JayB

I'd agree about the risks of the party lashing out for the reasons that you stated, but I'm hoping that people in Taiwan, Tibet, and elsewhere are savvy enough to take this into account in their dealings with the Chinese. I think they also need to factor in quite a few other variables that affect the way that the average Chinese person thinks if they want their dealings with the Chinese state to be constructive.

Heck - the same indictment applies to most congressmen and other miscellaneous bureaucrats, not just the lobbyists. As long as we have humans in government, the problem of people attempting to use the medium of government to enrich or benefit themselves at the public expense will be with us.

"What? Who? Li'l ole me?" Give us a break. You know damn well that free-market fundamentalists have fought tooth-and-nail to dismantle any such rules and keep any new ones from being put into place. The explosion in risky financial instruments, increased volatility, more frequent crises are part and parcel of the "casino capitalism" that deregulation has helped to create. As usual, it's all down the memory hole--"oh hey look, Lehman stocks are up!" So is the solution here better rules that increase transparency, etc or nationalizing the entire financial marketplace?

Well I'm not so sure the deciding factor was that they did not keep up with marketplace changes but chose to ignore the changes and the potential consequences. Some simple rules, which are now in the works, regarding oversight of lending practices (duh - don't lend money to folks who can't afford it) and more oversight of the credit rating firms and wall street who managed to turn investments worse than junk bonds into AAA rating investment vehicles. Capitalism is inherently greedy and cares for nothing but short-term gains, particularly the way it is practiced on Wall Street these days. So with some relatively mild oversight the Feds could have avoided this mess. Instead, they chose to let the market self-regulate, with the ensuing effects well outside the sphere of Wall Street. And now they choose to ignore the market forces solution when the financial elite come knocking at the door. No reason to throw the baby out with the bathwater. But a more reasoned approach to government regulation of capitalism will make for stronger long-term financial institutions. I'm really tired of the "get government off our backs" crowd, especially when they cost us billions when their get-rich-quck schemes go south. I think that the broad point about privatizing profits and socializing risk is well taken, and extends to many domains beyond the financial marketplace. Grazing rights on public lands, the forest service building and maintaining roads for timber extraction, etc, etc, etc, etc. GNMA, FNMA, and a host of other agencies distribute profits to private shareholders but enjoy privileged access to capital at below market rates because of the assumption that the US government will pay anyone who holds the securities face value for them when the chips are down. Given the size of the liabilities on their portfolios, this is more worrisome to me than anything that's surfaced in the IB's yet. Tarriffs that protect a particular subset of workers or employers from competition and transfer the costs of diminished competition to consumer, subsidies that transfer public revenues to favored constituencies are part of the same problem, and the list goes on... I think it's possible to construct mechanisms and incentives that limit these abuses without the state being an active participant in the marketplace. Turning to the current debacle, the reason that commercial banks have access to the discount window - and investment banks haven't - is that commercial banks are subject to regulation by the Fed. IMO if the investment banks want access to the discount window in the future, they are going to have to accept the same. I'd also either explicitly make FNMA, GNMA, and the other agencies public so that the nature and scope of their liabilities gets everyone's attention - and the treasury benefits from the upside to the risk - or pass legislation that would make them disappear in increments so that they're gone in twenty years. The basic problem with the entire real-estate market is that it's littered with more conflict of interests, information assymetries, and opacity than any other sector of the marketplace - starting with the appraisal process, and stretching all of they way to the point where the securitized mortgages are purchased or sold. The basic problem is that we've had horse-and-buggy era rules applied to a superhighway marketplace. Unfortunately, I think that the likely outcome is going to be wind up transferring more risk onto the public, instead of rewriting the rules with an eye to eliminating moral hazard and confining both the profits and losses to the private sector.

Seems like that analysis should include the effects of monetary policy, and the failure of the folks making the rulebook to keep up with changes in the marketplace. What kind of regulations would you put in place if someone gave you carte blanche?

