Obama, It's Krugman. Please Pick Up

I'm usually the last one to panic when things go from haywire to havoc. I'm the one who's out there directing traffic, shushing, patting shoulders, plumping pillows, digging in my pockets for chocolate--whatever it takes.

I don't see the tunnel, I see the light at the end. If there's a rainbow in the sky, I'll look past the dark clouds and find it. Pollyanna and I are almost BFFs, for God's sake. But when I see a Nobel-laureate in Economics practically self-immolating on the White House lawn in order to be heard, I'm not just scared, I'm petrified.

I don't know if Paul Krugman is right when he says the White House is going about this banking debacle all wrong, and that we're near the edge of the Cliff of Doom. One misstep, he seems to be saying, and it's all over. He's not the only one saying it, of course. If he were, I might go back to singing my comfort songs and handing out bonbons.

There are two camps now, each of them filled with "experts", each of them plucking ideas out of thin air and calling them "solutions". Their voices are ringing across a battleground, over our heads. We hear them shouting in a strange, incomprehensible language: "TARP bailout" "Zombie banks", "toxic assets", "Cash for Trash". . .

We want at least one of them to come over to our side and give us a heads up. What the hell is going on? What's going to happen? Are we or aren't we doomed?

This was the week it all hit the fan. Lots of voices out there shouting messages to Obama, and Obama, strangely, answers back with his version of "Heck of a job, Brownie". On "60 Minutes" last Sunday there was this exchange with Steve Kroft:

Kroft:Your Treasury Secretary, Tim Geithner, has been under a lot of pressure this week, and there have been people in Congress calling for his head. Have there been discussions in the White House about replacing him?
President Obama: No.
Kroft: Has he volunteered to or come to you and said, “Do you think I should step down?”
President Obama: No, and he shouldn’t. And if he were to come to me, I’d say, “Sorry, buddy, you still got the job.” But look, he’s got a lot of stuff on his plate, and he is doing a terrific job. And I take responsibility for not, I think, having given him as much help as he needs.

That was wince-worthy and I was wincing. One of those could-come-back-to haunt sound bite traps that Obama should know better than to fall into .

On Monday Paul Krugman wrote a piece in the NYT called "Financial Policy Despair" He said, " If the reports are correct, Tim Geithner, the Treasury secretary, has persuaded President Obama to recycle Bush administration policy — specifically, the “cash for trash” plan proposed, then abandoned, six months ago by then-Treasury Secretary Henry Paulson. This is more than disappointing. In fact, it fills me with a sense of despair. "

That can't be good.

Non-economist Frank Rich wrote a column this week called "Has a 'Katrina Moment' arrived?". He said, "Bob Schieffer of CBS [asked Larry Summers] the simple question that has haunted the American public since the bailouts began last fall: “Do you know, Dr. Summers, what the banks have done with all of this money that has been funneled to them through these bailouts?” What followed was a monologue of evasion that, translated into English, amounted to: Not really, but you little folk needn’t worry about it. Yet even as Summers spoke, A.I.G. was belatedly confirming what he would not. "It has, in essence, been laundering its $170 billion in taxpayers’ money by paying off its reckless partners in gambling and greed, from Goldman Sachs and Citigroup on Wall Street to Société Générale and Deutsche Bank abroad."

(Money-laundering? Isn't that illegal?)

Even-handed Eugene Robinson--no economist, either, it must be said--doesn't think we've quite reached the cliff edge yet, but he's not ruling out the possibility. In the Washington Post today he wrote a column called, "The Repairman's Burden". He said, "Geithner's plan offers private investors the opportunity to reap relatively big gains by taking relatively small risks. Some of the risk is assumed by taxpayers. Christina Romer, head of the Council of Economic Advisers, said over the weekend that these private firms will be doing the government a favor by participating in the program. But that's wrong. Investors will participate because they think they can make money. The only entity that's doing anyone a favor -- make that doing everyone a favor -- is the government of the United States. "

Romer: "private firms doing the Government a favor". Are you thinking what I'm thinking?

When they're talking about billions and trillions they're talking way over my head. I barely understand the concept of millions. I don't understand economics, or banking, or bailouts, or almost anything to do with Big Money. But what I'm hearing these days is panic and frustration among the cognoscenti. They see things that we don't see, and we're counting on them to make sure we get this right.

Somebody has to have a handle on this crisis. So far, nobody does. I don't know about you, but I would feel a whole lot better if I knew that President Obama was at least willing to listen to those whose opinions differ from his chosen few. His Washington insider choices for top cabinet positions made little old me nervous right from the start. When the new "Change" president puts former Big Business people in charge of regulating Big Business, even the dumbest among us sees trouble ahead.

