Blogs

Mortgage Association Has Mortgage Problems

| Tue Feb. 9, 2010 3:27 PM PST

The real estate situation is so bad, even the mortgage associations are having a hard time with their mortgages.

Last Friday, the Mortgage Bankers Association sold its $90 million headquarters—for $41 million.

As Dean Baker, co-director of the Center for Economic and Policy Research, mused to the Washington Post"It's a little bit of irony that in the middle of the mortgage crisis brought on by the bad lending practices of many members of the Mortgage Bankers Association that they got caught up in the same problem."

I believe that's what they call a taste of your own medicine.

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Public Not Ready to Give Up on Healthcare

| Tue Feb. 9, 2010 2:59 PM PST

The Washington Post reports today that both liberals and conservatives are in favor of compromise on healthcare — as long as the other guys are the ones doing the compromising. It's a start! The results aren't quite even, though:

But even Republicans are critical of their congressional leadership, with 44 percent seeing them as doing too little to strike deals with Obama; that compares with just 13 percent of Democrats worried about inaction on Obama's part.

That's something to work with. The Fox News wing of the Republican Party obviously isn't in the mood for compromise, but this is a reminder that there's still a quieter, non-Fox wing that would like to see some things get done. And as the chart on the right shows, 63% of the country thinks "lawmakers in Washington" should keep trying to pass comprehensive healthcare reform, including 42% of Republicans and a firm majority of independents. It's not clear what all these people think they're signing up to when they say they want "comprehensive" reform, but that's still a pretty healthy level of support. At the very least it should help stiffen a few Democratic spines in Congress.

GOP: Obama Admin is "Anti-Nuclear"

| Tue Feb. 9, 2010 2:34 PM PST

Barack Obama on Tuesday told reporters that his recent embrace of nuclear power is part of an effort to adopt some Republican ideas on energy, noting that he remains an "eternal optimist" about bipartisanship. But Obama's attempt to woo Republicans with nuclear power has met predictably bad reviews from the Party of No, which maintains that this is "an anti-nuclear administration." (Sarah Palin seems to like it, however.)

Pouring another $36 billion into government-backed loans "avoids the bold, no-cost solutions that would truly jumpstart nuclear power in the U.S." writes the GOP on its website. (The Republicans also describe nuclear as an "emission-free" energy source, though it's not quite clear why they care about emissions since most Republicans don't seem to think greenhouse gases are a problem.) The GOP plan also touts its "no-cost nuclear power initiative" to bring 100 new nuclear reactors online over the next 20 years, which was included in the energy bill the party released last summer. They don't manage to explain how it will be "no-cost," since the nuclear industry has made it very clear that it can't exist without government support.

"Without loan guarantees we will not build nuclear power plants," Michael J. Wallace, co-chief executive of UniStar Nuclear and vice president of Constellation Energy, told the New York Times in 2007. The nuclear industry has called for $100 billion in loan guarantees from the government. And while those are, in theory, "loans," the Congressional Budget Office projects default rates of "well above 50 percent." With the cost of reactors now estimated at over $10 billion, plans to build 100 new plants in the next two decades would require more than a trillion dollars in capital investment.

The 700 Military Bases of Afghanistan

| Tue Feb. 9, 2010 2:32 PM PST

Once is an anomaly; twice is the beginning of a pattern. Right now, we’re seeing the same sequence of events for the second time in less than a decade, and it looks like the signature American way of war in our time is coming into focus. 

In 2003, when the Bush administration invaded Iraq, the Pentagon already had on its drawing boards plans for building a series of permanent mega-bases in that country. (They were charmingly called "enduring camps.")  Once Baghdad fell and it turned out that, Saddam Hussein or no, the U.S. was going to have to fight rather than settle in and let the good times roll, hundreds of micro-bases were added to the mega ones—106 of them by 2005, more than 300 in all. Then, in 2005, Washington decided to trade in its embassy in one of Saddam’s old palaces for something a little spiffier. In its place, on a 104-acre plot by the Tigris River in the middle of Baghdad, for at least three-quarters of a billion dollars after cost overruns, it built the largest, most expensive embassy on the planet. It was planned for a staff of 1,000 "diplomats" with all the accoutrements of the good life and plenty of hired help. (Even now, despite much discussion about "ending" the American role in Iraq, further plans are reportedly being made for the embassy’s staff to double.) This was clearly to be U.S. mission control for the Greater Middle East. 

