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Cover Of The 2/18/09 Issue: The death of conservatism

This was written as a part of my application for TNR‘s once sought-after reporter-researcher position while I was wrapping up my web internship at The Nation. In the past, the year-long position has been an important career springboard for many accomplished journalists. Now I’ve heard TNR, the venerable Washington institution, can only afford to pay some $5,000 a year to whomever is selected. In 2009, I didn’t even score an interview. In 2010, I wasn’t even interested in applying. Oh, the sorry state of journalism…

As far as the actual analysis goes, I think it’s held up pretty well. Maybe I wrote a bad cover letter. Who knows? Any critiques are welcome in the comments section below.

FINANCIAL TROUBLES

The most important argument against nationalization raised in the lead editorial is that “absent clear conditions… nationalization could easily provoke a panicked sell-off.”  The news that has come out of the Treasury since the editorial was published has been anything but “clear.”  Geithner’s widely derided speech outlining the disbursement of the second round of Trouble Asset Relief Program funds lost the confidence of the markets, which will likely limit his ability to take any action more bold than simply handing out money to banks.  This timid approach that TNR editorial rightly suggested would be the “worst course of action” appears to be the direction in which the Obama economic team is leading the US.

The first act of the “Geithner-Summers psychodrama” was especially interesting to read in light of these disappointing developments.  The next scene is no doubt well into production.  The muddled TARP II (re-branded as the Financial Stability Plan) speech did not clear up how the administration plans to dispose of the toxic assets eating away at banks’ balance sheets or who is really directing the financial clean up.  The combination of Geithner’s tax-tarnished confirmation and now his expectation management failure have made him appear as anything but an “Obama-like perma-cool” leader, as Scheiber put it.  Scheiber also missed the opening salvos of the State/Treasury border skirmishes: Geithner foolishly accused China of “manipulating” its currency in his written responses to the Senate Finance Committee’s confirmation questionnaire.

The financial troubles that Geithner, et al., are struggling to resolve will present a serious challenge to health care reform that was not discussed in Cohn’s otherwise excellent feature.  The hopeful confluence of public opinion in favor of reform with the rise of broad-based interest groups like “Divided We Fail” was thoroughly examined, as was the argument against health care reform (which he had previously identified as “the best case against universal health care”).  However, Cohn did not address what will likely be the loudest case Republicans make in their inevitable opposition to comprehensive reform: the ballooning budget deficit.  The right used their recent conversion to fiscal discipline as justification for trimming the much-needed stimulus program.  They are likely to use the same shrill scare tactics to minimize change to the broken health care system.

Russia too is suffering from the worldwide recession.  While I found the exposé of the Kremlin’s p.r. ploys fascinating, I couldn’t help but wonder whether they have the attention and budget necessary to continue with pricey consultants, “self-laudatory” summits, and Russia Today propaganda broadcasts given the collapse in the price of oil and, with it, the living standards of the formerly docile Russian people.  The p.r. offensive may be too costly a distraction for an increasingly embattled Russian government.

FRUM, COLEMAN, AND CONSERVATISM

The cover story on the history and future of conservatism provides a useful lens through which to view the divergent paths of David Frum and Norm Coleman.  (more…)

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Below is my last MoJo blog post. I concluded my internship at the DC bureau of Mother Jones on Friday and had an editor publish the post for me at the beginning of this week. Next stop Reykjavík? (If you have any better ideas, leave me a comment.)

Could Iceland soon be to journalists what the Cayman Islands is to wealthy magnates? Supporters of the groundbreaking Icelandic Modern Media Initiative introduced a proposal today to establish the European island nation as the world’s first “offshore publishing center.” The proposal is based on the business model of offshore financial centers like Switzerland, which attracts foreign depositors with an enticing combination of low taxes and strict bank secrecy laws. The IMMI aims to do the same for investigative journalists by compelling Icelandic legislators to pass the strongest combination of source protection and freedom of speech laws in the world.

