Moon of Alabama Brecht quote
December 05, 2008

The Real Danger Of A Big Three Default

In light of the possible bankruptcy of one or more of the big three U.S. automakers, we need to again demand to Declare All Credit Default Swaps Null And Void.

Those $65 trillion reasons for the credit market freeze will never go away without a huge crash that then will have worth consequences than the 1929 stock market crash. The only way to eliminate these reasons is internationally concerted action to declare the legal obligations of all CDS' null and void.

What has this to do with automakers? As the folks at Institutional Risk Advisor wrote:

As Bloomberg News reported in August: "A default by one of the automakers would trigger writedowns and losses in the $1.2 trillion market for collateralized debt obligations that pool derivatives linked to corporate debt… Credit-default swaps on GM and Ford were included in more than 80 percent of CDOs created before they lost their investment-grade debt rankings in 2005, according to data compiled by Standard & Poor's."
...
Any bank with a large derivatives trading book is likely to be mortally wounded as the CDS markets finally collapse.  We don't see problems with interest rate or currency contracts, by the way, only the great CDS Ponzi scheme is at issue - hopefully, if authorities around the world act with purpose on rendering extinct CDS contracts as they exist today. Call it a Christmas present to the entire world.

In another piece they report:

We hear from a very well placed Buy Side investor with extensive business interests in the US and EU that three primary banking institutions in Europe, two French and one German, have such significant CDS exposure and other problems that they cannot even begin to fund the payouts anticipated over the next quarter.
...
Unlike the approach taken by Paulson and Geithner to bailout AIG and JPM (via the Bear Stearns rescue), however, the investor claims that EU officials are considering a moratorium on CDS payments by the three Euroland banks in question. The banks would be given ten years to write down their CDS and hedge fund exposures and would receive additional infusions of capital by their respective governments. The source claims that French banks have such huge exposure to both hedge funds and CDS, sometimes linked together, that the positions are beyond the ability of the EU governments to bail them out without a cessation of CDS payments.

Even a ten years write down will not help. The numbers are just too big. Still, calls to eliminate CDS and other derivatives by IRS or me are regarded as fringe or lunatic.

But now a really big investor joins the small chorus. Gao Xiqing is president of the China Investment Corporation, which manages $200 billion of the country’s foreign assets. James Fellows recently interviewed him for The Atlantic. Gao Xiqing opinion on derivatives (which includes CDS'):

If you look at every one of these [derivative] products, they make sense. But in aggregate, they are bullshit. They are crap. They serve to cheat people.
...
I think we should do an overhaul and say, “Let’s get rid of 90 percent of the derivatives.” Of course, that’s going to be very unpopular, because many people will lose jobs.

Gao Xiqing has some additional good advice for the U.S. and I recommend that you read it.

But back to the CDS problems. If Congress fails to bailout those three gargantuan hedge funds with the attached car manufacturing and sales departments we will see an unprecedented rout in the financial markets.

There are at least 13,602 CDS contracts with a total dollar value of $100,6 billion written on GMAC LLC, General Motor's finance arm. There are more than 9,683 contracts on GM itself. A GM bankruptcy would trigger a payout demand of the insurance bought with CDS' against such a GM/GMAC default. It is unlikely that those liabilities could be matched by the original writers of these insurances. A chain reaction of huge defaults would follow.

Senator Dodd touched the issue in yesterdays automaker hearing in Congress:

"The domestic auto companies already comprise more than 10 percent of the high-yield bond market and one of the largest sectors in leverage finance for banks," Dodd said at the first of two days of congressional hearings on whether Congress should return next week to provide automakers immediate aid. "A partial or complete failure of the domestic automobile industry would have ramifications far beyond manufacturing and pensions. It would affect virtually every sector of the economy."

A default by one of the big threes would be directly bad for the real economy. But the consequences in financial markets and the indirect damage in the real economy triggered by that financial turmoil are the really grave threat.

A solution to that would be to eliminate the crazy Ponzi scheme that was build with CDS and related derivatives by simply voiding them. But the economic pain seems not yet big enough to make that happen. 

