2008 - %3, September

Acid Oceans Also Noisier

| Tue Sep. 30, 2008 11:25 PM EDT


Increasing atmospheric CO2 increases the acidity of seawater, which allows sounds, like whale calls, to travel farther. Image: (c) 2008 MBARI (Base image courtesy of David Fierstein)

The acidification of seawater due to absorption of atmospheric CO2 is also enabling sound waves to travel farther. That's bad news for marine life, including whales and dolphins, who rely on sound for hunting and communication and who are already stressed by noisy ship traffic and military sonar.


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Election Day Is Deadly

| Tue Sep. 30, 2008 10:27 PM EDT

441px-Accident_Nehoda_Uhersk%FD_Brod_2.jpg American presidential elections change the world. They also have a direct effect on public health. Fifty-five percent of the American population is mobilized to vote. Most rely on motor vehicles to get to a polling place. The result: an 18 percent increase in fatal motor vehicle crashes on presidential election day.

According to new research forthcoming in the Journal of the American Medical Association, the increased risk also extends to pedestrians. It persists across ages, sexes, regions, polling hours, and whether a Democrat or Republican is elected. Believe it or not, election day risks exceed those of Super Bowl Sunday and New Years Eve. Explanations: speed, distance, distraction, emotions, unfamiliar pathways to polls, and the potential mobilization of unfit drivers. (What about unfit candidates? Fear of them drives me faster to the polls.)

The investigators looked at all US presidential election days in the past 32 years, starting with Jimmy Carter. They also examined the Tuesday immediately before and immediately after election days as controls. The average presidential election leads to ~24 deaths from motor vehicle crashes. . . Talk about the ultimate sacrifice. All the more reason to make sure your candidate is really worth it.


Cleaning Up the Rot

| Tue Sep. 30, 2008 7:03 PM EDT

CLEANING UP THE ROT....Atrios on the credit crisis:

CNBC just said what most aren't: the reason why interbank lending rates are so high is because banks don't trust each other. The reason they don't trust each other is they don't know how much and which pieces of big shitpile they own.

Yep. That's why having the Treasury Department buy up all those toxic assets is probably a good idea. Recapitalization isn't enough if it leaves banks still owning securities with values so variable that it's too risky to lend to them anyway. We need to get that stuff off their balance sheets in order to make their financial position more transparent and we need to increase their capital base (which the Paulson plan accomplishes by paying above-market prices for the toxic sludge in return for a guarantee of equity down the road if the sludge eventually has to be sold at a loss). That combination has a better chance of working than either one alone.

And why is the toxic sludge so hard to value? Can't we just make banks open their books and provide detailed information on all this stuff? Sure. But you've still got two problems. First, in the later days of the mortgage free-for-all, mortgages were packaged up with no documentation at all. So no one, not even the banks, knows for sure just how good or bad their mortgage portfolios are. Second, even if we knew that, their value would still depend on how much farther down home prices have to go. And that's anyone's guess.

So: get this crap out of the banking system, where it's causing systemic rot. Recapitalize the financial industry. Get equity guarantees in return to protect against future losses. And then hold your breath and hope it's enough.

House to Voters: Please Stop Emailing Us

| Tue Sep. 30, 2008 5:45 PM EDT

So much for taxpayer feedback on the House's failure to pass the $700 billion bailout plan. If you email your Rep. right now, here's the automated raspberry you'll likely get in return:

Subject: House of Representatives is limiting constituent email due to volume
Please be advised that the House of Representatives is currently imposing limits on inbound communications from constituents because volumes are so high that Congressional websites and web forms are becoming non-responsive. A limit on the number of emails that can be sent via the "Write Your Rep" web form system (the software that a majority of Representatives use to power their web forms) is being imposed during peak email traffic hours. Clients may want to adapt their campaign timing or switch contact methods (to phone) to avoid delivery disruptions due to these limits. The throttling is dynamic, so unfortunately there is no simple guidance we can offer that will ensure delivery. The throttling is likely to remain in place until the end of the current legislative session.

