Where's The Love?

Poor Megan McArdle takes the Libertarian, humanitarian side of a debate and what does she get in return?

McArdle: If you want to check citizenship status, do it for everyone, not just Hispanics.

Commenters: That's silly. We're white.

It's not a very good argument on either side, but we must make do. McArdle decides that inequalities that don't benefit her are bad, a generous statement indeed. The commenters point out that the bill would mostly enforce present laws on people breaking present laws, but leave out a detail or two.

G. A PERSON MAY BRING AN ACTION IN SUPERIOR COURT TO CHALLENGE ANY
11 OFFICIAL OR AGENCY OF THIS STATE OR A COUNTY, CITY, TOWN OR OTHER POLITICAL
12 SUBDIVISION OF THIS STATE THAT ADOPTS OR IMPLEMENTS A POLICY THAT LIMITS OR
13 RESTRICTS THE ENFORCEMENT OF FEDERAL IMMIGRATION LAWS TO LESS THAN THE FULL
14 EXTENT PERMITTED BY FEDERAL LAW. IF THERE IS A JUDICIAL FINDING THAT AN
15 ENTITY HAS VIOLATED THIS SECTION, THE COURT SHALL ORDER ANY OF THE FOLLOWING:
16 1. THAT THE PERSON WHO BROUGHT THE ACTION RECOVER COURT COSTS AND
17 ATTORNEY FEES.
18 2. THAT THE ENTITY PAY A CIVIL PENALTY OF NOT LESS THAN ONE THOUSAND
19 DOLLARS AND NOT MORE THAN FIVE THOUSAND DOLLARS FOR EACH DAY THAT THE POLICY
20 HAS REMAINED IN EFFECT AFTER THE FILING OF AN ACTION PURSUANT TO THIS
21 SUBSECTION.
22 H. A COURT SHALL COLLECT THE CIVIL PENALTY PRESCRIBED IN SUBSECTION G
23 AND REMIT THE CIVIL PENALTY TO THE DEPARTMENT OF PUBLIC SAFETY FOR DEPOSIT IN
24 THE GANG AND IMMIGRATION INTELLIGENCE TEAM ENFORCEMENT MISSION FUND
25 ESTABLISHED BY SECTION 41-1724.
26 I. A LAW ENFORCEMENT OFFICER IS INDEMNIFIED BY THE LAW ENFORCEMENT
27 OFFICER'S AGENCY AGAINST REASONABLE COSTS AND EXPENSES, INCLUDING ATTORNEY
28 FEES, INCURRED BY THE OFFICER IN CONNECTION WITH ANY ACTION, SUIT OR
29 PROCEEDING BROUGHT PURSUANT TO THIS SECTION TO WHICH THE OFFICER MAY BE A
30 PARTY BY REASON OF THE OFFICER BEING OR HAVING BEEN A MEMBER OF THE LAW
31 ENFORCEMENT AGENCY, EXCEPT IN RELATION TO MATTERS IN WHICH THE OFFICER IS
32 ADJUDGED TO HAVE ACTED IN BAD FAITH.
33 J. THIS SECTION SHALL BE IMPLEMENTED IN A MANNER CONSISTENT WITH
34 FEDERAL LAWS REGULATING IMMIGRATION, PROTECTING THE CIVIL RIGHTS OF ALL
35 PERSONS AND RESPECTING THE PRIVILEGES AND IMMUNITIES OF UNITED STATES
36 CITIZENS

The police must enforce immigration checks during "any lawful contact" or the department will be subject to enless suits. Employers must be able to prove they did not knowingly hire an illegal alien and so must check employees with a federal (Homeland Security) database. Punishment for hiring illegal aliens is fines and the loss of licenses.

Does this mean we can get rid of John Derbyshire and NRO? I know it's not retroactive and maybe we'd send him to jail and shut down NRO for nothing, but that's just a chance we'll have to take.

Bankgirl To The Rescue!

Meanwhile, in Gotham City, the Bat Bank Signal flashes into the night sky. Someone's in trouble! Who can it be? Holy Security Fraud, Batman! Goldman, Sachs needs help, and Batman and Robin are all tied up with the Obamnation, who is trying to conquer the world with his Socialist Mind Ray! But fear not--Batgirl Bankgirl is always ready to help the banking industry, and immediately rides her Bankcycle to the rescue of capitalist freedom!

Bankgirl sees the villain SEC but first laughs it off. Everyone knows that SEC wants to rule the world from its evil lair in Washington, DC, but that doesn't mean it should be taken seriously.

So the vote on the SEC to bring charges against Goldman broke down by party lines. Liberals, understandably, view this as evidence of malfeasance. But of course, there's an alternative interpretation also consistent with these facts: that Democrats brought a weak charge that won't stand up in court because they thought it would help them push through their bank reform.

Does the arch villain SEC slink away to fight another day when it sees Bankgirl? No, it does not. Foolish villains! Bankgirl approaches the madmen and accuses it of attacking the unpopular banks to polish its own rotted image.

So not political maneuvering, but agency butt-covering. This sounds suspiciously plausible. And even if the SEC didn't plan this, reporters would do well to counter this unfortunate accident of timing by resurrecting the story.

Meanwhile, the counter-leaks have begun, and as I thought they might, they make the SEC's case sound a bit weaker.

Bam!! But Bankgirl is just warming up! Next she hits them with the accusation that the Senate is just posturing instead of trying to foil the hated banks!

The statements from the Senators make it clear that they are not holding this hearing in order to find out what happened; that's the SEC's job. They're holding this hearing in order to be televised yelling at investment bankers. Claire McCaskill's rant was particularly irrelevant to the actual question at hand, but all of them are mostly trying to express outrage, not make any coherent assessment of the strengths of the SEC's case.

Pow!! The SEC is reeling from Bankgirl's blows but more villains are joining the gang! Bankgirl calls on reinforcements!

A lot of very smart people who know a lot about securities law seem to think that the SEC is pushing its luck on the law, if not the merits.

Kaboom!!! The law is on Bankgirl's side, and the SEC will fall before it knows what hit it! Bankgirl delivers the killing blow!

Carl Levin is asking the same silly question that I've heard over and over: shouldn't Goldman have told buyers that it was short?

The presumption is that Goldman has some sort of godlike knowledge that it was concealing from its customers. It's not Goldman's responsibility to tell its customers what they should want to buy (or at least, not on the trading/ABS side), or what Goldman wants to buy. It's Goldman's responsibility to make sure that its clients have all the relevant details about the securities. Clients buy stuff from Goldman all the time that some part of Goldman is short; differences of opinion are what make marriages and markets.

It is true that clients would like to know what Goldman is doing, but it's also true that the seller of the house I just bid on would like to know what my reservation price is. That doesn't mean that I have some obligation to disclose this information. These are large securities firms that are presumed to know how to evaluate a security; if they can't, they should turn in their charter and disband.

Goldman was making a bet. That bet could have gone wrong (not in this case, but in many similar). Other firms had different opinions of the market. Goldman was under no obligation to disabuse them of their opinions. They're not investment advisers; they're securities issuers.

Bankgirl dusts her hands off, adjusts her cowl and cape, and tosses off a little quip at the bodies left groaning on the floor, as superheroines are wont to do.

Now Levin is grilling a Goldman employee as to why they continued to sell a deal that the head of the division had described as "a shitty deal". The banker is trying to explain that he's a salesman, not a fiduciary, with little success. What I want to know is--didn't these guys learn a damn thing from the show trials of the last decade? These are the kinds of things that should never, ever be committed to any form that can be subpoena'd by a committee.

Look out, Bankgirl! One of the SEC villains is up and pulling out its Bank-Killing Reality Cannon! And it's pointed your way! Oh, no! You're about to be hit by the SEC complaint against Goldman, Sachs!

1.The Commission brings this securities fraud action against Goldman, Sachs & Co.(“GS&Co”) and a GS&Co employee, Fabrice Tourre (“Tourre”), for making materially misleading statements and omissions in connection with a synthetic collateralized debt obligation(“CDO”) GS&Co structured and marketed to investors. This synthetic CDO, ABACUS 2007-AC1, was tied to the performance of subprime residential mortgage-backed securities (“RMBS”)and was structured and marketed by GS&Co in early 2007 when the United States housing market and related securities were beginning to show signs of distress. Synthetic CDOs like ABACUS 2007-AC1 contributed to the recent financial crisis by magnifying losses associated with the downturn in the United States housing market.

2.GS&Co marketing materials for ABACUS 2007-AC1 – including the term sheet,flip book and offering memorandum for the CDO – all represented that the reference portfolio of RMBS underlying the CDO was selected by ACA Management LLC (“ACA”), a third-party with experience analyzing credit risk in RMBS. Undisclosed in the marketing materials and unbeknownst to investors, a large hedge fund, Paulson & Co. Inc. (“Paulson”), with economic interests directly adverse to investors in the ABACUS 2007-AC1 CDO, played a significant role in the portfolio selection process. After participating in the selection of the reference portfolio,Paulson effectively shorted the RMBS portfolio it helped select by entering into credit default swaps (“CDS”) with GS&Co to buy protection on specific layers of the ABACUS 2007-AC1capital structure. Given its financial short interest, Paulson had an economic incentive to choose RMBS that it expected to experience credit events in the near future. GS&Co did not disclose Paulson’s adverse economic interests or its role in the portfolio selection process in the term sheet, flip book, offering memorandum or other marketing materials provided to investors.

