Bush Says White House In Control Of Financial Rout

By Cernig

It's becoming a competition between Bush and Cheney to see which can appear more disconnected from reality these days. Cheney is in Iraq today, and more on that later, but Bush saying that the administration was "on top of the situation" in respect to the financial meltdown occasioned by the Bear Stearns firesale simply takes the biscuit.

The banking giant sold at a paltry $2 per share, a 93 per cent discount on the Friday closing price, despite the Fed taking a $30 billion share of its bailout.

Rather than being on top of the situation, the administration is seen by analysts as swan-like...trying to appear calm on the surface while everything under the surface is flapping about wildly. They're trying to head off a bank run.

Dean Baker, the co-director of the Center for Economic and Policy Research...said he sensed a whiff of panic at the Fed and in the Treasury Department.

"The main thing is that they [Fed and Treasury] are really really scared. Telling us that everything is great is an insult to intelligence. They should own up to it and talk seriously to people," Baker said.

And as a consequence there's a serious flight away from the dollar into other currencies and commodities, with gold and oil both trading at record values.

But Bush says he's on top of the situation - so he's taking ownership of it, win or fail. Remember that when the inevitable 'no one could have anticipated" excuses get trotted out later.

Failure Bonuses

I'm not on the board of any multi-billion corporations, hell I'm not on the board of any single dollar corporations or non-profits, but if I was, I would be scratching my head at a proposal to award massive pay raises, and large scale retention bonuses to the leadership team that took what was once one of the most profitable and predictable business models in the world, and turned it around to sustain massive losses and destruction of the basic value proposition. I would be very curious as to why I would want to retain this team in the first place.

And if I was on a board and was asked to approve the hiring of a C-level individual who took part in this fiasco, I might suggest that this individual be hired as the desk guard as that position could not seriously damage my company's net worth. But that is just me, and not Wall Street, as MBIA's leadership is getting shown more money than competent second string NFL cornerbacks are receiving from the New Orleans Saints. [Via CNN]

MBIA Inc. granted raises to some of its executives and offered bonuses to managers who stay another year as part of a plan to retain key people during a troubled period for the company.

In a regulatory filing Monday, the Armonk, N.Y.-based bond insurer said its compensation committee last month approved salary increases of as much as 60% for some executives. The committee also approved a "retention award" of as much as $2.3 million for executives who stay with the company a year.

MBIA (MBI) said it approved raises for 2008 after the company's stock plummeted 75% in 2007, because the company needs to retain people during a "critical period."....

Screwing up massively and losing credibility, respect and billions of dollars and people in charge are still getting rewarded. It is amazing how the risks and penalties of these screw-ups are transferred down the responsibility chain and the rewards never follow. Only the shit flows down hill, not the sunshine and rainbows.

Short sightedness is being rewarded, and we are systemically shocked when short sightedness dominates decision making. Amazing!

Gulf Triangles (Updated)

By Cernig
Updated below.

Bob Gates went to the Gulf and said Iran was a clear and present security threat to the region. But the situation as perceived by the Gulf States themselves is rather more complex - they're watching as Iran, the U.S. and Israel pit themselves against each other and working the angles for Arab benefit. In this, the Gulf Arabs aren't working as individual states, but as a co-ordinated body in anticipation of the Gulf Common Market - which takes effect in January and is highly likely to eventually include Iran.

Today, neocon Max Boot writes that, privately, the Gulf States are very worried about iran's regional ambitions. He even goes as far as to compare the Gulf nation's military might to Iran's and hint that the Arab states should solve Israel's problem for them. But if he was indeed told of Arab fears privately, it must have been very privately. In similiar vein, Powerline's Scott Johnson quotes an israeli conservative analyst friend of his that pictures "of Iranian President Mahmaoud Ahmadinejad walking “hand in hand” with Saudi leader King Abdullah at the Gulf Cooperation Council’s annual Summit in Doah, Qatar" show "how terrified the Sunni Arab establishment -- particularly the Gulf states -- are of Iran’s rising power." Huh?

All wishful thinking aside, public statements, and revealing actions, from the Gulf States show a willingness to play all other parties off against each other.

In response to Gates' statements on Iran, senior Gulf officials insisted that Tel Aviv was the greater threat to the Middle East.

"Israel is a source of threats. Any country that can attack its neighbours is a source of threats. There has to be a feeling of security, and we do not use a language of confrontation and aggression. We want to build relations of mutual trust and respect," Bahrain's Crown Prince Shaikh Salman told journalists on the sidelines of the conference. "We have seen numerous wars and we do not wish to see another war in the region."

Qatar's Prime Minister Hamad Bin Jasem Bin Jabr Al Thani in his speech immediately following Gates' remarks refused to consider Iran as the enemy.

"Iran is an important neighbour that cannot be seen as an enemy. We have had problems with Iran since the days of the Shah when Tehran occupied the three islands, but we cannot compare Iran with Israel," he said. "We at the GCC do have concerns about Iran, but we need to reach an understanding because there would be grave consequences for any military escalation."

