Pay no attention to the GOP "power grab" behind the curtain
This week, conservative media figures bombarded the media landscape with accusations that Treasury Secretary Timothy Geithner's proposal to allow the government to take over nonbank financial institutions amounted to a massive White House "power grab." A chilling accusation to be sure, especially when one considers the unprecedented abuses of power that occurred on President Bush's watch. In the words of Fox News' Sean Hannity, Geithner's plan is "the single biggest power grab and move toward socialism in the history of the country."
Others in the media uncritically cited such conservative claims, including House Minority Leader John Boehner's (R-OH) charge that Geithner's proposal constitutes "an unprecedented grab of power," despite the fact that the budget blueprint released by House Republicans, including Boehner, contained a call for "a process to address insolvent institutions that stops throwing good money after bad into failing institutions and places insolvent ones into temporary receivership." The GOP's proposal raises the question of whether the media, which reported ad nauseam on the charge that Geithner and the White House are engaging in a "power grab" by asking Congress for this authority, will now note that the same House Republican caucus that made the charge has now proposed giving the federal government similar authority. Hypocrisy, anyone?
Of course, the central question remains: How can it possibly be a power "grab" if the Obama administration is seeking this authority from Congress -- a coequal branch of government?
Where's W? The disappearing of a president
Like last week, much of the coverage this week of the AIG executive bonuses was devoid of any mention of the Bush administration's role in the controversy. A USA Today/Gallup poll question about who was to blame for the AIG bonuses conveniently left out the Bush administration as a possible response, despite the administration's decision to give AIG billions in aid without requiring that the company withhold the bonuses. Similarly, a Wall Street Journal article about Geithner and his aides' involvement in decisions about AIG's bonus payments did not note that it was the Bush administration that negotiated a November 2008 stock purchase agreement with AIG through which the Bush Treasury Department injected $40 billion into the company without requiring that the bonus contracts be nullified.
Worse yet, the conservative Washington Times took things a step further, reporting GOP criticism of Democrats over the AIG bonus issue and quoting a Republican strategist asserting: "This is not something [Democrats] can point to George Bush. ... They own the issue of giving bonuses to the AIG executives." Glaringly absent was any mention that the $53 million in AIG bonuses that the article mentioned were reportedly paid out under the Bush administration or that a Bush-appointed special inspector general for TARP has stated that the Bush Treasury Department knew about the AIG bonus contracts and did not insist on their cancellation as a condition of AIG's receiving bailout money.
For the media, laughter is not the best medicine
Media Matters for America this week released a compelling online video, titled "Infectious Laughter: The Epidemiology of a Smear," that demonstrates in detail how the conservative echo chamber operates, using President Obama's interview with Steve Kroft on CBS' 60 Minutes from last weekend as a case study. Echoing a March 22 Politico article, discussion of Obama's laughter was hyped by the Drudge Report. Additionally, the March 23 editions of several morning news shows featured segments on Obama's laughter during the interview. The segments, which aired on NBC's Today, MSNBC's Morning Joe, MSNBC Live, and Fox News' Fox & Friends, are reminiscent of the media's echoing of the Drudge Report, among others, in seizing on Hillary Clinton's laugh as a new subject of attention in September 2007 following Clinton's appearance on all five Sunday political talk shows. Whereas commentators speculated whether Clinton's laughter -- which some described as a "cackle" -- was evidence of her "calculating" nature, according to the Politico article, Obama's "awkward laughter highlighted an issue Obama has faced dating back to the campaign, a sense that he sometimes is too 'cool' and detached to fully grasp the public anxiety over mounting job losses and economic worries." Morning Joe co-host Mika Brzezinski, however, challenged her co-hosts' fixation on the topic, stating, "I don't care who's laughing. ... I want to look at the plan and really assess it fairly. Tone is one thing; we'll see what the action is."
Reading from Limbaugh's teleprompter
Almost daily over the past several weeks, conservative leader Rush Limbaugh has been fixated on Obama's use of a teleprompter. Despite the fact that such a device has commonly been used by media figures and past presidents of both political parties, Limbaugh presses on, day-after-day, taking every opportunity to lambaste what he refers to as "TOTUS," or the "teleprompter of the United States."
Apparently reading directly from Limbaugh's own personal teleprompter, several conservative media figures -- including Matt Drudge and Sean Hannity -- uncritically highlighted a March 18 SkyNews.com report that a "teleprompt blunder has led to Barack Obama thanking himself in a speech at the White House in a St Patrick's Day celebration." But as Toby Harnden, U.S. editor for the U.K.'s Telegraph, noted, the pool report of Obama's March 17 event with Irish Prime Minister Brian Cowen indicates that in saying, "First, I'd like to say thank you to President Obama," Obama was, in Harnden's words, making "a good-natured and well-received joke" at the expense of Cowen, who earlier in the event had mistakenly read from the teleprompter displaying Obama's speech. Indeed, as early as March 18, Fox News anchor Bret Baier reported that Obama had "jokingly" made the comments in question.
The ghost of George Will's presence
Last month, The Washington Post's George Will faced intense, widespread criticism for dubious global warming claims he made in two separate columns. It now appears The New York Times Magazine has been possessed by Will's science-denying spirit, as it is slated to run a profile of physicist and global warming skeptic Freeman Dyson this weekend.
The profile quotes without challenge Dyson's false suggestion that there was a scientific consensus in the 1970s that the earth was cooling. Unlike the current consensus that global warming exists, there was no consensus in the 1970s that the earth was cooling. A September 2008 article in the Bulletin of the American Meteorological Society (a peer-reviewed publication) investigated the "pervasive myth" that "there was a consensus among climate scientists of the 1970s that either global cooling or a full-fledged ice age was imminent." The article found:
A review of the climate science literature from 1965 to 1979 shows this myth to be false. The myth's basis lies in a selective misreading of the texts both by some members of the media at the time and by some observers today. In fact, emphasis on greenhouse warming dominated the scientific literature even then.
Additionally, The New York Times Magazine sent Nicholas Dawidoff, whom Brad Johnson refers to as a "baseball writer" and who has not previously written about science for the Times, to profile Dyson. Dawidoff has published four books -- The Fly Swatter, a biography of his grandfather Alexander Gerschenkron; In the Country of Country, a collection of biographies of country musicians; The Catcher Was A Spy: The Mysterious Life Of Moe Berg; and The Crowd Sounds Happy: A Story of Love, Madness and Baseball -- and began his career covering baseball for Sports Illustrated. Dawidoff not only allowed Dyson to advance the previously mentioned falsehood about global cooling, he also quoted Dyson accusing Al Gore of being global warming's "chief propagandist" and "an opportunist" and accusing scientist James Hansen, the head of the NASA Goddard Institute for Space Studies, of "consistently exaggerat[ing] all the dangers" of global warming.
Be sure to check out these lists of Dawidoff's previous articles for The New York Times Magazine and The New York Times.
Clearing up Kudlow's intentions
As Washington Post Co. blogger Greg Sargent noted this week, Media Matters has launched Financial Media Matters, a website dedicated to holding accountable those who report on the financial industry, as well as those who report on labor, the economy, and other fiscal matters. The new website will focus extensively on ensuring that outlets such as CNBC, Fox Business Network, and The Wall Street Journal are held accountable.
