Sean Paul is back! And he’s jet lagged. Which means for the next two weeks he’s going to be awake at 3:00 a.m. with nothing to do but catch up on late night American TV. Imagine what he’s missed in just one year – the shock could be overwhelming. As a public service for Sean Paul and other insomniacs, I am providing you with a quick introduction to late night TV, American style – but be warned! Late night television is inhabited by people who want your money, and what could be more American than that?

Buy! Buy! Buy! (But first look at these Boobies!)

There was a time when late night TV would entertain you with old movies or reruns of sitcoms. That’s all gone now; everyone has sold out to the infomercial, that peculiar blend of cheesy production values and gripping personal stories of desperate people who discovered the secret to wealth and who are so civic-minded that they want to share this secret with you for $39.95 (plus shipping and handling).

Sean Paul will be unable to avoid a namesake of his, the ubiquitous Jeff Paul and his $hortcuts to Internet Millions. In this half hour infomercial you don’t meet Jeff Paul right away, because first you want to feast your eyes on Carmen and Stacey, two beautiful girls who are our hosts for half an hour at a fabulous resort somewhere in Southern California.

You’ve seen Carmen and Stacey before, on other infomercials or other TV shows. For a while Stacey was Chuck Woolery’s sidekick on the game show Lingo, but she was let go, apparently for being a little too flirtatious with Chuck. Because Carmen and Stacey are at a luxurious resort, swanking it up around the swimming pool, they get to wear skimpy outfits that reveal their alluring boobies, which are collectively the four assets the two of them bring to this enterprise. Well, that’s not really fair – Stacey also has something indispensable in selling TV products to gullible Americans: a British accent! Never mind that she sounds like she is from somewhere down in the Antipodes; Americans think all Australians or New Zealanders sound just like Queen Elizabeth and must be as dignified.

Did you see that article back in February that predicted this Iranian revolution? No? Neither did I. As far as anyone can tell this revolution was unexpected. When millions of people in Iran take to the streets to shout “death to the dictator” – meaning President Ahmadinejad – and when hundreds of demonstrators are injured with many killed by roving militias, something of great significance is occurring. Too bad the world was unprepared for this.

In the United States it is easy to blame the press. After all, this trouble in Iran was brewing right during the middle of American Idol, when the US takes time out to vote for the least objectionable amateur singer. The UK was equally preoccupied this year what with all the fuss over Susan Boyle. It was only a week before the election in Iran than most people who follow the news in the US or Europe even heard about Moussavi vs. Ahmadinejad. But you had to search for the news – the main stream press coverage was spotty or non-existent.

“I feel like I went to sleep in one country and woke up in another." So said a Western reporter about the riots that have swept Iran following the disputed election for President between Mahmud Ahmadinejad and Mir-Hussein Mousavi. Following weeks of increasingly animated, large demonstrations in favor of Mousavi as a reform candidate, and despite polls just before the voting that showed Mousavi with a lead, Ahmadinejad emerged with a “landslide victory” from the Ministry of Interior’s election commission, which counts the votes and which conveniently reports to Ahmadinejad.

The crudity with which the voting has been conducted defies common sense. Ministry of Interior officials who were suspected of favoring Mousavi have been purged in the weeks leading up to the election. The election results are reporting districts with curiously even numbers of votes in favor of Ahmadinejad, such as 1,000 here, or 5,000 there. Districts where reform candidates reside went suspiciously in favor of Ahmadinejad. Mousavi himself has disappeared – some fear he is under house arrest – and internet social sites like Twitter and Facebook have been shut down, as has Mousavi’s website.

Well hooray! Ten US banks have been given permission to repay their TARP loans from the federal government - $68 billion worth. This governmental Seal of Approval may mean these banks are healthy and safe and ready to do business, but what it certainly means is that the executives running these banks want to escape any government control over how much they pay themselves.

What’s in it for us the taxpayers? Not much. The government still needs to borrow trillions and trillions of dollars, which means interest rates aren’t going down. No fundamental reforms have been imposed on the banking industry – just some tweaking around credit card rules – so you still will have a very hard time getting credit. You’ll also earn about 0% interest on your bank deposits, but pay 30% or more for credit depending on your financial condition. This is certainly not going to get the consumer spending or the economy moving, so what is it going to take to enact real change to our financial system?