GCC Secretary-General Abdul Rahman Al Attiyah said that Gates' statement that Israel did not represent any threat was "biased politics that reflected a determination to hold onto double standards".

Quatar's PM went even further, asking why, if they could go to Annapolis to talk to Israel, the U.S. cannot talk directly ot Iran. "Direct talks do not mean agreeing (from the start) with the other party," he told Gates as he and other Gulf statesmen said that they wanted the military option off the table. The GCC States also said at their recent Doha Sunmmit that they "will not go along with the United States in its pursuit to isolate or impose sanctions on Iran". Some fear.

The Arab states are looking at an economic future that includes Iran as a part of their common market - probably at around the same time as the member states transition to a unified currency, which makes Iran's refusal to take dollars even more interesting. Why would they want war or even sanctins interfering with business with such an important economic partner?

But U.S. fear of Iran, stoked by Israeli fears, are very useful for one thing - access to state-of-the-art weaponry systems. The Bush administration has notified Congress of its intent to sell $9 billion worth of Patriot Advanced Capability-3 missile defense system to the UAE - and Gates made it clear in his speech yesterday that the U.S. wants to see such a capable anti-missile and anti-aircraft shield extended to all the Gulf States. The U.S. also intends selling AWACS aircraft to the UAE and more patriots to Kuwait. The Saudis intend upgrading their existing AWACS capability and F-15 strike fighters as well as buying more than $100 billion in other weapons and aircraft from the U.S. and UK - all funded by oil sold at record prices due to regional tensions. At least someone in the West (arms manufacturers and oil companies) is doing well from tensions over Iran, eh?

It won't have escaped either Arab or Israeli notice that such defenses would be just as much of a defense against Israeli missiles and airstrikes as it would against Iranian ones. It's pretty clear where the Arab nations expect the attacks to originate. But by the time the Gulf nations are finished making all these purchases, Iran will be a far smaller giant militarily, and so a more acceptable trading partner. (Oh, and did I mention the Gulf State's intention to become nuclear nations themselves? Although they say without weapons.) So, for now, the Gulf states have a vested interest in making polite noises about the threat of Iranian hegemony in the region.

As the last leg of the triangle, Annapolis and the Bush administration's new-found determination to get involved in Arab-Israeli peace accords means that the recalcitrant Israelis are handing the Arabs a newfound opportunity to insert wedges between Tel Aviv and Washington. Condi has already met her first deliberate prevarication and isn't happy about it. Life is looking good for the new Arab common market.

Now, none of this is to say that Iran, the U.S. and Israel aren't trying to work their own triangles - of course they are. But the simplistic viewpoint presented by much of the U.S. media - that the Arab nations are totally alongside the Bush administration in seeing Iran as a massive regional threat - is just wrong and based upon stenographic repetition of the wishful thinking of those who have an axe to grind over Iran.

Update More triangles. The AP is reporting that Iraq's National Security Adviser Mouwaffak al-Rubaie has called on the US to engage with Iran:

"The United States, until they seriously engage with Iran ... the long-term regional security will be in doubt," al-Rubaie said on the final day of a regional security summit in the Bahraini capital Manama.

...Al-Rubaie's push for greater U.S. interaction with Iran was an uncomfortable reminder that Washington's greatest enemy in the Mideast is also the country most closely tied to the predominantly Shiite government in Iraq - the nation in the region where the U.S. has the most at stake.

"It is feasible for the government of Iraq to have on one side the strategic ally, the United States of America, and on the other side, we have a good relationship with Iran," said al-Rubaie, a Shiite. "I believe they are not mutually exclusive."

What the AP isn't saying is going to be even more of a shock to neocon systems. Iraq wants more than just direct US/Iran engagement:

Iraq's national security adviser yesterday called on Gulf states to form a regional security pact, which would include Iran, while he reassured the area's US allies that Baghdad is "heading West" in its foreign policies.

But Mouaffak al-Rubaie also criticised Saudi Arabia and Iran for what he called settling scores on Iraqi soil and called for regional reconciliation that put sectarian differences aside.

"It is extremely important to have a regional reconciliation rather than having this heightened sectarian tension in the region," he told delegates at a security conference held in the Bahraini capital.

"That is why Iraq is looking seriously to call for a regional security pact like the good old (1954 anti-Soviet alliance) Baghdad Pact or a Nato-style pact, with a set agenda: counter terrorism, counter narcotics, counter religious extremism and counter sectarianism," he said.

The Iraqi official said security in the region was "indivisible. You cannot stabilise Iraq and destabilise Iran, for example."

Iraqi Vice President Tariq al-Hashimi meanwhile agreed that Iran should be included in any regional security arrangement.

Ouch, that one's going to leave a mark.

Dereg and the fuel tanker explosion

By Libby

A parable for my "small government" loving friends. This is what happens when you let the trucking industry self-regulate. You diminish mandatory driver safety requirements, you get bad drivers and you hear stories like this.

Chris Barrow said he awoke to a loud bang and jumped into his car as he saw flames coming toward his home. But as he started to drive away, Barrow realized that the car was on fire. He got out of the vehicle and ran.