Posted by b on December 5, 2008 at 05:08 AM | Permalink

Comments

A couple of points/questions, b;

1) How is voiding CDS contracts different than counter parties defaulting on their CDS obligations? Which is what is going to happen anyway.

2) Again its good to see Senator Dodd, henceforth to be referred to as "bankster bitch," getting to the real heart of the matter; "Never mind the workers. We can't let Detroit fail because they owe my bankster bosses money!!!!"

Somebody has to pay for all this. It might as well be the public.

Posted by: Lysander | Dec 5, 2008 6:26:35 AM | 1

@Lysander - a controlled "default" of CDS would include instruments to level the playing field so to say. As I wrote in my original piece linked above:

At the same time:

* all financial exchanges and markets of the world close for a week
* CDS are declared null and void and new CDS creation is forbidden until new regulation is in place
* the publicly dealt financial entities have seven days to figure out and publicly restate the value of their liabilities and assets excluding all CDS
* a onetime windfall tax will be created that socializes overt advantages some entities will have from this
* the proceed of that tax shall be used to prop up the capital of the big losers in a program comparable to the Reconstruction Finance Corporation of 1932.

The tax issue important as is the market closure to avoid further damage. Trust in banking would be regained.

A uncontrolled big default would wreak havoc. Trust in banking would be crashed.

Posted by: b | Dec 5, 2008 7:34:33 AM | 2

I have to admit credit default swaps are something I hadn't heard of until recently and am just now figuring out. In general I would say that few people understand even a fraction of the global financial system and the economy. So when people are against an automaker bailout they don't even consider the ramifications of suddenly losing countless jobs, the sudden repayment of these credit default swaps, and the impact on the financial system and economy. People think that if they don't directly work for an automaker that they won't be affected.

Posted by: DTownie Detroit blog | Dec 5, 2008 7:52:42 AM | 3

The most galling aspect, for a common American citizen, of the circus at the Capitol is the debasement of the American prestige. When the administrators of large corporations are mocked for flying their jets,mocked for their administrative incompetence, and also deriding the quality of American products day after day, berating the American labor force for wanting to be paid salaries discordant with their work, the result must be the development of general contempt for everything American. That for me is the fundamental problem that we face.
The governemnt should have nationalized the auto companies by a swift decree, with a promise of compensation to creditors after a moratorium, frozen the salaries, guarateed medical care, confirmed the value of pensions and lifted the country from this cesspool of innuendo of exageration of slander. The purpose of government is not to sustain a certain ideology but the practical process of keeping American citizens respectable prosperous healthy and secure.

Posted by: jlcg | Dec 5, 2008 7:54:41 AM | 4

b: "A uncontrolled big default of CDS would wreak havoc. Trust in banking would be crashed."

Sorry, but it´s OK for me.

Posted by: timid | Dec 5, 2008 10:59:56 AM | 5

Chairman Gates made an interesting observation about the Federal government, slightly adlibbed here;'"The irony [is] that it's almost the highest spending per citizen in the country, and it's almost the worst set of outcomes of programs in the country -- and this is the nation's capital. You'd think that in terms of effective spending of dollars and outcomes, that D.C. would be a model city, and, in fact, it has been the exact opposite."

To which you might add, these are all well invested Congressmen, who have never yet shown any willingness to enact legislation which might hurt their portfolios, financial or political.

To which you might observe that the Fed banks have absolutely no intent to wipe out CDS's or it would have already happened... in a N y augenblik.

Posted by: Frank Doyle | Dec 5, 2008 11:23:46 AM | 6

b: "A uncontrolled big default of CDS would wreak havoc. Trust in banking would be crashed."

Sorry, but it´s OK for me.

In a certain way for me too. But then I have to acknowledge that some of the stuff banking does is actually useful and necessary for the world to function. Of course we can all go back to exchange pearls, but that may makes it a bit difficult for any economy to function.

