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Liberal Outrage

Now Roubini's Saying It

I mean, Dean Baker they can dismiss as some far leftist loon, but Nouriel Roubini gets airtime. They've got to listen now, right?

Nationalizing insolvent US banks is the best solution to avoid a Japan-like scenario in which 'zombie' financial institutions would eat up public resources while the US economy would teeter on the brink of depression, Nouriel Roubini, economics professor NYU and chairman at RGE Monitor told CNBC Tuesday.

Bank shares have fallen on news of abysmal losses and on fears that governments across the world would step in and wipe shareholders out, dragging global stock markets down, but temporary takeover by the state of the sick institutions will insure the survival of the system, Roubini said.

"The market friendly solution is temporary nationalization," Roubini told "Worldwide Exchange".

"Doing something surgical and radical actually may improve the market sentiment," he said. "If we don't do it, we risk ending up like Japan, that had zombie banks for a decade," he added.

Furious banking consolidation that took place in the years preceding the crisis has made matters worse, as it had created banks that were too big to fail but also too big to save, according to Roubini.

The US government has already provided between $7 trillion and $9 trillion in explicit or implicit support for banks, and taxpayers would actually benefit from nationalization, as they wouldn't have to bail out shareholders as well, he said.

"If you don't nationalize them on a temporary basis the fiscal commitments will be bigger," Roubini said. "The alternative is actually a dangerous debt spiral. We risk ending up in a near depression for the US and the global economy if we don't take this radical action as necessary."

Taxpayers could even make a small profit when the nationalized banks will be privatized again, he said.

And they'd better hurry the hell up with the nationalization because i'm getting a little tired of reading about banks that showed up to get a handout and then went and spent money on some lavish event.

A bank that received $1.6 billion dollars of the government's bailout money sponsored what reports are calling a lavish series of events in Los Angeles, California, last weekend.

Northern Trust, based in Chicago, Illinois, spent an undisclosed amount of money sponsoring a Professional Golf Association tournament and associated client events, including concerts, dinners and parties, according to celebrity Web site TMZ.com.

The bank spent millions of dollars on the event, which included -- on top of the sponsorship costs of the Northern Trust Open tournament -- concerts by Sheryl Crow and Earth Wind & Fire, a private party at music venue House of Blues and gift bags from Tiffany & Co., the Web site said.

According to TMZ.com's report, employees and clients attending the tournament dined on seared salmon and petite Angus filet and stayed at some of Los Angeles' most elegant and expensive hotels.

Doug Holt, senior vice president of communication for Northern Trust, confirmed to CNN that his bank sponsored the tournament and its events but, he said, not at taxpayer expense.

Holt told CNN that as a "healthy" bank, Northern Trust did not seek the $1.6 billion it received from the government as part of the U.S. Treasury's Capital Purchase Program, but that it "agreed to the government's goal of gaining the participation of all major banks in the United States."

"This is the second year Northern Trust is sponsoring the Open as part of a five-year contract," Holt said. The contract was signed in 2007, before the government's Capital Purchase Program to aid banks came into existence.

Holt also said that the sponsorship is an "integral part of Northern Trust's global marketing activities," and as with all marketing, advertising, corporate sponsorship or charitable activities, no taxpayer money was used to fund the weekend events.


Northern Trust announced it was laying off 450 employees in December of last year, with the bank saying the move was part of a number of actions "to better position the company for improved profitability and continued global growth during these difficult economic conditions."

So there are a few things wrong here.

  1. "We didn't need the money. The government just insisted on us taking it, and we didn't want to make them feel bad.

  2. "We always do stuff like this. It's how we do business."

  3. "None of that bailout money was used."

  4. "Business is bad so we are going to have to layoff some people to save some money."

As Dean Baker tells us (that loon), money is fungible. Their statement that the money they spent on a party came from a different account is ridiculous. Also, if you're laying people off, you shouldn't be having parties. Hey, jackass, i know where you could have saved some money!

I really hope the government does force the bank to do what Barney Frank threatened (but i'm not holding my breath).

Rep. Barney Frank, D-Massachusetts, the House Financial Services Committee chairman, is writing a letter to Northern Trust asking the bank to pay back the money it spent, according to Frank's spokesman.

"We are asking Northern Trust to repay the government the equivalent of the funds they spent on the tournament and related events," Steve Adamske of Frank's staff told CNN.

By min | February 25, 2009, 11:09 AM | Liberal Outrage | Link

Like a dog chasing a car

Quoted on Hullabloo:

NBC White House Correspondent Chuck Todd has a theory on why MSNBC's Hardball host Chris Matthews begged off from running for the Pennsylvania Senate seat held by Republican Arlen Specter. "Because [Chris] had a really good friend of his say to him, 'What are you going to do when you get there?' and he couldn't answer the question and he realized that, and that's why he didn't run," says Todd. "It was a childhood dream to be a senator, but he didn't know what he was going to do if he got there."

By fnord12 | February 24, 2009, 5:20 PM | Liberal Outrage | Link

Bipartisanship we can believe in

From a NYT poll discussed on Glenn Greenwald:

Which do you think should be a higher priority right now for Barack Obama -- working in a bipartisan way with the Republicans in Congress or sticking to the policies he promised he would during the campaign?

Working bipartisan way -- 39%; Sticking to policies - 56%

Which do you think should be a higher priority for Republicans in Congress right now -- working in a bipartisan way with Barack Obama or sticking to Republican policies?