The IMMI was drafted with help from Julian Assange and Daniel Schmitt, two of the founders of Wikileaks, an otherwise anonymous whistleblower website dedicated to publishing leaks of sensitive governmental, corporate, organizational, or religious documents. Wikileaks, which is currently offline due to fundraising difficulties, has already experimented with ways of breaking stories on a particular country by publishing outside their legal jurisdiction. Last May, when the UK’s strict libel laws prevented the BBC from posting documents detailing the dumping of 400 tonnes of toxic waste in the Ivory Coast, the papers appeared on Wikileaks days later. At the end of the summer, an Icelandic broadcaster listed the URL for Wikileaks on TV to circumvent a ruling blocking it from revealing a list of the country’s creditors.

Johnathan Stray of the Neiman Journalism Lab asks, “Could global news organizations with a home office in Reykjavík soon be as common as Delaware corporations or Cayman Islands assets?” In the wake of an economic collapse that some legislators feel was brought on by a lack of transparency, the Guardian reports that the proposal “has widespread backing” among Iceland’s 51 members of parliament. “The main purpose is to prevent something like our financial crisis from taking place again,” MP Lilja Mósesdóttir told Stray, noting the country’s financiers had great influence over the Icelandic media. “They were manipulating the news.”

Most coverage of IMMI has focused on the increased accountability that could result from passage of the groundbreaking proposal. But serious questions remain about the viability of the initiative. For instance, every country has libel laws for a reason. How will the IMMI ensure that it becomes a hub for investigative journalists and not the tabloid capital of the world? And if Icelandic MPs intend to remedy the country’s financial woes via journalism, they are likely to be sorely disappointed. As Gawker helpfully warns, “if you’re trying to pull in money from investigative journalists, Iceland, that’s strike two for you.”

Photo credit: Stig Nygaard (via Flickr)

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I’m working on a larger piece on the UBS whistleblower, Bradley Birkenfeld, so I’ve been following news of the bank rather closely. One exchange from the Congressional hearings on AIG regarding UBS caught my eye so I decided to put the piles of research I’ve done on it to good use. My editor liked the blog post and promoted it to the Top Stories slider. (I led the site for about an hour—the bureau chief’s Twitter-heavy review of the Obama and GOP question session knocked me into the second slot.)

UPDATE: Like my previous post on waterboarding, this piece was the top story on a conspiracy theory website, New World Order Report–this time in the Economics section. Any traffic is good traffic?

UPDATE 2: My reporting was featured in a Media Consortium post about the implications of the Citizens United Supreme Court decision, which has allowed unlimited corporate cash in US elections. Their post was republished on the Huffington Post, AlterNet, FireDogLake, Daily Kos, Open Salon, MyDirectDemocracy, and the Canadian site Rabble.

At this week’s congressional hearings on the AIG bailout, Swiss bank UBS received some undeserved praise.

UBS was one of eight large investment banks that benefited from the now-infamous backdoor bailout of AIG—resulting in government cash infusions totaling $182.5 billion—in the dark days of September 2008. At the hearing, the Special Inspector General for the Troubled Asset Relief Program, Neil Barofsky, revealed to the House Oversight and Government Reform Committee that UBS was the only bank willing to settle its soured credit default swaps (CDS) contracts for less than their face value. Why did UBS play ball when all the other banks didn’t? As the Washington Independent reported, “Barofsky speculated that the firm probably simply recognized that the American taxpayers ‘had taken the global economy on its back.'”

The financial crisis has proved time and again, big banks don’t account for taxpayers—except when they need their help. And that’s the more likely explanation for UBS’ good behavior during the AIG rescue. Like the rest of the global financial industry, UBS was hurting from the subprime mortgage meltdown. (The bank’s colossally bad bet on the US housing market—it had already written down $38 billion in bad loans as of April 2008—earned UBS the nickname Used to Be Smart.) But unlike its intransigent peers on Wall Street, the Swiss banking giant also faced the mounting threat of a US federal investigation. It was in no position to play hardball.

Click here to read the rest of this MoJo Top Story and to make a comment.