So give a little listen, Mr. President. It can't hurt. These are your friends, remember. They're all talking about you, anyway. Better to have them in front of you than behind your back.

Ramona

Shades of Dr. Phil! Pop Psych at HuffPo, and AIG is the patient

Today is Sunday and I started my day by reading Frank Rich, Maureen Dowd, and Tom Friedman. They all talked about AIG and the current money crisis, and I have to say--the wheelings and dealings and sheer dollar amounts are so beyond me I don't even pretend to understand. I just take their superbly-written words for it. Those jackals screwed us, we let them, and now we're in so much trouble we may all have to go back to living in caves and foraging for food. It's scary, I tell you. . .

Then I moved over to the Huffington Post to see what they had to say about it all. (I started reading the HuffPo on its very first day online (before it became HuffPo), and I can almost always find something worthwhile to read there. I admit I cringed a little when they added an Entertainment section, and I absolutely hated their screaming Tabloid headlines last week when they reported hour-by-hour the latest on Natasha Richardson's skiing accident and subsequent death. Disgusting ("She is brain-dead!") and more than gagworthy.)

After reading that triad of truth-seekers , I was ready for bear. But I saw a headline for an article called, "How Corporate America can Earn Forgiveness and Rebuild Trust", and decided to take a little humor break before I went hunting again. Arianna often has comedians or humorists giving their takes on politics, and after that whole Jon Stewart thing in the last couple of weeks, I could hardly wait.

But here's the weird part. I think the guy who wrote this was serious!

I don't know the author, Mark Goulston, and again, I'm no expert, but after reading those NYT columnists I'm having a hard time making a connection between what those AIG crooks have done so far and the notion that they're now humbled enough to work on earning forgiveness and rebuilding trust.

But the good doctor (He's an MD) seems to think that if they will just follow his "Four Hs" and his "Four Rs" (We'll get to that) all will be well in Dizzyland and there will be no more need for tent cities or snaking unemployment lines. (He doesn't actually say that, but it's implied.)

He starts off like this: To err is human; To admit and accept complete responsibility for it, divine.

Really. That was "erring"?

He goes on:

"There is a way to repair the damage wrought by corporate transgressions. Be forewarned. This solution is not for the faint of heart or the uncommitted.

THE FOUR H'S: THE FALLOUT OF IMPROPRIETY & DECEIT

When a company, CEO or Board of Directors commits an unethical, if not immoral act, it triggers Four H's in investors, shareholders, employees, and the public at large:

• HURT
• HATE
• HESITATION TO TRUST
• HOLDING ON TO RESENTMENT"

Uh huh. But wait--the Good Doc has thought this all out and there's a solution. The Four Rs:

THE FOUR R'S: DAMAGE CONTROL AND HEALING THE PAIN

The corrective responses to the Four H's are the Four R's: Remorse, Restitution, Rehabilitation and Request for Forgiveness. If you are the CEO or part of the team responsible for guiding your company or industry through such a crisis, these are the steps you will need to take, (You is used to describe an individual, management team or company).

Remember now, he's writing this for all those execs who've conned, are conning and will continue to con. But there's apparently hope for them--which means there's hope for us. Here's what the Doctor ordered:

"Delivering the 3 R's of Remorse, Restitution and Rehabilitation may not prevent the injured from holding on to their resentment. If that's the case, you will need to exercise the 4^th R -to Request Forgiveness. Make this request only after you have demonstrated a track record of remorse, restitution and rehabilitation for at least six months (and perhaps even as long as the length of the transgression). Forgiveness, like trust is something that must be earned. One hopeful point to keep in mind: If you demonstrate a solid track record of Remorse, Restitution and Rehabilitation, and then Request Forgiveness and are not forgiven, it is not you that is unforgivable. Your investors, shareholders and employees are unforgiving. You cannot control other's feelings. You can only be true to and control yourself."

Oh my God. "It is not you who is unforgivable"???

And NOW he tells them to control themselves. Where was he when all this was going on? Probably delivering homilies to Oscar the Grouch in hopes of turning a frown upside down.

This is pop psychology at the kindergarten level--the very reason we came up with "psychobabble" . Here is Dr. Goulston's last word to those naughty execs:

"Your ability to handle this crisis may be the lifesaver they've been reaching for, and the lift needed that will finally allow them to believe in you and more importantly to begin to believe in corporate America again."

Have you ever believed in Corporate America?  No, neither have I. So here's my last word: You want an "R"? I'll give you an "R". How about "Revenge"?