Posted by: b | Dec 5, 2008 12:26:49 PM | 7

Here's what's on my bar napkin- Rather than declare CDSs null and void, sterilize them. Kinda like carbon trading, assign a different currency to these pollutants and let the bankers trade them back and forth, but don't call them dollars or euros. Keep them separate from real commerce. Sterilize the banksters as well- for the benefit of future generations.

Posted by: biklett | Dec 5, 2008 12:36:08 PM | 8

Slightly OT but funny. MacroMan's version of "Who's on first"

The Scene:

The Presidential Salon in an undisclosed government palace, Beijing

Dramatis personae:

Hu Jintao, President of the People's Republic of China

Wen Jinbao, Premier of the People's Republic of China

Hank Paulson, US Treasury Secretary

Interpreters

Hu: Welcome, Secretary Paulson, to Beijing for our end of year strategic economic dialogue.

Hank: Thank you, Mr. President.

Wen: We know you have a lot on your plate at the moment.

Hank: Yes, these dumplings are delicious! (Eats three dumplings noisily.)

Hu: So what would you like to talk about first? How many Treasuries we're going to be buying over the next few years?

Hank: No, why don't you start by telling me when you're going to allow the renminbi to appreciate against against the dollar.

Wen: I'm sorry, I can't tell you that.

Hank: Who is going to then?

Hu: Not necessarily. No decision has been taken.

Hank: Excuse me?

Hu: We have not reached a decision yet.

Hank: But Mr. President, when will that happen?

Hu: I am the president, and it will happen when I decide it will.

Hank: I was speaking to you sir. But can you tell me when?

Wen: No, you need to ask Hu.

Hank: But the president already told me it was his decision. I need to know when!

Wen: Really, sir. The president is sitting right here. Why ask me when you can ask him?

Hank: I did ask him. Who asked you to pipe up, Mr. Premier?

Hu: No I didn't.

Hank: Excuse me?

Wen: Listen, Mr. Secretary. The renminbi has appreciated sharply against other currencies in the last few months. Who knows when it will start appreciating against the dollar again?

Hank: That's why I'm asking him! Mr. President, will you let USD/RMB fall any time soon?

Hu: When the time is ripe for the renminbi to strengthen.

Hank: Thank you for your help and understanding, Mr. President! (Pulls out iphone surreptitiously.) Hey George, I think the Chinese are finally ready to play ball on the currency, so that's one less thing we have to worry about.

(Hu and Wen exchange glances and snigger behind their hands.)

Posted by: b | Dec 5, 2008 12:44:17 PM | 9

Given that everyone in congress knows about the issues raised by CDS's should any of the auto makers go under, it means that the last week has, as we predicted in here a couple a weeks back, been nothing more than theatre.
There is no intent to let the car makers go under, the CEOs know it and they will do well enough outta stockoptions to cover their $1 a year salary, but Joe Carmaker is about to get a huge wrench shoved right up his ass.

When the pensions disappear, the health benefits get taken off the table, while overtime rates and other penalty allowances that stretch back to the lock outs of the earliest days of Detroit get ripped up.

The prestige which is such a false ideal anyhow (it can come and go with the stroke of a PR minders pen) which jlcg is concerned over is nothing in the minds of congress, the banks and the car makers, who see dollar signs everywhere cause soon they will have labour costs that rival China or India.
Workers in Auto factories around the world are amongst the best paid of their nation's manufacturing industries, (there are sound reasons for this) so the claims that wages need be cut to make these monoliths efficient is just another red herring.
This is a deliberate attack on working conditions to really screw ordinary humans.

By Paulson's own admission the bank bailout money wasn't used to relieve dubious mortgages as he publicly promised it would be, it was used to finance the banks into new scams leaving the victims of their old ones behind them. Now the money paid by ordinary citizens in taxes to bailout the auto industry will be used to screw the working conditions of every wage earner in amerika.

amerikans will be paying through the nose to fuck themselves over.

The plan will be to reverse the flow of organised labour. Just as many of the conditions other workers have now, came from battles won in Detroit all those years ago, the capitalists imagine that if they can obliterate union strength in Detroit, that that will spread across the country.

