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Posted at 12:00 AM ET, 01/26/2011

Curious George

By Tom Toles

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I've announced the State of the Union Cartoon Caption Contest winner. We received nearly 2,000 entries. Thanks to everyone who participated.
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Vive la something something something

Lately I seem to be trying to combine left-leaning populism with elitist wonkery. Good luck with THAT project, Tom!

First of all, populism has been taken over by the right wing. In their version, the vastly wealthy are the FRIENDS of the little people. The richer they get, the HAPPIER the small fry are! The more power they accumulate, the better! The more free of any restraint or obligation, it's high-fives all around! I'll leave it to billionaire Rush Limbaugh to explain it all to you by redirecting your attention to every sort of straw man he can conjure. He apparently still makes sense to some people.

Lefty populism, when there was such a thing, tended to regard the interests of the rich as NOT 100 percent identical and congruent with those of the rest of us, and, by golly, it might be worth our while to reign them in a bit, lest they, you know, wreck the economy and your job prospects and income and future with speculative bubbles that make them richer and you poorer. And maybe they'd like to share a bit more of the blessings of their ballooning slice of the pie to the public weal. What a radical idea, which is exactly how the idea is now perceived. And to top it off, I want to replace the pitchforks with policy papers, to do the job sensibly and effectively, with the fewest possible negative corollary consequences. I have raised the banner! But the text is too long to be read at a distance. --Tom Toles
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By Tom Toles  | January 26, 2011; 12:00 AM ET
Categories:  GOP, Scandals, VA  
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Comments

@dalyplanet - By fortuitous coincidence, Simon Johnson in today's Baseline Scenario had this to say:

"Unfortunately, most of our political elite – both left and right – is still living in a land of illusions. They cannot even seriously discuss what would be required to bring our true fiscal position under control – remember that most of the recent damage to our collective balance sheet was done by big banks blowing themselves up. No one who refuses to confront the power of those banks can be taken seriously as a fiscal conservative."

I certainly hope there are movers and shakers working behind the scenes on these issues, because the people making the most noise about how horrible escalating deficits and national debt are, are the people who are doing the least to repair the damage, and the most to prevent anyone else from doing so.

Posted by: fbrewer1 | January 27, 2011 1:16 AM | Report abuse

with the mortgage thing

The government guaranteed Freddy and Fanny so the rest of the market 'believed' in that, and foolishness and greed and poor risk management have sent us into deep trouble. Add energy into the cocktail and it could be an insurmountable problem for the western world if things don't work out as planned.

There will be some energy guarantee and those credits may be on world markets and China and others are not our friends for sure. I hate Taxes but for now they would be safer than this plan.

Posted by: dalyplanet | January 26, 2011 10:26 PM | Report abuse

Do market-based ideas need to have this kind of assurance/insurance for you before you'll support them?

This is a BIG government program not a market based program.

When it blows, or if, the consumer is left holding the bag.

When a market thing blows willing stockholders are holding the bag.

300 Billion \ year comes from where?

Posted by: dalyplanet | January 26, 2011 10:12 PM | Report abuse

If it is a plan like 2191 it needs more work

There are no ag offsets in 1990 or CAIR

Limit the trades to the players or producers

Better yet wait tell there is an alternative.

Bury CO2 is a 25% energy waste.

Still no nukes on paper yet.

When this doesn't work because there is no fast 15 year fix electricity doubles in price or more.

The market will steal dollars that may do real reductions.

Posted by: dalyplanet | January 26, 2011 10:02 PM | Report abuse

Redhead

S 2191 now dead but is the model I am aware of

sec 2101 and on makes for a messy messy fix.

Offsets are a joke, not real more ag subsidy

Posted by: dalyplanet | January 26, 2011 9:49 PM | Report abuse

dalyplanet
~~~ Prove it will not blow up in a CO2 trading Bubble. CO2 Trading has potential to be ten times the mortgage thing in dollars chasing.~~~

Do market-based ideas need to have this kind of assurance/insurance for you before you'll support them? What kind of economic/scientific-based parameters are these? There's always some uncertainty in the market and in science. Right?

Posted by: redhead1990 | January 26, 2011 9:30 PM | Report abuse

Show me the nuts and bolts of the plan.

Posted by: dalyplanet | January 26, 2011 9:27 PM | Report abuse

dalyplanet
~~~Several proposals I have seen are similar to the mortgage biz that blew up a couple of years ago. CO2 credits may be like corn or wheat, or mortgages, or reinsurance. The market manipulates.~~~

Links and citations please.