Also, following CNBC host Larry Kudlow's expression of interest in running for U.S. Senate in Connecticut, Media Matters President Eric Burns wrote an open letter last week to CNBC President Mark Hoffman that stated, in part, that Kudlow "is either a journalist or a candidate; he cannot be both. ... As a private citizen, [he] has a right to explore a run for public office, but using his platform as a CNBC host to further his political ambitions jeopardizes the integrity of your network." This week, Kudlow announced that he will not run for Senate, as The New York Times and the Hartford Courant, among others, noted.
This week's media columns
Media Matters Senior Fellows Eric Boehlert, Jamison Foser, and Karl Frisch look at Jeff Zucker and the CNBC straw man, deficient budget coverage, and the right's toxic assets, respectively.
Friday, March 27, 2009
assisted-suicide
Different assisted-suicide groups, one goal
The Times wrongly sees a difference between the Final Exit Network and the assisted-suicide laws promoted by organizations such as Compassion and Choices.
By Stanton J. Price
March 27, 2009
The recent arrests of four members of the Final Exit Network in Georgia have drawn more national attention to the issue of assisted suicide. According to The Times' March 23 editorial, "Sense and suicide," the organization has been involved in about 200 deaths across the country. This group has advised, consulted and even allegedly had its counselors facilitate suicides using helium tanks and plastic bags. Investigations in many of the cases have led authorities to question just how involved officials of the Final Exit Network were in the deaths of its members.
The Times says that the Final Exit Network does harm to the kind of physician-assisted suicide currently legal in Oregon and Washington. Such laws were heavily promoted by the group Compassion and Choices, a national organization that works for assisted-suicide legalization. It was a key player in the legalization efforts in Washington and Oregon as well as in failed attempts elsewhere around the country, including California.
While the groups may have different tactics, the goals of the Final Exit Network and Compassion and Choices are practically the same. Both want to see assisted suicide expanded to anyone who perceives himself to be suffering, and the relationship between the two groups goes beyond their shared cause. According to the timeline on Compassion and Choices’ web site, the group formed in 1980 as the Hemlock Society; it later merged with another organization to become what we now know as Compassion and Choices. Hemlock Society founder Derek Humphry is a member of the Final Exit Network's advisory board and author of the book, "Final Exit," first published in 1991. Both Compassion and Choices and the Final Exit Network are active members of the World Federation of Right to Die Societies. The only real difference between the two groups is the way they seek to expand assisted suicide.
Both Compassion and Choices and the Final Exit Network take the definition of "intolerable suffering" beyond terminal illness. They believe that a person suffering from a condition that he or she believes is unbearable (rightly or wrongly) should legally be allowed assistance in ending their own life, whether by inhaling helium from a tank or overdosing on barbiturates. This is a frightening prospect for people with disabilities, particularly those who think they may be burdens on their family and for those of us fighting for disability rights.
If, as The Times writes, there may be growing societal tolerance of expanding this practice, it is not an intellectual stretch to argue that people perceived by themselves or someone else to be undergoing "intolerable suffering" should have access to assisted suicide. Given our current economic climate, the lack of adequate healthcare for many and the stigma placed on those with chronic disease or disability, I do not share the faith in society or in our politicians such laws require. This dubious fight waged by the Final Exit Network and Compassion and Choices equates to dangerous public policy and places far too many vulnerable people in harm's way.
For The Times to write about the Final Exit Network, "Society is unlikely ever to condone the kind of ethically questionable 'help' such groups offer," is naive. When this issue was before the California Senate's Judiciary Committee two years ago, then-state Sen. Joe Dunn (D-Santa Ana) voted against the bill and said that he "could not resolve the risk that the power of money will ultimately define [assisted suicide's] parameters." To me, Dunn has a more realistic view of society than The Times.
Stanton J. Price is a health lawyer and member of the Los Angeles County Bar Assn.'s Bioethics Committee, which he recently co-chaired.
The Times wrongly sees a difference between the Final Exit Network and the assisted-suicide laws promoted by organizations such as Compassion and Choices.
By Stanton J. Price
March 27, 2009
The recent arrests of four members of the Final Exit Network in Georgia have drawn more national attention to the issue of assisted suicide. According to The Times' March 23 editorial, "Sense and suicide," the organization has been involved in about 200 deaths across the country. This group has advised, consulted and even allegedly had its counselors facilitate suicides using helium tanks and plastic bags. Investigations in many of the cases have led authorities to question just how involved officials of the Final Exit Network were in the deaths of its members.
The Times says that the Final Exit Network does harm to the kind of physician-assisted suicide currently legal in Oregon and Washington. Such laws were heavily promoted by the group Compassion and Choices, a national organization that works for assisted-suicide legalization. It was a key player in the legalization efforts in Washington and Oregon as well as in failed attempts elsewhere around the country, including California.
While the groups may have different tactics, the goals of the Final Exit Network and Compassion and Choices are practically the same. Both want to see assisted suicide expanded to anyone who perceives himself to be suffering, and the relationship between the two groups goes beyond their shared cause. According to the timeline on Compassion and Choices’ web site, the group formed in 1980 as the Hemlock Society; it later merged with another organization to become what we now know as Compassion and Choices. Hemlock Society founder Derek Humphry is a member of the Final Exit Network's advisory board and author of the book, "Final Exit," first published in 1991. Both Compassion and Choices and the Final Exit Network are active members of the World Federation of Right to Die Societies. The only real difference between the two groups is the way they seek to expand assisted suicide.
Both Compassion and Choices and the Final Exit Network take the definition of "intolerable suffering" beyond terminal illness. They believe that a person suffering from a condition that he or she believes is unbearable (rightly or wrongly) should legally be allowed assistance in ending their own life, whether by inhaling helium from a tank or overdosing on barbiturates. This is a frightening prospect for people with disabilities, particularly those who think they may be burdens on their family and for those of us fighting for disability rights.
If, as The Times writes, there may be growing societal tolerance of expanding this practice, it is not an intellectual stretch to argue that people perceived by themselves or someone else to be undergoing "intolerable suffering" should have access to assisted suicide. Given our current economic climate, the lack of adequate healthcare for many and the stigma placed on those with chronic disease or disability, I do not share the faith in society or in our politicians such laws require. This dubious fight waged by the Final Exit Network and Compassion and Choices equates to dangerous public policy and places far too many vulnerable people in harm's way.
For The Times to write about the Final Exit Network, "Society is unlikely ever to condone the kind of ethically questionable 'help' such groups offer," is naive. When this issue was before the California Senate's Judiciary Committee two years ago, then-state Sen. Joe Dunn (D-Santa Ana) voted against the bill and said that he "could not resolve the risk that the power of money will ultimately define [assisted suicide's] parameters." To me, Dunn has a more realistic view of society than The Times.
Stanton J. Price is a health lawyer and member of the Los Angeles County Bar Assn.'s Bioethics Committee, which he recently co-chaired.
Thursday, March 26, 2009
Market Mystique PAUL KRUGMAN
On Monday, Lawrence Summers, the head of the National Economic Council, responded to criticisms of the Obama administration’s plan to subsidize private purchases of toxic assets. “I don’t know of any economist,” he declared, “who doesn’t believe that better functioning capital markets in which assets can be traded are a good idea.”
