The Kroog On Fairness

And who gets to pay for it all.

Calculated Risk looks at the latest plan floated by the Treasury — to make low-interest, non-recourse loans to private investors who buy bad assets — and immediately gets it: this is a plan to drive up the prices of toxic assets by creating a lot of moral hazard.

By offering low interest non-recourse loans, these public-private entities can pay a higher than market price for the toxic assets (since there is no downside risk). This amounts to a direct subsidy from the taxpayers to the banks. It is amazing how many different ways they’ve tried to recycle the same bad idea.

Indeed. Every plan we’ve heard from Treasury amounts to the same thing — an attempt to socialize the losses while privatizing the gains. We’re going to buy up all the bad assets at premium prices; no, we’re going to offer the banks guarantees against losses; no, we’re going to let private investors buy the stuff, but offer them de facto guarantees against losses in the form of non-recourse loans.

And until that changes, nobody's going to take Timmy The Invisible Boy seriously. The "confidence in the stock market" problem is Timmy's baliwick, and until he and Helicopter Ben come up with a plan that doesn't boil down to "let the banks get trillions from the taxpayer as a reward for screwing up" then there's no real hope.

They're making it up as they go along, trying to find a plan where we don't catch on to the swindle. At this point, Obama needs to be looking for a new SecTreas.

Timmy is a fool.

Helicopter Ben, He Is Our Hero Of The Sky

Helicopter Ben apparently wants more money to throw out of his Helicopter Ben Helicopter! That's his superpower, you see.

Federal Reserve Chairman Ben S. Bernanke said policy makers may need to expand aid to the banking system beyond the $700 billion already approved and take other aggressive measures even at the cost of soaring fiscal deficits.

“Without a reasonable degree of financial stability, a sustainable recovery will not occur,” the Fed chairman said today in testimony prepared for the Senate Budget Committee. “Although progress has been made on the financial front since last fall, more needs to be done.”

Bernanke’s comments suggest he sees a role for bigger federal outlays as the Obama administration seeks congressional approval for a budget of $3.55 trillion for the fiscal year beginning in October. President Barack Obama has already signed into a law a $787 billion economic stimulus package of tax cuts and government spending.

Obama’s first budget seeks standby authority for as much as $750 billion in new aid to the financial industry. Whether those funds will be needed “depends on the results of the current supervisory assessment of banks” and the evolution of the economy, Bernanke said.

Bernanke said policy makers would have “preferred to avoid” what is likely to be the largest ratio of federal debt compared with gross domestic product since the end of World War II, and he urged lawmakers not to lose sight of fiscal discipline.

Up in the sky above Wall Street! It's Helicopter Ben, and his faithful sidekick Timmy The Invisible Boy!

In a rare outing in public, he's on Capitol Hill today, and we learn from the WSJ that

No decision has been made on the final structure of what the administration is calling a private-public financing partnership, but one leading idea is to establish separate funds to be run by private investment managers. The managers would have to put up a certain amount of capital. Additional financing would come from the government, which would share in any profit or loss.

The Dow is cratering; they've had months to come up with a plan, but they're still having a seminar. The gist of Noam Scheiber's piece on the Treasury Department is that they're too scared to seize the banks temporarily for political reasons, and too skittish to run the banks even for a short period of time. But staggering on for years slowly bleeding money to the banks ... that's just political heaven, isn't it?

But...he has a helicopter and the other guy's invisible! Clearly we have the right superheroes for the job. After all, Really Really Competent Man and Power Of Attorney, Attorney At Law are busy saving school buses full of nuns or something.

New tags for these idiots. Too scared/lazy/stupid to do the right thing, but they're perfectly OK to see the Dow die a death of 1000 cuts.

Al Versus Norm, Part 386

Norm Coleman, sick of losing, is now asking Minnesota's three-judge election panel to throw out the election and hold a new one, stating that Minnesota's election system is fundamentally flawed.

Coleman's team rested most of his case Monday in the U.S. Senate election trial after more testimony underscoring problems with the election system. Under questioning from the Republican's lawyers, Minnesota's elections director acknowledged inaccurate data in the registration system that could exclude otherwise qualified people from voting.

Now Al Franken's team will try to convince judges that things aren't so bad after all.

Franken lawyer Marc Elias said the team will begin a case today that will include evidence "about the good job that the state of Minnesota did ... that the hardworking auditors and election night officials did. How the system worked, by and large."

But Franken lawyers will walk a tightrope with that strategy, because they also plan to call on voters to testify that their absentee ballots were wrongly rejected. While Coleman seeks to count 2,000 rejected ballots, the DFLer has a list of 804 rejected ballots he wants reconsidered. Elias said more than 100 voters could be called to testify, including more than a dozen today.

Coleman rested the bulk of his case as the trial entered its sixth week. Franken's side of the trial is likely to last two to three weeks, Elias said. Franken holds a 225-vote lead that he gained after the state Canvassing Board, on Jan. 5, certified the results of a recount.