Posted by: redhead1990 | January 26, 2011 9:24 PM | Report abuse

dalyplanet
~~~~~I am not convinced that the acid rain program is scalable to world CO2 emissions.~~~~~

Who said US mrket-based cap and trade was meant to control world emissions?

Posted by: redhead1990 | January 26, 2011 9:20 PM | Report abuse

redhead1990

I am not convinced that the acid rain program is scalable to world CO2 emissions.

Link me to the nuts and bolts of the EPA's plan. Several proposals I have seen are similar to the mortgage biz that blew up a couple of years ago. CO2 credits may be like corn or wheat, or mortgages, or reinsurance. The market manipulates.

Bushes acid rain thing never made me nervous because Minnesota was already installing cleaner tech in the power plants and trading was for the most part inside only, no daily line on SO2 Credits.

Show me the nuts and bolts of the plan. Prove it will not blow up in a CO2 trading Bubble. CO2 Trading has potential to be ten times the mortgage thing in dollars chasing.

Posted by: dalyplanet | January 26, 2011 9:10 PM | Report abuse

~~~~~The proposed CO2 Cap and Trade thing really makes me worry as there is no underlying product to bring to market. I see Carbon Default Swaps or something similar in a few years. The whole thing works similar to a hedge fund and not a market. The invented money put into play on a world wide basis is mind boggeling. How will these credits be guaranteed when some can't or don't stay inside the allowances. AND we will leave it to Wall St. to manage because they have done such a good job the last 30 years.!!!

Posted by: dalyplanet | January 26, 2011 8:04 PM

Why would you be opposed to a market-based cap and trade market of real, measurable things like the right to emit NOx and SO2 priced at xxx dollars per ton when it has worked so well over the past decade?

Really, seriously, dalyplanet since we've seen it work with NOx and SO2 what's the difference in a similar market system of CO2-emission rights? I know it makes you nervous but you were nervous when George H.W. Bush's EPA set up acid rain component cap and trade and look how that turned out:

An increase between 1990 and 2006 of 35% electricity generation in the U.S. while at the same time a decrease of 45% for NOx and 39% SO2 all coming almost exclusively using the same power plants using market-based cap and trade.

(http://www.epa.gov/airmarkets/international/china/JES_USexperience.pdf; The Electricity Journal)

Why are we rehashing the same points when earlier ones are worked out?

Posted by: redhead1990 | January 26, 2011 8:35 PM | Report abuse

fbrewer


One finger point

Timothy F. Geithner Treasury secretary may know something about derivatives. It is no wonder reform is NOT going to happen anytime soon. This problem is much bigger than partisan politics. The truly rich do not have incomes, they MAKE money.

Posted by: dalyplanet | January 26, 2011 8:15 PM | Report abuse

: fbrewer1

Funny stuff there ship them to Guantanamo.

I have been trying to find something from anywhere regarding this type of reform. There are calls for it but no actual real bills or hearings etc.

I think that there is not a lot of awareness of this bit of trading and those that do know like to keep it a secret. I think you and I are in agreement as to the source of the income redistribution and difficulties in our economy, your punishment is appropriate.

The proposed CO2 Cap and Trade thing really makes me worry as there is no underlying product to bring to market. I see Carbon Default Swaps or something similar in a few years. The whole thing works similar to a hedge fund and not a market. The invented money put into play on a world wide basis is mind boggeling. How will these credits be guaranteed when some can't or don't stay inside the allowances. AND we will leave it to Wall St. to manage because they have done such a good job the last 30 years.

Posted by: dalyplanet | January 26, 2011 8:04 PM | Report abuse

@dalyplanet - The worst of the financial players have such a deeply entrenched position that they are nearly invulnerable to any sane actions by government or even society at large. I know that people, since the economic meltdown, have been clamoring for regulation, taxation, and criminal charges.

Being careful to avoid any partisan rhetoric or finger-pointing, those players have powerful supporters in Congress, the Administration, the regulatory agencies, even the courts. I have no way of knowing what efforts are being made outside the public view. Perhaps there are heroic attempts underway, perhaps it's all just business as usual. Time will tell.

My own personal preference would be to re-purpose Guantanamo, and start shipping hedge fund managers and other high rollers there. I'd probably find it difficult to object if someone proposed water-boarding.