Leave aside for a moment the question of whether a market in which buyers have to be bribed to participate can really be described as “better functioning.” Even so, Mr. Summers needs to get out more. Quite a few economists have reconsidered their favorable opinion of capital markets and asset trading in the light of the current crisis.
But it has become increasingly clear over the past few days that top officials in the Obama administration are still in the grip of the market mystique. They still believe in the magic of the financial marketplace and in the prowess of the wizards who perform that magic.
The market mystique didn’t always rule financial policy. America emerged from the Great Depression with a tightly regulated banking system, which made finance a staid, even boring business. Banks attracted depositors by providing convenient branch locations and maybe a free toaster or two; they used the money thus attracted to make loans, and that was that.
And the financial system wasn’t just boring. It was also, by today’s standards, small. Even during the “go-go years,” the bull market of the 1960s, finance and insurance together accounted for less than 4 percent of G.D.P. The relative unimportance of finance was reflected in the list of stocks making up the Dow Jones Industrial Average, which until 1982 contained not a single financial company.
It all sounds primitive by today’s standards. Yet that boring, primitive financial system serviced an economy that doubled living standards over the course of a generation.
After 1980, of course, a very different financial system emerged. In the deregulation-minded Reagan era, old-fashioned banking was increasingly replaced by wheeling and dealing on a grand scale. The new system was much bigger than the old regime: On the eve of the current crisis, finance and insurance accounted for 8 percent of G.D.P., more than twice their share in the 1960s. By early last year, the Dow contained five financial companies — giants like A.I.G., Citigroup and Bank of America.
And finance became anything but boring. It attracted many of our sharpest minds and made a select few immensely rich.
Underlying the glamorous new world of finance was the process of securitization. Loans no longer stayed with the lender. Instead, they were sold on to others, who sliced, diced and pureed individual debts to synthesize new assets. Subprime mortgages, credit card debts, car loans — all went into the financial system’s juicer. Out the other end, supposedly, came sweet-tasting AAA investments. And financial wizards were lavishly rewarded for overseeing the process.
But the wizards were frauds, whether they knew it or not, and their magic turned out to be no more than a collection of cheap stage tricks. Above all, the key promise of securitization — that it would make the financial system more robust by spreading risk more widely — turned out to be a lie. Banks used securitization to increase their risk, not reduce it, and in the process they made the economy more, not less, vulnerable to financial disruption.
Sooner or later, things were bound to go wrong, and eventually they did. Bear Stearns failed; Lehman failed; but most of all, securitization failed.
Which brings us back to the Obama administration’s approach to the financial crisis.
Much discussion of the toxic-asset plan has focused on the details and the arithmetic, and rightly so. Beyond that, however, what’s striking is the vision expressed both in the content of the financial plan and in statements by administration officials. In essence, the administration seems to believe that once investors calm down, securitization — and the business of finance — can resume where it left off a year or two ago.
To be fair, officials are calling for more regulation. Indeed, on Thursday Tim Geithner, the Treasury secretary, laid out plans for enhanced regulation that would have been considered radical not long ago.
But the underlying vision remains that of a financial system more or less the same as it was two years ago, albeit somewhat tamed by new rules.
As you can guess, I don’t share that vision. I don’t think this is just a financial panic; I believe that it represents the failure of a whole model of banking, of an overgrown financial sector that did more harm than good. I don’t think the Obama administration can bring securitization back to life, and I don’t believe it should try.
Leave aside for a moment the question of whether a market in which buyers have to be bribed to participate can really be described as “better functioning.” Even so, Mr. Summers needs to get out more. Quite a few economists have reconsidered their favorable opinion of capital markets and asset trading in the light of the current crisis.
But it has become increasingly clear over the past few days that top officials in the Obama administration are still in the grip of the market mystique. They still believe in the magic of the financial marketplace and in the prowess of the wizards who perform that magic.
The market mystique didn’t always rule financial policy. America emerged from the Great Depression with a tightly regulated banking system, which made finance a staid, even boring business. Banks attracted depositors by providing convenient branch locations and maybe a free toaster or two; they used the money thus attracted to make loans, and that was that.
And the financial system wasn’t just boring. It was also, by today’s standards, small. Even during the “go-go years,” the bull market of the 1960s, finance and insurance together accounted for less than 4 percent of G.D.P. The relative unimportance of finance was reflected in the list of stocks making up the Dow Jones Industrial Average, which until 1982 contained not a single financial company.
It all sounds primitive by today’s standards. Yet that boring, primitive financial system serviced an economy that doubled living standards over the course of a generation.
After 1980, of course, a very different financial system emerged. In the deregulation-minded Reagan era, old-fashioned banking was increasingly replaced by wheeling and dealing on a grand scale. The new system was much bigger than the old regime: On the eve of the current crisis, finance and insurance accounted for 8 percent of G.D.P., more than twice their share in the 1960s. By early last year, the Dow contained five financial companies — giants like A.I.G., Citigroup and Bank of America.
And finance became anything but boring. It attracted many of our sharpest minds and made a select few immensely rich.
Underlying the glamorous new world of finance was the process of securitization. Loans no longer stayed with the lender. Instead, they were sold on to others, who sliced, diced and pureed individual debts to synthesize new assets. Subprime mortgages, credit card debts, car loans — all went into the financial system’s juicer. Out the other end, supposedly, came sweet-tasting AAA investments. And financial wizards were lavishly rewarded for overseeing the process.
But the wizards were frauds, whether they knew it or not, and their magic turned out to be no more than a collection of cheap stage tricks. Above all, the key promise of securitization — that it would make the financial system more robust by spreading risk more widely — turned out to be a lie. Banks used securitization to increase their risk, not reduce it, and in the process they made the economy more, not less, vulnerable to financial disruption.
Sooner or later, things were bound to go wrong, and eventually they did. Bear Stearns failed; Lehman failed; but most of all, securitization failed.
Which brings us back to the Obama administration’s approach to the financial crisis.
Much discussion of the toxic-asset plan has focused on the details and the arithmetic, and rightly so. Beyond that, however, what’s striking is the vision expressed both in the content of the financial plan and in statements by administration officials. In essence, the administration seems to believe that once investors calm down, securitization — and the business of finance — can resume where it left off a year or two ago.
To be fair, officials are calling for more regulation. Indeed, on Thursday Tim Geithner, the Treasury secretary, laid out plans for enhanced regulation that would have been considered radical not long ago.
But the underlying vision remains that of a financial system more or less the same as it was two years ago, albeit somewhat tamed by new rules.
As you can guess, I don’t share that vision. I don’t think this is just a financial panic; I believe that it represents the failure of a whole model of banking, of an overgrown financial sector that did more harm than good. I don’t think the Obama administration can bring securitization back to life, and I don’t believe it should try.
Wednesday, March 25, 2009
A NATION OF IDIOTS!
Dear A.I.G., I Quit!
The following is a letter sent on Tuesday by Jake DeSantis, an executive vice president of the American International Group’s financial products unit, to Edward M. Liddy, the chief executive of A.I.G.