Building of this expansive kind is, of course, a staggering imperial undertaking. It implies a global power with resources beyond measure, for which waste means nothing. The mega-bases and the embassy were, in that sense, American wonders of the world, our own ziggurat-equivalents in Mesopotamia, right down to the multiple PXs, familiar fast food outlets, and miniature golf. No empire had ever launched a base-building program quite like it (if, that is, you leave out the precursor to this whole experience, the U.S. in Vietnam in the 1960s). 

The Iraqi base-building project alone had already absorbed several billion taxpayer dollars in just the first half-year of construction in 2003. But it did look like a one-of-a-kind architectural adventure— until, that is, the "forgotten war," the one in Afghanistan, came back into view. Starting in 2008, base building ramped up there, went into overdrive in 2009, and hasn’t come out of it yet. The result: an even more staggering base-construction splurge, and with it, the announcement last year that another monster embassy would go up, this time in Pakistan’s capital, Islamabad, for another cool near-billion. (The already large U.S. embassy in the Afghan capital, Kabul, would also be further expanded to the tune of $175-200 million). And keep in mind that none of this even includes the huge ring of supporting bases for America’s Afghan and Iraq operations in the Persian Gulf, South and Central Asia, and even on the island of Diego Garcia in the Indian Ocean. 

Does anyone see a pattern here?  The American military must be the heaviest occupation force in history. According to reports, it now has 1.5 million pieces of equipment, micro to mega, to get out of Iraq as U.S. forces draw down. This is war and occupation of Guinness World Records proportions, a veritable Ripley’s Believe It Or Not of imperial military construction. The only thing that won’t make the record books, of course, is the results: in war-fighting terms, in both Afghanistan and Iraq, the world’s mightiest military has been battled to at least a draw by rag-tag, lightly armed, minority insurgencies. 

To read more about Afghanistan's base-building boom, click here.

German Geezer Gang Kidnaps Investment Advisor Who Lost Their Money

| Tue Feb. 9, 2010 1:03 PM PST

The British Daily Mail today reports on what it calls a “gang of Old Rage Pensioners” in Bavaria who are accused of kidnapping and assaulting their financial adviser because, they said, he had “taken us for a ride.”

Keep in mind that this colorful account is from a British tabloid: Terms like “torture” are there for sensational effect, the events are still under contention, and none of the geezers has yet been convicted. According to NPR’s “The World,” the old people are charged with abduction and grievous bodily harm--the latter, apparently, for injuries caused when they hit the financial advisor with their walkers.

While the senior are on trial, the financial advisor is also under investigation for fraud.

The four German seniors said they were so incensed over the losses that American-born investment specialist James Amburn incurred that they hatched the plan to kidnap him in a bid to get their cash back....

Amburn was ambushed outside his home in Speyer, west Germany, where he was bound with masking tape and bundled into the boot of a car after being hit over the head with the walking frame of one of his kidnappers.

Prosecutors charged the two married couples, aged between 60 and 79, as well as the co-conspirator, with carrying out the kidnapping in order to recoup losses amounting to £2.3 million in investments that soured due to the international financial downturn.

According to the prosecutors, kidnappers Roland Koenig, 74, and Willy Dehmer, 60, attacked Amburn outside his home and bundled him into an oversize cardboard box which they wheeled to the boot of a silver Audi saloon car.

Sri Lankan President Arrests Election Opponent, Dissolves Parliment

| Tue Feb. 9, 2010 12:59 PM PST

It's been a busy February for newly reelected Sri Lankan President Mahinda Rajapaksa: Just two weeks after defeating ex-General Sarath Fonseka in the polls on January 26th, he had his arch rival physically carted from his office and placed under arrest for sedition. Then, he dissolved Parliament. It seems no amount of pleading by the UN  or India's Manmohan Singh can get Sri Lanka to just chill out. 

