I struggled with some of these mailbag questions today... I had one reader accuse me of being like “as bad as Glenn Beck” because of my “gleeful opprobrium” in avoiding the immigration question. I stared at the screen for nearly half an hour not knowing how to answer that, and then it occurred to me that I don’t have to answer that. Three things I try to avoid talking about publicly: Immigration, the Israel/Palestine conflict, and the CMKM Diamond penny-stock case. The instant you open your mouth about any of those things, you’re fucked, almost no matter what you say. Anyway, I’ll leave those minefields for others and move on to questions I actually can answer.
My take on your take on a reader's take on a reader's quibble: A narcissist can be injurious, but that's not what defines narcissism; assholism, on the other hand, is defined by injuriousness. Narcissism can survive and even thrive in a vacuum [it's self-obsession, after all], but assholism needs the oxygen of a victim in order to ignite. It's like Schrodinger's SUV: "If an asshole is driving and there's no one on the road for him to get into an accident with while he's talking to a bro on his cell phone, is there any way to prove he ever left his McMansion?" Hope this helps.
I vote yes on this definition, although it seems my fellow justices disagree. More on that later.
Thought you might like this - Dana Milbank gets a taste of the mortgage mess!
Mark D. Bolton
Thanks for sending that. I encourage readers to check this out; it’s the story of Post reporter Dana Milbank and how his bank nearly screwed up his credit rating and his mortgage by failing to pay his insurance on time. I’ve come across countless stories like this in the last two years, and even experienced something like this myself (I was nearly foreclosed on last summer when my bank mistakenly overestimated by escrow payment). My sense is that these “accidents” are more and more common and I would be interested to hear from readers who’ve dealt with things like this.
I didn't watch this video because I didn't want to vomit all over my desk.
Note to Alan: "You are never allowed to speak again."
My favorite part of this video comes at about 50 seconds in, when Greenspan is drinking from his mug, staring forward, seemingly completely ignoring the CNBC anchor. The look on Greenspan’s face is priceless. He seems to be lost in a perfect daydream. I can’t tell whether it seems more like he’s remembering beating a hooker to death or simply recalling a particularly satisfying bowel movement ... Whatever it is, he snaps out of it just in time to start his pontificating, in a perfect deadpan, about how the “government activism” is ruining the planet. The guy is just relentless and he does have gigantic balls to be talking like this, considering all that’s happened. I’m almost starting to admire him.
Last December, you wrote a bit about the results of the audit of the Federal Reserve that was undertaken in 2010. I'm wondering if you can offer some more information, or direct your readers to an online copy of the audit.
Hang on, I have something coming online later this week, I hope. I was hoping to do something in the magazine, but we’ve had to move on to something else.
A reader of yours asked the cause of the uprisings/what's going on. Be open to what an astrologer can tell you about the causes of extremes - in all areas of life - that the world is experiencing now. Then inform your readers who, like you perhaps, are most likely not drawn to astrology for explanations. Do a blog on "2012" (the astrologer can get you up to date on that, too). I find your mind and writing superb. Am reading Griftopia and loving every word/thought/laugh in it.
Thanks! Though I can never decide whether I think astrology is dumber than religion, or just less pretentious. Would be interested to hear reader feedback on that one.
As a taxpayer, a progressive, and a human being with a petty need for revenge, I would dearly love to see Mark Shields throw a drink into the smug mug of David Brooks. How do we make this happen? Bribe? Petition? If we can get Betty White on SNL, surely we can get this done.
I watched Shields and Brooks duke it out on collective bargaining and did think for a minute that Shields might leap across the table and pull Brooks’s tongue through his neck Colombian-style, but maybe I was projecting. I think I personally probably shouldn’t publicly endorse any more throwing of beverages, however. Incidentally, to the reader who asked when my review of Brooks’s new Yuppie-Master-Race screed The Social Animal is coming – haven’t read it yet, hope to in a few weeks.
Love your blog. I have a question I hope you can answer. I was debating a friend of mine about the bailouts. He claimed that most of the money that the government shelled out has already been returned with interest. Is this true?
While it’s maybe more true than it was maybe a year ago, the notion that “the bailouts were repaid” is still one of the great myths of the crisis era.
Most of the time, when people talk about the bailouts being paid back, what they’re referring to is the TARP or Troubled Asset Relief Program, which among other things involved direct cash injections into companies like Goldman Sachs. It is true that most of the money lent out via TARP has been paid back, with interest. Goldman, for instance, paid back its entire $10 billion loan.
But the bailouts reached far beyond cash loans, and that money is mostly never coming back. Take the case of Goldman. Goldman got $10 billion via TARP, but it also got $12.9 billion through the bailout of AIG, money that it would have lost otherwise; that money is never going to be “paid back.”
Another typical method of bailing out companies without direct cash injections was to allow firms to borrow money against a state guarantee. What programs like the TLGP (Temporary Liquidity Guarantee Program) allowed the banks to do was borrow against the government’s charge card instead of against their own more risky profiles. That way, the banks were able to spend billions less in finance costs on the money they borrowed. Goldman, for instance, borrowed at least $19 billion against the TLGP. How much more would they have had to pay to borrow $19 billion on the open market, without the government guarantee? Hard to say, but the figure is surely in the hundreds of millions.
There were other bailout methods that included getting the state to absorb investment losses (in programs like the PPIP, you kept your investment gains when you bought risky assets, but the state took the losses) and opening facilities that allowed the state to buy crappy assets from banks at above market value. Banks also got to post worthless assets as collateral to the Fed in exchange for cash. None of these things were direct cash injections; they were all sneaky ways to give the banks risk-free “profits” using government guarantees and loans.