Our own Zuma has come across a potent set of proposals for real reform from the author William Greider. You’ll want to check out both Zuma’s report on the Diaries page, as well as Greider’s article on Alternet (printed originally in The Nation). The gist of these reforms is radical in today’s political climate – it is nothing less than a legal cap on interest rates. No bank or finance company would be able to charge you more than this cap – to do otherwise would be considered usury. What would our economy look like if we had laws against usury?

Were you excited a few weeks ago when US mortgage rates fell to record lows of 4.75%? President Obama was. He urged struggling homeowners to refinance their mortgages, and whether it was at his urging or not, there was a refinancing rush and even a few people wanting to actually buy a home.

How did rates get so low in the first place? There was a little bit of government engineering and a large amount of market manipulation by the Treasury and the Federal Reserve to achieve these low, low rates. At first, the government had the wind behind its back, because in the first quarter investors were so concerned about credit defaults in the private sector they flocked to buy Treasuries as the only safe instrument available. This drove long term interest rates on Treasuries into the 3% range, and mortgage rates – which trade higher than US government paper – followed in the same path down.

PARANOIA

1. A psychotic disorder characterized by delusions of persecution with or without grandeur, often strenuously defended with apparent logic and reason.

2. Extreme, irrational distrust of others.

No wonder they kept Dick Cheney in a secure, undisclosed location. The man was certifiable, and they knew it; “they” meaning the political handlers in the Bush White House, like Karl Rove. It probably took Bush at least four years to figure out something was wrong with his Vice President, and by then it was too late.

Someone should have been suspicious of him in the very beginning, when he humbly proposed himself as the best choice for the vice presidency, having managed the selection process himself. There was certainly more than a little touch of grandeur in that selfless gesture. About the last thing someone like that needs is to go on to win the vice presidency and spend the next eight years feted and coddled and praised and hidden away from all criticism or questioning.

It’s spring. Green shoots are sprouting, the skies are clear, the days ahead are warm, and according to Ben Bernanke, the Bluebird of Happiness has landed on our doorstep. Those green shoots are signs that the economic downturn has bottomed out, and while the road ahead will be bumpy, the Fed sees the recession ending by 2010.

The stock market is not so patient. It wants the recession over now, or at least it really wants to believe the recession is over now. The S&P 500 index is up 36% from its low in March, one of the fastest and largest rises in stock prices ever. As we all are told, the stock market is a forward looking indicator, and a rise of this magnitude must surely indicate the recession is coming to an end.

Or does it? Bear markets have been known to sport sucker rallies, often showing characteristics similar to this one: a tremendous advance that convinces investors the worst is over. Recognizing that there is no sure way for any investor to predict the future and to discern a bear market rally from a true, bull market rally (in which we ultimately will set new highs for stocks), what should we look for?

Everyone says the transformation of Senator Arlen Specter from a Republican to a Democrat represents the frustration of a political moderate in an arch-conservative party. This misses the point, because there is nothing moderate about Arlen Specter’s political beliefs. Like Joe Lieberman, he has reserved for himself the right to vote his conscience, which means he will hardly be a staunch Democrat in favor of workers rights against corporate interests, or even in favor of President Obama’s Supreme Court nominees. What Arlen Specter does have, along with Olympia Snowe and Susan Collins and a few other Republicans, is a last little shred of sanity and rationality. These people are not at home in a party that is suffering from mass delusions.

We also hear that the Republican Party is shrinking into a Southern redoubt as a marginalized, regional party. This is true, but something much more interesting is going on here. We are watching a major national political party disappear from the American scene. The Republicans are in their Cheshire Cat phase – all that is left to see are the inane grins of politicians who have lost all connection to the real world. They wear the rictus of a doomed and dying political force that is paying the price for decades of hypocrisy and deceit. They have peddled the elixir of deception for so long that they have begun to drink heavily from their own product, and now it is too late. There are barely any Republican politicians on the national scene who are not irrevocably disconnected from reality.