DEAR Mr. Liddy,
It is with deep regret that I submit my notice of resignation from A.I.G. Financial Products. I hope you take the time to read this entire letter. Before describing the details of my decision, I want to offer some context:
I am proud of everything I have done for the commodity and equity divisions of A.I.G.-F.P. I was in no way involved in — or responsible for — the credit default swap transactions that have hamstrung A.I.G. Nor were more than a handful of the 400 current employees of A.I.G.-F.P. Most of those responsible have left the company and have conspicuously escaped the public outrage.
After 12 months of hard work dismantling the company — during which A.I.G. reassured us many times we would be rewarded in March 2009 — we in the financial products unit have been betrayed by A.I.G. and are being unfairly persecuted by elected officials. In response to this, I will now leave the company and donate my entire post-tax retention payment to those suffering from the global economic downturn. My intent is to keep none of the money myself.
I take this action after 11 years of dedicated, honorable service to A.I.G. I can no longer effectively perform my duties in this dysfunctional environment, nor am I being paid to do so. Like you, I was asked to work for an annual salary of $1, and I agreed out of a sense of duty to the company and to the public officials who have come to its aid. Having now been let down by both, I can no longer justify spending 10, 12, 14 hours a day away from my family for the benefit of those who have let me down.
You and I have never met or spoken to each other, so I’d like to tell you about myself. I was raised by schoolteachers working multiple jobs in a world of closing steel mills. My hard work earned me acceptance to M.I.T., and the institute’s generous financial aid enabled me to attend. I had fulfilled my American dream.
I started at this company in 1998 as an equity trader, became the head of equity and commodity trading and, a couple of years before A.I.G.’s meltdown last September, was named the head of business development for commodities. Over this period the equity and commodity units were consistently profitable — in most years generating net profits of well over $100 million. Most recently, during the dismantling of A.I.G.-F.P., I was an integral player in the pending sale of its well-regarded commodity index business to UBS. As you know, business unit sales like this are crucial to A.I.G.’s effort to repay the American taxpayer.
The profitability of the businesses with which I was associated clearly supported my compensation. I never received any pay resulting from the credit default swaps that are now losing so much money. I did, however, like many others here, lose a significant portion of my life savings in the form of deferred compensation invested in the capital of A.I.G.-F.P. because of those losses. In this way I have personally suffered from this controversial activity — directly as well as indirectly with the rest of the taxpayers.
I have the utmost respect for the civic duty that you are now performing at A.I.G. You are as blameless for these credit default swap losses as I am. You answered your country’s call and you are taking a tremendous beating for it.
But you also are aware that most of the employees of your financial products unit had nothing to do with the large losses. And I am disappointed and frustrated over your lack of support for us. I and many others in the unit feel betrayed that you failed to stand up for us in the face of untrue and unfair accusations from certain members of Congress last Wednesday and from the press over our retention payments, and that you didn’t defend us against the baseless and reckless comments made by the attorneys general of New York and Connecticut.
My guess is that in October, when you learned of these retention contracts, you realized that the employees of the financial products unit needed some incentive to stay and that the contracts, being both ethical and useful, should be left to stand. That’s probably why A.I.G. management assured us on three occasions during that month that the company would “live up to its commitment” to honor the contract guarantees.
That may be why you decided to accelerate by three months more than a quarter of the amounts due under the contracts. That action signified to us your support, and was hardly something that one would do if he truly found the contracts “distasteful.”
That may also be why you authorized the balance of the payments on March 13.
At no time during the past six months that you have been leading A.I.G. did you ask us to revise, renegotiate or break these contracts — until several hours before your appearance last week before Congress.
I think your initial decision to honor the contracts was both ethical and financially astute, but it seems to have been politically unwise. It’s now apparent that you either misunderstood the agreements that you had made — tacit or otherwise — with the Federal Reserve, the Treasury, various members of Congress and Attorney General Andrew Cuomo of New York, or were not strong enough to withstand the shifting political winds.
You’ve now asked the current employees of A.I.G.-F.P. to repay these earnings. As you can imagine, there has been a tremendous amount of serious thought and heated discussion about how we should respond to this breach of trust.
As most of us have done nothing wrong, guilt is not a motivation to surrender our earnings. We have worked 12 long months under these contracts and now deserve to be paid as promised. None of us should be cheated of our payments any more than a plumber should be cheated after he has fixed the pipes but a careless electrician causes a fire that burns down the house.
Many of the employees have, in the past six months, turned down job offers from more stable employers, based on A.I.G.’s assurances that the contracts would be honored. They are now angry about having been misled by A.I.G.’s promises and are not inclined to return the money as a favor to you.
The only real motivation that anyone at A.I.G.-F.P. now has is fear. Mr. Cuomo has threatened to “name and shame,” and his counterpart in Connecticut, Richard Blumenthal, has made similar threats — even though attorneys general are supposed to stand for due process, to conduct trials in courts and not the press.
So what am I to do? There’s no easy answer. I know that because of hard work I have benefited more than most during the economic boom and have saved enough that my family is unlikely to suffer devastating losses during the current bust. Some might argue that members of my profession have been overpaid, and I wouldn’t disagree.
That is why I have decided to donate 100 percent of the effective after-tax proceeds of my retention payment directly to organizations that are helping people who are suffering from the global downturn. This is not a tax-deduction gimmick; I simply believe that I at least deserve to dictate how my earnings are spent, and do not want to see them disappear back into the obscurity of A.I.G.’s or the federal government’s budget. Our earnings have caused such a distraction for so many from the more pressing issues our country faces, and I would like to see my share of it benefit those truly in need.
On March 16 I received a payment from A.I.G. amounting to $742,006.40, after taxes. In light of the uncertainty over the ultimate taxation and legal status of this payment, the actual amount I donate may be less — in fact, it may end up being far less if the recent House bill raising the tax on the retention payments to 90 percent stands. Once all the money is donated, you will immediately receive a list of all recipients.
This choice is right for me. I wish others at A.I.G.-F.P. luck finding peace with their difficult decision, and only hope their judgment is not clouded by fear.
Mr. Liddy, I wish you success in your commitment to return the money extended by the American government, and luck with the continued unwinding of the company’s diverse businesses — especially those remaining credit default swaps. I’ll continue over the short term to help make sure no balls are dropped, but after what’s happened this past week I can’t remain much longer — there is too much bad blood. I’m not sure how you will greet my resignation, but at least Attorney General Blumenthal should be relieved that I’ll leave under my own power and will not need to be “shoved out the door.”
Sincerely,
Jake DeSantis
The following is a letter sent on Tuesday by Jake DeSantis, an executive vice president of the American International Group’s financial products unit, to Edward M. Liddy, the chief executive of A.I.G.
DEAR Mr. Liddy,
It is with deep regret that I submit my notice of resignation from A.I.G. Financial Products. I hope you take the time to read this entire letter. Before describing the details of my decision, I want to offer some context:
I am proud of everything I have done for the commodity and equity divisions of A.I.G.-F.P. I was in no way involved in — or responsible for — the credit default swap transactions that have hamstrung A.I.G. Nor were more than a handful of the 400 current employees of A.I.G.-F.P. Most of those responsible have left the company and have conspicuously escaped the public outrage.
