OT, but it deserves prompt mention. Obama re-nominated Bush-fired US Attorney Daniel Bogden as a US Attorney in Nevada. I’m delighted he’s given him recognition, but two issues cry out for debate.

Are there not several hundred highly-qualified Democratic Party lawyers eligible for such posts? Why is Bogden the most qualified? Does he think he will win kudos from Sen. Ensign (R-Gaming Commission) or further empower the milquetoast fighter Harry Reid by nominating a Bush appointee?

Does Obama intend the re-nomination of Mr. Bogden to be his only response to the possibly criminal firing by Bush of eight or so US Attorneys who failed properly to politicize their offices to promote Republicans and defeat their Democratic opponents?

As a related matter, when will he fire the GOP harpies in the US Attorneys offices in Alabama?

When you keep paddling from only one side of the canoe, the effort required to steer a straight course is not commensurate with the results. The Dems need to increase their bench strength as well as get today’s jobs done. This sort of staffing is unlikely to accomplish that goal.

Brooks as usual doesn’t know what he is talking about. I went and read his article, something I avoid if I can. But Brooks talking about economics is especially grating. He is basing this “grim fairy tale” as you call it on David Wessel’s remarkably shallow account. Wessel is the economics editor at the WSJ, Brooks’ old stomping ground.

Brooks is trying to square the circle. Like Wessel, he ignores Paulson, Bernanke, and Geithner’s heavy responsibility in creating both the housing bubble and the underlying conditions which then made a meltdown all but certain. So he invokes Lincoln and tries to make them into Lincoln-esque figures, men who were great, well prepared but who nonetheless made mistakes. I can see the movie now, a nailbiting suspense drama, sort of a All the President’s Men does Wall Street as played by Larry, Curly, and Moe. What makes Brooks and Wessel’s storyline so hard to believe is that they got all the big stuff wrong and even apologists like Brooks and Wessel can’t cover that up, although they try. Brooks says they were aware something was going to happen because they knew there was a problem with debt. Well, if debt was a problem why had Bernanke supported Greenspan’s easy credit policies for so long? And it wasn’t debt that blew things up, it was the bursting of the housing bubble, an $8 trillion bubble that none of them saw. Wessel does say that they underestimated the magnitude of the bubble bursting. That is an understatement. Paulson and Bernanke consistently guessed wrong and did too little to hold back the gathering storm. They consistently proclaimed that the market had taken housing market losses into account and that the worst was over.

But where Brooks is essentially lying is in his description of Lehman and AIG. Brooks would have us believe that Paulson was “sick of doing bailouts. He seems to have had some sort of intuitive moral sense that it was time for some bank to pay for its mistakes.” Unfortunately, he misread the “economic psychology” when Lehman failed. As for AIG, our fearless threesome “developed a feel for the crisis, and for the sort of traditions they would have to smash to address it.”

Now, there are many things wrong with this characterization. The most obvious is that the Lehman and AIG negotiations took place on the same weekend September 13-14. Somehow Paulson wasn’t so tired for AIG which held $20 billion in bonds that his old company was going to lose out on if AIG hit the wall. A loss that would have meant the end of Goldman. Somehow despite the time pressures our daring trio found the time anyway to develop a feel for the crisis, as Brooks describes it. But Lehman, a Goldman competitor for whom Paulson had a real dislike? That was all about morality, enough is enough, hit the road, jack. Well all that and Goldman had no exposure if Lehman went under. So while our intrepid triad had time to develop that crisisy feel for AIG, they had no time for Lehman. Brooks, as I said, ascribes the financial meltdown that followed to Paulson not reading market psychology right. But it was about much more than that. With AIG, because of the Goldman connection, our dynamic duo plus one knew about the bond exposure. But none of our tri-guys thought to inquire into who had bond exposure to Lehman, you know about the first f*cking thing you would want to know if you were even minimally competent. So they decided to set an example and let Lehman go into uncontrolled bankruptcy. The money markets that were holding Lehman debt promptly panicked froze up credit markets and the great financial meltdown was on.

