Farmland Blue Skies Bliss wallpaper, Reforming Wall St and Republican Puppet Master Frank Luntz

Farmland Blue Skies Bliss wallpaper

A couple of links from Salon on Wall St reform and derivatives worth a read. Andrew Leonard’s Credit default swaps: What are they good for?

As Congress prepares to debate the role of derivatives in banking reform, a reader asks a highly pertinent question, “One thing I have no understanding of at all: Why are “naked” credit default swaps even legal?”

There is no quick and easy answer to the question, but let’s give it a stab. A credit default swap is analogous to an insurance policy written against the possibility of some kind of negative “credit event,” such as, for example, an automaker declaring bankruptcy and defaulting on its bond obligations. Let’s say General Motors issues a bond and I purchase it. But I’m worried that General Motors may collapse, so I buy a credit default swap on my bond from A.I.G. In return for regular premium payments, A.I.G. promises to reimburse me in full in the event for the value of my bond in the event of a GM bankruptcy. In the parlance of Wall Street, by purchasing the credit default swap I am “hedging” against the chance that my bond will suddenly become worthless.

It has been a standard talking to point to defend Wall St and the nation’s financial sector in general as modern American heroes. They may not leap tall buildings in a single bound, but they take huge risks. Whether they are a default or “naked” derivative these are in fact insurance against any risks taken. Granted you have to be a player to get in the game, but if one of those mythical risk taking entrepreneurs has millions, for the most part they have to be idiots not to still have their bankroll at the end of the day. Not necessarily a bad thing, but hopefully more Americans are beginning to realize the game Wall St has been playing is rigged. And if there is a big enough payout due to loses – the players do not pay – tax payers do. It seems like we’ll be getting our money back eventually – tax payer bail-out wise, but what about the millions of unemployed and under-employed Americans have become so much road kill in Wall St’s march to riches.

Let’s use the now famous casino analogy – I think Senator Reid(D-NV) was the first to use it during the TARP bail-out debate – and expand it a little. When you place a bet at a casino the house keeps enough capital in reserve to pay off even the largest bet allowed. What Goldman Sachs and others did was allow these bets – credit swaps – without the reserves to pay them off. If Goldman was like a regular bank that probably would not have happened because the FDIC regulars a certain reserve limit. Lead by Mitch McConnell (R-KY), Republicans are saying hands off Wall St. Let them gamble without having the same financial safety measures in place that even a casino has. The guy who told the GOP to brand financial reform a “bailout”? Every word he speaks seems to be a lie by Gabriel Winant

It was Luntz who suggested, in a now-infamous memo, that Republicans mask their assiduous service of Wall Street in the fight over financial reform by accusing the Democrats of assiduously serving Wall Street. The ceaseless claims that the proposed bill would authorize a new “bailout” come directly from Luntz’s playbook. Senate Minority Leader Mitch McConnell, for example, warned, “We cannot allow endless taxpayer-funded bailouts for big Wall Street banks.”

Here’s what Luntz advised: “[A] vote in favor of creating a permanent bailout fund of private companies is like committing political hari-kari. Frankly, the single best way to kill any legislation is to link it to the Big Bank Bailout.”

Of course, the proposed bill doesn’t create a permanent bailout. The measure that Republicans have criticized, borrowing language from Luntz, in fact levies a tax on banks, and would use the money to dismantle — not reward — companies under financial duress. But I guess that still fits under Luntz’s rubric of “any legislation.”

That hand up the back of Senator McConnell and the newly elected Republican himbo from Massachusetts Scott Brown – a tea bagger hero – is the puppet master Luntz telling his puppets what to think and what to say. If anything the Wall St reform proposed by Democrats is not enough – A Short Citizen’s Guide to Reforming Wall Street

The Dodd bill now being considered in the Senate is a step in the right direction. Yet despite the hype, it’s a very modest step. It leaves out three of the most important things necessary to prevent a repeat of the Wall Street meltdown:

1. Require that trading of all derivatives be done on open exchanges where parties have to disclose what they’re buying and selling and have enough capital to pay up if their bets go wrong. The exception in the current bill for so-called “unique” derivatives opens up a loophole big enough for bankers to drive their Ferrari’s through.

Former Secretary of Labor Reich is right about the Dodd bill, but this piece from TNR might help explain what is going on. The Dodd bill might be the minimum standard which Democrats will settle for. There are derivatives measures being pushed by  Speaker Pelosi and the House, and Blanche Lincoln in the Senate that have much tougher standards and more openness in all derivatives than the Dodd bill. The inside story of how Goldman and the banks are getting clobbered on financial reform. One last thing that Ezra Klein takes a look at today is the money that has gone from banks and financial companies like G.S. to Democrats and Republicans. Some bloggers have pointed to some campaign contributions from Goldman at to Democrats claiming this proves Democrats are tainted with G.S. money. The problem with that narrative is that Democrats are willing to pursue reform despite the influence Goldman hoped to buy with Democrats and Republicans are the ones defending the corrupt and dysfunctional status quo.

The Big Lie: Tea Party Rebranding and Liberal “Infiltrators”

The Right wing media and the Tea Parties are playing chess while the Left and the mainstream media are playing checkers.

While they can be disparaged as being narrow minded ideologues possessed of an authoritarian personality, Conservatives in the U.S.–and the extreme Right wing that has now become the center of the GOP–have long been masters of using emotional and moral appeals to motivate their public. While the Democrats are hamstrung by an issues based approach to politics, Conservatives have mastered the art of creating an alternate world of political facts and reason (enabled by the Right wing media echo chamber) where the reality based community need not tread.

This week the note being struck is that liberal infiltrators (in the guise of “agent provocateurs”) are targeting the Tea Parties in order to smear and discredit them. Without any factual substantiation (and ignoring the racist, bigoted, and violent rhetoric that is common at the Tea Party gatherings) the Right has succeeded in reframing the narrative which surrounds the tea baggers. Now, freed from any responsibility for their own actions, the Tea Parties can point to some imagined villain as being responsible for all things disruptive and violent at their protests.

Also worth a read as the new tea party tactic seems to be blaming any violence, racial slurs, homophobic rhetoric that occurs at tea nut rallies on liberal “infiltrators”. It may seem insane, but Bush and company had plans to create false flag attack  as another bogus excuse to invade Iraq – Bush-Blair Iraq war memo revealed

The US “was thinking of flying U2 reconnaissance aircraft with fighter cover over Iraq, painted in UN colours”, Mr Bush said.

If Saddam fired on them, the Iraqis would be in breach of UN resolutions, he suggested.

And Dick Cheney’s Iran obsession – To Provoke War, Cheney Considered Proposal To Dress Up Navy Seals As Iranians And Shoot At Them