This crash may not have been deliberate but there is no doubt that pols and owners are putting a well rehearsed plan into operation now it has occurred. To screw every shit kicker that walks the earth.
This will exacerbate the financial issue but the rich-pricks are too blinded by greed to see that.

Posted by: Debs is dead | Dec 5, 2008 1:51:54 PM | 10

Now the money paid by ordinary citizens in taxes to bailout the auto industry will be used to screw the working conditions of every wage earner in amerika.

amerikans will be paying through the nose to fuck themselves over.

right on, did! Couldn't have encapsulated the situation better myself.

But don't worry, Obama and Waldo will save us.

Posted by: Malooga | Dec 5, 2008 2:04:06 PM | 11

We're sorry, your comment has not been published because TypePad's antispam filter has flagged it as potential comment spam. It has been held for review by the blog's author.We're sorry, your comment has not been published because TypePad's antispam filter has flagged it as potential comment spam. It has been held for review by the blog's author.We're sorry, your comment has not been published because TypePad's antispam filter has flagged it as potential comment spam. It has been held for review by the blog's author.We're sorry, your comment has not been published because TypePad's antispam filter has flagged it as potential comment spam. It has been held for review by the blog's author.

TypePadTypePadTypePadTypePadTypePadTypePadTypePad

b, I've asked in the other threads if there is any word on this TypePad it's really become a pain in the ass this week at no less than ten times I and other have had a problem with battling the bot. ANY WORD?

Posted by: Uncle $cam | Dec 5, 2008 2:19:13 PM | 12

I've asked in the other threads if there is any word on this TypePad it's really become a pain in the ass this week at no less than ten times I and other have had a problem with battling the bot. ANY WORD?

No.

But your recent comment, just manually published by me with some correction, was malformed as the second URL was severely garbled and led nowhere. The spam filter was right to catch that in my view.

Sorry, but there is are 3 to 10 real spam comments the filter catches and which I delete without anyone seeing them here. There would be even more if the filter were less effective (and annoying).

Posted by: b | Dec 5, 2008 2:55:35 PM | 13

well,I don't see it... and if it was malformed it's because I tried to post it 7 tiomes... fuck it!

Posted by: Uncle $cam | Dec 5, 2008 3:18:35 PM | 14

b will stick with the ancien regime until the flock flees. (He has made this clear over several years of Typepad charades.)

Neither of the two URLs were garbled in my last post, but when split into two posts the "bot" miraculously accepted them -- after previously rejecting them.

That said, let's give b some credit. Chris Floyd's (In my opinion, the consistently best, and least read, poster on the web) website makes it imposssible to see who just posted, how to navigate to the beginning of the posts, and is the slowest loading website I have ever encountered.

But then, I'm not one who believes in the myth of progress (at least in the sense of those who are least privileged in society).

Posted by: Malooga | Dec 5, 2008 3:34:52 PM | 15

Thanks Malooga. We can see it but what are we going to do about it? More of the same? although I suspect community organisations may get overcrowded with cautious white boys with nice nair and their own teeth since BO has made that route a recognised path the prezness. (LOL)

But I jest maybe BO did put in some hard yards but the aforementioned white boys surely won't, so work in communities must continue. But without coming over all grandiose we do need to try and generate something a bit bigger in the long term.
I suspect we all know where /what that should be, a web based consumer rights infrastructure, one that can mobilise a good chunk of mac users, or toyota drivers or big mac eaters as and when required.
Corporate capitalists have been playing divide and rule with humans for years, creating and abusing differential pricing structures, wage structures, and regulatory structures around the planet while they preach globalisation.
The logistics are the biggest stumbling block. It is really tough to reach outside one's immediate web social grouping, deliberately so, just see how jealously the corporations watch over their product based forums.

That is the corporations which have to have such dangerous things many manage to avoid them altogether. As soon as dissent even looks like breaking out over some product fault or the like, the paid arse lickers step in to defend the corporations and it's product and attack the 'whiners'. Pretty soon the thread gets closed off.

But there are ways. I have a few ideas as I'm sure many others do.