3.In sum, GS&Co arranged a transaction at Paulson’s request in which Paulson heavily influenced the selection of the portfolio to suit its economic interests, but failed to disclose to investors, as part of the description of the portfolio selection process contained in the marketing materials used to promote the transaction, Paulson’s role in the portfolio selection process or its adverse economic interests.

4.Tourre was principally responsible for ABACUS 2007-AC1. Tourre devised the transaction, prepared the marketing materials and communicated directly with investors. Tourre knew of Paulson’s undisclosed short interest and its role in the collateral selection process. Tourre also misled ACA into believing that Paulson invested approximately $200 million in the equity of ABACUS 2007-AC1 (a long position) and, accordingly, that Paulson’s interests in the collateral section process were aligned with ACA’s when in reality Paulson’s interests were sharply conflicting.

5.The deal closed on April 26, 2007. Paulson paid GS&Co approximately $15million for structuring and marketing ABACUS 2007-AC1. By October 24, 2007, 83% of the RMBS in the ABACUS 2007-AC1 portfolio had been downgraded and 17% were on negative watch. By January 29, 2008, 99% of the portfolio had been downgraded. As a result, investors in the ABACUS 2007-AC1 CDO lost over $1 billion. Paulson’s opposite CDS positions yielded a profit of approximately $1 billion for Paulson.6.By engaging in the misconduct described herein, GS&Co and Tourre directly or indirectly engaged in transactions, acts, practices and a course of business that violated Section17(a) of the Securities Act of 1933, 15 U.S.C. §77q(a) ("the Securities Act"), Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. §78j(b) ("the Exchange Act") and Exchange Act Rule 10b-5, 17 C.F.R. §240.10b-5. The Commission seeks injunctive relief, disgorgement of profits, prejudgment interest, civil penalties and other appropriate and necessary equitable relief from both defendants.

Poor Bankgirl! Tune in next week to see how she manages to save the banks from the accusation that they fraudulently mislead investors!

This program was brought to you by pharmaceutical companies, banks and insurance companies.

Bankgirl picture replaced by better Bankgirl picture. Better Bankgirl picture replaced by best Bankgirl picture, many thanks to Botacchio for making the image.

Wishful Thinking

Somewhat Shorter Megan McArdle: Although the government tax credits are keeping some of the housing bubble afloat, DC houses are in high demand temporarily until the credit expires, and bad loan standards have not gone away and will lead to further mortgage losses and lower house prices in the future, I am desperately bidding above market to get a house before I marry in six weeks.

Because part of the Fantasy Wedding is coming home to your sweet little house, not waiting until the market goes lower, and your husband finds a job, and if you wish hard enough, the market really will hit bottom when you want it to.

The only status item McArdle hasn't yet tried to acquire is a baby, and no doubt that is next. We wish McArdle nothing but luck in that endeavor, and most especially hope that McArdle will refrain from sharing with us her personal experiences during that journey.

Also.

A Great Mind Is Gone

Alice Miller has died. (Via Arthur Silber, who promises more on the great psychoanalyst) Miller took on God and won.

"Honor thy father and thy mother" is one of the Ten Commandments, and has been drilled into every generation before and after its codification. It is the fundamental law of the fundamental unit of the family, and obedience to the father and love for the mother are taken for granted as necessary and beneficial to the upbringing of the child. Miller pointed out the simple fact that not everyone is able to love; some people never received love and therefore are unable to give it. Abusive parents demand obedience in response to and in revenge for abuses heaped upon them as children. They are emotionally needy since none of their emotional needs were met while they were growing, and they use their children to satisfy those needs--for unconditional acceptance, for a good self-image, for a feeling of power and control over their lives.

Worse of all, the child is expected to be grateful, to honor these parents and to love them. The guilt at being unable to love someone who was unable to love you, the resentment at being used to satisfy an adult's needs when you have needs of your own that are neglected, the anger at the suffocation of your personality, your self-image, your need for control--these are utterly crippling for most people. They lead to rape and murder, to greed for money, to war, to childhood cruelty and bullying. They lead to all the ills of the world, and most people would rather have this cruel world than admit that their parents didn't love them, and have to give up hope that they will--somehow--finally earn or be given that love. And even that won't satisfy them, because the adult is no longer a child and cannot go back in time to when he most needed that love.

Miller gave us a way to be free of authoritarianism and relief from crippling guilt and self-hatred. We can learn to recognize why we act destructively and suffer from seemingly inexplicable emotional pain. When we accept the pain of loss of love, we stop practicing destructive behaviors that are used to avoid pain. When we accept our parents couldn't love us, we stop looking for that absolute love from God, party, spouse, or other source.

But that means giving up the myth of our happy family, our parent-substitute gods that reward and punish us and tell us when we are good, our excuses for our bad behavior and our hope for perfect love. In return we get peace and freedom, but many people would rather watch the world burn than give up their chains.

Cracking Open The Conservative Mind

Ross Douthat ruminates on the closed loop of the conservative mind, and points out that before the creation of a right-wing noise machine, conservatives had more policy successes. He lists those conservative success as:

[...T]he American Right managed to lower taxes, slow government’s growth to a crawl, whip inflation, and deregulate important swathes of the American economy, among other Reagan-era accomplishments.

They did manage to lower taxes, and continued to use lower taxes to win many more elections, except for those which followed the inevitable financial turmoil that resulted from Republican financial policies. They did not slow government's grow, as the tea-baggers will tell anyone who will listen to them. They did "whip inflation," as globalization lowered prices of consumer goods. And they certainly did deregulate--we are enjoying the fruits of both globalization and deregulation right now.

[...C]onservatives had a real intellectual advantage in the days when they had to engage with the mainstream media instead of more congenial outlets, and that in the age of Fox News they’re giving this advantage up.

It's so cute when conservatives talk about how smart they are compared to liberals. The party that prizes belief and conformity over intellectual freedom and scientific rigor is not capable of proving its intellectual superiority. Unfortunately for both parties, most people don't make decisions based on intellectual arguments anyway. They have emotional reactions based on psychological needs instead. The only advantage conservatives have is that people like lower taxes.

This little bit is accidentally interesting, though.

In one of the exchanges that rippled outward from last week’s debate on National Review Online, [Mark] Levin exhumed an old David Frum post from 2005 praising Levin’s earlier book, “Men in Black.” I was less interested in the “gotcha,” though, than this line of Frum’s from five years back:

I’m reminded of something that John Podhoretz said many years ago: The great advantage that conservatives have over liberals is that we are bilingual. We can speak our language and we also know theirs. They however even now still don’t know ours and cannot be bothered to learn.

Conservative Big Media is many things, but bilingual isn’t really one them. And a less bilingual conservatism is a weaker conservatism, I suspect — no matter how high Fox News’ ratings go.

Liberals have always been reluctant to use conservative language to talk to conservatives. They think that pretending to conform to ideals they don't hold is dishonorable. To conservatives, nothing is more honorable than paying lip service to something you don't believe. It's a sign of faith and unity, both core principles in conservatism. Liberals should be using the language of faith, since that is the language of morality in the US. It will expose the core hypocrisy of Republican morality and force them to go on the defensive for once. Most important of all, it will be immensely entertaining to see the Right explain why they don't live up to the ideals they want to shove down others' throats.

Here's one especially good example of conservative hypocrisy doing its little dance of the seven veils. Kathryn Jean Lopez has a new BFF: Miss Janine Turner, star of stage screen Lifetime movies, found herself in a delicate situation. One of her relationships ended when she became pregnant, and Turner found herself a single mother. Ordinarily that would be a very, very bad thing; a Hollywood actress who engages in extramarital sex and has a child out of wedlock. But Turner is a conservative, and was able to convince herself that it's okay for a nice Baptist girl from Texas to get knocked up after all!

This is not how I envisioned the drama of my life, the joy of bringing a child int the world, but life presented itself to me in this way. Yet I have thanked God every day that I'm a mother, even if a single mother, because God has blessed me with sweet Juliette. And I have never, for one moment,doubted that God designed Juliette to be born, no matter the circumstances. God wanted Juliette to be here. God sees eternity in perspective.

And why did God give her this miracle?

If my life had been picture perfect then I might not have reached out to God the way that I have ardently and consistently done. Consequently, I have enjoyed a rich friendship with God, and so has my daughter. God has taught me to hold my head high. I'm on my knees in praise every morning and every night. God is great.

Now, that was easy wasn't it? Your child is special and a gift from God. Yours was practically sanctified by God! Other illegitimate children are a symbol of society's decline, however. Other families need a father and mother, you don't. Other pregnancies are punishments for sins; yours in a blessing. Other women were sluts and got knocked up; your pregnancy was "presented" to you. God wanted you to screw around, get pregnant, and be abandoned by your boyfriend, because it would draw you closer to him. (Although she refused to name the father, everyone in Texas knew who he was and in fact Turner later added his last name to her child's name.) What a great guy!

Using the language of faith to expose conservative hypocrisy would not only be successful, it would also help reveal to the public a valuable source of entertainment in this unhappy times.