Posted by: fbrewer1 | January 26, 2011 6:10 PM | Report abuse

fbrewer1

I have been searching for months for a clue or direction on this issue. Hedges are well protected by many interests. Derivatives are used to make fast money by so many that make the rules that it is a long shot.

Can you or any one else shed some light

Posted by: dalyplanet | January 26, 2011 4:30 PM | Report abuse

@dalyplanet - You said, "I would also suggest that starting taxing derivative or hedge based income would be the first, best place to 'tax the rich' and slow the movement of money from the masses to the few."

Any proposal on how to get such a tax through Congress? I'm quite sure if that were to happen, the President would sign it.

Posted by: fbrewer1 | January 26, 2011 4:09 PM | Report abuse

And, yes, signing that stinker into law was very possibly the worst thing Bill Clinton ever did to this country.

Posted by: jonroesler

I would at least agree that I am on the same page as your opening statement. Surprised to find me in agreement with you?

This is a fine example of unintended consequences of poor Wonk 'policy' at work.

I would also suggest that starting taxing derivative or hedge based income would be the first, best place to 'tax the rich' and slow the movement of money from the masses to the few. Plus this may reduce or remove the bubble economics of the last 10 or 15 years. (Tech, Stock, Commodity, Oil, Housing, soon Carbon Caps.

Posted by: dalyplanet | January 26, 2011 3:43 PM | Report abuse

Okay... So, Daly, are you saying that you support reinstatement of the Glass-Steagall Act of 1933, that was basically gutted by the Gramm-Leach-Bliley legislation that was signed into law by Clinton in 1999?

Seems to me that, at the time, Gramm-Leach-Bliley was part of the movement toward reducing what were framed as costly and competition-stifling regulations on the financial industry, and that getting rid of them would result in a whole new era of opportunity and growth for America and all its citizens.

And, yes, signing that stinker into law was very possibly the worst thing Bill Clinton ever did to this country.

Posted by: jonroesler | January 26, 2011 3:03 PM | Report abuse

Its funny how in the early 1900's we had less wealth inequality but we had actual class warfare. Check out the Battle of Blair Mountain where people fought pitched battles over the right to form unions and demand a fair wage.

Now, you suggest a slight increase in the marginal tax rate for the top tier of earners and folks act like you're Stalin proposing a 5 year plan.

Read up on the original progressive movement and then try to call today's liberals proponents of class warfare. Its not even close.

Posted by: ELA5 | January 26, 2011 2:54 PM | Report abuse

From the Times today Regarding the Financial Crisis Inquiry Commission findings.

The commission that investigated the crisis casts a wide net of blame, faulting two administrations, the Federal Reserve and other regulators for permitting a calamitous concoction: shoddy mortgage lending, the excessive packaging and sale of loans to investors and risky bets on securities backed by the loans.

Timothy F. Geithner, who was president of the Federal Reserve Bank of New York during the crisis and is now the Treasury secretary, was not unscathed; the report finds that the New York Fed missed signs of trouble at Citigroup and Lehman, though it did not have the main responsibility for overseeing them.

Democrats also come under fire. The decision in 2000 to shield the exotic financial instruments known as over-the-counter derivatives from regulation, made during the last year of President Bill Clinton’s term, is called “a key turning point in the march toward the financial crisis.”

On the other hand, the report is harsh on regulators. It finds that the Securities and Exchange Commission failed to require big banks to hold more capital to cushion potential losses and halt risky practices, and that the Fed “neglected its mission.”

It says the Office of the Comptroller of the Currency, which regulates some banks, and the Office of Thrift Supervision, which oversees savings and loans, blocked states from curbing abuses because they were “caught up in turf wars.”

It quotes Citigroup executives conceding that they paid little attention to mortgage-related risks. Executives at the American International Group were found to have been blind to its $79 billion exposure to credit-default swaps, a kind of insurance that was sold to investors seeking protection against a drop in the value of securities backed by home loans. At Merrill Lynch, managers were surprised when seemingly secure mortgage investments suddenly suffered huge losses.

By one measure, for about every $40 in assets, the nation’s five largest investment banks had only $1 in capital to cover losses, meaning that a 3 percent drop in asset values could have wiped out the firm. The banks hid their excessive leverage using derivatives, off-balance-sheet entities and other devices, the report found. The speculative binge was abetted by a giant “shadow banking system” in which the banks relied heavily on short-term debt.