You can see some raw footage if you scroll up to the top of the video section on the main page. It's like a Die Hard movie.

Some things you need a government for and this is one of them. It appears to me this was a preventable accident. The moral of the story being, without strong, centralized safety regulations, you'll see more fuel, and other hazardous cargo trucks, overturning in densely populated cities.

No free market for small farmers

By Libby
Updated below

While the Bush administration continues its ongoing war against competency in government and ignores climate disruption, consumers have been taking matters into their own hands and buying shares in small farms in order to get access to organic, unprocessed food and diary products from local purveyors outside of the corporate delivery system.

Business is booming and suddenly, the same regulators that can't be bothered to inspect commercial facilities more than once a year, have taken a keen interest in protecting us from direct transactions with food providers. In the last few weeks federal regulators arrested 62-year-old custom hog farmer Richard Bean, and his 60-year-old wife, Jean Rinaldi, for slaughtering their own hogs, an apple cider provider was shut down on his busiest weekend and a share farm selling raw dairy products was quarantined under a regulation that shouldn't apply to them.

There's more at the link but in every instance, the consumer chose to cut corporate profit out of the equation. The benefit to the farmer is obvious.

Farmers who sell their cattle to processors may receive $2 a pound, compared to anywhere from $5 to $18 a pound, depending on the quantity purchased and the cut of meat, when they do their own slaughtering. Similarly, when dairy farmers sell milk to processors for pasteurization, they receive in the neighborhood of $1.50 to $2.50 a gallon (depending on bacteria counts and whether the milk is organic). When they sell direct, they receive $5 to $10 a gallon.

The good news is that some case law in favor of the farmer-to-consumer model has upheld its legality. But it's far from a settled issue and I expect the intimidation of the farmers will continue as the consumer demand grows. Yet to my knowledge, there have been no instances of illness arising from the transactions. The same can't be said for the corporate delivery system where it seems there's a new round of recalls of tainted food every week.

Libertarians keep telling me that the solution to this is to weaken government regulations. I don't see how that will do anything but allow the corporations to more easily foist off bad food. If anything, the regulations probably need to be strengthened. More importantly they need to be enforced against the commercial facilities they were designed to oversee, not wrongly used to destroy privately owned competition. [via Avedon]

Update: Jim Henley kindly links in. Loves me, hates my conclusions. I'd have to say the same about him.

I'm not unaware that Bush didn't build the bureaucracy singlehandedly, but he stacked the agencies with industry cronies, putting them in charge of oversight. Under his administration, regulations have been relaxed from previous safety standards for everything from consumer goods to coal mining. Enforcement against corporate entities is practically nonexistent. As a result we've seen unprecendented recalls of everything from toys to food to prescription drugs and a lot of coal miners have died. I just don't see how eliminating regulatory control altogether would provide any incentive for improvement. It makes sense to me to have safety standards.

Which is not to say the system isn't bloated and could use a good overhaul. But I think the problem isn't so much with the bureaucracy as it is with the bureaucrats who run it. And for the record, I'm against farm subsidies. They're just another form of corporate welfare. The money doesn't go to the small farmers who could really use it.

So long Gideon, hello condoms

By Libby

I never really understood why every hotel put a bible in the night stand drawer. I mean, you're either working or on vacation, so what are the chances you're going to want to look up a Bible passage to pass the time? Me, I check the local phone book to see what the restaurant scene is like.

In any event, the Gideon Bible's days appear to be numbered

Edgier chains like the W provide "intimacy kits" with condoms in the minibar, while New York's Mercer Hotel supplies a free condom in each bathroom. Neither has Bibles. Since its recent renovation, the Sofitel L.A. offers a tantalizing lovers' dice game: roll one die for the action to be performed (for example, "kiss," "lick") and the other for the associated body part. The hotel's "mile high" kit, sold in the revamped gift shop, includes a condom, a mini vibrator, a feather tickler and lubricant. The new Indigo hotel in Scottsdale, Ariz., a "branded boutique" launched by InterContinental, also has no Bibles, but it does offer a "One Night Stand" package for guests seeking VIP treatment at local nightclubs and late checkout for the hazy morning after.

The Bibles are mainly falling out of favor due to complaints of religious bias. The hotels prefer to avoid litigation that might result in some requirement to place the holy texts of every religion in the room and are increasingly opting out of the tradition altogether. This current trend towards intimacy aids seems more practical, not to mention honest, but I do wonder how long it will take before the morality police in the 'family values' crowd start picketing the hotels for encouraging recreational sex.

We're number... 15?

by shamanic

Ah yes, coverage of America's lagging implementation and adoption of broadband. I worked for an ISP for four years until just a few weeks ago, and what I know is this: Asia and much of Europe is kicking our butts on this front. Through public-private partnerships and government regulation, their networks are faster, cheaper, more stable, and in a lot of places, nearly universal.

And ours are pokey, unreliable, expensive, and unavailable in many areas. So we're number 15, or 17, or in any event, far from number 1.

Thanks, free market ideologues! I love paying more for less!