After 12 months of hard work dismantling the company — during which A.I.G. reassured us many times we would be rewarded in March 2009 — we in the financial products unit have been betrayed by A.I.G. and are being unfairly persecuted by elected officials. In response to this, I will now leave the company and donate my entire post-tax retention payment to those suffering from the global economic downturn. My intent is to keep none of the money myself.
I take this action after 11 years of dedicated, honorable service to A.I.G. I can no longer effectively perform my duties in this dysfunctional environment, nor am I being paid to do so. Like you, I was asked to work for an annual salary of $1, and I agreed out of a sense of duty to the company and to the public officials who have come to its aid. Having now been let down by both, I can no longer justify spending 10, 12, 14 hours a day away from my family for the benefit of those who have let me down.
You and I have never met or spoken to each other, so I’d like to tell you about myself. I was raised by schoolteachers working multiple jobs in a world of closing steel mills. My hard work earned me acceptance to M.I.T., and the institute’s generous financial aid enabled me to attend. I had fulfilled my American dream.
I started at this company in 1998 as an equity trader, became the head of equity and commodity trading and, a couple of years before A.I.G.’s meltdown last September, was named the head of business development for commodities. Over this period the equity and commodity units were consistently profitable — in most years generating net profits of well over $100 million. Most recently, during the dismantling of A.I.G.-F.P., I was an integral player in the pending sale of its well-regarded commodity index business to UBS. As you know, business unit sales like this are crucial to A.I.G.’s effort to repay the American taxpayer.
The profitability of the businesses with which I was associated clearly supported my compensation. I never received any pay resulting from the credit default swaps that are now losing so much money. I did, however, like many others here, lose a significant portion of my life savings in the form of deferred compensation invested in the capital of A.I.G.-F.P. because of those losses. In this way I have personally suffered from this controversial activity — directly as well as indirectly with the rest of the taxpayers.
I have the utmost respect for the civic duty that you are now performing at A.I.G. You are as blameless for these credit default swap losses as I am. You answered your country’s call and you are taking a tremendous beating for it.
But you also are aware that most of the employees of your financial products unit had nothing to do with the large losses. And I am disappointed and frustrated over your lack of support for us. I and many others in the unit feel betrayed that you failed to stand up for us in the face of untrue and unfair accusations from certain members of Congress last Wednesday and from the press over our retention payments, and that you didn’t defend us against the baseless and reckless comments made by the attorneys general of New York and Connecticut.
My guess is that in October, when you learned of these retention contracts, you realized that the employees of the financial products unit needed some incentive to stay and that the contracts, being both ethical and useful, should be left to stand. That’s probably why A.I.G. management assured us on three occasions during that month that the company would “live up to its commitment” to honor the contract guarantees.
That may be why you decided to accelerate by three months more than a quarter of the amounts due under the contracts. That action signified to us your support, and was hardly something that one would do if he truly found the contracts “distasteful.”
That may also be why you authorized the balance of the payments on March 13.
At no time during the past six months that you have been leading A.I.G. did you ask us to revise, renegotiate or break these contracts — until several hours before your appearance last week before Congress.
I think your initial decision to honor the contracts was both ethical and financially astute, but it seems to have been politically unwise. It’s now apparent that you either misunderstood the agreements that you had made — tacit or otherwise — with the Federal Reserve, the Treasury, various members of Congress and Attorney General Andrew Cuomo of New York, or were not strong enough to withstand the shifting political winds.
You’ve now asked the current employees of A.I.G.-F.P. to repay these earnings. As you can imagine, there has been a tremendous amount of serious thought and heated discussion about how we should respond to this breach of trust.
As most of us have done nothing wrong, guilt is not a motivation to surrender our earnings. We have worked 12 long months under these contracts and now deserve to be paid as promised. None of us should be cheated of our payments any more than a plumber should be cheated after he has fixed the pipes but a careless electrician causes a fire that burns down the house.
Many of the employees have, in the past six months, turned down job offers from more stable employers, based on A.I.G.’s assurances that the contracts would be honored. They are now angry about having been misled by A.I.G.’s promises and are not inclined to return the money as a favor to you.
The only real motivation that anyone at A.I.G.-F.P. now has is fear. Mr. Cuomo has threatened to “name and shame,” and his counterpart in Connecticut, Richard Blumenthal, has made similar threats — even though attorneys general are supposed to stand for due process, to conduct trials in courts and not the press.
So what am I to do? There’s no easy answer. I know that because of hard work I have benefited more than most during the economic boom and have saved enough that my family is unlikely to suffer devastating losses during the current bust. Some might argue that members of my profession have been overpaid, and I wouldn’t disagree.
That is why I have decided to donate 100 percent of the effective after-tax proceeds of my retention payment directly to organizations that are helping people who are suffering from the global downturn. This is not a tax-deduction gimmick; I simply believe that I at least deserve to dictate how my earnings are spent, and do not want to see them disappear back into the obscurity of A.I.G.’s or the federal government’s budget. Our earnings have caused such a distraction for so many from the more pressing issues our country faces, and I would like to see my share of it benefit those truly in need.
On March 16 I received a payment from A.I.G. amounting to $742,006.40, after taxes. In light of the uncertainty over the ultimate taxation and legal status of this payment, the actual amount I donate may be less — in fact, it may end up being far less if the recent House bill raising the tax on the retention payments to 90 percent stands. Once all the money is donated, you will immediately receive a list of all recipients.
This choice is right for me. I wish others at A.I.G.-F.P. luck finding peace with their difficult decision, and only hope their judgment is not clouded by fear.
Mr. Liddy, I wish you success in your commitment to return the money extended by the American government, and luck with the continued unwinding of the company’s diverse businesses — especially those remaining credit default swaps. I’ll continue over the short term to help make sure no balls are dropped, but after what’s happened this past week I can’t remain much longer — there is too much bad blood. I’m not sure how you will greet my resignation, but at least Attorney General Blumenthal should be relieved that I’ll leave under my own power and will not need to be “shoved out the door.”
Sincerely,
Jake DeSantis
OTC BIRTH CONTROL
In Defense of OTC Birth Control
Posted Tuesday, March 24, 2009 12:55 PM | By Kerry Howley
Emily and Torie, my grasp of the regulatory issues is imperfect, but it’s my understanding that a drug company would have to apply for over-the-counter status through the FDA. (I've never heard a single plausible medical justification for keeping birth control prescription-only.) There are various reasons why drug companies would not want to attempt this; the most obvious being that pharmaceutical companies can charge much higher prices for prescription drugs covered by insurance. Companies would also see resistance from gynecologists, who rely on their prescription powers to keep women coming back for annual appointments.
Torie, I understand your concern about insurance refusing to pay for OTC drugs, but it seems to me that your logic applies to every single drug that has gone over-the-counter, from Prilosec to Nicoderm. Keeping birth control prescription-only actually raises the cost for the poorest women—those without insurance who must pay retail at that the pharmacy counter and pay out of pocket for the doctor’s appointment required to get the prescription. When drugs go OTC the price plummets, so the cost to the consumer without insurance falls. Here's a blurb from a 2006 survey by the Pharmacy Access Partnership, a group that advocates for wider emergency contraception access:
Women said convenience, simplicity and affordability were their highest considerations when choosing their current contraceptive. Fifty-four percent of women also chose their method because it did not require a prescription. African-Americans (65%) were more likely to choose a method because it did not need a prescription, compared to Caucasians (51%) and Latinas (54%). Importantly, 20% of women said the cost of a visit to the doctor was an obstacle in obtaining a prescription contraceptive. Overall, 28% of women have had problems with obtaining a prescription for contraception, filling the prescription or getting to their supplies when they needed them. Women who had fewer resources to manage an unintended pregnancy (uninsured women, single women and younger women) were more likely to have experienced problems with obtaining a prescription for contraception.