The biggest bailout mechanism was the banks’ ability to go to the Fed and borrow hundreds of billions in emergency loans at rock-bottom interest rates, or sometimes at zero. Goldman, for instance, borrowed $600 billion in emergency loans during the crisis period, which makes the $10 billion TARP payment look meager.
Your friend would say that the banks ultimately paid those loans back, which is true, but put it this way: If a bank can go to the Fed, borrow $100 billion at 0% interest, lend it out on the market to all of us suckers as 4% mortgages and 11% credit cards and so on, what does it mean when it “returns” that money to the Fed later on? Are the profits they make in the meantime “earned” money, or is that subsidy? You and I don’t have the ability to borrow at 0%, but Goldman and JP Morgan Chase do.
Not to belabor the point, but there’s another hidden cost to all of us; since the bailouts demonstrated to the market that the state will never let the big banks fail, that means that smaller banks now have to spend more money to borrow on the open market, since they don’t have the same implicit guarantee. So if too-big-to-fail Goldman can borrow at 1.5% while Small-Enough-to-Fail Schmuck Local Bank has to borrow at 3%, that 1.5% is another hidden bailout that will not, of course, ever be paid back.
One could go on and on with this, but here’s the upshot: Yes, the banks mostly paid back the cash bailouts. But they didn’t pay back the money they got via hidden bailouts (like the AIG rescue) and they certainly won’t ever pay back the trillions they received via state guarantees and artificially reduced borrowing costs, which really all came out of our pockets. The bailouts allowed the banks to borrow for less from the state, while simultaneously paying less to private depositors and charging private borrowers more. That’s the real value of the bailout – the difference between how much they have to pay to borrow from the Fed, and how much we have to pay to borrow from them.
If you want a more complete look at the bailouts, check out my friend Nomi Prins’s site. She publishes regular reports on how much bailout cash has been spent, how much is still owed, and how much has been extended in guarantees.
Quick question for you - any other St. Maarten dining recommendations? I've been to the island a couple of times before and am heading there next week for some R&R. I'm partial to Le Cottage in Grande Case myself.
Definitely check out the two barbecue “Lolos” in Grande Case. My wife is partial to the “Bar De La Mer” in Marigot.
While I agree that cities thus far have a terrible, stupid track record of selling off [assets like parking garages] too cheaply, the reason there is such demand for these assets by the private sector is that infrastructure related to automobile usage is heavily, stealthily subsidized, and private companies know that they won't have to answer to voters when they end the subsidies to parking real estate or road transit via toll roads. To wit, the sale of parking garages in Los Angeles just fell through because the city, prodded by business owners adjacent to the parking garages, mandated that any buyer maintain the current level of subsidization (keep the parking rates about where they are) and all of the potential buyers backed out. In the meantime, it's this quiet subsidization that is at the root of our dependence on oil - it makes automobile-oriented transit appear much cheaper than it actually is. So, if cities were able to raise usage prices on these public assets to the rates that private industry would, or were to sell the assets at a fair value, and were in turn to guarantee that that money would only be spent on creating a better, less oil-intensive transportation infrastructure (trains, subways, light rails, PRT, whatever) I would have to be in favor of it.
I see where you’re going here, but I don’t completely buy the idea that low-cost parking and free roads are “subsidies.”
I was once in Siberia, in the Krasnoyarsk region, driving north toward a little village called Tolstikhino, where I was going to be doing a story about cattle thieves at the former collective farms. On the road north, my driver had to stop because there were three dudes in camouflage, with machine guns, standing alongside a toll bar they’d draped across the road. I asked the driver if this was a toll road. “Every road is a toll road around here,” he explained. The farther away you got from population centers like Krasnoyarsk, the more you found these “tolls,” which were basically groups of local thugs who made uniforms for themselves, bought guns, and picked cozy spots along highways to collect tribute from passing cars.
It wasn’t legal or official, but try telling that to the dude with the machine gun and the Kevlar vest asking you for 100 rubles or whatever it was. It was just like that scene in Blazing Saddles where Cleavon Little put up a toll both in the middle of the desert. That’s privatization, right? By your logic I would have been enjoying a subsidy if I’d driven that road earlier in the day, when those guys were still home nursing their hangovers.
My point here is that it’s absolutely true that there’s a lot of money that could be made out there, if only we put up to bid the power to harass and tax the public as it moves from place to place and tries to eat, breathe and sleep. But to me the whole point of civilized society is that everybody gets to move around freely without being constantly accosted by assholes for money. I think it’s dangerous to think of the free use of public property as a subsidy. I can see that with grazing lands maybe, but parking? Roads? I mean, what’s next – air? Are we enjoying “respiration subsidies” when we breathe?
And I get that the automobile industry hugely benefited from our massive public investment into roads and highways and parking facilities. But you want to end that subsidy to the automobile industry by selling off public property to create a new publicly-subsidized transportation system? How about we just keep things simple and find a way to move to a more energy-efficient transportation network without selling off our roads and parking garages to China and the United Arab Emirates?
How do you feel about sports mascot controversies - a la the University of North Dakota's "Fighting Sioux" nickname or the Washington Redskins?
It’s not high on my list of worries, but I do think “Redskins” probably needs to go. If I lived in Washington I would probably be convinced that my team’s perpetual suckitide was a cosmic karma situation.