In the early days of the George W. Bush administration, there was a theme which cropped up frequently on right-wing websites: “The grown-ups are in charge!” This of course meant that the salacious behavior of President Clinton in the Oval Office was now replaced by the moral and ethical behavior of an administration composed of adults, not juvenile narcissists.

With Barack Obama in the Oval Office, the exact same thing has been said on left-wing websites. Now it is the turn of the left to celebrate rationality, decency, a respect for intelligence, openness, and a renewal of government of laws and not men.

I'm referring to the tube-viral performance of Susan Boyle this week on Britain's Got Talent.

You can see it here on Chickadee's diary: http://agonist.org/chickadee/20090415/introducing_susan_boyle#new

As that tape began, I wondered why Simon Cowell and the other judges were rolling their eyes and giving each other questioning looks before Susan Boyle even began singing. They don't do impolite smirking with other contestants, even the fat, homely ones. Yes, indeed, Susan Boyle was older, frumpy, ungainly - a typical British housewife from a Monty Python set, even if she made it clear she was a spinster (and a virgin at that, which was such an odd thing to admit on national television that I began to wonder if she wasn't deliberately presenting this image of innocence and purity).

One of the great illusions of late 20th century finance was that banks were profitable. On paper - investment, commercial and mortgage banks appeared extremely profitable. The percentage of total S&P 500 profits that was attributable to financial companies rose steadily from 1980 to 2000, and by 2007 reached 40%, depending on how you measured it. This meant that two out of every five dollars of profit generated by America’s 500 largest companies came from the financial function. This, by the way, understated things, since it left out the quasi-banks like General Electric and GMAC.

The illusion comes from the fact that this paper profit was not the result of selling products that allowed businesses and consumers to be more productive and more profitable in their own right. What was really happening was that financial firms were extracting equity that had been built up over nearly a century by businesses and consumers. The financial business had become a predatory business, scavenging the land for pockets of wealth to convert into cash that would be funneled in part to the banks as fees.

President Obama and Michelle Obama are on their way home from their first state visit abroad. They attended the G-20 Summit in London, joined the NATO summit in Strasbourg, visited the Czech Republic and Turkey, then dropped in briefly in Baghdad. How well did they represent the United States?

Diplomacy
The G-20 Summit used to be a periodic meeting of finance ministers and central bank heads from the world’s major economies, but has since expanded to include heads of state. Its focus remains the global economy, and given the financial crisis that has spread across the globe, it must have seemed a golden opportunity for the administration to get out ahead of these issues early in Obama’s term.

For two decades the media drumbeat about religion in America has emphasized its ascendancy, especially the growth of the conservative evangelical and fundamentalist movement. We’ve been told no one should be surprised when politicians pass restrictions on abortion or gay marriage or prayer in school, because this is what an overwhelming and growing number of Americans want. America is a Christian nation, probably the most Christian nation on earth, and we are becoming more aggressive and militantly Christian by the day.

So what’s with this Newsweek cover article The End of Christian America? We know that American journalists are taught to frame every article like a story, with a beginning, middle, and end, and pepper it with juicy personal quotes that humanize the story line. But if every journalist is secretly a television screenwriter, how can they maintain their credibility when they suddenly tell us Jack Bauer of 24 is now picketing the CIA for its use of torture? And since Newsweek is basing its latest Christianity in America story on a recent survey which said self-identified Christians have fallen from 86% to 76% in the past ten years, how could Christianity possibly be dying in America?

The Financial Accounting Standards Board succumbed today to intense pressure from the banking industry and Congress, by relaxing the rules surrounding mark to market accounting. These were already loose rules to begin with. Banks could use internal models rather than an outside price to determine the value of an asset. They had great flexibility on what went into this "mark to model" pricing.

That wasn't enough, though, Certain assets like mortgage-backed securities had outside prices, but for the longest time these have been anywhere from 30 cents/dollar down to nearly zero. A small number of trades were being down at these greatly-reduced prices. The banks argued that their much large portfolio of trades, if forced on to the market at once, would drive even these low prices close to zero. Also, the assets over their shelf life of five to ten years will generate enough cash flow to justify much higher prices today - more like 60 cents to 70 cents on the dollar, the price which the bank was currently using for valuation.