Photo credit: Allie_Caulfield (via Flickr)

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I volunteered to fill in for one of the San Francisco editors on weekend website duty and got stuck writing this post on a Saturday. I will not make that mistake again.

One highlight: Bill Moyers asked a question regarding the Wall Street-bashing article from Rep Paul Ryan (R-Wisc.), about which I had previously blogged.

Recently DC Bureau Chief David Corn and blogger Kevin Drum have had to wear a lot of makeup—that’s what happens when you’re on three different shows in the course of two days. If you haven’t had a chance to see all the clips yet, the links are below in bold.

On Friday, the two sat down with PBS’ Bill Moyers for an insightful hour-long conversation about the unrepentant and unreformed financial industry. Moyers began his show by detailing how completely Wall Street has recovered since bankers like Goldman Sach’s CEO Lloyd Blankfein, the Financial Times‘ Person of the Year, nearly destroyed the global economy. “How do the bankers pick our pockets so thoroughly with barely a pang of guilt or punishment?” he asked. “You will find some answers in this current edition of Mother Jones magazine, one of the best sources of investigative journalism around today.”

Moyers went on to point out that MoJo and, surprisingly enough, the Wall Street Journal are both skeptical of the administration’s efforts to reform derivatives trading. They discussed the House Committee on Financial Services, which David pointed out “is called a money committee…because if you serve on that committee, you have access to a lot of money. Campaign cash.” The first half hour concluded with talk about the lack of outrage over the infamous carried interest rule that allows hedgefund millionaires to pay income tax rates lower than those of their secretaries. “We should lay some of the blame,” Kevin suggested, on “the media…People don’t see it enough to get angry about it.”

In the second half of Bill Moyers Journal, Kevin said that part of the reason real financial reform hasn’t occurred is because “the bailout last year succeeded in a way, too well” and now people think “we can go back to business as usual.” After a lost decade in which new jobs were not created and median wages did not increase, Moyers asked what the two made of the much discussed new article in Forbes by Rep. Paul Ryan (R-Wisc.) bashing Wall Street. “Well, the Democrats have to worry,” David replied. “There is an opening here for the Republicans.” Kevin concluded by offering Obama a suggestion from FDR’s playbook: “If there’s any one issue where…a real show that he was going to take these guys on could bring the country together, it very well might be taking on Wall Street.” Better late, than never!

Click here for the Rachel Maddow Show and Countdown with Keith Olbermann links or to comment on the MoJo blog post.

Photo of Mother Jones and her TV: georgia.g (via Flickr)

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UPDATE: My review of the speech was picked up by the AtlanticWire and prominently featured on today’s Need to Read list.

President Barack Obama has spent much of his term, from the stimulus bill pushed through shortly after he took office, up to this morning’s speech on jobs at the Brookings Institution, trying to show the public that he is serious about reducing the unemployment rate. Today, with 15.4 million Americans looking for work and tens of millions more joining the ranks of the long-term unemployed, the president announced a series of small business tax cuts, infrastructure investments, and aid measures to build on the Recovery Act, which the nonpartisan Congressional Budget Office estimates has already saved or created some 1.6 million jobs. The speech, which a senior administrative official said was primarily intended to “get ideas out there,” was encouraging but left many questions unanswered.

The components of Obama’s new jobs plan that were apparently intended to appeal to his Democratic base were the green building and aid measures. In a statement issued shortly after the speech, Lawrence Mishel, the president of the progressive Economic Policy Institute, noted that he was “particularly enthusiastic about the president’s proposals for infrastructure investments and assistance to state and local governments.” The speech also included support for a muchdiscussed “cash for caulkers” program modeled on the popular cash for clunkers scheme. There are questions about how Congress would motivate homeowners to take part. After all, consumers are more accustomed to purchasing cars than insulation. But Dean Baker, the director of the Center for Economic and Policy Research, said he was still “fairly certain” cash for caulkers would stimulate job growth. The public’s response will largely “depend on how generous we’re prepared to make [the subsidies],” Baker added.