Now Let's Talk About Me

Megan McArdle wrote a review of a book called Marry Him, by Lori Gottlieb, in which Gottlieb recommended that other women "settle" for a man who is less than ideal, rather than regret their unmarried state for the rest of their lives. The culprit, of course, is feminism, which made women "too picky about their dating lives," to quote McArdle's description. After many paragraphs of maybes and on-the-other-hands, McArdle decides that while it might be better to have a "bitter, unhappy ex-husband" than to be a single mother, it's hard to generalize.

So maybe it is, maybe it isn't, but that's not the important part of the review. The important part is the chance for McArdle to inform the audience that while He's Not That Into You, Megan McArdle is the exception to the rule. Cutting away all the parts that are not about Megan, we are left with this:

[Waiting to marry] is a slightly sensitive topic for me to write about, of course--I'm a woman in her thirties who will, barring tragic accident, get married in six weeks. My dating prospects did not dry up as I moved deeper into my thirties (much to my surprise), possibly because I was a skinny woman with a baby face. I won't say, coyly, that I never really thought about [being unable to find a husband] (because I'm too fabulous to worry; I did, and frankly I find it awfully hard to believe any woman in her late thirties who declares that it never crossed her mind.[)] I decided I wasn't going to settle, because I suspected that if I settled down with someone who wasn't a good match, I'd have killed either him, or myself. Then as luck would have it I didn't have to--I met someone as ideally suited to me as is possible in this vale of tears. That women should have to think about [getting older and not finding a husband and having a baby], while men don't, is certainly unfair, and I understand why feminists resist accepting it. But not all unfair things can be rectified.

Does she find that people often roll their eyes when she's around? Wince? Look at their watches? Have to meet a deadline?

Letting Go

This is the direction we must take:

In my travels around the world, I encounter two Catholic Churches. One is the rigid all-male Vatican hierarchy that seems out of touch when it bans condoms even among married couples where one partner is H.I.V.-positive. To me at least, this church — obsessed with dogma and rules and distracted from social justice — is a modern echo of the Pharisees whom Jesus criticized.

Yet there’s another Catholic Church as well, one I admire intensely. This is the grass-roots Catholic Church that does far more good in the world than it ever gets credit for. This is the church that supports extraordinary aid organizations like Catholic Relief Services and Caritas, saving lives every day, and that operates superb schools that provide needy children an escalator out of poverty.

This is the church of the nuns and priests in Congo, toiling in obscurity to feed and educate children. This is the church of the Brazilian priest fighting AIDS who told me that if he were pope, he would build a condom factory in the Vatican to save lives.

This is the church of the Maryknoll Sisters in Central America and the Cabrini Sisters in Africa. There’s a stereotype of nuns as stodgy Victorian traditionalists. I learned otherwise while hanging on for my life in a passenger seat as an American nun with a lead foot drove her jeep over ruts and through a creek in Swaziland to visit AIDS orphans. After a number of encounters like that, I’ve come to believe that the very coolest people in the world today may be nuns.

So when you read about the scandals, remember that the Vatican is not the same as the Catholic Church. Ordinary lepers, prostitutes and slum-dwellers may never see a cardinal, but they daily encounter a truly noble Catholic Church in the form of priests, nuns and lay workers toiling to make a difference.

It’s high time for the Vatican to take inspiration from that sublime — even divine — side of the Catholic Church, from those church workers whose magnificence lies not in their vestments, but in their selflessness. They’re enough to make the Virgin Mary smile.

We can try to elect leaders who will, we hope, help us. That method has been spectacularly unsuccessful. Or we can help other people. That method hasn't really been tried yet. It's very slow and much less pleasant, but it is the right thing to do and in the end it will get us what we want--a society that works together to help those who need it. Empower the poor. The only power we have access to is the power of numbers. Trying to grasp a tiny smidgen of power from politicians, servants of the corporations, is a waste of time and money.

Less Tall Megan

Shorter Megan McArdle: The lawsuit involving the illegal practices of the shadow banking system that helped bring down the world economy is nothing but a PR battle.

It's cute to see McArdle's sudden and intense concern for the problems with the SEC. The Democratic administration has motivated wingnuts to a brand-spanking new sense of duty and previously unknown levels of industry.

ADDED:

Shorter Because She's Not Worth A Longer Megan McArdle: Ugh, new $100 bills. Who cares about stupid old counterfeiters anyway?

If the counterfeiter is North Korea, the US government does.

Across The Atlantic: I'm So Happy Just To Shill For You

Before this day is through,
I think I'll shill for you too,
I'm so happy when I shill for you.
I don't wanna write or report facts
If it's funny, know that I'm a hack.
There is nothing else I'd rather do,
'Cos I'm happy just to shill for you.
I don't need to try with all my might,
I just wanna shill for you all night,
In this world there's nothing I would rather do,
'Cos I'm happy just to shill for you.
Just to shill for you is everything I need,
Before this day is through,
I think I'll shill for you ,
I'm so happy when I shill for you.
If somebody tries to take my place,
Let's pretend, we just can't see her face.
In this world there's nothing I would rather do,
'Cos I'm happy just to shill for you.
Just to shill for you is everything I need,
Before this day is through,
I think I'll shill for you,
I'm so happy when I shill for you.
Oh, oh 'cos I'm happy just shill for you.
Oh, oh.

Fair And Balanced

Good Lord, Megan McArdle has up yet another article trying to spit-polish Goldman, Sachs's reputation. You'd think someone just called her mother a whore, the way she's leaping to the defense. Did they offer to pay for her wedding, or does she just roll that way?

So the vote on the SEC to bring charges against Goldman broke down by party lines. Liberals, understandably, view this as evidence of malfeasance. But of course, there's an alternative interpretation also consistent with these facts: that Democrats brought a weak charge that won't stand up in court because they thought it would help them push through their bank reform.

Please, McArdle, don't go over the charges and determine their merit to the best of your ability, or research and determine the facts. I know you're dying to go over the issue in detail, but it's not necessary at all. Perhaps you can just consult your social circle. That'll be just as good as research, addressing the argument, and analyzing the facts.

One piece of evidence in favor of this: none of the people I know who are familiar with securities law think that the government has a strong case; the opinions range from "seriously pushing the envelope" to "give me a break."

Excellent! I'm dying to know what the latte-sipping Reason crowd think about this alleged fraud.

And no, these aren't my fat cat friends on Wall Street; they're folks like Economics of Contempt, who has had more than a few harsh words about Republican efforts to stall reform.

I've always found it best to look around the web and read what everyone else is thinking, instead of doing the actual work myself. Life is short, you know, and it's much less time-consuming to report on what others are thinking than to actually do any thinking myself.

It is, of course, entirely possible that I'm missing a lot of top-notch securities lawyers who think the government has a slam dunk.

No! You mean there are experts to consult but you missed them, no doubt while they passed by like a ship in the night. Too bad there was nothing you could do about that, like seek out an expert or do research.

But there's a plausible argument that the government simply demanded too high a settlement, either because it wanted a political coup, or because it just miscalculated.

Please, don't bother going over the argument so we can think for ourselves. We do so enjoy watching you watch others think, and then scampering back to us and telling us what Economics of Contempt or Radley Balko or Felix Salmon think.

Particularly since I think Economics of Contempt is right that Goldman would have been better off settling. On the other hand, now that the lawsuit's been filed, I'm not sure that's still so.

By all means, report on both sides equally and fairly. That way you don't have to figure anything out.

I'm sure they want to avoid another embarrassment like the Fab Tourre email.

Yes, admissions that the CDO you're selling is worthless can be so embarrassing.

But if they settle now, they're guilty. If the government loses, it looks bad, and is less tempted to throw its weight around. If they're willing to endure the bad publicity, they might be better off seeing it through.

She's so even-handed. You'd almost be unable to determine what she actually thinks, and therefore be unable to pin her down later as biased or wrong.

To return to the broader political question, I confess, I'm baffled by the Republican opposition to financial reform; it seems politically stupid, and I'm having a hard time seeing the ideological principals that are motivating it. I mean, I understand the fundraising advantages, but what's the good of having a bunch of money if everyone thinks you're in the pocket of the banks . . . which is, after all, possibly your most effective weapon against Obama? So there's an argument to be made that even if this indictment is a political stunt, it's necessary in the face of intransigent opposition.

Everything is politics. It's not about preventing abuses of the financial system.

But on balance, I do not find that argument convincing. Regulatory agencies should not be in the practice of helping serve the political ends of the party in power, no matter how worthy those ends. In practice, of course, they often do . . . think district attorneys around election time. But we shouldn't encourage it. To the extent that we want to have anything like a working technocracy, we need those institutions to be as independent from politics as possible.

Says the woman who watched and approved as the Republicans removed necessary banking regulations on the behalf of their political contributors, which brought on this disaster.

Also: an interesting article on the Koch fortune, via The Sideshow. Remember how McArdle said that David Koch didn't support the tea partiers and astro-turfers, which she knew because she met him at a cocktail party? Heh.

The Propaganda Delivery System Of The Elite

Almost everyone begins life with the desire to be loved and wanted by their family. Often people expand their family group to include the community, state, religion, nation, and political party. Usually people consider themselves a part of the group, but sometimes they also consider themselves one of the elite leaders of the group, whether or not they are actually one of the elite. The purpose of conservatism is to preserve the status of whomever happens to be in power at the time.