Right now that things are getting tough, is the time that activists need to be ready and waiting, because we know from previous 'lesser recessions' that this is the time when corporations are at their most venal, immoral and untrustworthy as they bend and break rules to make a profit.
Now is the time when we need to be watching out for issues that people will rally around.

Posted by: Debs is dead | Dec 5, 2008 3:41:20 PM | 16

I'm done posting until this shit is resolved...

Posted by: Uncle $cam | Dec 5, 2008 3:46:01 PM | 17

A Honda ad I saw on TV last night had verbiage to the effect that "We've been making quality cars for years and will continue to so for many more years."

Not so subtle dig at the US Big Three. Heh.

Posted by: jawbone | Dec 5, 2008 5:51:09 PM | 18

Debs #10--You said what I was thinking, only more cogently and with saltier language.

Naomi Klein says the NeoCons find ways to use any crisis to advance their agenda: That seems to be exactly what they're doing with labor during this part of the econ crisis.

Kevin Phillips said about the Paulson Fix (Is In) that the arsonists who started the fires were coming back with their firemen's hats on, saying they were going to put out the fire, but actually pouring gasoline on it. (Link to Bill Moyers' Journal has video and transcript.)

And, damn, gotta hand it to them (oh, right-Congress did just hand those billions to them), they have succeeded in protecting themselves and their bankster buds. And won't even tell where it's all gone!

Posted by: jawbone | Dec 5, 2008 6:00:24 PM | 19

"The purpose of government is not to sustain a certain ideology but the practical process of keeping American citizens respectable prosperous healthy and secure."

The entire US fedgov has entirely lost track of it purpose then.

The banksters have been engineering financial crises for over a hundred years in the USA. The current crisis is still in its early days. The "bailout" is part of the crash, not an attempt to rescue banks but step towards the ongoing consolidation of power. There will be major changes to US society in the coming year.

Posted by: James Crow | Dec 5, 2008 6:24:59 PM | 20

OT-ish, but related to the broader picture:

CIMC suspends dry container production

CHINA International Marine Containers. the world’s largest marine container maker, has brought forward its year-end holiday and suspended the production of dry marine containers due to exceptionally slow demand.

Shenzhen-listed CIMC, which has a 56% share of the world’s dry marine container market, halted all production lines of dry containers in October this year and 22,000 employees from the production department have been on leave since then, according to local reports.
(snip)

Posted by: Alamet | Dec 5, 2008 8:01:25 PM | 21

b wrote, But your recent comment, just manually published by me with some correction

Just manually published? Then where is it? I've given it some time and I'm not seeing it from my screen...

Posted by: Uncle $cam | Dec 5, 2008 8:02:02 PM | 22

Hiya Uncle. let's talk about this issue over here on the open thread.

Posted by: Debs is dead | Dec 5, 2008 9:50:56 PM | 23

Naomi Klein says the NeoCons find ways to use any crisis to advance their agenda: That seems to be exactly what they're doing with labor during this part of the econ crisis.

Naomi Klein says a lot of very obvious things, the above being only one of them.

She's a bit of a joke, honestly. She's all for empire and capitalism as long as it's not tacky or too overtly murderous, or too overtly criminal. She has no problem writing books that tell 75% of the story and leaving silence on a very critical 25% (fractions fictional, just used for example). She's been an Obama booster for a long time. And she's not even a US citizen... yet people take her commentary deadly seriously.

She hasn't demonstrated any capacity to adjust her Pampered Logo-Free Yuppie perspective to reality, that's what I'm saying. She lives in a comfy well-off bubble. She writes about half-important things and only says obvious things when so writing.

Posted by: micah pyre | Dec 5, 2008 11:08:46 PM | 24

* Naomi Klein is not a US citizen - true
* Naomi Klein is privileged - true
* Naomi Klein is not a Communist, but a reformist liberal (as are most posters to this blog) - most probably true

None of which disproves the (painfully obvious) point that so-called Neo-Cons (and everyone else) will use crises to advance their agenda. (What is that Chinese saying about Crisis and Opportunity?)

