The Agonist - Agonist Exclusives

2009: What a Difference One Word Might Make!

Thu, 01 Jan 2009 09:44:26 -0800

What is the difference between the and those? If you are Barack Obama, it may determine whether you have a successful presidency, and at the very least it defines how much maneuverability you will have in the financial markets. To give an example, suppose I said “Damn the deficit! Full speed ahead.” This is an altogether different statement than “Damn those deficits! We have enough debt.”

The first sentence is how the global bond market has approached the U.S. financial condition for the past fifteen years. The focus is short term and singular – the market looks at the deficit racked up in the past fiscal year. Year by year goes by, and nobody notices how the annual deficit creeps higher and higher. When economic conditions worsen, the market says “I don’t give a damn about the deficit – go ahead and borrow more.”

The second sentence was how the bond market used to approach the issue; the concern was on the cumulative deficits, or in other words, the total debt. In this second mode, the market penalizes each incremental borrowing because it expands the total debt and is seen as hurting investors.

Obviously the first approach is a very indulgent view of U.S. borrowing and has allowed for an enormous expansion of the federal deficit. How did we get into this situation? There are quite a number of biases that helped create this tolerance.

A Foolish Consistency

Mon, 15 Dec 2008 01:59:58 -0800

"A foolish consistency is the hobgoblin of little minds" – Ralph Waldo Emerson

Sometime between 1960, when Bernard L. Madoff Investment Securities was founded, and this past week, Bernie Madoff went a little bit crazy. He says it occurred years ago. He has told his family and now the SEC that his investment business, and his associated hedge fund, have been running losses for years and were bankrupt a long time ago. He admits to running a gigantic Ponzi scheme, in which he has taken new investors’ contributions and paid them out as income to earlier investors. Schemes like this can work a long time if fresh money keeps coming in, and they can even hide actual investment losses for a long time.

Depressed Lately?

Thu, 27 Nov 2008 21:09:55 -0800

Do you know that feeling when you are just waking up and half of you is in a dream state while the other half is beginning to engage in the real world? That pretty much describes the economic world we live in.

Collectively, we are all still in a dream world where the economy functions like it always has in the past. In this world, the U.S. and the global economy are probably in a recession, and this recession may linger next year before things begin to turn around. Inflation still is something to fear, though somewhat less so now that oil has come back down to $50/bbl. The government is doing everything it can to prevent this recession from getting worse.

Ahoy There! Piracy is the newest security threat

Tue, 18 Nov 2008 08:37:36 -0800

Asymmetrical warfare, the Pentagon calls it. The U.S. spends a minimum of $600 billion on its Defense Department budget, but the real security threats come from terrorists or pirates with minuscule budgets and attack forces numbering 20 or less.

The latest outrage is this week's commandeering of a Very Large Crude Carrier, the Star Sirius, off the coast of Somalia. VLCC means that the carrier is holding $100 million of crude oil, destined for the United States. This is a vessel taller than the Chrysler Building, yet it was successfully overtaken by 15 pirates who captured the crew, and had the carrier taken to a Somali port where it is now surrounded by hundreds of other pirates.

Lessons Learned on the Loading Dock

Tue, 04 Nov 2008 22:52:14 -0800

Martin Luther King brought his campaign for civil rights to Chicago in 1965, giving my father yet another excuse to rail on and on about Negroes not knowing their place. When he was at home he was restricted to the term “Negro” – our mother saw to that – but to the embarrassment of everyone in our family he was allowed to let loose whenever his own parents held a family party with his many brothers and sisters.

We kids would sit quietly in their living room, while in the kitchen the aunts and uncles, plus Grandpa and Grandma and our Dad, would tell the latest jokes about the "coons" or "spades" they met showing off their Cadillacs, or lazing around the streets. There was a decided overtone of superiority to these conversations; it seemed to make my Dad’s family feel much better to talk about the ignorant and indolent blacks they would come across from time to time. But there was also an undercurrent of fear; the blacks were beginning to move into yet another neighborhood, they would say, branching out like a menace to all the nice communities where the sons of white immigrants from Europe made their living as tradesmen, steelworkers, or in other manual labor.