Conservatism in the Land Of Progress was a bit of a joke until the white power structure came under attack by the dispossessed--the working poor, women, minorities. The ruling elite exploited the group identity of its conservative followers using fear of the other, in these cases the other races and sex, to maintain their power. This worked very well for the elite, who paid the lesser elite, the aristocracy (or Villagers, as we call them now), to do the actual exploiting and conserving. Many think tanks and institutes were born, and many clever politicians were nurtured on the mother's milk of payoffs. But the Other had elites as well, elites who did not yet have enough power to exploit their own members, although that came in time.

Meanwhile, the conservatives attacked the elite Other, which of course chipped away at the reputation of all minor elites. Newspapers gave way to a few television stations, which gave way to many sources of information--so many, in fact, that conservatives never had to hear a dissenting word if they didn't want to. Talk show hosts and political preachers gradually replaced journalists and public intellectuals, just as a blend of news and entertainment replaced Edward R. Murrow. The elite journalists were no longer needed to pass on the message; they were being by-passed by the new conservative aristocracy, the propagandists, to spread their propaganda directly to the people.

And so David Frum is told his services are no longer required, since they no longer are. You don't need a Harvard Man to explain to the authoritarian followers why they should elect a dog-whistle candidate like Bush or Santorum or Mitch McConnell. You just have to blow the dog whistle.

Billmon considers the Conservative Party.

The business, of course, is disinformation: the creation of a closed loop of emotions, beliefs and pseudo-facts that buttress, at all times and all points, the party line.

However, the more I study this, the more I’m convinced the primary goal of the exercise isn’t to convince the broader public, whom I think the Rovians essentially view as the equivalent of the "proles" of 1984 -- dull lumps of unthinking flesh who, nine times in 10, will follow the loudest, most simplistic and most passionate voice they hear.

The goal of conservative disinformation, then, is to provide that voice by creating the kind of "mind" (e.g. epistemic community) among the true conservative faithful that [Julian] Sanchez is talking about: one impervious to reason, logic and -- most importantly of all -- factual evidence. The growing nervousness of some conservative intellectuals, like [Ross] Douthat and Frum, about this project perhaps reflects the dawning realization that they are basically irrelevant to its success.

They are indeed. They are no longer needed; all that is needed is to parade Sarah Palin around on the Discovery Channel, or sponsor tea parties as Fox has been doing. It's not poliltics, it's Politainment! No brains needed at all, and in fact there is always the danger that the Villager will dissent from the elite's plan, out of hubris or greed or vanity.

The creation of a closed mind is, of course, a prerequisite for successful doublethink (defined as the ability to hold two diametrically opposed beliefs at the same time, and to immediately change one or both of those beliefs when instructed). By their very nature, doublethink constructs tend to be fragile. They have a low tolerance for contact with non-managed reality -- much less open debate (thus the need, in 1984, for the constant writing and rewriting of history, to ensure a seamless and timeless continuity to the party line).

But the real breakthrough discovery by the conservative propaganda machine (Fox News, in particular) is that despite this inherent fragility, it doesn’t take an Orwellian police state to create and maintain the kind of self-contained, artificial consciousness that doublethink requires. Indeed, it can be done even in a supposedly free and open society....

[snip]

One final note: I should clarify that when I refer to the creation of a "self-executing" conservative doublethink as a breakthrough, I’m only talking about the American political experience. The ability of an authoritarian movement to build a powerful false narrative -- and then persuade millions of followers not only to believe it but actively defend it against encroaching reality, even in a more-or-less free society -- was clearly demonstrated in Weimar Germany during the 1920s and ’30s by [GODWIN REDACTION].

One can hope the peculiarities of time, place and culture explain much, if not all, of the catastrophic success of that previous experiment, which is unlikely to be repeated now.

But I’m not entirely sure it would be the smart way to bet.

The only thing that is needed for a recreation of Weimar Germany is an authoritarian people who would rather kill than let go of their needs and desires--and we already have that.

Lauds (Morning Prayers)

As we have seen, Goldman, Sachs is being sued by the SEC for fraud and Megan McArdle is defending them, both in The Atlantic and The New York Times. Let's take a look at her (second) defense from The Atlantic. It's a marvel of mitigation from the Queen of Failure and Defender Of The Faith Banks.

There's been a lot of indignant chatter about how Goldman Sachs had been selling investors long positions that they were short on, and how this represented a conflict of interest, or something.

The word she can't find is fraud. "Or something" pales in comparison, as if the banks have been naughty but Nanny can't quite figure out what they've done behind her back. The "indignant chatter" is also known as sued for fraud. McArdle knows this because she linked to a Wall Street Journal about the suit.

This rather fundamentally misunderstood the role of a market maker, which is, after all, to take the other side of the trade.

Because she (presumably) read the article she linked to, McArdle knows that there is no misunderstanding, but as she wishes to mitigate the actions of Goldman, Sachs, she lies, pretending that she does not know GS's role in the fraud. It wasn't a matter of taking the other side of the trade, it was a matter of hiding knowledge that the CDO it sold was worthless.

On the other hand, if the SEC complaint filed today holds up, these complaints will turn out to have a certain . . . truthyness . . . to them:

Truthyness, according to the Urban Dictionary, means "when you are meaning to tell the truth but are actually lying." Truthiness means "a "truth" that a person claims to know intuitively "from the gut" without regard to evidence, logic, intellectual examination, or facts." So McArdle is actually insinuating that the SEC is lying. McArdle gives a quote from the SEC complaint, then says:

One wants to be cautious about saying that Goldman Sachs is definitely guilty.

Of course one does. McArdle is not a heretic, and is willing to give her religious authorities the benefit of the doubt. Just as Kathryn Jean Lopez will always throw the full weight of her support behind the pope, McArdle will defend her faith to the death.

Financial crises produce immense political pressure for securities regulators and attorneys general to go head-hunting, and the cases often turn out to be weaker than they seem once the defense gets a chance to speak.

Everyone is out to get the Catholic Church banks! It's anti-bank bigotry! What about the freedom to worship, huh? It's in the Constitution and everything!

The case against two Bear Stearns hedge fund managers, for example, turned out to hinge on horrific-sounding quotes that had very clearly been ripped out of a context that totally changed the implications. Which just goes to show how heavy the pressure is on prosecutors to make these cases.

It's just prejudice. And politics. Democrats hate banks and Obama can't wait to punish his second largest presidential campaign contributor, the investment bank that gave him $994,795.00.

But it certainly sounds as if the SEC has the goods here. Felix Salmon has gone through the pitchbook, and pronounces it free of any indication that a third party with a strong economic interest in the transaction was picking the securities to be included. I will be interested to hear the defense rebuttal. It should, at the very least, be entertaining.

It's not a matter of national interest, it's just entertaining petty gossip.

Was anyone hurt by it? That's less clear--at that point, the market still had a bit of froth left, and people might well have bought the securities if Paulson's interest had been disclosed.

Nothing to see here, move it along. It's not like the article McArdle just read said:

According to the SEC, Mr. Tourre wrote in an email shortly before the bonds were sold that "the whole building is about to collapse anytime now." He described himself in the email as the "Only potential survivor, the fabulous Fab … standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstruosities!!!"

But let's not be hasty. Just because Touree's email said he knew the CDO was worthless doesn't mean people wouldn't have bought it if they knew it was worthless. Perhaps people just enjoy giving a billion dollars to obscenely wealthy crooks.

But that doesn't matter.

It might matter to the people who lost that billion dollars.

It's hard to imagine anyone making an argument that Goldman didn't have an obligation to disclose this information--and the fact that they failed to disclose seems to indicate that Goldman, at least, thought that the information would adversely impact the sale price.

Yes, it is hard to imagine, which makes it hard to explain why McArdle is trying to excuse Goldman's actions under the circumstances. But McArdle is hard to explain under so many circumstances.

I suspect this case will get a lot of public traction. At this point, what galls people is not so much the stupid behavior that led to the bailouts, but the blatant self-dealing that seems to have gone on.

Not crooked behavior--stupid. The people that had to have million-dollar bonuses because they were Too Smart To Fail are now too stupid to be punished for their illegal actions.

Unfortunately, much of that self-dealing is not actually illegal . . . so when we find an example that is legally actionable, the public and the court system are bound to jump on it with both feet.

I just can't believe that CNBC hasn't snapped this woman up yet. Sure, she didn't work at Goldman, Sachs like Jim Cramer and Erin Burnett, but surely her obsequiousness in its time of need will count for something?

Old News

Back in July of 2009, Matt Taibbi wrote a Rolling Stones article on the Wall Street machinations that helped create the current crises. He focused on Goldman, Sachs, and whenever bankers are attacked, we know Megan McArdle will rush to their defense. Which she did:

[Taibbi's account] is all technically true, and collectively nonsense.

It's always fun to be there at the birth of an internet tradition. McArdle can't call Taibbi a liar without being sued, so she says that the truth makes no sense, narratively speaking. At this point her pants should have spontaneously burst into flame, but most unfortunately that appears to merely be a playground taunt, and, while narratively true, is factually nonsense.