More Notes on the Bailout

| Tue Sep. 30, 2008 5:39 PM EDT

MORE NOTES ON THE BAILOUT....Nathan Newman has a pretty good post over at TPMCafe defending the bailout legislation. Take a look. Among other things, he notes that we're bailing out Wall Street on an ad hoc basis already and creating an exclusive troika of megabanks in the process. Whatever its weaknesses, the bailout legislation is probably a better deal than allowing this to continue.

And while we're on the subject, here's a question: assuming the bailout eventually passes, how good a deal are taxpayers likely to get when Henry Paulson starts doling out his $700 billion? The conventional wisdom across a remarkably wide ideological spectrum is that Paulson is a creature of Wall Street and will end up offering sweetheart deals to all his old pals when he begins buying up their troubled assets. But this deserves a closer look.

See, Paulson is a creature of Wall Street. And the way you become successful on the Street is not just by being the smartest guy in the room, but by being the toughest guy in the room; the guy who drives harder bargains than anyone else and always comes out on top. The top execs on Wall Street might be arrogant, they might be crazy, and they might be greedy, but they play a testosterone-fueled game to win. This is practically their religion.

Paulson now works for the United States Treasury, but his instincts are the same as always: even if for no other reason than to boost his own ego, he's going to want to drive the hardest bargains possible — and the weaker the opponent, the harder he'll push.

Don't believe it? Take a look at the Fed/Treasury actions so far. Was the Bear Stearns rescue a sweetheart deal? No. In fact, the original $2 per share terms were so onerous that JP Morgan, which bought Bear, eventually raised the offer voluntarily. And what about Lehman Brothers? Would a Wall Street crony have let Lehman fail? Nope. The next day AIG was rescued, but read this and tell me if you think AIG got any kind of break in return for its $85 billion loan. They didn't. AIG got hammered.

Now, these have been a combination of Fed and Treasury actions, and their track record on other bailouts has been mixed. And I'd be happier if the bailout bill had even more oversight and tighter restrictions on equity sharing than it does. But that aside, the evidence suggests that the Treasury and the Fed are hardly a bunch of pushovers. They deserve to be watched like hawks, but when everything is said and done, I wouldn't be surprised to see them demanding some pretty harsh terms.

"The Rulers of the Exchange of Mankind's Goods Have Failed..."

| Tue Sep. 30, 2008 4:56 PM EDT

Early 1933, when Franklin Delano Roosevelt gave his first inaugural address, was one of the most terrifying times in United States history. More than 10,000 banks had failed, credit had dried up, businesses had gone bankrupt, and the jobless rate was 25 percent, with another 25 percent underemployed and underpaid.

After telling Americans that "the only thing we have to fear is fear itself," FDR went on to describe the causes of the devastating financial crisis, in terms that sound all too familiar today:

"Only a foolish optimist can deny the dark realities of the moment.

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Quote of the Day - 9.30.08

| Tue Sep. 30, 2008 4:06 PM EDT

QUOTE OF THE DAY....From Barack Obama, speaking in Nevada today about the financial crisis:

For the rest of today and as long as it takes, I will continue to reach out to leaders in both parties and do whatever I can to help pass a rescue plan. To the Democrats and Republicans who opposed this plan yesterday, I say — step up to the plate and do what's right for this country. And to all Americans, I say this — if I am President of the United States, this rescue plan will not be the end of what we do to strengthen this economy — it will only be the beginning.

Good. That's what he should be saying. Is it politically risky to take a more active role in congressional negotiations — and with it, possibly more responsibility for an unpopular bailout? Maybe slightly. But if you want to be president of the United States, that's what you need to do. And you need to do it for real, not just for the cameras.

The rest of the speech isn't bad either. It could stand to have a little bit punchier explanation of what's going on, but overall, not bad at all.