The lack of specifics in Obama’s speech was troubling…

Click here to read the rest of the MoJo blog post.


Photo credit: jurvetson (via Flickr)

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This post was assigned to me by the bureau chief David Corn. One of the interns at the home office in San Francisco had recently run a profile on Barofsky (the post’s title plays off Andy Kroll’s original piece “Meet the Taxpayers’ $3 Trillion Watchdog“) and Corn wanted me to post an update on it. Although I was initially not terribly excited to spend my time doing PR for another intern’s article, it actually turned out to be kind of interesting.

Treasury Inspector General Neil Barofsky has released another biting report on his department’s mismanagement of the Troubled Asset Relief Program (TARP). This latest assessment will probably make former Treasury Secretary Hank Paulson’s retirement a bit less comfortable and Bank of America CEO Ken Lewis’ likely court appearances a whole lot more interesting.

Barofsky, whom Mother Jones profiled last week, accuses Paulson of misleading Americans about the precarious state of the financial industry in the immediate aftermath of the bailout. One example he cites is the secretary’s assurances on October 14 that the banks were “healthy” and that they’d accepted the TARP funds for “the good of the U.S. economy.” The Fed concurs with Barofsky’s assessment, but his bosses at the Treasury have attempted to defend Paulson’s statements by suggesting that they “must be considered in light of the unprecedented circumstances in which they were made.”

Barofsky’s report also seems to lend credence to Lewis’s claims that the Treasury Department forced Bank of America’s troubled merger with Merrill Lynch. As the New York Times notes, Bank of America received only $15 billion of the $25 billion it was eligible for under TARP, with Merrill receiving the other $10 billion. Although the two companies had agreed in principle to the merger when the funds were disbursed in October, their deal had not yet been approved by regulators or shareholders. Bank of America’s restricted TARP funding may have been a way to force Lewis into an awkward arrangement with the troubled investment bank and a sign that Treasury already considered the shotgun marriage a done deal.

Although the inspector general’s report was primarily intended to address TARP, Barofsky has also raised some troubling questions about both the credibility of Treasury and its role in the ill-fated BofA-Merrill merger. Some of these questions may soon be addressed if Ken Lewis appears in court to address unrelated concerns about bonuses payed to Merrill traders. Stay tuned.

Click here to see the original post or to make a comment.

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I first became aware of Sen. Murkowski at the costs of cap-and-trade hearing I attended last week. She griped to the panel of experts about how it would cripple our already weakened economy and they pointed out that all the proposals on the table wouldn’t go into effect for until like 2012. Clearly, reality did not deter her from proposing this idiotic amendment.

UPDATE: My post was featured on the daily “Eco-New Roundup” and in a post on “Today in Climate Maneuvering” on Mother Jones‘ Blue Marble blog.

Sen. Lisa Murkowski’s attempt to block EPA regulation of greenhouse gases is DOA.

Although Murkowski (R-Alaska) will be introducing her amendment to the Interior and Environment Appropriations bill on the floor of the Senate later today, Joe Romm reports that her attempt to undermine the Clean Air Act will not come to a vote. As Kate Sheppard pointed out yesterday, the legally questionable provision would have been another setback during what the UN is optimistically referring to as “climate week.”

The provision was condemned not only by more than 30 environmental groups but also raised the ire of centrist legislators such as Sen. Mark Warner (D-Va.). Yesterday at the Council on Competitiveness, Warner criticized the amendment for “simply putting off an inevitable decision.” He specifically rebuked the supposed economic concerns Murkowski cited in proposing the amendment and suggested that it “not only sacrifices American leadership but—equally important—it sacrifices our ability to get on board with…what I believe would be the greatest wealth-creation sector and job-creation sector in the next quarter century.”

The possibility of EPA greenhouse gas regulation has survived another day, but getting a comprehensive climate bill through the Senate before Copenhagen still looks difficult, if not impossible.

Click here to see the original MoJo blog post or make a comment.

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