Investment trusts--aka mutual funds, now heavily regulated--were not the cause of the Great Depression. They were not even the cause of the stock market crash. They were an interesting sideshow that Galbraith included in his book because they were a vivid example of the froth. And Goldman was not the center of investment trust activity. They were one player among many whom Galbraith picked as an example, presumably because they happened to be still around and had a recognizable name. In other words, because their activity had been less extreme, and hadn't taken the bank down with it. Yet Taibbi turns this into a central example in the exhibit against them. Then there's a 65-year gap in the indictment, presumably because no one has written an engaging popular book about the stock market convulsions of the 1970s.

Then the reserve of popular investment post-mortems fattens, and suddenly there's a lengthy litany of new complaints about Goldman: pumping, laddering, spinning. Eric Martin defends Taibbi on the grounds that it's all true. I myself firmly believe that these things are true (she said, looking demurely over her shoulder at the nice man from Legal).

McArdle is forced by those horrid things, namely, facts, to admit that Taibbi is telling the truth. So what does an expert on failure do when she is forced to explain how her heroes of the universe failed? Pump, ladder and spin, just like the objects of her worship.

But it's all old, old news.

It was 2007.

It's not even a particularly well-written or thoughfully analyzed summary of the exhaustive treatments of the subject by the fuzzy headed moderate business journalists Taibbi disdains.

There are simply too many notes.

Investment banks treated their clients disgracefully during the internet bubble, and a lot of the clients were managers who did the same to their shareholders. But what does this have to do with the current financial crisis? Perhaps more to the point, how is it a special indictment of Goldman, the ostensible topic of his piece? Other banks did more and worse.

Who knew that successful methods for analyzing failure including saying, "he did it too!"

Even as an indictment of the system this thing is lacking, and showcases Taibbi's lack of fundamental conceptual understanding.

Arguing from authority only works if you are an authority.

He complains about CDO's on the grounds that Goldman hid the atrocious risks inside a fancy dan derivative package that no one could understand. But in fact, everyone was aware that CDO's were repackaging crap mortgages--that was the point. The idea was pure portfolio theory, broadly agreed upon by everyone involved. Everyone knew a lot of the mortgages might go bad, either by defaulting or prepaying. (This is a risk for bankers, who don't like the idea that if interest rates drop, their 7% mortgage might suddenly turn into a pile of non-interest-bearing cash which can only be invested at 5%.) But if you pool the risk, only some of the bonds will go bad, while others pay off. The result is a less risky, less volatile investment than any individual junk mortgage bond. And it would have worked, too, if it hadn't been for those crazy kids a collapse in the housing market of a scale not seen since the Great Depression.

Taibbi quoted a hedge-fund manager who pointed out one simple fact--everyone didn't know about the weakness of the CDO, because Goldman didn't tell them. The quote:

"That's how audacious these assholes are," says one hedge-fund manager. "At least with other banks, you could say that they were just dumb - they believed what they were selling, and it blew them up. Goldman knew what it was doing." I ask the manager how it could be that selling something to customers that you're actually betting against - particularly when you know more about the weaknesses of those products than the customer - doesn't amount to securities fraud.

"It's exactly securities fraud," he says. "It's the heart of securities fraud."

Faced with inconvenient facts, McArdle flounders around with bogus excuses.

First of all, of course banks sell people positions they aren't themselves taking. Sometimes the bank is right, and sometimes the customers are; differences of opinion are what make marriages and horse races.

Irrelevant. The issue is Goldman's knowledge that the positions were bad.

Second of all, the banks that went down, the ones that arguably caused the financial crisis, were long their own toxic waste (and that of others).

Irrelevant, for the same reason.

Third of all, Goldman itself might argue that its mortgages were not as toxic as others, and for all I or Matt Taibbi know, they might be telling the truth.

The question is, what if they aren't? Is not!/Is too! isn't really a productive method of argument.

Fourth of all, the disconnect between the underwriting and the customer side of the investment houses was not only legal, but in some cases, mandatory. Excessive entanglement between the two is why Henry Blodget, whom Taibbi references elsewhere, has been banned from the securities industry for life. That Taibbi could even ask how this was not securities fraud is really troubling.

You know who else asked if this was fraud? The SEC.

Undisclosed in the marketing materials and unbeknownst to investors, a large hedge fund, Paulson & Co. Inc. ("Paulson"), with economic interests directly adverse to investors in the ABACUS 2007-AC1 CDO, played a significant role in the portfolio selection process. After participating in the selection of the reference portfolio, Paulson effectively shorted the RMBS portfolio it helped select by entering into credit default swaps ("CDS") with GS&Co to buy protection on specific layers of the ABACUS 2007-AC1 capital structure. Given its financial short interest, Paulson had an economic incentive to choose RMBS that it expected to experience credit events in the near future. GS&Co did not disclose Paulson's adverse economic interests or its role in the portfolio selection process in the term sheet, flip book, offering memorandum or other marketing materials provided to investors.

In sum, GS&Co arranged a transaction at Paulson's request in which Paulson heavily influenced the selection of the portfolio to suit its economic interests, but failed to disclose to investors, as part of the description of the portfolio selection process contained in the marketing materials used to promote the transaction, Paulson's role in the portfolio selection process or its adverse economic interests.

[Goldman, Sachs employee Fabrice] Tourre was principally responsible for ABACUS 2007-AC1. Tourre devised the transaction, prepared the marketing materials and communicated directly with investors. Tourre knew of Paulson's undisclosed short interest and its role in the collateral selection process. Tourre also misled ACA into believing that Paulson invested approximately $200 million in the equity of ABACUS 2007-AC1 (a long position) and, accordingly, that Paulson's interests in the collateral section process were aligned with ACA's when in reality Paulson's interests were sharply conflicting.

Megan McArdle was utterly incapable of assessing and analyzing the failure of Goldman, Sachs and the entire banking industry because she is utterly incapable of accepting a reality in which her pet authority was wrong and venal. She simply ignores the facts, makes up a long list of bullshit reasons to ignore the facts, and calls the bringer of the facts a big poopyhead who doesn't know what he's talking about and who won't listen to the smart elites who do know what they're talking about. Like Megan McArdle, Queen of Failure and Defender of Banks' Honor.

The Role Of Women In Society by Mrs. Suderman, A Lady

[A] quarter of an hour quite convinced [Emma] that Mrs. Elton was a vain woman, extremely well satisfied with herself, and thinking much of her own importance; that she meant to shine and be very superior, but with manners which had been formed in a bad school, pert and familiar; that all her notions were drawn from one set of people, and one style of living; that if not foolish she was ignorant, and that her society would certainly do Mr. Elton no good.

Emma was not required, by any subsequent discovery, to retract her ill opinion of Mrs. Elton. Her observation had been pretty correct. Such as Mrs. Elton appeared to her on this second interview, such she appeared whenever they met again,—self-important, presuming, familiar, ignorant, and ill-bred. She had a little beauty and a little accomplishment, but so little judgment that she thought herself coming with superior knowledge of the world, to enliven and improve a country neighbourhood; and conceived Miss Hawkins to have held such a place in society as Mrs. Elton's consequence only could surpass.

Emma, by Jane Austen


Although I tremble to directly address those of greater learning and understanding than myself, I take pen in hand to give my poor, ignorant opinion regarding the place of women in society today. This is a topic of frequent discussion amongst my father Mr. McArdle's country seat, Upper West Side, where I grew up. Indeed, Washington is very like Upper West Side in attractiveness and exclusiveness, although it has a shocking lack of parks and other amenities that made Upper West Side such a charming, beautiful place. When you are transplanted like me from a beautiful country seat (which my father had for quite a long time, indeed, most of his adulthood) to a smaller, less convenient set of rented rooms, you will be able to appreciate how difficult it is to leave such happiness behind. But I digress.

Interestingly, this debate on the role of women seems mostly to be taking place among libertarian men, while I am here, ready to be consulted. Not that I expect to be consulted, mind you, being only a humble female, yet I do believe my utterly unique experience as the only female libertarian of any merit should have led those of good breeding like my own to seek out my opinion.

Some might have misunderstood me when I said that the conservative (and by association libertarian) is the Negro of academia and media, so let me hasten to add that the Negro has been mostly sorely vexed and put upon, and while I am a modest women, I too have felt vexation at the constraints placed upon women like myself in previous eras. Women of other classes do not feel the same restrictions as myself, of course. We were banned from rising to our natural station in life, forced to take jobs no woman of my class could ever want.

Most women would not have become professionals in the first place and so were not affected by this prejudice against women in the workplace. Most women saw their role as a wife and mother, and no doubt if they became widowed or needed to supplement their husband's small income by working in factories and shops, they could go to their fathers for additional support, as I did when unemployed.

While nothing is more unjust than trying to inflict justice on others, I still find it personally advantageous to have equal rights, and therefore am willing to accept whatever privileges my rank and wealth can give me, no matte how wrong it might be. Nothing is worse for a marriage than power inequality, which should exist solely in the economic spheres of the lower classes, who by virtue of their lack of morals and hard work have found their natural level. Not even my caro sposo, dear Mr. S., a Christian ("former") evangelical most unimpeachably committed to equality, in theory and action, could be trusted with that much power over his wife.