(The REST of this story: I tried to leave a comment at the bottom of Gouldston's article and it was rejected! I mentioned some of the same things I wrote about here, but I did it in a polite way. Really. I might have said "You've got to be kidding!" and maybe I mentioned "kindergarten stuff" and I think I might have sounded like I was scoffing a little, but is that reason enough to just delete me? I don't know what's going on over there at HuffPo. Who's running that show, anyway?  But I got a blog post out of it, which wouldn't have happened if I hadn't been--I'll just say it--rejected.)
 

Ramona

There's Chutzpah and Then There's A.I.G

"While the American International Group [AIG] comes under fire from Congress over executive bonuses, it is quietly fighting the federal government for the return of $306 million in tax payments, some related to deals that were conducted through offshore tax havens."

Lynnley Browning, NYT 3/19/09
______________________________
Can you believe this? I couldn't either, but there it is. I'm going to assume this wasn't just a figment of Lynnley Browning's imagination, because it did appear in the New York Times, but where else was it yesterday? Today? Nowhere to be found. I wasn't exactly glued to my television set, but I watched it enough to see plenty about President Obama's appearance on the Leno Show last night. Now there's some news.

AIG, that insurance company that turned out not to really insure anything; that company that is now almost wholly owned by the government (that's us--or so they tell us when they want us to pay for something); that same company that still wants to pay out $165,000,000 in bonuses because they're so good; yes that company--they now want--you ready for this? They want us to give back $306,000,000 because they think they overpaid their taxes!!

And (sputter, spit, stammer, scream. . .) they're not only suing us, they're expecting us--the taxpayers--to foot the bill for their. . .aarghh. . .lawsuit!! Against us!!!

Really. Here it is:

"A.I.G. sued the government last month in a bid to force it to return the payments, which stemmed in large part from its use of aggressive tax deals, some involving entities controlled by the company’s financial products unit in the Cayman Islands, Ireland, the Dutch Antilles and other offshore havens.

A.I.G. is effectively suing its majority owner, the government, which has an 80 percent stake and has poured nearly $200 billion into the insurer in a bid to avert its collapse and avoid troubling the global financial markets. The company is in effect asking for even more money, in the form of tax refunds. The suit also suggests that A.I.G. is spending taxpayer money to pursue its case, something it is legally entitled to do. Its initial claim was denied by the Internal Revenue Service last year."

Browning goes on: "United States tax law allows American companies to claim a credit for any taxes paid to a foreign government. But the I.R.S. denied A.I.G.’s refund claims in 2008, saying that it had improperly calculated the credits. The I.R.S. has identified so-called foreign tax-credit generators as an area of abuse that it is increasingly monitoring.

The remainder of A.I.G.’s claim, for $244 million, concerns net operating loss carry-backs, capital loss carry-backs, a general refund claim and claims for refunds of other tax-related payments that A.I.G. says it made to the I.R.S. but are now owed back. The claim also covers $119 million in penalties and interest that A.I.G. says it is due back from the government.

In part, A.I.G. says it overpaid its federal income taxes after a 2004 accounting scandal that caused it to restate its financial records. A.I.G. says in part that it is entitled to a refund of $33 million that SICO paid in 1997 as compensation to employees, which it now says should be characterized as a deductible expense."

(Hang on a second, I feel another scream coming on. . .)

"Asked about the lawsuit, Mark Herr, an A.I.G. spokesman, said Thursday that 'A.I.G. is taking this action to ensure that it is not required to pay more than its fair share of taxes.'"

Fair. Let's think about that word "fair". And that word "share". Then let's think about AIG. Do you see the connection? Neither do I.

So that's it. Nothing we can do. But before we say goodbye, let me just leave you with this:

Citigroup Plans Big Bonuses Despite Rules Against Them

This is what happens when you treat corporations like royalty. They actually begin to think they're entitled. And why not? The leaders of the land are their humble servants, and the rest of us are out there in the latrines with slop buckets.

I'm going to ask this, but I really don't expect an answer:
Where is the America that never would have allowed this to happen?

Ramona

Our Money? Since when?

Does anybody believe that the money we shell out in taxes is anything other than an absolute giveaway? Do I have control over it once it leaves my hands? No, I don't. Do you? The truth is, as much as we want to feel good when The Powers say, "This is your money. . ." or "We owe it to the taxpayers. . . ", it's nothing more than a soothing murmur, a perfunctory pat on the head, as they pocket it all and head for their far-off moated castles.

Make no mistake. We are not "partners" in this great country of ours. We're the serfs, the peasants, the "folk", and our sole function is to fill the coffers, to provide services and succor to the gentry--and to do it with no questions asked and great gushes of gratitude.

In the mid- to-latter part of the last century we, the people, had it pretty good. We made things--remember? A good portion of the working class brought home paychecks large enough to actually buy things without mortgaging their entire lives. Mothers could even be home with their children.