Yesterday the Federal Reserve announced it will purchase $300 billion in Treasury bonds, and an additional $750 billion in Fannie Mae and Freddie Mac securities. Treasury bond rates fell from 3.0% to 2.5%, the greatest one day drop in interest rates since 1981. The stock market loved it; it looks like the Fed is dead serious about pushing down long term interest rates, which will especially help the mortgage market.

Isn’t it wonderful we have such a generous and caring central bank? Or is this really motivated by something else. I wonder.

Does anybody remember last week when Wen Jiabao, the premier of China, complained about the deteriorating financial condition of the United States, and the risks this poses for China’s nearly $1 trillion in reserves held in Treasury and agency securities? He wanted some “guarantee” from the U.S. that China wouldn’t lose anything on its holdings.

Republicans and Democrats have so little to agree upon these days, that we must give thanks to AIG for bringing this country together, however briefly. Everyone agrees that paying $165 million in retention bonuses to AIG employees on March 15 is outrageous and shows an appalling lack of appreciation and sensitivity by AIG for all that the U.S. taxpayers have done for them.

To find out just how outrageous these bonuses are, I read the correspondence between AIG executives and the U.S. Treasury, including a White Paper explaining in detail why these payments are considered obligatory. There is, as you can expect, more to this story than the average newspaper reader wants to know, but at the very least it is a cautionary tale about what happens when standard business practices meet up with political realities that are normally not a concern in business.

I suppose someday a pope will tell us that abortion is acceptable under certain circumstances, contraception is an important part of any birth control plan, and gays are humans deserving of God’s grace in equal measure to everyone else.

Something like that happened today in the business world. Jack Welch, as close as one can get to a living god in corporate America, renounced most of the business practices he once used as CEO of General Electric. Jack Welch was universally esteemed in the 1980s and 1990s as America’s most brilliant and successful manager. He took a sleepy industrial company and made it into an earnings powerhouse by buying and selling subsidiaries as if they were baseball cards. Year after year he produced solid earnings growth, and the GE share price followed suit. People rushed to buy his books and they studied every public word he uttered to benefit from his managerial genius.

The Obama administration has a rather odd view of bipartisanship. Barack Obama has gone out of his way to schmooze Republican politicians, in the vain hope of attracting even a handful of votes for his stimulus package. When he finished addressing the Congress for the first time as president, he headed immediately to the Republican side of the aisle to shake hands and dole out hugs. His entertainment schedule at the White House is filled with private dinners and intimate chats with key Republican Congressional leaders.

Meanwhile, somewhere in the White House – it is presumed to emanate from the office of chief of staff Rahm Emanuel – a sting operation was mounted to trap Republicans into acknowledging Rush Limbaugh as their party leader. Various Democratic party officials goaded Limbaugh into ever more outrageous claims, and when he finally admitted he wanted President Obama to fail, the Democrats pounced. They organized a nationwide campaign, using party officials, newspaper reporters, bloggers, and television personalities, to put Republicans on the spot: did they want the president to fail, or did they renounce Rush Limbaugh? Newt Gingrich ought to be proud, since he invented this game of phony indignation over an inconsequential issue, all part of his take-no-prisoners, slash-and-burn brand of politics.

Good Evening. My Fellow Americans.

Tonight we heard President Obama talk about the Democrats’ plans for America. We Republicans have many disagreements with these plans, but we can all agree it is historic for a black person to rise all the way to the Oval Office and deliver the State of the Union. Isn’t that WONDERFUL! Of course it is!

I’m Governor of Louisiana and I’m here tonight to provide the Republican Party response to President Obama’s speech. I was chosen because, like President Obama, I too am a Person of Color. But there is a big difference between me and President Obama. President Obama has Too Much Color! Having Too Much Color can be a bad, bad thing.