If she is only telling 75% of the story, you have a forum here to elucidate the other 25% and make a case for why it is so important (dispositive).

Posted by: Malooga | Dec 5, 2008 11:41:34 PM | 25

@Uncle - @22 Just manually published? Then where is it? I've given it some time and I'm not seeing it from my screen...

here

Posted by: b | Dec 6, 2008 2:06:31 AM | 26

the spam filter algorithm probably picks up all txt w/ ".com" or dot-whatever -- no matter whether it's inside html markup or not -- so it counted eight links in that one comment & flagged it as spam

Posted by: b real | Dec 6, 2008 2:15:46 AM | 27

Malooga,

If you can't see where she's lying by omission, is it my duty to tell you? And if I spoon-feed you, you can just dismiss it as cranksterism. Why don't you investigate Naomi Klein yourself, instead of merely drumming support for her DLC message?

She's a DLC stooge. Now if you prefer the DLC view of America, that's your choice and you can keep the DLC jingoism stream flowing with comments in this here forum. That's your privilege, I guess.

I'd wager you enjoy the Obama "victory" inasmuch as that's what Naomi Klein was aiming for. She's just against Bush/Cheney and "rethugs." She doesn't dare criticize Democrats nor materialistic capitalism. She DEFINITELY does not criticize empire or imperialism. Her rants are about her diminution of status and how the world ought to be a Whole Foods/NPR/PBS glory of rich liberals who have all modern conveniences w/o logos or other tacky devices of low-taste consumerism. She doesn't mind consumerism. Hell, she thrives on it.

I guess that's okay by you, as long as she criticizes Bush/Cheney. Here's a hint for you: it's damned obvious that Bush/Cheney are bad for MOST Americans. It's been damned obvious. So who is Naomi Klein helping, but herself?

I leave it to you to question her motives and to see the truth. I'm not spoon feeding you on what's missing. That's your job, to find out for yourself. And naturally, you're free to dismiss me as a crank. That's what most terrified, intellectually fettered cowards would do in the situation.

Posted by: micah pyre | Dec 6, 2008 11:11:01 AM | 28

PS to Malooga --

I didn't mention Communism. Are you trying to imply that I seek communism? Or are you just using caricature and hyperbole for effect?

I'm no communist, and I resent your using that term to imply that I am. What I am for is not your business, but more importantly, what I am for as a social structure is irrelevant to whether Naomi Klein is honest. Leave me out of this. I'm talking about Naomi Klein being a fraud and stooge. If you can posit a reason why MY views are relevant where Klein's honesty is concerned, I'd love to read about it.

Posted by: micah pyre | Dec 6, 2008 11:15:17 AM | 29

She's a DLC stooge.

do you have any links to support this, or is it your hunch?

Posted by: annie | Dec 6, 2008 11:27:13 AM | 30

So besides the fact that Big3 make and sell cars, we see that they are in many ways a sort of finance company, or used finance in ways that go beyond the ordinary, conventional, usual, for a manufacturing business. The cars are a kind of side product, offshoot, tip o the iceberg thing. A little empire, that outputs some product. (A quirky vision I know..)

No doubt that explains in part why, compared to competitors, they aren’t to put it kindly brilliant or innovative and come in for much criticism. A bit like the health industry; how the patients actually live out the rest of their lives - I seem to be comparing ppl to cars! sorry - is lost in the mess of insurance, accounting, bargaining, payment plans, all the finance behind all that, court cases, bail-outs (read mergers, etc.), price fixing, lobbying, FDA manipulations, etc. etc.

I like biklett’s suggestion at 8 but can’t see how it would pan out (too ignorant.)

To save the jobs and pensions only nationalization would be appropriate. They won’t be saved with bail-outs in any case.

The solution is simple: China should buy GM. This would give them an in to the US market, the technology, the plants, etc. and permit them to get rid of some of their dollaris. Honda did OK with US workers, afaik?

Posted by: Tangerine | Dec 6, 2008 11:36:26 AM | 31

She's all for empire and capitalism as long as it's not tacky or too overtly murderous, or too overtly criminal.

as malooga says you have a forum here to elucidate.

there's an abundance of resources available, including youtube. maybe you could give us examples of her being all for empire..