The judges will rule before the end of the month, and Coleman will certainly appeal to the US Supreme Court, meaning it may be months before this is decided. What Coleman is ultimately trying to do is assure that a standard, national vote qualification procedure is created by the Supremes that favors Republicans. I'm betting the Supremes will leave it to the states, or to the Democrats in Congress.

Dear America:

"After six weeks of the Already Failed Obama Presidency, it is clear to us that the Already Failed Obama Economy is purely 100% Barack Obama's fault and we are tired, I say tired, of his excuses for not having fixed it with tax cuts yet. It's been six whole weeks already and he hasn't fixed the stock markets yet. The Dow is all the proof we need to declare Obama's era over and done with. Clearly the markets have resoundingly rejected the failed policies of the Already Failed Obama Presidency. What a loser. Bring the other guy back. Now. So sayeth we all."

--The Wall Street Journal Editorial Board

Polls Are In The Eye Of The Beholder

Greg Sargent takes Rasmussen Reports latest health care poll to task:

Well, this week brings a new example. Here’s the headline on Rasmussen’s latest press release touting its poll on health care:

49% Say Obama Should Delay Health Care Reform Until Economy Is Better

And it’s true that the Ras poll found this. But if you dig down into the poll, you find that it also found another number that’s just as newsworthy, if not more so. From the Ras release:

Seventy-eight percent (78%) of voters acknowledge, however, that reining in health spending is at least somewhat important to improving the nation’s economy. That includes 46% who say it is Very Important.

That’s a striking, headline-worthy finding. An enormous majority — nearly 30 points more than the number who said Obama should delay health care reform — believes the central argument being made for reforming health care right now.

But, Rasmussen is only interested in giving Americans a loaded question, which needs to be fixed right now, health care or the economy? In that zero sum game, of course the overall economy is more important.

The answer, as an overwhelming percentage of voters -- seventy-eight percent --say, the answer is clearly both. Fixing health care will help to fix the economy and nearly 4 out of 5 Americans believe this. But Rasmussen would have you believe half of Americans are instead against Obama's health care reforms, period.

The wingnuts are already jumping on this poll as proof Americans are now against Obamacare, when the truth is they want to see both the economy and health care significantly reformed.

Containment Breach

As John Cole points out, the one thing that would serve to put a leash on Rush Limbaugh's power is the Fairness Doctrine, and right now the man in the GOP with the biggest, loudest, microphone reaching millions of GOP primary voters for 4 hours, 5 days a week is El Rushbo himself.

You'd think the people who want Obama's job in 2012 would want that kind of exposure too (and get paid for it.) But hey, the Fairness Doctrine is a fascist, unconstitutional law that would limit Rush and his near total fascist control of the GOP.

Conservatives Are Stupid At Times

As Instamoron "Heh indeeds" his way into yet another basic fallacy about the US tax system.

UPDATE: Can you say “going John Galt?” Upper-Income Taxpayers Look for Ways to Sidestep Obama Tax-Hike Plan. “A 63-year-old attorney based in Lafayette, La., who asked not to be named, told ABCNews.com that she plans to cut back on her business to get her annual income under the quarter million mark should the Obama tax plan be passed by Congress and become law. So far, Obama’s tax plan is being looked at skeptically by both Democrats and Republicans and therefore may not pass at all.”

Dear idiotic Conservatives: please look up the definition of MARGINAL TAX RATE. You know what that means? It means you only pay the higher tax rate on the income above $250,000. If you earn $270,000, you only pay that highest marginal tax rate on that last $20,000. That higher tax rate would be a couple of points higher, to the Clinton era rates of 1994, 39.6% for everything above $250,000. It would not change your entire taxation rate to that maximum number, only the margin above $250,000. That is why it is called a MARGINAL TAX RATE, you MORONS.

Now, having said that, marginal tax rates during the Great Depression were 63% in 1931 to 90%+ by the time WW II was ending in 1945. By comparison, 39.6% is downright reasonable. However doing this is "punishing the most productive members of society." After all, it's not like the rest of America isn't being punished right now by these trillion dollar losses these "most productive members of society" made. It's not like Bernie Madoff conned this society out of $50 billion.

So no, we should reward these idiots instead. Let's cut taxes on them! Our financial system is in ruins and the country is in a death spiral because of the decisions the wealthiest people in the country made, but the best way to get out is to cut taxes on them!

When the wealthiest 10% in this country control over two-thirds of the wealth in this country, there's a problem. They lost it because they got greedier for more. Time to pay up.

StupidiNews!

• More people are showing up at California's food banks in 2009.
• Obama may offer to scrap US missile shield plans in Europe in exchange for Russia's help on Iran.
• A new alliance of Pakistani militant groups could ignite tensions in Afghanistan.
• JP Morgan Chase reportedly made $5 billion in profit from the derivatives trade last year.
• Rural broadband internet still has a long way to go in the Southern U.S.