Author's note: This diary can be read in conjunction with the post just below from Sean Paul, in which he quotes an 11 point Tough Love plan from market analyst Karl Denninger on how to clean up the banking system

We are reminded daily by politicians that the banks are not lending. Not just American banks, but Canadian, British, Spanish, German, Australian banks – no country has been exempt from the collapse of global financial liquidity. The assumption governments make is that it is their job to get the banks to lend again, since it is very clear that the recession is morphing into a depression if consumers and businesses cannot borrow money, and if governments find their tax revenue falling. We therefore get TARP and related programs designed to provide liquidity to banks so they can lend again, or remove bad assets from their balance sheets so they have the capital to lend again.

No one seems to be looking at the reverse side of the question: why aren’t the banks lending? The answer to this question should reveal whether all of these government programs will have any beneficial effect.

Some years ago a company marketing a safety device for seniors created an ad campaign with the memorable image of a woman collapsed on her apartment floor, moaning “I’ve fallen and I can’t get up”! This became one of those catch phrases from advertising that seeps into popular discourse, and it came to my mind when I watched the performance of an array of bank executives before the House Banking Committee.

These men - looking alternatively wretched, peeved, and confused – gave an overall impression of helplessness. They couldn’t help paying million dollar bonuses to their managers because otherwise the “market” would snap them up. When they issued new bonds backed with the guaranty of the U.S. government, they couldn’t help paying the underwriters tens of millions of dollars in fees, even though they themselves were the underwriters, because this is how the market worked. They’d love to lend money to people but these “people” were not interested in borrowing (they have enough debt thank you very much), or their creditworthiness had collapsed.

There’s a social theory which claims that in recessions all hell breaks loose – meaning social disorder spreads and previous sectors of stability and growth lose traction. Political partisanship, ethnic divisions, criminal enterprise, and religious strife can be exacerbated in a recession, and since we are in a doozey of a recession we should expect all manner of rancor and discord. It’s always hard to prove theories like this, and so you fall back on anecdotal evidence, which lately hasn’t been hard to find. When it comes to religion in particular, the evidence is mounting: God no longer works in mysterious ways, because He seems to have stopped working altogether. He’s abandoning his sheep, and especially some well-placed shepherds, who have lost their ability to navigate the world. Let’s look at some case studies.

We’ve had this discussion before here at The Agonist. It’s esoteric, it’s dry, it’s boring – but it’s oh so critical in understanding the banking mentality that got us into this financial mess. It’s all about fair value accounting.

The easy-to-understand definition is this: when a bank buys a big pile of manure, fair value accounting opens the doors of the institution wide so that the whole market can get a good strong whiff. The opposite – call it historical accounting or reserve accounting or cost accounting – slams the doors of the bank shut so the odor concentrates to the attention only of the management.

For decades now management consultants have told us that one of the best predictors of a company’s success is whether or not the management of a company has put their own personal wealth into the company. The more a manager has at risk if the company’s stock price declines, the more likely he is to work hard to generate “shareholder value.” Investors got into the habit of monitoring management shareholdings – they would buy the stock if management was buying shares in the company, and sell the stock if management was dumping their own shares of the company’s stock. We are beginning to learn, though, that management shareholdings were a mirage, because behind the scenes and out of the view of investors, management was “hedging their bets” The most recent example is Boston Scientific.

It is time for the Republican Party to die. To disappear forever from the American political scene. To salvage one, minuscule shred of dignity for itself and willingly disband.

The reason the Republican Party needs to just go away is that it is the most un-American political party in this country’s history. It would be one thing if the list of complaints against the Republican Party were limited to its attempts since the 1950s to divide Americans among themselves, or its eagerness to dismantle the middle class in this country and distribute its wealth to a handful of oligarchs, or its disgusting appeals to racism as a way to get votes.

These are character flaws along the lines of the genetic propensity of all Republican officials to embrace hypocrisy – to have not even a speck of awareness of when they are lying, or when they are proposing something the very opposite of their private behavior. These sort of sins can be addressed by the voters, who can banish the Republicans from public office, but these sins are not sufficient to demand that the party dissolve itself.

No. What is fundamentally wrong with the Republican Party is that it routinely, vigorously, and unapologetically undermines the U.S. Constitution, and as such it has shown itself inimical to the interests of the republican form of government that is the foundation of the U.S. political order.