The Importance of Being Boring

| Tue Sep. 30, 2008 2:47 PM EDT

THE IMPORTANCE OF BEING BORING....Barack Obama has another 2-minute ad running. Jonathan Stein says it's pretty dull ("I tuned out at 0:42"), but that being dull is the whole point:

Obama is presenting himself as the boring choice in this financial crisis. To the extent that boring correlates with responsible, adult, and steady, Obama wins. And with Obama's poll numbers looking the way they are, that appears to be a correlation worth betting on.

I think I'd take this even further, addressing Ross Douthat's surprise that Obama won last week's debate at the same time. The key insight is this: lots of ordinary viewers enjoy a bit of policy wonkishness. We political junkies, even those of us who enjoy policy discussions, don't. We've heard it a million times before.

But most viewers haven't, and they find it kind of interesting, the same way they mostly liked Bill Clinton's endless laundry list State of the Union addresses. They don't hear this kind of thing very often, and when they do it's a nice change of pace from the daily soundbites on the evening news, which are hard to put together into a coherent understanding of what each candidate stands for. Hearing it all in one piece is a bit of a revelation.

Needless to say, this can be overdone. And a financial crisis is an unusually good time for a sober, wonky address to the voters. But we shouldn't be too surprised that it works well both in ads and in debates. Voters like being treated like adults more than most of us give them credit for.

Where's Main Street?

| Tue Sep. 30, 2008 1:21 PM EDT

WHERE'S MAIN STREET?....Matt asks a question:

Here's what I don't understand about either the politics or the policy of the bailout failure. If the situation is as dire as Kevin Drum says then where's corporate America? That swathe of American business that isn't in the finance and housing sectors. ExxonMobil, Wal-Mart, Proctor & Gamble, Johnson & Johnson, Microsoft, Google, Chevron, etc.

Actually, I've been wondering the same thing. Here are two guesses.

First, these guys all thought the bill was going to pass. Sure, there'd be lots of grandstanding and high drama, but in the end they figured everyone would act like adults and understand that allocating money to buy a fire hose is a good idea when the economy is on fire. So there wasn't a big sense of urgency.

Second, they might have been sensitive to the possibility that their support would just make things worse. Saving "Main Street," to most Americans, means the dry cleaners down the street, not ExxonMobil. They're mad enough already about bailing out Wall Street, and if they thought they were bailing out ExxonMobil too — well, that might just be the last straw.

Anyway, those are just guesses. But I'll bet there's way more business lobbying going on behind the scenes today than there was last week. That might make the difference if the House takes up the bill again on Wednesday.

McCain and bin Laden

| Tue Sep. 30, 2008 12:59 PM EDT

McCAIN AND BIN LADEN....Our story so far: Barack Obama says that if he had actionable intelligence about Osama bin Laden's whereabouts in Pakistan, he'd take him out. John McCain says that's naive and reckless. Then, a couple of days ago while ordering a cheesesteak, Sarah Palin jumped in and said she'd take him out too. Huh? So on Monday Katie Couric asked the two of them whether Palin had gone off the reservation. Answer: that's a silly gotcha question. The issue isn't whether McCain/Palin take out bin Laden, it's whether they'd say that they're willing to take out bin Laden. "Never would our administration get out there and show our cards to terrorists," Palin said, "in this case to enemy, and let them know what the game plan is."

Got that? They'd do it, but they'd never publicly say they were going to do it. But Judah Grunstein points us to this interview with McCain from a year ago:

Q: So if you were president and you knew that bin Laden were over there, you had a target spotting, you could nail him, you'd go get him?


So long ago, before all of this nonsense hit the campaign trail, McCain himself was saying the exact same thing as Obama: if we knew where bin Laden was, of course we'd take him out — and then pick up the pieces afterward. Needless to say, this will come as no surprise to the government of Pakistan, which has never been under any illusions about this. (And neither have the terrorists, regardless of what Palin burbles about it.) But it's a useful attack line for McCain, so I guess we'll keep hearing it.