But then a plague called "Reaganomics" descended upon the land, and over the years the Robber Barons were given the gift that keeps on giving: Deregulation. Talk about glee! The Free markets shall reign! Long live the Free Marketeers!

But peasants, never fear--Reaganomics will be good for us. They've come up with something called "trickle down". Yes, the rich will get richer. Of course! But they're going to share. No really--they're Americans. They wouldn't sell us down the river. Or across the sea.

Remember that? Has the trickle gotten to you yet? Nope, me neither. I see gushers of gold going to the already monied, but nary a drop coming this way. Not even a shiny damp spot. None to be seen.

I'm going to skip over the dreaded Bush Years here. You already know what happened. Talk about your horrible nightmares come true. Longest eight years of my life. But we're on the other side now, and while I doubt we'll ever look back on any of it and laugh, even after all we've been through we were still able to muster enough energy to boot the thugs out and bring in a shiny-armored knight. That was good.

But the trouble with knights? When they remove all that glitter, underneath they're just--you or me. All the power, apparently, is in the heavy metal.

So today, when we peasants were hearing about $165,000,000 worth of bonuses paid or promised to executives who dragged their company, AIG, to the edge of the cliff, where we peasants, AKA taxpayers, threw out a safety net and rescued just this bunch alone to the tune of 170 billion dollars (We must have done it in our sleep because when we finally woke up whole storehouses full of money had disappeared), a cry went over the land that the shiny-armored knight is beginning to tarnish.

The re-birth of this nation is still in its infancy. The knights are just leaving the Round Table, getting ready to do battle. There are marauders all along the way, and let's face it--they're good at doing dastardly. They've had a lot of practice.

So get out the damned Tarn-X or whatever it takes. Shine up that suit. Wipe the mist from the man's eyes so he can see more clearly now. He's got promises to keep and daunting tasks ahead. And the peasants, in case you haven't noticed, are on the move.

(Any pigs at the trough? Your days are numbered. We mean it this time, so enjoy it while you can.)


Ramona

A contract is a contract--WHEN??

The real scandal of AIG isn't just that American taxpayers have so far committed $170 billion to the giant insurer because it is thought to be too big to fail -- the most money ever funneled to a single company by a government since the dawn of capitalism -- nor even that AIG's notoriously failing executives, at the very unit responsible for the catastrophic credit-default swaps at the very center of the debacle, are planning to give themselves over $100 million in bonuses. The scandal is that even at this late date, even in a new administration dedicated to doing it all differently, Americans still have so little say over what is happening with our money.
Robert Reich here.

I'm going to make this short because I want to go off and think about that number, $170 BILLION.  I might have to get out my handy calculator again, but from right here, right now that looks like a whole hell of a lot of money.

I guess we're supposed to feel good about the $100 million worth of bonuses going to those needy, worthy AIG execs, since it's nowhere near $170 BILLION.

I guess we should all feel good about honoring contracts. After all, these same people have always been so good about honoring contracts with their workers. Doesn't Big Business enter into contracts with ALL workers? Don't they promise, at the hiring of those workers, that if they do their jobs they'll be entitled to job security, pay raises, reasonable benefits--and best of all, down the road, a bankable, safe retirement fund that'll take them happily and healthily into their Golden Years?

What? They don't? They haven't? I'm shocked.  I thought all those other figures--more than 600,000 workers losing jobs EVERY MONTH--were just more socialist propaganda.

Those unemployment lines? Pshaw! They're people who really don't want to work and would rather collect checks from the government. (See Erin Burnett's "maybe, possibly, some people say, let's look at China" here.)

Seven hundred out-of-work Americans standing in line for a handful of jobs? Grand-standers, actors even,  probably hired by the Democrats to make a pathetic point.

A Bailout LOAN for GM? Ridiculous! The unions must die. . .

But let's, in the name of all that's holy, save those CEO bonuses. We will not survive as a civilization without them. We can't let AIG fail!!

But wait. . .that was yesterday. This is today. Is there anybody today, besides Erin Burnett, who believes that taxpayers should be paying huge multi-million dollar bonuses to AIG execs? Erin, dearheart, was just on Morning Joe claiming that if AIG doesn't honor those contracts, they'll end up paying twice that amount to some upstanding businessmen in London who are obviously entitled. To which Mort Zuckerman, sitting on the set, said, Outrageous! It's a rogue operation in London. AIG should never have had dealings with them. (How come Erin didn't know that?)

So can we all agree now that if we're going to own 80% of AIG we should have a say in who gets what? Thank you. Now can we, the taxpayers, light a fire under our leaders and get them to do what they promised to do when we gave them all of the power?

I think we can. The calculator can wait. Those number are too big for my little mind, anyway. I'm going after my congressmen instead. I've got their numbers and I know how to use them.

Ramona