Strange sensitivities on display here. I think that the ideology that the PRC was founded on sucks in a massive way, that transferring control of all economic assets to the state in service of the said ideology guaranteed the totalitarian control of the population, and that the resulting state's treatment of its own people between roughly 1945 and 1975 amounts to one of the most monstrous and shameful episodes in all of recorded history. Since the market reforms initiated since the late 1970s, the balance of power between the state and the people has been shifting, and I think that now it's at least possible to wonder whether the people depend on the state for their existence, or if the opposite is true. As the balance of power has shifted between the people and the party, the state has become much more sensitive to both internal and external criticisms, its conduct has been tempered by a moderation that - while calculating and self-serving - would have been unthinkable and unnecessary when the state held all economic power. If present trends continue, I expect that the conditions in China will continue to evolve in directions that force the party to become less repressive and brutal over time. I think that this kind of political evolution constitutes the only real hope that the people of Tibet have for realizing the changes that they seek, and that anyone who cares about their plight should bear these realities in mind.

What a day. Estoy muy envioso.

400 million a pop. Incredible.

These are welcome clarifications, Matt. From now on when you say "valuable resources" I will take it as a given that you are referring to "strategic significance" and not to anything more tangible or concrete than that.

Seems like an apt summary of the above would be "Adjectival Imperialism." I pretty much agree with your analysis of the manner in which the US has wielded power, but have to observe that it differs substantially from the classical definitions and the conventional understanding of the term "imperialism." I think that where we'd part company is that I think that - given the available alternatives that were on the table between 1939 and 1989 - the American imperialism that you describe has been quite a bit better for humanity than the probable outcomes would have been if either the Axis powers or the USSR had prevailed.

So where did you get the idea I was talking only about military intervention when I said we were not likely to get involved? Is that the only type of "involvement" we might undertake? Thanks for answering my question about waht do you actually think here. It seems you more or less agree with the basic premise of my posts above. Now you can continue to sling the insults or sarcasm if you feel the need. Consider this my stock response: "I know you are, but what am I." Are you really suggesting that we generally go to war for reasons that do NOT have to do with geopolitical influence or resources or, god forbid I'd introduce another possible motivation: business interests? Why don't you do some of my homework for me and list all these great moral wars we've embarked on where we had no political or economic interest in the outcome. I'm suggesting that you can't accurately understand the history of US military interventions around the world as a series of conflicts designed to secure physical control of salable commodities. If this is a gross misrepresentation of the views encapsulated in your original statement, feel free to disavow it at your leisure. If you bundle in your "we only go to war to seize natural resources" article of faith/innuendo in with "political and economic interests" then you've made a statement along the lines of..."Prove that I am not the reincarnation of Napoleon *AND* that the sky isn't blue." Of course nations don't often go to war when there's no significant political or economic interests at stake. The fact that this is so doesn't lend any support to your position that the only, or even the principal, motive behind US participation in wars has been to enrich itself via seizures of natural resources or territory, much less that it's all been orchestrated by whatever devious cabal is presently haunting your imagination.

Anyone familiar with the block of Condos built by the Bremerton ferry landing, a few of which were listed for ~1 million dollars? http://www.kitsapsun.com/news/2008/mar/09/tough-market-leaves-bremertons-harborside-condos/ http://www.kitsapsun.com/news/2008/mar/12/waterfront-condos-to-be-put-up-for-auction/ Sounds like the Kitsap County Housing Authority is behind this project.

"Bear execs lack golden parachutes as stock plan crunched" http://www.reuters.com/article/newsOne/idUSN1649271520080317

I've heard similar analysis elsewhere - at least to the effect that compelling banks to modify their lending standards if the standards in place lead to them extending fewer loans to minority populations resulted in a general weakening of lending standards. Seems like this is more of a case of the state adding well-intentioned regulations with some unforseen (at least by them) secondary consequences more than de-regulating.

Comment sent to the "Museum of Irony" for storage in its "Hall of Fame" collection.