* Naomi Klein is not a Communist, but a reformist liberal...

I didn't mention Communism. Are you trying to imply that I seek communism? Or are you just using caricature and hyperbole for effect?

freak alert.

Posted by: annie | Dec 6, 2008 11:38:15 AM | 32

Yes, annie. I know. You want to dismiss me as a freak, because I post things you find uncomfortable. Have fun with your closed-minded pseudo-skeptic perspective.

Posted by: micah pyre | Dec 6, 2008 11:47:12 AM | 33

you don't make me uncomfortable in the least. i find you quite amusing.

so, of all the wealth of information at your fingertips are you going to make any kind of effort to illuminate us on your naomi dlc hack allegations. or are you just going provide us w/another good chuckle ? by all means spin us another strawman.

you can start w/

Are you trying to imply that I seek chuckledum? Or are you just using caricature and hyperbole for effect?

(stricktly effect!)

Posted by: annie | Dec 6, 2008 12:21:20 PM | 34

You want to dismiss me as a freak,

actually i am trying to encourage you. i'm a firm believer in providing someone w/enough rope.

Posted by: annie | Dec 6, 2008 12:23:28 PM | 35

That's a neat trick, annie. You have tried to shift the focus away from Naomi Klein and onto me. And you've tried to be tribalist in the bargain, trying to pitch the battle as mean old "micah pyre" against noble MoA "liberal reformists." If you think "liberal reform" is accomplished by having the same old thing with a Democrat label instead of a Republican label, then it's no wonder why you'd like me to be seen as a kook. You don't want people to see that your "reform" is a lie. As is Naomi Klein's desire for "reform" to a logo-free materialism.

Yes, annie. Imagine yourself Dona Quixote. Your friend Sancho Panza Malooga should be along soon to sing the praises of the mighty DLC and its "reform" agenda!

Posted by: micah pyre | Dec 6, 2008 12:41:32 PM | 36

As I look at our financial mess and the way Paulson is handeling it I start to think we should let Andy Fastow out of jail and give him a few billions.

Posted by: Sgt Dan | Dec 6, 2008 12:44:14 PM | 37

You have tried to shift the focus away from Naomi Klein and onto me.

apparently the mere mention of a term could be grounds for accusations turning the attention towards you.

I'm no communist, and I resent your using that term to imply that I am.

i'm a fan of naomi. here's your "fraud and stooge" circa 11/18

Wall Street's Bailout is a Trillion-Dollar Crime Scene -- Why Aren't the Dems Doing Something About It?

Despite all of this potential lawlessness, the Democrats are either openly defending the administration or refusing to intervene. "There is only one president at a time," we hear from Barack Obama. That's true. But every sweetheart deal the lame-duck Bush administration makes threatens to hobble Obama's ability to make good on his promise of change. To cite just one example, that $140 billion in missing tax revenue is almost the same sum as Obama's renewable energy program. Obama owes it to the people who elected him to call this what it is: an attempt to undermine the electoral process by stealth.

Yes, there is only one president at a time, but that president needed the support of powerful Democrats, including Obama, to get the bailout passed. Now that it is clear that the Bush administration is violating the terms to which both parties agreed, the Democrats have not just the right but a grave responsibility to intervene forcefully.

I suspect that the real reason the Democrats are so far failing to act has less to do with presidential protocol than with fear: fear that the stock market, which has the temperament of an overindulged 2-year-old, will throw one of its world-shaking tantrums. Disclosing the truth about who is receiving federal loans, we are told, could cause the cranky market to bet against those banks. Question the legality of equity deals and the same thing will happen. Challenge the $140 billion tax giveaway and mergers could fall through. "None of us wants to be blamed for ruining these mergers and creating a new Great Depression," explained one unnamed Congressional aide.

More than that, the Democrats, including Obama, appear to believe that the need to soothe the market should govern all key economic decisions in the transition period. Which is why, just days after a euphoric victory for "change," the mantra abruptly shifted to "smooth transition" and "continuity."