Since then the government and Fed have poured nearly $7 trillion into the hole our good enough tertiary care team created. They have fixed none of the financial system or the economy’s problems. We are treading water only. But for Brooks, it is all greenshoots and silver linings.

It’s a story of effective muddling through. Bernanke & Co. never really got control of events. But they did avert disaster and committed only a few big blunders. In the real world, that counts as a job well done.

I suppose if they had done any better there would be no economy at all. The only silver lining I can see in that is there would have been no more David Brooks penning incredibly dumb op-eds.

Brooks, who tirelessly reminds us that he knows nothing about economics, but who keeps writing about economics, discloses as much as about what really went on during the bail-out as is helpful to his patrons. Nothing.

Bobo must be attempting to rehabilitate Bernanke, Paulson and Geithner in much the same way Liz Cheney is trying to rehabilitate her dad. Facts, logic, the truth play a small role, none at all if they get in the way. Thanks for the nice takedown of David Brooks’ faux characterization of went went on in the federal government’s bail-out of the thieves at Goldman Sachs.

We’re still wasting bandwidth on Bobo? No one outside the Village reads him.

Thunk, thunk, thunk. That is the sound of me hitting my head repeatedly against my desk as I read the shorter Brooks (I cannot read his column). Talk about being an idealogue. Nothing matters but his precious balance–whatever that means. Wanker.

Much of the discussion and actions that have been taken are based on an ingrained acceptance of trickle down economics that we have had since Raygun. It is this concept that has led to the growth of these to big to fail institutions. The failed system will not even start getting repaired until the advocates are replaced with people who can return us to bottom up.

The fact that the Chairman of Goldman Sachs was in the room when the decision to let Lehman Brothers fail and go bankrupt was made is an additional indictment in the decision making process. And now we know that Paulson did not like Fuld and vice versa.

These guys just didn’t get “too big to fail,” or they didn’t care. Too stupid to breathe or criminally reckless with the global economy let alone the American economy.

It has cost about $130 billion to date to save and maintain AIG. Let’s assume it would have cost as much to save Lehman Brothers. That’s a far cry from the $7 trillion required to save the American economy through Treasury and Fed intervention. Not to mention the loss in asset values suffered as a result, not to mention the loss of revenues from the economic downturn, not to mention the unemployment and depletion of savings and bankruptcies, et cetera.

I wonder if David Brooks can come up with a figure that encompasses the total consequences of the just good enough team’s decision to let Lehman Brothers fail. Paulson is out now. I suspect Bernanke will be out soon too. I wonder if the next team will be just good enough too for the next global financial crisis?

Love it!
The dastardly trio knew exactly what they were doing. They and the World Bank/IMF had run out of countries to pillage so they turned their cyclopean eye on America, the fatted calf.
And they didn’t even get a bunch of “insurgents” out of it, so it was all pure vanilla for them!
Thank all the forgotten gods and goddesses Pelsoi didn’t let Bush put Social Security in the stock market; ‘course, they’ve spent most of it anyways.
Klein is right when she says Obama’s financial policies are “seamless with Bush’s”. This is the final “shock” to the system. The only question remaining for me is whether the American people are still strong enuff to do their jobs and whip Congress good…there are “green shoots” there, I think.
I’m convinced that Obama HAD to put these three in charge of the banksters or not get the presidency. Bilderberg may have told him he could tryfor healthcare reform heheheh, but “good luck”. They may have been surprised that the activists didn’t breathe a sigh of relief and go home. Some did, and it’s been hard to get them moving again.

This hideous idea of putting the “Fed” in charge of “regulating” the financial system is another thing we’ll have to get up front on.

Great post, thanks.

Several million people listen to David Brooks every Friday on the NewsHour and consider him an objective public intellectual with a conservative, not radical bent. A million or more read him twice a week in the dead tree and online versions of the Times. He is a frequent speaker at “jouranlist” conferences, colleges and, of course, Reichwing think tank-sponsored events.

It pays to know what the other side is thinking, even when it’s not.

The ironic thing is that most conservatives do not consider Brooks one of their own. In fact they think (with some reason) that he’s more of a liberal than a conservative, or at best a RINO who too often agrees with the George Will establishment rather than the Rush Limbaugh base. He’s not well regarded by either side, it appears.