McAmerican McExceptionalism

In her attempt to smooth over her stupidity in comparing the prejudice against African-Americans to conservatives' supposed exclusion from academia and the media, Megan McArdle compares Obama's relationship to Rev. Jeremiah Wright's Trinity Church to Bush's relationship with evangelicals and Bob Jones University.

There is, as expected, a lot of discussion in the comments to my previous post about whether you can compare Jeremiah Wright to Bush's visit to Bob Jones university. In terms of saying "Which is worse", I'm not sure this is useful. Bush went somewhere reprehensible to campaign, once. Obama developed a close relationship with someone saying somewhat less reprehensible (but also, crazier) things, and apparently never called him out. Which is worse is bound to be about 100% correlated with your political persuasion. But I'm not interested in the moral equivalency; I'm interested in whether it is true that one party keeps its fringe at arm's length, while the other party embraces it. I think that for either party to say this requires some pretty energetic airbrushing of its own less salutary moments, and also, of course, a fairly hefty amount of bias as to what ideas you consider actually crazy, as opposed to merely a tad radical.

This are the "crazy" things that Rev. Wright has said that McArdle finds so objectionable:

Where governments lie, God does not lie. Where governments change, God does not change. And I'm through now. But let me leave you with one more thing. Governments fail. The government in this text comprised of Caesar, Cornelius, Pontius Pilate - the Roman government failed. The British government used to rule from East to West. The British government had a Union Jack. She colonized Kenya, Ghana, Nigeria, Jamaica, Barbados, Trinidad and Hong Kong. Her navies ruled the seven seas all the way down to the tip of Argentina in the Falklands, but the British government failed. The Russian government failed. The Japanese government failed. The German government failed. And the United States of America government, when it came to treating her citizens of Indian descent fairly, she failed. She put them on reservations. When it came to treating her citizens of Japanese descent fairly, she failed. She put them in internment prison camps. When it came to treating citizens of African descent fairly, America failed. She put them in chains. The government put them on slave quarters, put them on auction blocks, put them in cotton fields, put them in inferior schools, put them in substandard housing, put them in scientific experiments, put them in the lowest paying jobs, put them outside the equal protection of the law, kept them out of their racist bastions of higher education and locked them into position of hopelessness and helplessness. The government gives them the drugs, builds bigger prisons, passes a three-strike law, and then wants us to sing God bless America? No, no, no. Not God bless America; God damn America! That's in the Bible, for killing innocent people. God damn America for treating her citizen as less than human. God damn America as long as she keeps trying to act like she is God and she is supreme!

And what did McArdle get out of this speech?

Similarly, a lot of white conservatives know one thing about Jeremiah Wright: he apparently at least occasionally goes off on lengthy rants about the united states, and white people. Since that's all they know, when they think of Obama as attending the church, they tend to think of him as embracing the rants against white people. But just as with Bob Jones, attending a hard core church is a way of embracing a community which mostly has nothing to do with ranting about white people, and the improbable accusations against the government. The black commenter who is angry that I brought it up understand this--but doesn't think of Bob Jones as also having a host of other values attached to it.

Since when was God an American? Why does God owe us allegiance over all other nations? Why should God bless our endeavors--our wars, our murders, our contracts on our own citizens, our oppression, our greed and vanity? McArdle thinks it's crazy to put God over country. To put helping the poor over capitalist success. To put peace over killing innocent people. To put morality over nationalism.

Yes, the hatred and disgust of Christian bigots is exactly like African-Americans' anger and grief over their abuse and exploitation.

Shame, McArdle. It's not just for poor unwed mothers, you know.

Roundabout

Shorter Megan McArdle: People are risking my life by ignoring the traffic laws that I, a libertarian, don't believe in, except when they benefit me.

Shorter Commenters: We, as libertarians, are annoyed by Americans' "outsized sense of personal liberty."

One commenter is consistant--"Probably the best thing you can do is make yourself up in a fashion that nobody wants to hit you [with their car]."

And if you don't want factories to pump pollutants in the air, make yourself up so nobody wants to poison you.

Jesus Wept

Shorter Kathryn Jean Lopez: Sure, child raping and molesting priests are bad, but do you know what's really bad? Liberal priests!

Work Wanted

Shorter Megan McArdle: Conservatives are the Negroes of the academic and entertainment industry.

What's wrong, sweetie? Your boyfriend's internship is almost up and he can't find a job in the mainstream media?

Jesus! I was just joking, but curiosity made me check her archives.

If it's a recession when your neighbor loses his job, and a depression when you lose yours, the depression just ended for the McArdle-Suderman household. Peter has accepted a Koch fellowship* to work at Reason for the next eleven months, and today's his first day.

That was June of 2009. It's almost May, when P. Suderman's internship evidently runs out.

Arthur Silber is very, very ill and works for free. His work is very nearly the only honest, accurate portrayal of our society that exists. He is one of the very few people who sees clearly, speaks truthfully, and has the mind and heart to understand why we do what we do. And yet McArdle whines about her tea-bagger boyfriend's inability to find a sponsor for his venal, destructive work.

When I--if I--find a job, this blog will cease because I won't have the time or emotional energy. But I'm a jokester, a thorn, a nobody. Silber is worth a hundred of people like me.

Standards Of Living

Poor, poor Megan McArdle. She thought that the collapse of the financial market would benefit her personally, but she's out of luck.

We've been dipping our toes into the DC housing market recently, but after this weekend, I think I'm just about ready to give up. Anything that comes on the market at a decent price is snapped up almost immediately--by my count, mean time from listing to contract is under seven days.

[snippity snip]

This should be a golden time for buyers with decent credit, stable incomes, and modest requirement for neighborhood safety. But there's almost no inventory, and what there is, can't be sold.

And she had so looked forward to this opportunity!

Like most renters who hope to buy, I'm rooting for a continued fall, at least in the DC area. (Sorry, homeowners). For people like me in other cities, a new report from Deutsche Bank provides some reason for pessimism about the economy, but optimism about their personal prospects for homeownership: they rate overvalued cities, and are looking for price drops from 20% in San Luis Obispo all the way to 47% in New York City.

But alas, it was not to be, and McArdle must content herself with a rental that doesn't live up to her standards.

Nationwide, we're probably looking at a long period over which house prices don't fall, but they don't really rise much, either, and the market sorts itself out by letting inflation eat away the nominal value of peoples' outstanding mortgages. And over here on Florida Avenue NW, we're probably looking at a few more years crammed into an oddly-laid-out one-bedroom-plus den flip house.

McArdle could move further out and commute like everyone else. It's not quite so hip, but when you are in a relatively low-paid profession you have to compromise. We recommend to McArdle that she ask for a raise large enough to afford one of the charming DC houses so beloved of the media elite. They are grossly underpaying her for her efforts. She should have known better than to settle for journalist wages when other shills and lobbyists are making ten times her wage. But image is everything, and working for AEI or Cato would never have the same cachet as The Atlantic.

Ross Douthat Throws Pope John Paul II Under The Bus

In a feeble attempt to excuse Pope Benedict for his abetting of child rapists and molesters, Ross "sex is icky" Douthat throws Pope John Paul II under the bus, blaming him for Benedict's inaction. Benedict was in charge of handling the rape and molestation cases as the head of the re-named Inquisition, the Congregation for the Doctrine of the Faith. He was very active hunting down liberal priests and nuns, which is no doubt why he found it so difficult to stop priest child rapists and molesters. As pope, he felt it was necessary to ask George W. Bush for diplomatic immunity for one of his crimes; covering up the sexual assault of three Texas boys.

Lawyers for Pope Benedict XVI have asked U.S. President George W. Bush to declare the pontiff immune from liability in a lawsuit that accuses him of conspiring to cover up the molestation of three boys by a seminarian in Texas, court records show.

The Vatican's embassy in Washington sent a diplomatic memo to the State Department on May 20 requesting the U.S. government grant the pope immunity because he is a head of state, according to a May 26 motion submitted by the pope's lawyers in U.S. District Court for the Southern Division of Texas in Houston.

Joseph Ratzinger is named as a defendant in the civil lawsuit. Now Benedict XVI, he's accused of conspiring with the Archdiocese of Galveston-Houston to cover up the abuse during the mid-1990s. The suit is seeking unspecified monetary damages.

[snip]

The three boys, identified in court documents as John Does I, II and III, allege that a Colombian-born seminarian on assignment at St. Francis de Sales church in Houston, Juan Carlos Patino-Arango, molested them during counseling sessions in the church in the mid-1990s.

Patino-Arango has been indicted in a criminal case by a Harris County, Texas grand jury and is a fugitive from justice, the lawsuit says.

Of course Bush granted Benedict immunity.

Meanwhile, back at the chicken ranch, Douthat explains that Pope Benedict was right on top of the scandal that John Paul let fester.

So the high-flying John Paul let scandals spread beneath his feet, and the uncharismatic Ratzinger was left to clean them up. This pattern extends to other fraught issues that the last pope tended to avoid — the debasement of the Catholic liturgy, or the rise of Islam in once-Christian Europe. And it extends to the caliber of the church’s bishops, where Benedict’s appointments are widely viewed as an improvement over the choices John Paul made. It isn’t a coincidence that some of the most forthright ecclesiastical responses to the abuse scandal have come from friends and protégés of the current pope.