Take Obama's pick for chief of staff. Despite the Republican braying about his partisanship, Rahm Emanuel, the House Democrat who received the most donations from the financial sector, sends an unmistakably reassuring message to Wall Street. When asked on This Week With George Stephanopoulos whether Obama would be moving quickly to increase taxes on the wealthy, as promised, Emanuel pointedly did not answer the question.

This same market-coddling logic should, we are told, guide Obama's selection of treasury secretary. Fox News's Stuart Varney explained that Larry Summers, who held the post under Clinton, and former Fed chair Paul Volcker would both "give great confidence to the market." We learned from MSNBC's Joe Scarborough that Summers is the man "the Street would like the most."

Let's be clear about why. "The Street" would cheer a Summers appointment for exactly the same reason the rest of us should fear it: because traders will assume that Summers, champion of financial deregulation under Clinton, will offer a transition from Henry Paulson so smooth we will barely know it happened. Someone like FDIC chair Sheila Bair, on the other hand, would spark fear on the Street -- for all the right reasons.

she doesn't downright call them collaborators, that doesn't mean she's their stooge.

Posted by: annie | Dec 6, 2008 1:40:30 PM | 38

b:

your 1st link: eg Institutional Risk Advisor wrote ... 404s. Is it gone, or perhaps you got a typo in there?

Your link: https://us1.institutionalriskanalytics.com/pub/IRAstory.asp?tag=325%22

Posted by: jdmckay | Dec 6, 2008 4:32:46 PM | 39

I enjoyed No Logo by N. Klein (the only book I read.) Since I have seen writings, reviews, commentaries, and youtube etc. Not more.

The latest was The end of America is near Naomi Klein, comments on her own book. https://www.youtube.com/watch?v=3B9LhwPsTQc&feature=related>youtube

Klein is an allowed critic, commentator. Some might call her a left gate keeper. She skirts a thin line - and that line is clear, she cannot or does not talk /write about what is beyond the symptoms she mentions, or outside of what might be called ‘general sentiment’, picking it up and going a bit further, within the accepted schemas.

She positions herself as as an alarmist, someone who warns, alerts, but takes not one step further. Her analogies and warnings (in this vid anyway) are off; it is the counterpart of Saddam with green claws or Islamists taking over etc. Easy to critisize, but it is not easy to do everything at once, one has to position oneself somewhere.

In this vid, she pulls all the triggers. She wrote if for friends, and supposedly realized where the US was going when she talked to a Holocaust survivor. The emphasis is on DEMOCRACY, fragile or robust...Powerful crazed leaders (they are not named except Mussolini, Thailand gets a mention along the way) closed down democracy. Apparently, there is a blue print for accomplishing destroying democracy, or, mysteriously in her words, an open society (Soros talk), in 10 steps, like an instruction sheet or book of words, and this plan (I presume it is outlined in the book) is now being implemented in the US.

Anecdotes fly = A refresher for what Democracy is! She fled with her son in her arms! She understood liberty, took risks to raise her baby in liberty and freedom! - quick shoddy transcription

But why? Why does the US need to close down ‘democracy’? It is triumphant right now, btw, with a young ‘black’ who makes many swoon? And what is to be done? These questions cannot be answered in her framework and she doesn’t attempt it, she knows she mustn’t or can’t. There is no back analysis, no matter how close you look.

Her small cottage industry - how many employees does she have? - 20? - are just another form, a more respectable form, of scare mongering, Alex Jones is on the radio, right?

A bit harsh. She may think she is truly warning ppl... she sure is one nervous lady, see the vid.

Posted by: Tangerine | Dec 7, 2008 12:49:15 PM | 40

Tangerine -
Klein or Wolf?

Posted by: Rick | Dec 7, 2008 1:00:09 PM | 41

@jdmckay @39 - thanks, corrected
---

The New Yorker has a profile of Naomi Klein this week -(I haven't read it yet)

Posted by: b | Dec 7, 2008 1:11:05 PM | 42

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