Jay, I could spend hours on your homework assignment here, and the results would be as dmuja suggests above, that we go to war for (1) resources, (2) geopoolitical "influence" and (3) where American lives are at stake. There will be few examples of any war we undertook for humanitarian reasons, despite Fairweather's apparent assertion that those were our motives in Vietnam (I guess he was assuming fighting communism there was for their beneifit not ours). But I'd actually be interested to see you state a coherent position here. What do YOU think is the prospect for a free Tibet? What do YOU think our government should do about it? Take off that pimple face and stop throwing spitballs and tell us what you think. See if you can take a stand in a clear fashion where you can't back peddle out of it if somebody questions something you write. This is a much different conclusion than the one you put forth with your categorical statement stating the only reason that the US wouldn't intervene militarily on behalf of Tibet is because they aren't sitting atop a significant concentration of natural resources. Of course nations wage war for "resources" more generally, but the number of instances in which the only, or even the most significant variable at play in the strategic calculations is physical control over a salable commodity constitute such a minority of cases that one has to wonder why people trot out this trope over and over again. As a theory to explain the history of American millitary interventions throughout history, it's about as accurate and intellecutally honest as the oft cited claim that the only reason why we haven't "cured cancer" is that "there's too much money in the disease." The prospects for a free Tibet are zero. China has succeeded in creating facts on the ground such that are beyond any other nation's power to reverse. The only significant, lasting changes in Tibet that will occur are those that occur with the consent and approval of the Chinese. End of story. You know this as well as anyone, and you are also aware of the fact that the Tibetans themselves are hardly unanimous in their desire for specific political changes or how to secure them. Instead of addressing these realities, you repeated the same lame, mendacious cliche. Why? The only thing that anyone - the US government included - can do for the Tibetans is to attempt to create a political consensus in China that would be more favorable to granting the Tibetans concessions and protections that would enable them to pursue their own ends within the Chinese political system. The other side of the same coin would be letting the Tibetans know that violent uprisings are likely to be not only futile, but counterproductive measures that will only make it more difficult to secure whatever gains that they hope to achieve.

"Golly gee, if only we had known something like this could happen when we were clamoring to deregulate the financial services industry!" Wash hands, a few bad apples, business as usual. BTW, I'm under no illusion that what is playing out here is any serious collapse (in the short term), if for no other reason than that the State has proven so willing and adept at managing increasingly frequent, if less destructive, capitalist crises and bailing out individual firms when the "free-market" inevitably shits the bed. When did this "de-regulation" that you speak of occur? Are you suggesting that prior to a specific point, the financial sector had price controls governed by the state that determined say, how much someone would have to pay for advice on a leveraged buy-out, bringing a stock public, etc? In this sector, as in others, regulations are typically backward looking. When innovation outpaces regulations, risks can accumulate that aren't addressed by the previous set of rules. Unfortunately, it normally takes a crisis to expose the true magnitude of the risks, and for the government to address them with a new set of rules that mitigate the said risks. When automobiles started to appear on the roads alongside the horse and buggy, it took a while for the rules of the roads to catch-up with changes in technology. That's a common failure of governance, and not one that is entirely preventable in all cases. In this case it was clear that the rules governing the real-estate market needed to be changed to reflect the changes from a thrift-based model to an originate-and-securitize model. I think we'll see broad revisions to the rules governing securitization, risk management, etc - but that's it.

Yeah - we'd roll right past the PLA if they had oil. It'd be one thing if constantly attributing the basest possible motives to every single action this country takes were even accurate, but it's not. I invite you to start counting at the Revolutionary War and work forward, and tabulate how many military interventions which [you believe] were motivated by nothing more noble than a simple desire to for material gain. List the wars and the probable material gain that [according to you] that served as the foremost motive for participating in them in each case.