Has Benedict done enough to clean house and show contrition? Alas, no. Has his Vatican responded to the latest swirl of scandal with retrenchment, resentment, and an un-Christian dose of self-pity? Absolutely. Can this pontiff regain the kind of trust and admiration, for himself and for his office, that John Paul II enjoyed? Not a chance.

But as unlikely as it seems today, Benedict may yet deserve to be remembered as the better pope.

Strange--it was only a month ago that Douthat was preaching responsibility and criticizing Pope Benedict.

I think there are two things the pope can do. The first is to answer (or have the Vatican answer) allegations related to his time as archbishop of Munich in a “buck stops here” spirit, rather than just trying to deflect blame away from the pontiff’s person. Whatever then-Archbishop Ratzinger’s direct responsibility for allowing a sex abuser to return to public ministry, he was ultimately the man in charge in the archdiocese at that time, and he should be able to say “yes, I bear some responsibility,” even if he wasn’t the primary official at fault. This is what I meant when I said the pontiff should be willing to express contrition “on his own behalf,” as well as on behalf of the church as a whole.

Now it seems only John Paul II was to blame, as more facts become public and the public and press start to call for Benedict's resignation. I look forward to the next pope, when Douthat will, no doubt, write about that fine Pope Benedict, and how his successor just didn't live up to his predecessor's example.

Outsourcing

Megan McArdle discusses how to cut the deficit. She does not mention what happens when you cut spending during a recession/depression, so let's ask Brad De Long.

Before the Great Depression the U.S. government borrowed in time of war,and almost invariably ran peacetime surpluses to pay off accumulated war debt.The possibility of using the government deficit as a tool of macroeconomic management was never considered.

The Great Depression itself broke this pattern: both the Hoover and the first Roosevelt Administrations wished to maintain the pattern of peacetime surpluses, but both found the austerity required to achieve surplus in the midst of the Great Depression to be politically impossible. In the end—backed by Keynesian and Keynesian-like economic theories—the political nation made a virtue of necessity by concluding that large deficits in time of recession helped moderate the business cycle.

In the generation after World War II, economists and politicians moved toward a consensus position on deficits set out by the CED [Committee on Economic Development]: set tax rates and expenditure plans so that the budget would be in surplus or in balance at high employment, but do not take any steps to neutralize the “automatic stabilizers” set in motion as the budget swings into deficit when recession threatens (and perhaps take discretionary action to further stimulate the economy in recession should the “automatic stabilizers” be seen as too small to be fully effective.

Unfortunately, the American political system seems unable to hold more than one idea at a time. The idea that “cyclical” deficits in recession could be good appears to have weakened attachment to the idea that persistent “structural”deficits that lowered the national savings rate were a bad idea. The Reagan administration called for large tax cuts—and Congress never refuses a presidential call for a tax cut—that created substantial and damaging structural deficits in the 1980s. Confusion between “cyclical” and “structural” deficits appears to have played an important role in the creation of the structural deficits of the 1980s. And revulsion in the 1990s against the persistent “structural”deficits has led to proposals for balanced-budget amendments to the Constitution that would eliminate the government’s ability to run beneficial“cyclical” deficits to moderate recessions.

Meanwhile, Matt Taibbi finally remembers that McArdle exists and wrote a foolish post criticizing his work on Goldman Sachs.

P.S. A friend of mine reminded me of this — over the summer, the Atlantic’s Randian blowhard Megan McArdle wrong a long criticism of my Goldman, Sachs piece. In making her case, McArdle in one part was trying to argue that I was naively painting all derivatives with the same brush, her point being that CDOs and CDS are nothing like, say, rate swaps. Which of course they aren’t, but that’s not the point; the similarity is in the fact that they’re not regulated at all. In any case, she writes:

To give you a flavor of what I mean, Taibbi rants about how we knew derivatives were bad bad BAD! because they’d gone so badly wrong before… But it’s not clear how much derivatives regulation would have helped any of these three companies. Gibson was defrauded by its bankers. P&G wasn’t; they spent a great deal of money unwinding their positions when the Treasurer realized they had a lot of exposure on a bad bet on falling interest rates. Orange County, too, was making a massive, levered bet on a steep yield curve (roughly, a large difference between short and long term interest rates) that came undone when the yield curve flattened and interest rates rose. Moderately complex derivatives allowed its idiot financial manager to take somewhat larger bets, but you can take massive, money losing bets without them. At any rate, none of these derivatives have much to do with CDOs or CDSs; you might as well conflate stocks and bonds because they’re both “securities”. No one, as far as I know, is now proposing that we need to curtail the use of interest rate swaps.

McArdle wrote this after Jefferson County had blown up. This is just FYI. It’s on par with Charlie Gasparino calling the notion that Hank Paulson and Lloyd Blankfein were regularly on the phone with each other brokering the AIG deal “the mother of all conspiracy theories.” The story about Blankfein and Paulson’s regular phone contacts during the AIG deal broke in the New York Times just days after Gasparino’s post.

Heh. That post was full of fail on so many levels. Some of her assertaions were being disproved by her own magazine! My favorite exchange in the comments:

Downpuppy 9 months ago
So his facts are right, and his conclusion is right, but he was, ummm, shrill?
Taibbi will be devastated.

Megan McArdle 9 months ago in reply to Downpuppy
No, his facts are wrong, his conclusions are wrong, and only his discomfort with Goldman Sachs' role in our public life is correct. Since that's about 5% of the essay, and he doesn't even explore THAT in any interesteing way, F-

[And here is where McArdle remembers that lawyers and lawsuits exist, and Taibbi doesn't suffer fools politely.]

Megan McArdle 9 months ago in reply to Megan McArdle
Or perhaps a better way to say it is that the facts are right, but the mini narratives are ludicrously wrong, which makes the meta narrative suspect.

nillionaire 9 months ago in reply to Megan McArdle
That's an astounding self-reversal. The "mini-narratives" are the problem now? I haven't read the Taibbi article yet nor do I have a financial background so I can't really comment, but it reads like you are flailing here.

And what's with the tacked on Palin reference? Why in the world would you bring her up so unnecessarily?

Heh.

While we're at it, Matt Bai has something to say to McArdle as well.

“Are we now in a world where there is absolutely no recourse to the tyranny of the majority?” Megan McArdle wrote in her blog for The Atlantic, making the procedural case against the new law. “Republicans and other opponents did their job on this; they persuaded the country that they didn’t want this bill. And that mattered basically not at all.”

On the facts alone, this argument is a little wobbly. The polling on health care does not, in fact, lead to any simplistic conclusion about the will of the electorate; a lot of voters seem to favor key provisions of the law while opposing the law itself, which mostly proves that they are skeptical of the impact of any sweeping legislation that might come out of Washington, health-care-related or not. But more to the point, the conservative indictment fails a basic test of philosophical consistency. After all, the guiding rationale of the Bush presidency, and especially his handling of the Iraq war, was that real leadership often meant doing what was mightily unpopular. Republicans embraced the Bush-Cheney administration as the antidote to Bill Clinton’s presidency, with its relentless emphasis on approval ratings and “triangulation.” Are those same Republicans really going to argue now that it’s immoral for Bush’s successor to enact his agenda because it doesn’t create a spike in the latest tracking poll? On the scale of political hypocrisy, this has to fall somewhere just behind John Edwards’s responsible-fatherhood initiative.

In a broader way, the problem with the “rammed down our throats” paradigm is that it undermines the critical ideal for which the Republican Party was named. The rise of the Internet society, and the ability we now have to register our every contemporaneous thought and to feel as if we speak directly to our leaders, has revitalized the tension in our politics between the idea of a constitutional republic and the more populist notion of an Athenian-style democracy. Digital technology makes ever more feasible a kind of government by plebiscite, in which the citizenry can decide everything by an instantaneous majority vote, sort of the way they do on “American Idol.” This concept appeals to some liberals, who have long complained that rural and less populated states exercise disproportionate influence over the affairs of the country under the current, state-based conceit.

[snip]

Ultimately, the job of our elected leaders isn’t to poll the majority and act accordingly, like responsive droids. It’s to make choices and then to persuade us that those choices were right for the country. McArdle lamented in her post that, unlike the governments of Europe, “we don’t have the mechanisms, like votes of no confidence, that parliamentary democracies use to provide a check on their politicians.” (Tragically, we also lack a queen.) And yet we do have these notable things called elections, and as no less a Republican than John McCain has pointed out, they have consequences. A record number of Americans participated in a pretty consequential election in 2008, which is why a Democratic majority and a Democratic president had every right to pass the most transformative piece of social legislation in 40-plus years. If the voters don’t like it, they can reverse themselves in about seven months’ time — and that’s exactly how the system ought to work.

If Obama does cut spending and makes the economy much worse, McArdle will be one of the first to say that it's just another example of irresponsible Democratic socialism.

How To Create A Megan McArdle

A Family Affair [Kathryn Jean Lopez]

From a $100 contributor to NRO's spring fund drive:

My husband and I frequently comment on what we've read on NRO in a given day around our little girls — a 2 1/2 year old and a 9-month old. The message seems to be sinking in — at dinner the other night, the oldest announced to great laughter that President "Bama" (as she calls him) wanted to take the M&Ms she worked hard for away to give to boys and girls who didn't earn them)! "And that's not very nice!" she emphasized, wagging her finger no.