That depends on what you mean by “conservative”. He is not Norquist or Rush or Newt or Bachman or Palin. A rational assessment would characterize them as radical right, not “conservative” except in name only. Brooks is more a creature of establishment power, which leads from the right. His effectiveness, unlike Limbaugh’s, requires that he appear bland and centrist. It doesn’t mean that he or what he advocates is.

Brooks was such a relief when he took the spot when Gigot went to WSJ. A hugh improvement, at least in large part, b/c Gigot had gone truly whacky and could not recover after Gore dared to contest the election in which W was crowned….strangest thing I had seen. Gigot could not get over it….I wonder if he has recovered, or even has some doubts about the wisdom of W. Not that’s a contradiction in terms

I favor the medieval punishment for treason for these people. Hung, drawn and quartered.

It seems clear they put their personal fortunes and Goddam Sucks ahead of the country when they arranged Lehman’s fall.

And this is a call for violence, after a fair trial.

In my Tract The Age of Turbulence: Plea for a New World Economic Order, I explain the nature and causes of economic depressions.

It proves that the ominous fate of this economy is Keynes’ Liquidity Trap.

Its consequences are a new, bigger Crash causing, this time, a real Great Depression II.

A turbulence in fluid mechanic is a chaotic state of a liquid.
It Owns Most of the Proprieties of The Liquidity Trap, Origin of The Crash.

Before The Crash:

Preparing for the Crash, The Age of Turbulence. Proposes a way to profit from The Crash.

Using the yield curve as a predictor that strategy covers Treasuries, Corporate Bonds, Minerals (Oil, Precious Metals and Base Metals.) and Stocks.

Its aim is to profit from both the Asset Price Bubble and Irrational Exuberance and The Crash and Economic Depression that will necessarily ensue.

It tries, and for the time being very profitably, to accomplish Alan Greenspan Mission Impossible:

“That is mission impossible. Indeed, the international financial community has made numerous efforts in recent years to establish such oversight, but none prevented or ameliorated the crisis that began last summer.

Much as we might wish otherwise, policy makers cannot reliably anticipate financial or economic shocks or the consequences of economic imbalances.

Financial crises are characterised by discontinuous breaks in market pricing the timing of which by definition must be unanticipated – if people see them coming, then the markets arbitrage them away.”

….

The clear evidence of underpricing of risk did not prod private sector risk management to tighten the reins.

In retrospect, it appears that the most market-savvy managers, although conscious that they were taking extraordinary risks, succumbed to the concern that unless they continued to “get up and dance”, as ex-Citigroup CEO Chuck Prince memorably put it, they would irretrievably lose market share.

Instead, they gambled that they could keep adding to their risky positions and still sell them out before the deluge. Most were wrong.”

Alan Greenspan
The Age of Turbulence: Adventures in a New World [Economic Order?].

But what do we do After The Crash?

I propose a plausible alternative solution to the Depression: I designed a System that will allow us, when The Crash will come, to get out of Credit Based Free Market Economy, Capitalism, and transfer to my Adjusted Credit Free, Free Market Economy and Abolish the FED:

To participate in our new economy you need to Enter Your €5 in The Cra$h R€gi$t€r. Before The Crash.

I.10.82

“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.

It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice.

But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.

I.10.83

A regulation which obliges all those of the same trade in a particular town to enter their names and places of abode in a public register, facilitates such assemblies. It connects individuals who might never otherwise be known to one another, and gives every man of the trade a direction where to find every other man of it.

I.10.84

A regulation which enables those of the same trade to tax themselves in order to provide for their poor, their sick, their widows and orphans, by giving them a common interest to manage, renders such assemblies necessary.”

Adam Smith
June 5th, 1723 – July 17tn, 1790
An Inquiry Into the Nature and Causes of the Wealth of Nations.
Inequalities Occasioned by the Policy of Europe.
March 9th, 1776

Buy Now The Tract That Will Be Published September 17th, 2009.

You will enjoy my popular articles:

:
Ron Paul vs. Bernanke.

Ben “Systemic” Bernanke.