It's good to be Morgan We can hope. Hope is what I reserve for my daily bank (WAMU) not to implode in the coming week some not so good news coming out for them too. look for them to be gobbled within 2 months (thats my bet) I've had a bad gut-feeling about WAMU for a while. I think the only basis I have for that, aside from their enthusiastic participation in the present megacluster is some stuff I read in the WSJ about their exposure to SoCal, and the percentage of their profits that were derived from negative amortization on residential loans. I think the accounting rules say that you can book the additional interest that accrues on neg-ams when people use the "pay-option" feature of the loans to pay less than the interest that they owe as "interest paid." Makes sense, but still a bit spooky if it makes up too much of the total interest paid IMO. Somewhere there's a stat out there concerning the percentage of Alt-A and Prime optionARMs in which the borrowers are paying the lowest possible (neg-AM) payment. I think the figure I saw was something like 70%, but that could be: A)Wrong. B)Include subprime. WAMU. Booga-Booga.

It's good to be Morgan We can hope. Hope is what I reserve for my daily bank (WAMU) not to implode in the coming week At least it's not Lehman. I'm personally hoping that Fidelity has enough cash in the bank to make sure that FDRXX doesn't go deer-balls if any of the commercial paper in the portfolio goes bad in a BSC like implosion.

It's good to be Morgan We can hope.

It doesn't. Where do you see may saying "...from which the public will profit handsomely" in that post. The only upside for the public as far as the discount window operations involving NCBs are concerned, as far as I understand, is avoiding a much more dramatic meltdown that would have repercussions far beyond Wall Street. As far as BSC is concerned, again - BSC is dead. Dead. They were as good as dead before the Fed extended the loan, which looks to me like it was constructed to allow for a less destructive unwinding. Financial equivalent of a screamer on a single piece of pro, with the rest of the country being unwittingly tethered to a mank-anchor a short distance below. The benefits associated with the BSC deal have and will accrue to parties outside of BSC.

Isn't that the core of capitalism? Reward comes with Risk? BSC made tons of cash in the past decade because of risk. This bailout is privatized rewards and socialized risk. The Bear Sterns building alone is worth $1 billion. Morgan can make a killing on this. BSC is dead and the shareholders took a 15-fold reaming, so I'm not worried about BSC's example inspiring others to follow their path. The money they've [CEO, CFO, all the managing directors, etc] got in the bank already is the shareholder's concern, IMO. When it comes to opening the Fed Funds window to NCB's, and accepting MBS securities at par for collateral though, I agree that what we're seeing is a classic risk socialization. Short of a time machine that could go back to 1998 and rewrite the rules governing retail lending, transparency and ratings standards for securitizing mortgages, etc - I am not sure what other options the Fed thought that they had available to them. Seems like they're smart enough to devise mechanisms that would transfer at least some of any upside that arose from their action to the public, while still looking like a life-ring to the institutions circling the drain - but who knows. Maybe things are too far gone at this point.

I've been worried about something like this coming to pass for quite a while - ever since the price-to-income and price-to-rent metrics detached from anything that could fit into what I thought were the standard lending models. Unfortunately for you, I think that what we're witnessing here is the early stages of a classic credit bubble bursting, rather than the internal contradictions of the capitalist society leading to the ascendance of the proletariat and whatnot. Thankfully the madness was contained to the US....

What's the African Proverb, "When elephants fight, it's the mice that suffer..." Somehow I think what the Fed saw had them concerned about something beyond whether or not the hedgies would be able to afford the spring renovations they'd planned for their spreads in the Hamptons. FWIW the text in bold constitutes the real bailout IMO, especially if they value the collateral assets at part(which I think they are): "March 16 (Bloomberg) -- The Federal Reserve, in emergency decisions aimed at containing a crisis of confidence in the U.S. financial system, cut the rate on direct loans to commercial banks and opened up borrowing at the rate to securities firms." Seems like Fed's thinking that this'd be something roughly akin to letting a privately run dam at the head of a populous valley fail in order to teach the dam-owners a lesson. ------ I'd look for some of this to materialize in Japan shortly, since there are quite a few folks who borrowed in yen to finance their leveraged MBS purchases in dollars. I suspect that people rushing to settle their yen-denominated debt before the dollar declines still further had something to to with the yen rally last week...