Posted Tuesday, March 24, 2009 12:55 PM | By Kerry Howley
Emily and Torie, my grasp of the regulatory issues is imperfect, but it’s my understanding that a drug company would have to apply for over-the-counter status through the FDA. (I've never heard a single plausible medical justification for keeping birth control prescription-only.) There are various reasons why drug companies would not want to attempt this; the most obvious being that pharmaceutical companies can charge much higher prices for prescription drugs covered by insurance. Companies would also see resistance from gynecologists, who rely on their prescription powers to keep women coming back for annual appointments.
Torie, I understand your concern about insurance refusing to pay for OTC drugs, but it seems to me that your logic applies to every single drug that has gone over-the-counter, from Prilosec to Nicoderm. Keeping birth control prescription-only actually raises the cost for the poorest women—those without insurance who must pay retail at that the pharmacy counter and pay out of pocket for the doctor’s appointment required to get the prescription. When drugs go OTC the price plummets, so the cost to the consumer without insurance falls. Here's a blurb from a 2006 survey by the Pharmacy Access Partnership, a group that advocates for wider emergency contraception access:
Women said convenience, simplicity and affordability were their highest considerations when choosing their current contraceptive. Fifty-four percent of women also chose their method because it did not require a prescription. African-Americans (65%) were more likely to choose a method because it did not need a prescription, compared to Caucasians (51%) and Latinas (54%). Importantly, 20% of women said the cost of a visit to the doctor was an obstacle in obtaining a prescription contraceptive. Overall, 28% of women have had problems with obtaining a prescription for contraception, filling the prescription or getting to their supplies when they needed them. Women who had fewer resources to manage an unintended pregnancy (uninsured women, single women and younger women) were more likely to have experienced problems with obtaining a prescription for contraception.
Tuesday, March 24, 2009
RUSH is a big fat a..hole!
Media Matters
Limbaugh
This hour of the Limbaugh Wire brought to you by Barack Ogabe
By Simon Maloy
To kick off the final hour, Rush noted a Reuters article headlined, "Resistance grows to Obama's bigger government," and encouraged us all to look at the bigger picture. Rush took us back to January 15, asking us to imagine where the country would be if, between now and then, there had been no resistance to Obama's "assault" on capitalism.
Limbaugh defense of AIG bonuses follows attacks on "insane benefits" of UAW sending Big Three "down the tubes"
Limbaugh joined by other conservatives standing up for AIG against "mob rule"
Related
Limbaugh defends AIG from "lynch mob"
Latest Limbaugh items
County Fair: Limbaugh refers to "Barack Ogabe," drawing comparison between Obama and Robert Mugabe
County Fair: Limbaugh says ACORN "got three and a half billion dollars from the stimulus bill"
County Fair: Limbaugh on Obama administration: "They are focused on the destruction of the private sector. This is an all-out assault on capitalism"
County Fair: Limbaugh on Obama: "He's a bad guy. He's one angry guy. His wife is angry as well."
Boehlert: Jeff Zucker and the CNBC straw man
County Fair: Limbaugh guest host Steyn on Wall Street bankers: "They're not fat cats. They're emaciated, cadaverous cats. They've got ... that cat version of AIDS that the cats get -- the feline immunodeficiency virus."
County Fair: Burnett claims bailout recipient bonus tax "to some echo[es] the Russian and French Revolutions," asks: "[I]s America starting to look like Venezuela?"
County Fair: Tim Graham is never satisfied
Media Matters: Media Matters Week-in-Review
County Fair: Limbaugh says Obama wants I-bankers "to be hated," asks, "You don't think this guy has a bug up his dress ... chip on his shoulder about wealthy people?"
County Fair: Addressing listeners who disagree with him on AIG, Limbaugh calls them "mobsters," says they've been whipped into "frenzy of totalitarian hatred"
County Fair: CNBC's Francis channels Limbaugh on response to AIG bonuses: "This feels like mob rule"
County Fair: Limbaugh on response to AIG: "We now have mob rule the way it started in Nazi Germany"
County Fair: Limbaugh: Obama "has a chip on his shoulder, and his wife does too, and they are some angry people"
An AIG of conservative enlightenment? Hardly.
Limbaugh
This hour of the Limbaugh Wire brought to you by Barack Ogabe
By Simon Maloy
To kick off the final hour, Rush noted a Reuters article headlined, "Resistance grows to Obama's bigger government," and encouraged us all to look at the bigger picture. Rush took us back to January 15, asking us to imagine where the country would be if, between now and then, there had been no resistance to Obama's "assault" on capitalism.
Limbaugh defense of AIG bonuses follows attacks on "insane benefits" of UAW sending Big Three "down the tubes"
Limbaugh joined by other conservatives standing up for AIG against "mob rule"
Related
Limbaugh defends AIG from "lynch mob"
Latest Limbaugh items
County Fair: Limbaugh refers to "Barack Ogabe," drawing comparison between Obama and Robert Mugabe
County Fair: Limbaugh says ACORN "got three and a half billion dollars from the stimulus bill"
County Fair: Limbaugh on Obama administration: "They are focused on the destruction of the private sector. This is an all-out assault on capitalism"
County Fair: Limbaugh on Obama: "He's a bad guy. He's one angry guy. His wife is angry as well."
Boehlert: Jeff Zucker and the CNBC straw man
County Fair: Limbaugh guest host Steyn on Wall Street bankers: "They're not fat cats. They're emaciated, cadaverous cats. They've got ... that cat version of AIDS that the cats get -- the feline immunodeficiency virus."
County Fair: Burnett claims bailout recipient bonus tax "to some echo[es] the Russian and French Revolutions," asks: "[I]s America starting to look like Venezuela?"
County Fair: Tim Graham is never satisfied
Media Matters: Media Matters Week-in-Review
County Fair: Limbaugh says Obama wants I-bankers "to be hated," asks, "You don't think this guy has a bug up his dress ... chip on his shoulder about wealthy people?"
County Fair: Addressing listeners who disagree with him on AIG, Limbaugh calls them "mobsters," says they've been whipped into "frenzy of totalitarian hatred"
County Fair: CNBC's Francis channels Limbaugh on response to AIG bonuses: "This feels like mob rule"
County Fair: Limbaugh on response to AIG: "We now have mob rule the way it started in Nazi Germany"
County Fair: Limbaugh: Obama "has a chip on his shoulder, and his wife does too, and they are some angry people"
An AIG of conservative enlightenment? Hardly.
Obama News Conference CNN's Ed Henry question?
Ed Henry was out of line on AIG!
That issue is over and the President didn’t do anything wrong.
He just didn’t act as Ed wanted him to act.
I like the calm manner in which the Prez acted instead of
the mob media hounds!