I know $100 isn't much, but I want to do my part to make sure NRO is still around when my daughters are old enough to read. It has been invaluable to my husband and I and will be to them, too. In an ever changing, crazy world, it's comforting to have an anchor to keep us grounded! Thanks, NRO!

Give to NRO — making the world safe for M&Ms ..... ? Maybe run that line buy your 2 1/2 year old?

Save The Children

Kathryn Jean Lopez is horrified over the rape and molestation of children by priests.

There have been crimes. There are sins.

She has made a study of the world-wide scandal of priests raping and molesting children and has prepared an exhaustive rebuttal.

[M]uch of what is being reported on does not always live up to its billing.

She examines the suggestions being offered and thoroughly assess their likelihood for success.

[T]he solutions pundits present are not all that they think they are.

Lopez, an expert on sex, has made a examination of the effect of celibacy on men and has determined that the priests who rape and molest children do not have sexual problems, they have obedience problems.

For one thing, celibacy is not the problem. It’s easy to see why people who live in a culture that has made a religion of sex — believing it is the road to love and fulfillment rather than the expression of it — would insist that a man surrendering it, as well as his whole will, to Divine service, is simply impossible.

She has also developed a complete assessment of the Pope's possible role in the priest rape and molestation cover-up. The following is her entire rebuttal.

In truth, the problems that have led to all kinds of “filth” — to use the former Cardinal Ratzinger’s term of disgust for crimes and sins that he was made aware of while a cardinal at the Vatican and did not tolerate — and breakdown in so many American and other seminaries and dioceses stem from issues of integrity and fidelity, not the existence of celibacy.

[and]

[W]hile being the father of fraternal correction, crackdown, and cleanup, Pope Benedict XVI, in word and deed, is teaching and modeling what exactly being Catholic means to a few generations who haven’t been clear on it. He is an example of a leader who is living up to his office, while calling others to account.

The Pope, God's emissary on earth, the one chosen by the Church's cardinals to guide and protect the Church, is helpless in the face of priest rapists and molesters, however, says Lopez.

If there were easy, across-the-board solutions that would do away with sin, I’m sure he’d be all for it. The truth is that there aren’t. The answer to preventing moral breakdown — whether we’re talking about the Catholic Church or a marriage — is fidelity.

In her defense of the church Lopez does not mention rape or molestation or children, but no doubt that is a small oversight. Everyone knows that Lopez is all about protecting the lives of children.

Reality Is For Other People

Something is making Miss Kathryn Jean Lopez cranky.

Twitter 1: there are bigger fish to fry but the president's leg on the oval office desk is a jarringly perfect image of this administration's approach

Twitter 2: yes, bush put his feet on his desk too. doesn't quite change my view of the obama photo. and i'm sure i haven't surprised you any. enjoy.

Yes, let's not let facts get in the way of mindless hating. Now, what was it that Miss Kathryn Jean said about Bush Derangement Syndrome?

Once There's a Proper Treatment for Bush Derangement Syndrome... [Kathryn Jean Lopez]

..."history will provide a more clear-eyed verdict on this president’s leadership than the anger of current critics would suggest." So predicts Karl Rove, on his last day in the White House.

Don't you just want to do science experiments on her to see how far her self-delusions can go?

Here There Be Monsters

In each human heart terror survives
The raven it has gorged: the loftiest fear
All that they would disdain to think were true:
Hypocrisy and custom make their minds
The fanes of many a worship, now outworn.
They dare not devise good for man's estate,
And yet they know not that they do not dare.
Prometheus Unbound Percy Shelley


Glenn Greenwald asks:

What rational person can maintain that incidents like the one in the Iraq video are extraordinary and rare when the top General in Afghanistan is stating publicly that -- even in Afghanistan, where avoidance of civilian casualties is a claimed top priority -- we're shooting an "amazing number" of completely innocent people, including "families"?

No rational person can; those who support atrocities just because we do them are utterly irrational. Which brings us, as it so often does, to Megan McArdle.

I'm still not quite sure what to say about the now infamous video of pilots in Iraq shooting down a group of people, two Reuters cameramen among them.

McArdle is unable to make a moral judgement because she is unable to overcome denial. She thinks making judgements and decisions is too hard because every time she comes face to face with unpleasant facts, she hits a mental wall. Three years ago, The New Republic published a report that American soldiers were committing terrible war crimes in Iraq. McArdle dismissed the claims repeatedly, saying that Americans just wouldn't run over a dog with a tank. It doesn't matter if the report is true or not, McArdle uses the same approach to deny it happened, for the same reasons.

For starters, as some of my more critical commenters will be happy to affirm, Americans are really, really attached to dogs. As Radley Balko was telling me yesterday, libertarian media types apparently found it much easier to gin up outrage about Waco and Ruby Ridge by pointing out that the government agents had shot dogs, than by pointing to the dead human bodies, even children's bodies. I find it thoroughly conceivable that one or two psychos might go after dogs this way. I find it numerically extremely unlikely that everyone in a Bradley would have gone along with this; the military is disproportionately drawn from the dog-loving rural classes. Not to mention the fact that swerving back and forth in an IED-laden war zone seems exceedingly likely to get your unit killed.

McArdle simply denies that any such thing could have happened. She invents reasons that are not fact-based, and aren't even logical. She uses multiple stereotypes to support her opinion since she has no facts to back herself up. She states as fact things she does not know and could not prove. Because McArdle can't support her opinions she uses weasel words like "I find it likely" and "I find it numerically extremely unlikely" and "it seems exceedingly likely." She even says that the report probably isn't true because while activities like rape and murder will happen in war, it just defies logic to believe that soldiers would run over an animal in a tank. Because they wouldn't.

And now more atrocities are being reported, and our elite assessor of failure has not changed her opinion or method of reasoning one iota. This is what Megan McArdle has learned from failure: If you deny that you have failed, you get to keep your job shilling for the Man, your pride and vanity, and the thick protective shield of denial you use to make it through another day.

Mostly what I think at this point is that the video is considerably more ambiguous than the editorializing from Wikileaks suggests. That's not to say that the pilots were right; only that the video is clearly stripped of context, like why the pilots thought there might be insurgents in the area. Of course, it's not beyond imagination that some psychos with guns decided to shoot for the sheer joy of it; that's one of the tragic side effects of putting guns into the hands of large numbers of people. But they do at points seem to be discussing the rules of engagement, which you assume they wouldn't be if they were just shooting for the hell of it . . . indeed, if they were just shooting for the hell of it, one assumes that their camera would have some sort of "malfunction".

When the news about torture at Abu Ghraib prison came out, McArdle came out with more excuses. After all, who can know anything, ever?

This is denial in action; this is how it works. Many people grow up hating themselves. Their parents filled their heads with negative thoughts, put them down, insulted them, or maybe just insinuated over and over that they were not good enough. Some people are able to shrug such treatment off. Others take it to heart but carefully examine themselves and learn to separate truth from parental abuse. But most are incapable of rejecting their parents' world view, and instead they accept it and swallow it whole, and then are left to fend for themselves for the rest of their lives, full of self-hatred and self-doubt. McArdle chooses to fight self-doubt by believing she and everyone like her is special. We all want to think well of ourselves; we can't live our lives hating who we are and what we do. And so some of us are driven to insane lengths that leave facts, logic, and morality far, far behind, in the name preserving their state of denial.

My sentiment is probably closest to Roger McShane's, at the Economist: [snipped quote that basically says shit happens in war, and nobody knows anything for sure, and people make mistakes]

I'm not sure this video is so much evidence of a war crime, as evidence that war is horrifying. It involves finding the most efficient ways of killing other human beings. So naturally when you hear soldiers casually enjoying being good at their jobs, you think "this is wrong". It may be. But there is no legal requirement that soldiers be repelled by what they do. They probably wouldn't be very good at their job if they displayed the horrified soul-searching that most of us here would like to see on that tape.

She's such a Good German. People think American Exceptionalism means we are more moral than others and wouldn't commit atrocities. Instead, it guarantees them. If we are moral no matter what we do, what we do doesn't matter.

We can rape, as long as we call it one bad apple. We can torture, as long as we call it a fraternity prank. We can kill, as long as we call it spreading freedom. We can debase ourselves in the eyes of the world, as long as we call ourselves exceptional. It's all good because we're all good.

So I'm not sure what we're witnessing is against the laws of war, rather than the instincts of a cosmopolitan public that has enjoyed an unusually long period without confronting slaughter directly. Don't get me wrong--I like peaceful cosmopolitanism, and think the world would be a better place if we had more of it. But I suspect this tape raises more questions about war itself, than about the conduct of the pilots.

And since war is hell, we can either eradicate it (but won't) or put up with a constant stream of atrocities such as rendition, torture, rape, murder, invasion, starvation, mutilation, and poisoning. It's all part of the price other countries have to pay for our gift of freedom from tyranny, rape and murder.

That said, I'm certainly no expert on the law of war, and I'm sure actual experts will rush to correct me.

Actually, the experts will ignore her and the right will quote her, and it will be left to amateurs to point out the moral vacuum in the heads of our media. McArdle knows this. She's perfectly aware that others find her immoral and selfish, yet is utterly incapable of understanding why, reacting with confusion and self-pity instead of going through the painful process of assessing one's failures, the only way to learn from experience.