The Young Turks Tonight 715 Eastern

Tue, 04 Nov 2008 14:07:36 -0800

I'll be on The Young Turks tonight at around 715PM Eastern. Tune in if you can. I'll be discussing the election results (if any are in) and what the world thinks and has been saying about this election.

Oh, and yes, I got off my lazy butt and got on a bus to Vientiane. I'm here. Pretty cool town, if you ask me.

The Young Turks and I

Fri, 31 Oct 2008 22:01:44 -0700

I have a very special announcement to make. One I am extremely excited about and one in which I believe you will share my excitement. As of today, November 1st, I am now the official 'Global Correspondent' for The Young Turks radio show. We're still ironing out some of the details, but as of this moment it's pretty much going to play out like this. There will be some kind of weekly segment, which of course depends on where I am, if I am in transit and if communication is available, of me reporting from where ever I happen to be at the time. Ideally it will be on a set day and time, but this is all up to Cenk and his producers so we'll see.

We'll be running a blogad announcing the gig too, at some point very soon. I'll also be doing a little blogging over at The Young Turks blog once a week, exclusive to the their blog, about something 'global.' I imagine it will be kind like a weekly column called 'The Global Perspective' or some such. We're going to roll out the deal on election night (I hope to have my first post up in the next two or three days as well) as I broadcast the reaction of Laotians and many of the European travelers who are here in Luang Prabang (of all the places!) to the election news.

Cenk and I worked pretty hard to put the deal together and we're going to give it a trial run for a few months. If it pans out as I hope it will then I'll be doing it the full year I am traveling. In that year I hope to return to Iran, possibly visiting Kurdistan (northern Iraq) and Afghanistan if at all possible. So, I'm extremely excited to be joining the Young Turks team. And I hope you all tune in. They broadcast mostly on satellite radio and this is a deal between the Young Turks and I, not Air America and I, but they are also syndicated by Air America, so if Air America is available in your neck of the woods, again, please tune in! The satellite radio details are available at their site.

Onward Christianist Soldiers

Sat, 25 Oct 2008 20:39:15 -0700

Republican leaders are already talking, albeit sotto voce and usually with anonymity, about Barack Obama’s landslide victory, and who is to blame. Being Republican means never having to say you’re sorry – it’s the Love Story approach to politics – but that doesn’t mean you can’t throw mud at some other guy in the party when everything has gone badly wrong.

Quite a gaggle of GOP geese are doing just that in a U.K. Telegraph article here. On one side are the apostates who have already criticized the party or even endorsed Barack Obama. This includes “intellectuals” like David Brooks, Andrew Sullivan, Doug Kmiec, and Peggy Noonan, as well as party stalwarts like Scott McClellan, David Frum, Matthew Dowd, and Kenneth Adelman.

More after the jump.

And What About Bridget?

Wed, 22 Oct 2008 05:44:58 -0700

With Barack Obama’s 85 year old grandmother in the hospital after a fall, we are reminded about the extraordinary role she and her husband played in Obama’s life. It was not easy for a white couple in Kansas to take on a black teenager as their son when his mother died, and Obama’s biography testifies to the enormous influence both of his grandparents have had on him, allowing him to find his way with confidence in both black and white society.

We don’t hear much about white couples who have faced the challenges of raising African-American children, or of mixed couples who have endured the prejudice that dates back to miscegenation laws. Which makes it all the more curious that we hear very little about Bridget McCain.

Who Got it Right? How About The Agonist!

Sat, 18 Oct 2008 04:11:43 -0700

It's no longer possible for the bank executives who brought us this all-consuming financial crisis to plead "No one could have seen it coming!" Even the mainstream media are on to this falsity. They are publishing top ten lists of the perpetrators who caused the financial crash, and the now-celebrated few who predicted it, among them Nouriel Roubini, Robert Schiller, and Warren Buffett. But they tend to miss the blogs that, even more so than the professional economists, predicted quite well what would happen and how it would go down (literally). To help redress that omission, the blogs need to speak up. It is time, therefore, for one blog that got it right to lay out its case. It is time to do some serious bragging here at The Agonist!