Short order cooks get three months when they start cooking
hamburgers. The President and his people have done a very good job
in most difficult time. Wait for results!
The GOP is totally lost. I can predict on anything BO does they either
say NO or it’s a BAD idea!
No one (as I told my ex wife) can be so perfect they are
wrong all the time. The GOP should try to help BO fix the problems
and not hope nothing works so they can reclaim power!!
That issue is over and the President didn’t do anything wrong.
He just didn’t act as Ed wanted him to act.
I like the calm manner in which the Prez acted instead of
the mob media hounds!
Short order cooks get three months when they start cooking
hamburgers. The President and his people have done a very good job
in most difficult time. Wait for results!
The GOP is totally lost. I can predict on anything BO does they either
say NO or it’s a BAD idea!
No one (as I told my ex wife) can be so perfect they are
wrong all the time. The GOP should try to help BO fix the problems
and not hope nothing works so they can reclaim power!!
LEGAL DRUGS & VIOLENCE DEBATE
Jeffrey A. Miron is senior lecturer in economics at Harvard University.
CAMBRIDGE, Massachusetts (CNN) -- Over the past two years, drug violence in Mexico has become a fixture of the daily news. Some of this violence pits drug cartels against one another; some involves confrontations between law enforcement and traffickers.
Recent estimates suggest thousands have lost their lives in this "war on drugs."
The U.S. and Mexican responses to this violence have been predictable: more troops and police, greater border controls and expanded enforcement of every kind. Escalation is the wrong response, however; drug prohibition is the cause of the violence.
Prohibition creates violence because it drives the drug market underground. This means buyers and sellers cannot resolve their disputes with lawsuits, arbitration or advertising, so they resort to violence instead.
Violence was common in the alcohol industry when it was banned during Prohibition, but not before or after.
Violence is the norm in illicit gambling markets but not in legal ones. Violence is routine when prostitution is banned but not when it's permitted. Violence results from policies that create black markets, not from the characteristics of the good or activity in question.
The only way to reduce violence, therefore, is to legalize drugs. Fortuitously, legalization is the right policy for a slew of other reasons.
Prohibition of drugs corrupts politicians and law enforcement by putting police, prosecutors, judges and politicians in the position to threaten the profits of an illicit trade. This is why bribery, threats and kidnapping are common for prohibited industries but rare otherwise. Mexico's recent history illustrates this dramatically.
Prohibition erodes protections against unreasonable search and seizure because neither party to a drug transaction has an incentive to report the activity to the police. Thus, enforcement requires intrusive tactics such as warrantless searches or undercover buys. The victimless nature of this so-called crime also encourages police to engage in racial profiling.
Prohibition has disastrous implications for national security. By eradicating coca plants in Colombia or poppy fields in Afghanistan, prohibition breeds resentment of the United States. By enriching those who produce and supply drugs, prohibition supports terrorists who sell protection services to drug traffickers.
Prohibition harms the public health. Patients suffering from cancer, glaucoma and other conditions cannot use marijuana under the laws of most states or the federal government despite abundant evidence of its efficacy. Terminally ill patients cannot always get adequate pain medication because doctors may fear prosecution by the Drug Enforcement Administration.
Drug users face restrictions on clean syringes that cause them to share contaminated needles, thereby spreading HIV, hepatitis and other blood-borne diseases.
Prohibitions breed disrespect for the law because despite draconian penalties and extensive enforcement, huge numbers of people still violate prohibition. This means those who break the law, and those who do not, learn that obeying laws is for suckers.
Prohibition is a drain on the public purse. Federal, state and local governments spend roughly $44 billion per year to enforce drug prohibition. These same governments forego roughly $33 billion per year in tax revenue they could collect from legalized drugs, assuming these were taxed at rates similar to those on alcohol and tobacco. Under prohibition, these revenues accrue to traffickers as increased profits.
The right policy, therefore, is to legalize drugs while using regulation and taxation to dampen irresponsible behavior related to drug use, such as driving under the influence. This makes more sense than prohibition because it avoids creation of a black market. This approach also allows those who believe they benefit from drug use to do so, as long as they do not harm others.
Legalization is desirable for all drugs, not just marijuana. The health risks of marijuana are lower than those of many other drugs, but that is not the crucial issue. Much of the traffic from Mexico or Colombia is for cocaine, heroin and other drugs, while marijuana production is increasingly domestic. Legalizing only marijuana would therefore fail to achieve many benefits of broader legalization.
It is impossible to reconcile respect for individual liberty with drug prohibition. The U.S. has been at the forefront of this puritanical policy for almost a century, with disastrous consequences at home and abroad.
The U.S. repealed Prohibition of alcohol at the height of the Great Depression, in part because of increasing violence and in part because of diminishing tax revenues. Similar concerns apply today, and Attorney General Eric Holder's recent announcement that the Drug Enforcement Administration will not raid medical marijuana distributors in California suggests an openness in the Obama administration to rethinking current practice.
Perhaps history will repeat itself, and the U.S. will abandon one of its most disastrous policy experiments.
The opinions expressed in this commentary are solely those of Jeffrey Miron
CAMBRIDGE, Massachusetts (CNN) -- Over the past two years, drug violence in Mexico has become a fixture of the daily news. Some of this violence pits drug cartels against one another; some involves confrontations between law enforcement and traffickers.
Recent estimates suggest thousands have lost their lives in this "war on drugs."
The U.S. and Mexican responses to this violence have been predictable: more troops and police, greater border controls and expanded enforcement of every kind. Escalation is the wrong response, however; drug prohibition is the cause of the violence.
Prohibition creates violence because it drives the drug market underground. This means buyers and sellers cannot resolve their disputes with lawsuits, arbitration or advertising, so they resort to violence instead.
Violence was common in the alcohol industry when it was banned during Prohibition, but not before or after.
Violence is the norm in illicit gambling markets but not in legal ones. Violence is routine when prostitution is banned but not when it's permitted. Violence results from policies that create black markets, not from the characteristics of the good or activity in question.
The only way to reduce violence, therefore, is to legalize drugs. Fortuitously, legalization is the right policy for a slew of other reasons.
Prohibition of drugs corrupts politicians and law enforcement by putting police, prosecutors, judges and politicians in the position to threaten the profits of an illicit trade. This is why bribery, threats and kidnapping are common for prohibited industries but rare otherwise. Mexico's recent history illustrates this dramatically.
Prohibition erodes protections against unreasonable search and seizure because neither party to a drug transaction has an incentive to report the activity to the police. Thus, enforcement requires intrusive tactics such as warrantless searches or undercover buys. The victimless nature of this so-called crime also encourages police to engage in racial profiling.
Prohibition has disastrous implications for national security. By eradicating coca plants in Colombia or poppy fields in Afghanistan, prohibition breeds resentment of the United States. By enriching those who produce and supply drugs, prohibition supports terrorists who sell protection services to drug traffickers.
Prohibition harms the public health. Patients suffering from cancer, glaucoma and other conditions cannot use marijuana under the laws of most states or the federal government despite abundant evidence of its efficacy. Terminally ill patients cannot always get adequate pain medication because doctors may fear prosecution by the Drug Enforcement Administration.
Drug users face restrictions on clean syringes that cause them to share contaminated needles, thereby spreading HIV, hepatitis and other blood-borne diseases.