Rajapaksa and Fonseka were always an odd couple: closely allied during last spring's final campaign against the separatist Tamil Tigers (LTTE), the two men fell out after the war, each accusing the other of taking sole credit for the Tigers' defeat. After trading accusations of war crimes through the summer and fall, the President "promoted" the General to a largely ceremonial position last winter. Fonseka quit, and shortly thereafter, declared his intent to unseat his rival. 

That's when things got really weird. Both Fonseka and Rajapaksa are suspected by international agencies of having committed war crimes during the spring campaign; both are open Sinhalese nationalists. Yet, with little trouble, Fonseka managed to secure the backing of a coalition of minority parties, including the Tamil National Alliance, a crucial ally. In the elections, he carried the largely Tamil provinces of the North and East, but lost the national vote by 17 points. 

Then day after the elections, rumors began to fly that the General had plotted with army officers to murder the President and his family. Fonseka's campaign headquarters were searched and several campaign workers arrested.  For the last 24 hours, the General was kept in an undisclosed location, though India's Hindustan Times is reporting that Fonseka's wife, Anoma, was allowed to see her husband for the first time today, bringing him a change of clothes and his inhaler. Many critics fear arresting the losing presidential candidate and dissolving Parliament sends the wrong message to a country that just ended a 26-year-long civil war. That's putting it mildly. 

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The Healthcare Summit

| Tue Feb. 9, 2010 11:52 AM PST

Jon Chait writes about President Obama's proposed healthcare summit meeting later this month with Republicans:

Skeptics around Washington are already warning that the summit will be nothing more than Kabuki theater, allowing each side to grandstand on television while providing little in the way of substantive debate or additional understanding for the folks watching back home.

That's not the point. Obama knows perfectly well that the Republicans have no serious proposals to address the main problems of the health care system and have no interest (or political room, given their crazy base) in handing him a victory of any substance. Obama is bringing them in to discuss health care so he can expose this reality.

I agree that this is almost certainly Obama's intent. The question is whether it will work. The GOP leadership has already responded to Obama's offer with a list of preconditions for the meeting, a tactic straight out of Negotiation 101, but also one that works pretty well. What's more, if they decide to show up anyway, they'll be a lot better prepared than they were for their Q&A a week ago. My guess is that they'll have some pretty good sounding arguments lined up about consumer focused healthcare, the need for market-driven reforms, the evils of top-down government control, etc. etc. Those aren't things that Obama will be able to conclusively swat down in a few hours.

But we'll see. I don't have high hopes for the summit because Democrats haven't shown much ability to control the media narrative lately, and that's what this is really all about. Hopefully they'll do better than I think.

The Pain of Spain is Mainly in the....Euro

| Tue Feb. 9, 2010 11:21 AM PST

Paul Krugman writes about Europe's troubles today:

Most press coverage of the eurozone troubles has focused on Greece, which is understandable: Greece is up against the wall to a greater extent than anyone else. But the Greek economy is also very small....

Well, OK, but Lehman Brothers was also pretty small relative to the rest of Wall Street. A failure in Greece could easily have knock-on effects that start taking out other weak countries and then spreads to not-so-weak countries. Still, point taken. Moving on:

....in economic terms the heart of the crisis is in Spain, which is much bigger. And as I’ve tried to point out in a number of posts, Spain’s troubles are not, despite what you may have read, the result of fiscal irresponsibility. Instead, they reflect “asymmetric shocks” within the eurozone, which were always known to be a problem, but have turned out to be an even worse problem than the euroskeptics feared.

The rest is worth reading if this stuff seems mysterious to you. It's very short, comes complete with some colorful charts, and gets across the main problems very succinctly. Basically, the problem is that Spain is in big trouble and needs to devalue its currency, but it can't because it doesn't have its own currency anymore. It has the euro, and the rest of the eurozone (i.e., Germany) doesn't want to adopt an expansionist monetary policy just to bail out Spain and a few other countries. So they're stuck.

Read More Books!

| Tue Feb. 9, 2010 10:12 AM PST

I promise not to spend all day writing about Twitter and the end of Western civilization, but having defended e-media of various kinds earlier this morning, now I want to plead the case for books. Here is Ezra Klein's defense of online media:

Then there are the advantages that online media offer that books can't match: It's possible to follow an issue in real time. People who really wanted to understand the health-care reform conversation were better off reading Jon Cohn's blog than any particular book or magazine. Did those people spend more time reading Jon and less time reading books? Probably. But it was time well spent. Packer is insistent on making the point that something is lost as we move into this faster, more fractured, more condensed media environment. But so too is something gained.

