The Dodd Mess

Comes Chris Dodd to Hardball to explain how the February 11 language was put into the bill:



So, number one, Chris Dodd knew the language was going in during the House-Senate conference. His staff wrote it in.

Number two, it was at the insistence of Treasury who would otherwise have had the entire section taken out.

Number three, it was a senior administration official telling The New York Times on deep background that Dodd put the language in, while leaving out the Treasury's part in the matter. For what it's worth, Greenwald thinks it was Rahm.

Very depressing stuff to look through here. One of the few bright spots in this:



Still looks more and sounds more like a president than Bush ever did.

Greenwald on Dodd Smear: Obama's Fingerprints

Glen Greenwald has pulled together the best presentation of this yet, and it's clear that the language exempting bonuses before February 11, 2009 in the stimulus legislation was put in at the behest of the Obama administration.

And the smear against Dodd is also coming from the White House:

Yet now, the Obama administration is feeding reporters the accusation that it was Dodd who was responsible for the exemptions that protected already-vested bonuses. The Times article from Saturday that started the Dodd scandal thus contains this outrageously misleading claim:

The administration official said the Treasury Department did its own legal analysis and concluded that those contracts could not be broken. The official noted that even a provision recently pushed through Congress by Senator Christopher J. Dodd, a Connecticut Democrat, had an exemption for such bonus agreements already in place.

And yet another New York Times article from today ("Fingers Are Pointed Across Washington Over Bonuses") -- this one by David Herszenhorn -- contains this White-House-mimicking, misleading passage:

But Mr. Reid mostly ducked a question about whether Democrats had missed an opportunity to prevent the bonuses because of a clause in the economic stimulus bill, part of an amendment by Senator Christopher J. Dodd, Democrat of Connecticut, that imposed limits on executive compensation and bonuses but made an exception for pre-existing employment contracts.

That was the exact provision that Geithner and Summers demanded and that Dodd opposed. And even after Dodd finally gave in to Treasury's demands, he continued to support an amendment from Ron Wyden and Olympia Snowe to impose fines on bailout-receiving companies which paid executive bonuses (which was stripped from the bill at the last minute). But now that Treasury officials are desperate to heap the blame on others for what they did, they're running to gullible, mindless journalists and feeding them the storyline that it was Dodd who was responsible for these provisions. And today, during his White House Press Conference, Robert Gibbs advanced this dishonest attack by repeatedly describing the offending provisions as the "the Dodd compensation requirements."

How in Hades did these "administration officials" think they could get away with it? This is going to be the first real mess that the Obama White House has gotten themselves into, full fledged. Stupid politics, stupid internicene war, stupid all around.

Roubini: The Ponzi Economy

Combine this insight with Bernanke's stressing of savings relative to investment below:

According to Minsky and according to economic theory Ponzi agents (households, firms, banks) are those who need to borrow more to repay both principal and interest on their previous debt; i.e. Minsky’s "Ponzi borrowers" cannot service neither interest or principal payments on their debts. They are called "Ponzi borrowers" as they need persistently increasing prices of the assets they invested in to keep on refinancing their debt obligations.

By this standard media US households whose debt relative to income went from 65 percent 15 years ago to 100 percent in 2000 to 135 percent today were playing a Ponzi game.

And an economy where the total debt to GDP ratio (of households, financial firms and corporations) is now 350 percent was a Made-Off Ponzi economy. And now that home values have fallen 20% and they will fall another 20% before they bottom out and now that equity prices have fallen over 50% (and may fall further) using homes as an ATM machine and borrowing against it to finance Ponzi consumption is not feasible any more. The party is over for households, banks and non-bank highly leveraged corporations.

The bursting of the housing bubble and of the equity bubble and hedge funds bubble and private equity bubble showed that most of the "wealth" that supported the massive leverage and overspending of agents in the economy was a fake bubble-driven wealth; now that these bubble have burst it is clear that the emperor had no clothes and that we are the naked emperor. A rising bubble tide was hiding the fact that most Americans and their banks were swimming naked; and the bursting of the bubble is the low tide that shows who was naked.

I'm sitting here happy that my credit has been crap for years. I never took out any liar's loans. It scares me to even think I could have before the bubble burst. My major debts right now are student loans, which I'm repaying slowly.

It is hard to see how this economy gets better anytime soon, when the best solutions to the problem are so politically untenable or simply undoable (nationalize the banks which, among other obstacles, the FDIC could never back up right now).

Secret Bush Memos Released

On a Monday. Welcome to the new administration:

The Obama administration threw open the curtain on years of Bush-era secrets Monday, revealing anti-terror memos that claimed exceptional search-and-seizure powers and divulging that the CIA destroyed nearly 100 videotapes of interrogations and other treatment of terror suspects.

The Justice Department released nine legal opinions showing that, following the Sept. 11, 2001, terrorist attacks, the Bush administration determined that certain constitutional rights would not apply during the coming fight. Within two weeks, government lawyers were already discussing ways to wiretap U.S. conversations without warrants.

The Bush administration eventually abandoned many of the legal conclusions, but the documents themselves had been closely held. By releasing them, President Barack Obama continued a house-cleaning of the previous administration's most contentious policies.

The shame in this is not that they are exposed but that they were written in the first place.