Wonks are the creators of this as the Pols and People expected the smart elites to manage correctly. The carbon cap and trade thing has even greater potential to create a crises. Messy as it is Laws from elected officials are more transparent than Wonkish policies. Be careful what you wish for.

Posted by: dalyplanet | January 26, 2011 2:20 PM | Report abuse

Hey Pdog

"global warming is a myth whose goal is to take over your life" and "Obama is a socialist",

Not your 'life' but substitute, world energy production.

Not 'socialist' but sub, wants to greatly expand the federal government. Said so last night again !!

When the carbon cap and trade bubble bursts It may make the 2008 recession look like cake walk.

I know a very very very good democrat that makes millions every year. The job, selling stickers for autos expressing their carbon neutral-ness Ha !! Someday in the future they are going to plant some trees or tag along on some other green project. This is the kind of thing Wonks figure out.

It was Wall Street Wonks working with Government Wonks that created Credit Default Swaps that crashed the financial markets.

Oh, And it was Wonks that figured out the fantastic food to fuel subsidy program. Tell me how great that has worked out with a double of much of our food cost and we are importing how much less oil? Ha!!

Posted by: dalyplanet | January 26, 2011 11:58 AM | Report abuse

Tom, excellent comment. We seem to have fallen back to the premise of "What's the Matter With Kansas" again (I thought it died in 2006); that premise being people who would have the most to gain by reigning in the ultra-wealthy, are voting against their own self-interest by continually putting Republicans in charge, who then continually reward the ultra-wealthy.

If we repeat unendingly that "global warming is a myth whose goal is to take over your life" and "Obama is a socialist", etc, then people believe these things. Faux News, funded by the ultra-wealthy, has perfected this. Keep the masses thinking that we are their friend, while we keep them shopping at Wal-Mart, buying things they don't need, going into massive debt. And when they realize they're really not doing all that well, or lose their job and can no longer afford those things or even basic necessities, tell them it's the liberals and evil socialists that are ruining their lives. Never mind that the two worst financial crises this country has ever seen (1929 and 2008) came at the pinnacle of deregulation and free-market frenzies.

This game plan isn't rocket science, but they've used it to boost their wealth to dizzying heights.

Posted by: PrairieDog60 | January 26, 2011 10:52 AM | Report abuse

Mr. Tom, your use of the word "reign," was that a pun?

Posted by: bturcotte2 | January 26, 2011 10:25 AM | Report abuse

Why is it only class warfare when it affects the rich?

Posted by: jhnnywalkr | January 26, 2011 9:24 AM | Report abuse

Mr. Toles, I was right -- well, left -- along with you as long as you were talking about the right's hijacking of populism, and the peculiar passing off of exploitation as being what the little guy supposedly wants, and so on. But the solution is not to hand things over to the wonks in the policy tanks; they too are an interest group, as disconnected from the lives of ordinary people as the fat cats and billionaires. Given the choice between plutocrats and bureaucrats, sure, give me the bureaucrats, who at least are trying to balance interests rather than identify with one side. But rule by those with great GRE scores is not inherently more representative, or better for the ordinary people, than rule by those with great net worth. In both cases you've handed over power to those for whom the system has worked pretty well on the personal level, and you aren't going to see much change for those for whom it has not; in both cases you're handing over power to those who will tell you that a situation that gives them more (when they already have a lot) is what will be good for everyone.

The idea of democracy has to be something more than a choice of Yalers. Ultimately it IS about being governed by the butcher, the baker, and the candlestick maker, and if a modern world requires better informed governance, then we must pursue better informed butchers, cleverer bakers, and analytically skilled candlestick makers -- not replace those who govern by enhancing the balance sheet of their class with those who govern by enhancing its resume.

If that sounds difficult, so what? Democracy as an idea was not meant to be easy, simple, practical, or efficient -- only free and fair.

Posted by: PasserThru | January 26, 2011 8:36 AM | Report abuse

Liberals waste little time in pitting Americans against each other via socialisms class warfare strategy. Civility sitters like George Allen don't stand a chance against a Sarah Palin backed Tea Party candidate so who has really tripped on the banana peel here..

Posted by: billybeer6 | January 26, 2011 6:18 AM | Report abuse

Uh... What?

Hope tomorrow the synapses are firing better.

Posted by: chaunceygardener | January 26, 2011 12:39 AM | Report abuse

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