What is Behind the Veil - A Deeper Look into Syria

Mon, 13 Oct 2008 12:51:48 -0700

Syria is an easy enemy. The news shows soldiers in camouflage walking through the mountains of an inhospitable desert with AK-47s slung over their shoulders. The history books portray warriors with curved swords raised over their heads, their faces wrapped up in black cloth. The Syrian flag is red and black like the Nazi swastika, their language can sound to our ears like angry hisses, and they are run by an all-powerful dictator who calls himself “President”. In short, Syria is everything America fears in the Middle East. And the Syrian government seems to fear us too, for they have banned within their country American symbols such as McDonalds, Coca-Cola, and even websites such as Amazon.com and Facebook. But besides that, for me there was something about Syria that made me scared. I had seen in photographs how women were forced to walk the scorching streets completely covered in black, like vacant ghosts devoid of a face, a voice, or a personality. It is this desire to hide their women, this piece of cloth, this veil, that I could not understand.

Distributed to Buzzflash, Digg, and NewsHeat

Who Will Buy?

Mon, 06 Oct 2008 21:36:28 -0700

There’ll never be a day so sunny,
It could not happen twice.
Where is the man with all the money?
It's cheap at half the price!

From the Musical Oliver

Henry Paulson has turned into our very own Oliver now that he has gotten permission from the Congress to start peddling toxic mortgage securities and credit default swaps. Soon Old Hank is going to be out on the street corner with his bucket of goodies, glowing bright green with radioactivity. He’ll be looking for the man with all the money, willing to purchase something at half the price, or better.

George Bush With Lipstick

Fri, 03 Oct 2008 05:46:03 -0700

At my recent high school reunion you couldn’t help but notice that the jocks and cheerleaders and popular kids sat in one corner of the room, while little pockets of high school’s “dispossessed” were scattered elsewhere. These were the nerds, brains, unpopular kids, future homemakers, auto mechanics – everybody else who was not quite cool enough.

I didn’t realize it at the time, but we had a Sarah Palin in our midst. A bubbly, enthusiastic, friendly organizer who had been head of the cheerleading squad. I thought she had done a fine job planning the reunion, so I was surprised at how much resentment there was towards her from other women not among her crowd. These women were successful in business, or as lawyers, or teachers, or medical professionals. Two or three were writers, and one was a professional musician.

What Are They Hiding?

Tue, 30 Sep 2008 11:38:28 -0700

We are now down to five major US financial institutions that pose some degree of systemic risk to other banks, largely through their derivatives portfolios: Citibank, Bank of America, JP Morgan Chase, Goldman Sachs, and Morgan Stanley. All of these institutions are now commercial banks, subject to Federal Reserve oversight, and with immediate access to Fed liquidity. Goldman Sachs and Morgan Stanley, which were the last of the two great investment banks, are now focused on building up a consumer deposit base as a means to avoid large daily borrowings of short term funds.

With the obsession going on in Congress over a massive bailout of “the market”, aren’t we now really talking about a massive bailout of these five institutions? Is it really worth all this trouble for just five banks? Perhaps there are some better ways to handle the problem.

Buzzed, Dugg and Heated

Hold to Maturity Accounting = Hold on to Your Wallet

Wed, 24 Sep 2008 16:36:59 -0700

I’ve been flipping through my accounting books trying to find something about the “hold to maturity” accounting that Fed Chairman Ben Bernanke was talking about yesterday at the Senate hearings on the bailout. I haven’t been able to find anything exactly described as “hold to maturity” accounting, or a hold to maturity price, and on the internet all you get is references to Ben Bernanke’s speech yesterday. Maybe this is something new the government has come up with.

I have a pretty good idea what he means, though, and what he intends to do. There has been an esoteric discussion going on for a year now in the financial industry about how to move away from mark to market accounting, also called fair value accounting. This is the practice of taking your portfolio at the end of every month and valuing it at current prices in the market at the day of valuation. Any gains or losses when comparing today’s value to last month’s value go right to the income statement as a gain or loss. Mark to market accounting was a wonderful, wonderful thing for the financial industry when markets in general were going up. Valuations of the portfolio were going up as well, so income was rising, and along with that came fat bonuses for Wall Street. Now that the market is going down, valuations are declining, losses are being declared, and bonuses have disappeared, there is an earnest debate over whether some other type of accounting is needed.

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