Italics mine. I don't want to disagree too much with this. Obviously online media does allow you to follow issues in real time, something that books don't. But is it really time well spent to devote more time to reading Jon Cohn's blog posts on healthcare and less time to reading Jon Cohn's book about healthcare? I'm not so sure, and to this extent I think George Packer has a point when he bemoans the loss of time for reading books.

This is, I grant, a purely personal reaction, but one of my occasional frustrations with the blogosphere is that a lot of people seem to think they can understand complex issues merely by reading lots of blog posts and newspaper articles. I'm not so sure of that. There's a big difference between a 100,000-word book on healthcare and 100,000 words of real-time commentary on healthcare. You can learn a lot from the latter, but very frequently you miss the big picture because (a) it's not all there and (b) you have to put it together yourself over time. The result is often a sort of glib and shallow understanding that can produce enjoyable polemics or good water cooler arguments, but not much more.

A few hours spent with a carefully constructed book, on the other hand, can change the way you think about something by showing you history, context, and all the non-sexy stuff — in other words, all the messy complexity — in a single package that you absorb all at once. Basically, if you read Sick, you're getting years of Jon Cohn's distilled knowledge of American healthcare in a few hours. To get the same from his blog posts, you'd have to spend months or years reading them, and you still wouldn't get it all.

If you really want to understand any issue more complex than Brad and Angelina's marital status, there's really no substitute for a book. Not instead of blogs and newspapers and Twitter, but in addition to them. So: read more books! They're good for you.

Black History Month: What's In It For Me?

| Tue Feb. 9, 2010 10:11 AM PST

FYI: It's Black History Month, and to honor the occasion I got the scoop on proposed policies that could directly impact me—a 25-year old, African-American female with some debt and no health insurance. To find out what the government has in store, I enlisted the help of Marjorie A. Innocent and Alana Hackshaw who are directors at the Congressional Black Caucus Foundation, which recently slammed Obama for not tailoring policies to fit the needs of African-Americans.

First up is health care. Both the House and Senate health care reform bills would extend the age limit for young adults to retain insurance coverage under their parents’ plans. The House bill allows parents to cover their children until age 27; the Senate version grants coverage until age 26. Nearly one-third of young adults in their twenties lack coverage, with the rate being even higher for African-American males. Either bill would increase access to preventive health care as young Americans transition from school to the workforce—which for many is a time of financial vulnerability.

I'm familiar with financial vulnerability: I was unemployed after graduating from college, and now I'm an intern. But I'm fortunate in comparison to many college-educated African-Americans who are more likely to be unemployed than whites who have only a high school diploma. Not to mention, African American males my age who represent the highest unemployment rate in the nation. At this time, none of the administration's initiatives specifically target unemployment's disproportionate impact upon African-Americans, but the policies below may help:

  • President Obama’s proposal of the Small Business Jobs and Wages Tax Credit will provide employers with a tax credit of $5K for every new employee added to their payroll.
  • The effects of the black community's 16.5 percent unemployment rate would be blunted by the continued extension of unemployment compensation under the American Recovery and Reinvestment Act (ARRA), which is slated to expire at the end of the month.

I'm lucky to have a job, but I'm still broke, partly because I'm drowning in student loans. In his State of the Union speech last month, President Obama said he wants to provide relief to college graduates. The Income-Based Repayment (IBR) plan, which was enacted under the College Cost Reduction and Access Act of 2007, went into effect in July. It's good news for federal student loan borrowers who are experiencing financial challenges, have a high debt-to-income ratio, or are seeking a career in public service. And the administration is proposing to strengthen it by limiting loan payments to ten percent of discretionary income instead of the current 15 percent, plus forgiving unpaid balances after 20 years instead of 25. Such changes would benefit many African-American graduates who relied on federal student loans to realize their higher education goals, but it should be noted that African Americans disproportionately default on private student loans. And the IBR program doesn't touch those.

All of these proposals would signify a bit of progress, if only Black History Month could inspire Congress to pass them.

 

Follow Titania Kumeh on Twitter.