Working bipartisan way - 79%; Sticking to policies: 17%

By fnord12 | February 24, 2009, 3:49 PM | Liberal Outrage | Comments (1)| Link


Not on turning over the Bush administration's emails.

Not on rights for "enemy combatants."

Not on using "state secrets" to avoid legal challenges on extraordinary rendition.

By fnord12 | February 23, 2009, 8:55 PM | Liberal Outrage | Link

Dean Baker saves Social Security


The New York Times reports this morning that the White House had abandoned plans to unveil a Social Security "task force" at today's fiscal summit, raising the question of whether the Obama administration is ready to conduct separate debate over the long-term health of Social Security and Medicare -- or whether the tired canard of "dangerous entitlement spending" will continue to rule the political roost.

One liberal activist who weighed in against the proposed task force told me that some within the administration are ready to attempt "one more fix" for Social Security, thinking of the 70-year-old benefits program "as an equation to be solved" and the Obama team as the mathematicians on the case.

"We just think the timing is terrible" to formally open such a Social Security task force now, this activist added. "At a time when the economy is terrible and people are losing their 401(k)s, you want people to feel more comfortable about their retirement."

Dean Baker, co-director of the Center for Economic and Policy Research (and a TPMCafe contributor), was another influential voice on the left urging Obama aides to use the White House bully pulpit on other issues and leave aside Social Security.

"I certainly let them know that I thought it would be a really bad idea" to create any task force, Baker told me. "Most of us took the position that we were trying to use whatever contacts we had [to raise concerns], working from the position that we were expecting to be working with the Obama administration."

The message sent to the White House by progressives, as Baker put it, was: "We're going to have to oppose you on this. It's a waste of political capital - why would you do it?"

In the end, of course, the task force was put on the back burner and the mantra of "health reform is entitlement reform" became the order of the day, thanks in large part to the work of White House budget chief Peter Orszag.

By fnord12 | February 23, 2009, 3:15 PM | Liberal Outrage | Link

Like Money

fungible   [fuhn-juh-buhl]


  1. Returnable or negotiable in kind or by substitution, as a quantity of grain for an equal amount of the same kind of grain.

  2. Interchangeable.

Something that is exchangeable or substitutable. Often used in the plural.

Regarding the bonuses Morgan Stanley gave out to its advisors while taking their share of the bailout money:

James Wiggins, a Morgan Stanley spokesman, said that such payments were necessary and would come out of operating revenue, not government bailout funds.

Dean Baker from the Center for Economic and Policy Research responds:
Since money is fungible, this comment doesn't make any sense.

By min | February 12, 2009, 11:32 AM | Liberal Outrage & Ummm... Other? | Comments (1)| Link

Death of an industry


Newsweek also plans to lean even more heavily on the appeal of big-name writers like Christopher Hitchens, Fareed Zakaria and George Will.

Starting in May, articles will be reorganized under four broad, new sections -- one each for short takes, columnists and commentary, long reporting pieces like the cover articles, and culture -- each with less compulsion to touch on the week's biggest events. A new graphic feature on the last page, "The Bluffer's Guide," will tell readers how to sound as if they are knowledgeable on a current topic, whether they are or not.

By fnord12 | February 10, 2009, 11:46 AM | Liberal Outrage | Link

What have we learned?

1. Republicans aren't going to vote for the stimulus package, so you might as well not try to compromise with them in advance by cutting out good stimulus programs and replacing them with tax cuts. Republicans are going on TV sayings "this isn't a stimulus package, it's a government spending program" not realizing that the way one stimulates the economy is by creating demand by... spending.

2. Republicans are going to call your Pentagon budget increase that isn't as much of an increase as the Joint Chiefs wanted a budget cut anyway, so you might as well actually cut the budget and save some money. For those who don't follow the links, here's a chart showing the US's military budget vs. the rest of the world's.

3. I too easily believed the center-left blogs into thinking that Daschle was a good choice for HHS, but Glenn Greenwald makes it clear that we basically dodged a bullet with this guy. I'd like to see Howard Dean take his place. Rahm Emmanuel doesn't like Dean, in part because of the whole 50 State Initiative thing, and he's also been described as too partisan. He's got the background, has been an advocate for universal health care, and has some experience improving health care coverage as a governor. However, Republicans are going to attack whoever leads the charge for universal healthcare as a socialist, so does it really matter if the guy is "too partisan"? Have we learned anything yet?

By fnord12 | February 4, 2009, 10:58 PM | Liberal Outrage | Link

Focusing on the Positives or Deluding Oneself

While speaking at Cambridge yesterday, China's Prime Minister Wen Jiabao had to exercise some quick reflexes ala George W. Bush when a protester threw a shoe at him.

One commenter's take on the situation, from a Chinese-language site:

The protest proved that China's power had been recognized by the British...People wouldn't protest against a little country.

Not to mention the level of assholery you have to achieve to get people interested in protesting. Cereally. Don't mention it. It undermines the whole manufactured image thing the Chinese government and media's got going.

I bet all those other leaders of countries are feeling pretty shabby right now, never having had to duck shoes themselves.

My one complaint is the protester's lack of originality. Shoe throwing is so two months ago.

By min | February 3, 2009, 11:24 AM | Liberal Outrage | Link

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