. They should have all, frankly, been impeached for that (if not tarred and feathered – though that apparently really burns). Bush v. Gore was the ultimate vindication of legal realism’s predictions. It happened in 2000. I entered law school in 2000. So it goes.

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Nicholas Kristof Says The N Word

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by hilzoy No, not that one. The one that is, for a Democrat, the worst insult of all: “Yes, Hillary Rodham Clinton may still have a chance of winning the Democratic nomination. But it’s probably smaller than the chance that a continued slugfest will hand the White House to John McCain. (…) Mrs. Clinton’s chances … Read more

It’s 3am. Do You Know Where Joe Lieberman Is?

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by hilzoy Harold Meyerson: “It is 3 a.m., and the stillness of the White House night is shattered by the ringing of the red phone. President John McCain, rousing himself from a deep sleep, turns on the light and picks up the receiver. A U.S. embassy in a Middle Eastern country, he is told, has … Read more