Prohibitions breed disrespect for the law because despite draconian penalties and extensive enforcement, huge numbers of people still violate prohibition. This means those who break the law, and those who do not, learn that obeying laws is for suckers.
Prohibition is a drain on the public purse. Federal, state and local governments spend roughly $44 billion per year to enforce drug prohibition. These same governments forego roughly $33 billion per year in tax revenue they could collect from legalized drugs, assuming these were taxed at rates similar to those on alcohol and tobacco. Under prohibition, these revenues accrue to traffickers as increased profits.
The right policy, therefore, is to legalize drugs while using regulation and taxation to dampen irresponsible behavior related to drug use, such as driving under the influence. This makes more sense than prohibition because it avoids creation of a black market. This approach also allows those who believe they benefit from drug use to do so, as long as they do not harm others.
Legalization is desirable for all drugs, not just marijuana. The health risks of marijuana are lower than those of many other drugs, but that is not the crucial issue. Much of the traffic from Mexico or Colombia is for cocaine, heroin and other drugs, while marijuana production is increasingly domestic. Legalizing only marijuana would therefore fail to achieve many benefits of broader legalization.
It is impossible to reconcile respect for individual liberty with drug prohibition. The U.S. has been at the forefront of this puritanical policy for almost a century, with disastrous consequences at home and abroad.
The U.S. repealed Prohibition of alcohol at the height of the Great Depression, in part because of increasing violence and in part because of diminishing tax revenues. Similar concerns apply today, and Attorney General Eric Holder's recent announcement that the Drug Enforcement Administration will not raid medical marijuana distributors in California suggests an openness in the Obama administration to rethinking current practice.
Perhaps history will repeat itself, and the U.S. will abandon one of its most disastrous policy experiments.
The opinions expressed in this commentary are solely those of Jeffrey Miron
Monday, March 23, 2009
TOXIC ASSET SOLUTION DETAIL
Asset Purchase Program Details
THE ASSOCIATED PRESS March 23,2009
The Obama administration's plan to finance purchases of as much as $1 trillion in toxic assets from banks will include programs supported by the Treasury Department's bailout fund, the Federal Reserve and the Federal Deposit Insurance Corp. Here is a look at how they will operate.
--Public-Private Investment Program: The umbrella organization that will support the effort to entice private investors to join with the government to purchase troubled assets. The administration plans to commit $75 billion to $100 billion from the government's $700 billion bailout program to support $500 billion in troubled asset purchases initially with the potential to expand to $1 trillion over time.
--Troubled Mortgage Loans: The FDIC, the agency that insures deposits at the nation's banks, would operate auctions of troubled mortgage loans and then provide financing to the winning bidders. Under an example provided by the administration, the FDIC loan would cover 86 percent of the purchase price of the troubled mortgages with the Treasury's bailout fund contributing 7 percent and the winning private investor bidder contributing the remaining 7 percent.
--Troubled Asset-Backed Securities: The Treasury and the Federal Reserve announced they were expanding the Term Asset-Backed Securities Loan Facility, or TALF, beyond its goal of boosting consumer debt in the area of credit cards, auto loans and student loans. The facility, which has the capacity of supporting $1 trillion in loans, will be expanded to cover securities backed by residential and commercial real estate and other types of asset-backed mortgages. Five asset managers will be chosen by Treasury to compete for purchases of troubled asset-backed securities with financial backing provided by Treasury and the TALF. The assets would be held in public-private investment funds.
THE ASSOCIATED PRESS March 23,2009
The Obama administration's plan to finance purchases of as much as $1 trillion in toxic assets from banks will include programs supported by the Treasury Department's bailout fund, the Federal Reserve and the Federal Deposit Insurance Corp. Here is a look at how they will operate.
--Public-Private Investment Program: The umbrella organization that will support the effort to entice private investors to join with the government to purchase troubled assets. The administration plans to commit $75 billion to $100 billion from the government's $700 billion bailout program to support $500 billion in troubled asset purchases initially with the potential to expand to $1 trillion over time.
--Troubled Mortgage Loans: The FDIC, the agency that insures deposits at the nation's banks, would operate auctions of troubled mortgage loans and then provide financing to the winning bidders. Under an example provided by the administration, the FDIC loan would cover 86 percent of the purchase price of the troubled mortgages with the Treasury's bailout fund contributing 7 percent and the winning private investor bidder contributing the remaining 7 percent.
--Troubled Asset-Backed Securities: The Treasury and the Federal Reserve announced they were expanding the Term Asset-Backed Securities Loan Facility, or TALF, beyond its goal of boosting consumer debt in the area of credit cards, auto loans and student loans. The facility, which has the capacity of supporting $1 trillion in loans, will be expanded to cover securities backed by residential and commercial real estate and other types of asset-backed mortgages. Five asset managers will be chosen by Treasury to compete for purchases of troubled asset-backed securities with financial backing provided by Treasury and the TALF. The assets would be held in public-private investment funds.
OBAMA continues doing it right!
The Obama plan to solve the `toxic’ assets (?) of banks that has frozen the leading
of banks is a winner! It let’s the market value the toxics and take care of this problem which is a major piece in the overall finance problem.
The DOW jumped almost 500 (497.48) points on March 23/09 is first POSITIVE reaction proof. Plus there are other signs that the very complex steps taken by Obama administration are working in the record!
The GOP is consistent that NOTHING Obama is doing is right.
Again this problem is faled according to the GOP. How predictable!
They are wrong again! I wouldn't what to be these dummies when it WORKS!!
Like in 1993 when BILL CLINTON solved the deficit problem of another BUSH!
Some weird folks are reaction to BO laughing on `60 Minutes’ night.
I’v no problem withe Prez - What would be better sack cloth and ashes?
Program noy live and subject to CBS TV edit out of context!
Two weeks ago people were upset because BO was to sober!?
Forget the nit wits, who have a dammed if you do and dammed
if you don’t silliness!
AIG BONUS – The media, congress, and the people don’t get it!
The bonus was paid (155 million) to people who got rid of over a trillion and half dollars in bad business for AIG!!!
This makes the company less likely to fail and it’s bad ripple effect.
of banks is a winner! It let’s the market value the toxics and take care of this problem which is a major piece in the overall finance problem.
The DOW jumped almost 500 (497.48) points on March 23/09 is first POSITIVE reaction proof. Plus there are other signs that the very complex steps taken by Obama administration are working in the record!
The GOP is consistent that NOTHING Obama is doing is right.
Again this problem is faled according to the GOP. How predictable!
They are wrong again! I wouldn't what to be these dummies when it WORKS!!
Like in 1993 when BILL CLINTON solved the deficit problem of another BUSH!
Some weird folks are reaction to BO laughing on `60 Minutes’ night.
I’v no problem withe Prez - What would be better sack cloth and ashes?
Program noy live and subject to CBS TV edit out of context!
Two weeks ago people were upset because BO was to sober!?
Forget the nit wits, who have a dammed if you do and dammed
if you don’t silliness!
AIG BONUS – The media, congress, and the people don’t get it!
The bonus was paid (155 million) to people who got rid of over a trillion and half dollars in bad business for AIG!!!
This makes the company less likely to fail and it’s bad ripple effect.
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