clintonomics

I haven't talked a whole lot about the current presidential race. It isn't because I don't have strong feelings about it, but just because I think other people have covered it a whole lot better than I can.

Matt Taibbi (whom I've mentioned before) is killing it, again, with his summary of how Romney got where he is. Wondered how leveraged buyout works? He covers it. Incredulous about how one of Romney's pollsters (Neil Newhouse) can say "We're not going let our campaign be dictated by fact-checkers"? Check. Given thought to how Romney's experience in indebting companies would help him keep the government out of debt? Yeah, I hadn't thought about that angle, either.

I wasn't a big fan of Clinton when he was president. I never voted for him, instinctively distrusting his ability to promise everything to everyone, all at the same time. It even kept me from voting for The Goracle, which I now regret (not that it would have mattered). But my point is that, looking back on what he accomplished, Clinton was quite a good president (philandering aside; although I look at that as a personal and familial failing, not a political one).

But even Clinton's level of mendacity doesn't approach Romney's. When the campaign started, I was thinking of him as the least dangerous (to the country) of the various Republican challengers. I figured he was the most moderate, among other things. Then I watched as he reversed pretty much all of his earlier positions. And since then, I've found out many other things about his concept of "truth-telling" (like what he went through to be able to get on the Massachusetts ballot). Then we've found his repeated changes of direction in when he left Bain (retroactive retirement? Seriously?). I also had no idea about the lengths to which he has gone to avoid paying taxes (real patriotic, dude).

After all of that, though, I've got to say that I think Romney is downright dangerous. I think he'll be the titular head of a kleptocracy (or plutocracy, if you want to be slightly more charitable), similar to what Bush Jr did (but probably on a larger scale).

I'm not real thrilled with how Obama has done (in particular, he's been a disaster in civil liberties, and has a very mixed record on governmental transparency (he has made some good strides, there, with new programs, but his war on whistle-blowers is truly reprehensible)), but I'm still 99% sure that he's been far better than what a Romney administration would be.

I truly do not understand how the race is as close as it is; almost nobody would benefit from the policies Romney has espoused (ignoring the ones he's repeated flip-flopped over, as I have no idea what he'd do about any of those issues). The only people who would are the insanely rich, and even they only would in the very short term. The amount of demand that would be crushed out of the economy by his policies would cause an absolute cratering of the overall economy (I'm not sure how long it would take, but I am sure of what would result), because nobody would be hiring.  And in an economic heavily driven by consumption, that would be a death-knell.

Anyway, the only thing I find encouraging are the polls that ask "who do you think is more likely to win?", because Obama leads those polls by a huge margin. I keep hoping that's a true sign of what is to come.

If the Feds won't do it...

maybe smaller localities can do something to help rein in the big banks.

NYC and LA have passed laws that are aimed at forcing big banks to invest in the local community. They do it by

giv[ing] preference for city contracts to banks that make the most substantial investments in the local community through small business loans, home loans, foreclosure prevention, and other programs.

I won't say that I'm especially optimistic about this working, but maybe it's a small step in the right direction.

It'd be interesting if some of the larger states (read, especially, California) passed laws saying that their pension funds and other government accounts could only be deposited in institutions that follow certain rules. Like, maybe, not engaging in naked shorts (naked shorts, I should point out, are an incredibly risky "investment". So risky, in fact, that they should really be called gambles. They're small on upside, and unlimited on downside. Yes, if your bet misses, you can lose all of your money. No matter how much you have).

Epic Banking Fail

The library finally got Malkiel's latest edition of Random Walk Down Wall Street to me earlier today (it took an inordinately long time; something like two weeks to inprocess the book. Dunno what's typical, but I'd think on the order of a day).

I must admit, I ended up feeling good that I'd gotten the previous edition (due to buying it a couple of months before this edition came out). I didn't go through the whole book looking for updates, but I looked for something on the mortgage crisis/bubble (there, but short and not very thorough) and to see if anything was updated in the derivatives section (actually removed). The rest of the changes appeared to be minor updates.

The reason I felt like I knew enough about the mortgage crisis to be disappointed with the handling of it in Random Walk was that I recently read Michael Lewis' The Big Short.

It wasn't the first Lewis book I'd read. I read about Moneyball, when it came out, on a number of baseball blogs; several years later, I finally read it. And a friend gave me The Blind Side when it came out, which I read very shortly thereafter. I've also read some pieces he's written for Vanity Fair.

He's a very funny and insightful writer. His descriptions of Michael Oher playing high school football had me laughing out loud repeatedly. But what really struck me about The Big Short was how good his analogies were. They really helped to simplify a very complex process.

And that's what I mostly got out of the book, was seeing the financial legerdemain that tried to follow the Yellow Brick Road. And that gave a great deal of insight into what happened on the way to the Emerald City.

But another good part about the book was being introduced to many of the major players (the big winners, as well as some of the losers).

One way that the book fell short, for me, was that his overarching thesis was that the 80s investment bank milieu (which he wrote about in Liar's Poker) had never really ended until this all happened.

My problem with that is that I don't see how it's actually ended, except, perhaps, in a sense so narrow as to be useless. The narrow truth is that all the big investment banks ended up as depository banks, or bought by same, or went out of business.

But the problem comes in in seeing how that actually made them change how they operate. The people who caused the problems still ended up rich (as Lewis himself points out) as Midas. There's no evidence that Too Big To Fail will not be the case in a subsequent crisis (you know, privatized profits with socialized losses). The banker's bonus money still flows like a river in flood. In fact, with the banking "reform" bill eliminating "mark to market", it could be argued that things are even worse now, systemically.

Another minor problem (minor because I'm sure Lewis would argue that it was beyond the scope of what he was writing, and my only counterargument to that is how big a deal this is) is that he doesn't get into just how close this mess came to bringing down the entire banking system. According to what I've read lately, we were days away from not being able to get money from an ATM, because the banks wouldn't lend to each other. Yes, it was that bad.

But despite those two issues, I thought the book was fabulous. I really appreciated how he laid out the trickery (and treachery), that built the house of cards. Next up on my reading list (for financial matters, anyway), is Matt Taibbi's Griftopia. We'll see how that adds to my understanding.